With tight budgets and pressure from management to show results,
more and more organizations are putting their promotional dollars
behind direct marketing. The sophistication of databases and expanding
number of channels through broadcast, cable TV, telephone and direct
mail gives marketers unprecedented power to zero in on prospects.
Looming over the future of direct marketing is the Internet,
which has the potential to be the ultimate direct marketing channel.
"Years ago direct marketing was the dregs of the earth. Today,
it's the most effective tool out there," said Kathy Crawford,
president of Western Direct Response , Phoenix.
Many organizations apparently agree, as direct marketing
expenditures are surging, rising nearly 10 percent per year, according
to data from the Direct Marketing Association. More than half of all
advertising expenditures in the United States include some direct
response mechanism, ranging from listing of phone numbers or addresses
to coupons, according to DMA.
Computers, Databases Revolutionize
Desktop computers and versatile databases are the two major
developments behind direct marketing's increasing effectiveness and
popularity.
"Database marketing permits a direct relationship with a
customer," said Western Direct Response's Crawford. "Heretofore, it
was a hit or a miss, based on a list." By tracking results of
programs via the computer, direct marketers can track not only the
success of individual programs, but also the lifetime value of
customers. "Obviously, without the computer, we could do none of
this," said Crawford.
To push the power of database marketing further, some companies
are using "modeling technologies" which can pull prospects out of
databases based on factors which predict their likelihood of becoming
good prospects or customers, said Julie Ann Cohn, executive vice
president and director of database marketing, Western International
Media , Los Angeles.
Easy to Test
In addition to its inherent accountability, another major
advantage of direct marketing over other approaches is that it is easy
and quick to test campaigns. "You can test it for very little money
in a very short period time," said Western Direct's Crawford. With a
typical advertising effort, an organization would need to run an
entire campaign first. Even then, it would face the daunting
challenge of trying to isolate the impact of advertising from other
factors which may have influenced sales.
Internet Opportunity Looms
All direct marketers today are looking at the Internet, though it
is anything but a proven direct marketing channel at this point. "The
challenge, as well as the greatest opportunity, is trying to determine
audience levels and how people are responding," said Jean McHenry,
media director at Kuhn & Wittenborn Advertising Inc. , Kansas City,
Mo.
Marketers are having "limited success" on the Internet today,
said Mitch Burg, executive vice president of The Media Edge , New
York. For the time being, Burg believes organizations should focus on
learning "how to market" in the new medium. He believes widespread
successful use of the Internet for direct marketing "is more than
three years out."
McHenry predicts that shopping sites on the 'Net are likely to
have the most success initially, "because people are familiar with the
products being offered." (DMA, 212/790-1525; Western Direct, 602/650-
1711; Western International, 310/659-5711; Kuhn & Wittenborn, 816/471-
7888; Media Edge, 212/474-5784)
Direct Marketing's Huge Impact
Direct marketing has become a huge industry, responsible for
millions of jobs and billions of dollars in sales in the United
States.
According to data compiled by economic forecasting firm The WEFA
Group for the Direct Marketing Association, in 1995 direct marketing
was responsible for well over $1 trillion in sales in the United
States. Nearly 20 million jobs nationwide are directly or indirectly
dependent on the direct marketing industry.
The DMA projects that business-to-business direct marketing sales
will increase by slightly more than 10 percent per year between 1995
and 2000, totalling $810.4 billion at the turn of the century.
Consumer direct marketing sales are expected to rise at a slower rate-
-7.2 percent--climbing from $594.4 billion to $841.2 billion over that
time period.
Telephone Is Largest Channel
The DMA study, "Economic Impact: U.S. Direct Marketing Today,"
documented telephone direct marketing as the largest segment, with
estimated 1995 spending of $54.1 billion. Direct mail came in with
the second-highest level of expenditures--$31.2 billion. Television,
at $14.1 billion, and newspapers ($13.6 billion) round out the list.
(DMA, 212/768-7277)