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What is it?

Direct marketing is a type of advertising campaign that seeks to elicit an action (such as an order, a visit to a store or Web site, or a request for further information) from a selected group of consumers in response to a communication from the marketer. The communication itself may be in any of a variety of formats including postal mail, telemarketing, direct e-mail marketing, and point-of-sale (POS) interactions. Customer response should be measurable: for example, the marketer should be able to determine whether or not a customer offered a discount for online shopping takes advantage of the offer.


How is Direct Marketing Used?


Who uses direct marketing?


Some examples of companies that use direct marketing are the following:

Burger King

Hoping to sell more burgers, fast-food chain Burger King recently introduced a mobile Web site as a direct marketing vehicle designated for driving consumer traffic to its restaurants. The site comes equipped with a Burger King restaurant finder, which uses maps and zip code, and nutritional data on the restaurant's offerings. Burger King emphasizes the importance of extending traditional and digital marketing so that it can connect with the growing number of customers who use mobile communication as a source of information. Burger King's internal research outcomes show that customers welcome this option

National Geographic Channel

On August 10, Janrain rolled out its Capture software platform, which was created to cull information from social networking websites. The National Geographic Channel decided to use the software to acquire data about visitors to its website. When consumers sign up for a company's website or use Twitter, MySpace or Facebook sign-in data, the data is shared with the client. Before using the software, the National Geographic Channel was not in the practice of gathering data on its website's visitors. The channel didn't have any consumer registration, only message board and blog comments that were anonymously posted. The Capture software allowed the company to implement direct marketing to collect consumer data and proceed further to solicit feedback from its viewers.

Verizon and Motorola

Verizon and Motorola teamed up to launch a sweepstakes in connection with the next Super Bowl to increase customer response to the event. Both companies are sponsors of the National Football League and called on a sports marketing agency to handle the task. When the "Ultimate Game Day Access" sweepstakes was introduced, a program was created to benefit the consumer and utilize both companies' assets under one roof. Consumers are able to participate in the sweepstakes on the Motorola website through a landing page. They are then required to provide an e-mail address and view a presentation about Verizon's FiOS to enter the contest. Tickets to a December NFL game are offered as the prize.


The Advantages and Disadvantages Of Direct Marketing


Advantages


Flexible Targeting

Direct marketing enables you to talk directly identify, isolate and communicate with well-defined target markets. This means you get a higher conversion and success rate than if you tried communicating to everyone in the mass market. And direct marketing is also far cheaper than mass market communication.

Multiple Uses

Direct marketing doesn't just have to be used to sell - it can be used to test new markets and trial new products or customers, to reward existing customers to build loyalty, collect information for future campaigns, or segment a customer base.


Cost-Effectiveness

The cost per acquisition of direct mail can be significantly less than other marketing methods. Plus once you've acquired a customer, you can also benefit from highly profitable repeat sales, gained once again through direct marketing methods.

Ease of Management

Direct marketing provides greater control and accountability than other marketing methods. It is easy to measure results because you know exactly how many people you've contacted in the first place. Once you've run a direct marketing campaign and know the conversion rates involved, you can work on refining and improving your success rates. Plus it also makes it easier to plan, forecast and budget for future direct marketing campaigns.

Rapid Delivery

Direct marketing is both swift and flexible in achieving results. This is especially true for telemarketing, one of the direct marketing tools, as the results of a conversation can be logged immediately and scripts adjusted straight away to improve results.

Testing Capability

Direct marketing allows you to test, test and test again in order to hit upon the most successful combination of direct marketing tools. Any of these variables such as timing, list, message, mailer and offer can be adjusted, tested again, and measured to find the optimum direct marketing proposition.

Relationship Building


Direct marketing is far more effective at initiating and developing a meaningful dialogue with new customers. From the outset you have a direct relationship with them, which can also be used as part of a push pull strategy to stimulate demand for retailers.

Targeting of Messages

Direct marketing can enable you to target different messages to different recipients. Using technology such as digital printing, it's even possible to display different images, designs and offers in a direct mailer according to who it's being sent to, as well as personalising the mailer to the recipient to increase conversion rates.

Geographic Targeting

Direct marketing can be used for any level of geographic targeting, whether it's the local area surrounding a shop or restaurant, regional targeting by postcode or county, national targeting and even international - when direct marketing can prove a far cheaper way of testing the market than a costly personal sales visit.


Disadvantages

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Junk Mail

"Junk mail" is the pejorative term used for direct advertising involving mail. Many people become agitated by the constant influx of direct marketing materials to their private mailbox. The use of the term "junk" to describe it is an indicator of this social phenomenon. By using direct mail, a company risks alienating the customers it seeks to gain. The use of direct mail

is often associated with a company of lower status and quality.

Enviromental Impact

Direct marketing has come under additional criticism in recent years for the disadvantages that it poses to the environment. Direct marketing typically involves the heavy use of physical components in order to give consumers an object they can hold in their hands. This physical side of direct marketing means that a greater amount of natural resources are consumed in their production as well as a greater amount of pollution.

Metrics

It is hard when using direct marketing to getany reliable metrics on its impact. With more traditional advertisements such as radio and television, there are often immediate results that can be measured. Direct marketing involves a much longer-term strategy where the results are uncertain and the best that can be said is that it may be working. It is often very unclear whether direct marketing is alienating more customers than it is creating.

Time

It is hard to get as immediate of an impact when using direct marketing, as the advertising product, by its nature, takes time to reach consumers. Waiting for consumers to receive the physical product of direct advertising means missing out as potentially more efficient advertising from competitors reaches them through the radio and television and other sources. Time is often equated with money in business, and the time ratio in direct marketing is a disadvantage.

Laws

The distribution of fliers and street advertising is often prohibited by law in certain areas. This is a major disadvantage of this form of direct marketing as certain customer bases will be unreachable. If a marketer wishes to reach customers, for instance, in a high-traffic and wealthy area, this may be impossible using direct marketing of this kind.

Limited Reach

There is an inherently limited geographic reach to direct marketing involving fliers and street advertising. By using this form of direct marketing, you will be limited to consumers in a very specific distribution area and will have to depend on word of mouth for others. This form of direct marketing has severe disadvantages in this way when compared with other forms such as television or radio.




How is it relevant?



  1. Identifies customers with similar purchasing patterns. This enables marketers to tailor specific campaigns, message, or merchandise based on theinformation gleaned from the data.
  2. Identifies new marketing opportunities. Mining a customer database can reveal new markets to penetrate. For example, as Director of Database Marketing, data mining I performed on a B-T-B customer database revealed additional SIC's the company could target in general advertising and mailing lists.

  3. Customer profiling improves on and offline advertising channels. Increased customer knowledge can reveal where to direct advertising placement or conversely where existing advertising should be pruned or eliminated. Based on simple frequency counts, marketers can identify geographic areas where more merchandise should be allocated or increasing advertising expenditures.

How is it relevant today?


In this Internet age, traditional direct marketing (i.e. off line channels) are now (or should be) intertwined with online marketing. SEM, SEO, Email Marketing, Social Media are new communication channels. However, at their root, each of them, like traditional off line direct mail, TV Direct Response, Infomercials, Package Inserts, CO-OP fall under the definition of direct response marketing. We are still offering direct response marketing services so the same financial metrics are still required. We still must test, calculate ROI, profitability and determine response rates (i.e. click through, conversion rate) to determine success.

In these difficult economic conditions we are facing, direct marketing is more relevant today than ever before. Only direct marketing provides marketers the ability to analyze with small carefully selected test panels before committing significant financial resources. And only direct response marketing provides the analytical ability to predict with a high degree of certainty future response rates and ROI.


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See Also




Sources

  1. SearchCRM.com (2003) Direct marketing: the basics,http://searchcrm.techtarget.com/definition/direct-marketing
  2. Business Link (2011) Telemarketing, http://www.businesslink.gov.uk/bdotg/action/layer?r.i=1073790746&r.l1=1073861169&r.l2=1073858842&r.l3=1073902327&r.t=RESOURCES&topicId=1087353192
  3. Youtube What is Direct Marketing? http://www.youtube.com/v/sc-aWv_2kTI
  4. eHow.com What Companies Are Using Direct Marketing for Advertising http://www.ehow.com/list_7352718_companies-using-direct-marketing-advertising_.html
  5. PositiveArticles.com What are the Advantages of Direct Marketing?, http://www.positivearticles.com/Article/What-are-the-Advantages-of-Direct-Marketing/38713
  6. eHow.com (2011) The Disadvantages of Direct Marketing, http://www.ehow.com/info_7752574_disadvantages-direct-marketing.html
  7. Interactive, Online and Digital Direct Marketing Ideas (2009) Is Direct Marketing Still Relevant?, http://www.ericbmohr.com/2009/01/is-direct-marketing-still-relevant.html