Direct marketing is a sub-discipline and type of marketing. There are two main definitional characteristics which distinguish it from other types of marketing or advertising. The first is that it attempts to send its messages directly to consumers, without the use of intervening media. This involves unsolicited commercial communication with consumers or businesses. The second characteristic is that it is focused on driving purchases that can be attributed to a specific "call-to-action." This aspect of direct marketing involves an emphasis on trackable, measurable results (known as "response" in the industry) regardless of medium.
The most common form of direct marketing is direct mail, commonly called junk mail, where the marketers use a reduced bulk postal rate to send paper mail to all postal customers in an area or all customers on a list. The second most common form of direct marketing is telemarketing, where marketers call selected (or random) telephone numbers. Email Marketing, including spam may have passed telemarketing in frequency at this point, and it is a third type of direct marketing. A fourth type of direct marketing, broadcast faxing, is now less common than the other forms. This is partly due to laws in the United States and elsewhere which make it illegal. A related form of marketing is infomercials. They are typically called "direct response" marketing rather than direct marketing because they try to achieve a direct response via television presentations. Viewers respond via telephone or internet, credit card in hand.
Direct marketers also use media such as door hangers, package inserts, magazines, newspapers, radio, television, email, internet banner ads, pay-per-click ads, billboards, transit ads, etc. And according to Ad Age, "In 2005, U.S. agencies generated more revenue from marketing services than from traditional advertising and media."
If the ad in the medium asks the prospect to take a specific action--call a free phone number, visit a website, return a response card, place an order, visit a PURL, complete a survey, etc.--then the effort is considered to be direct marketing. Direct response or direct-response advertising are both synonymous terms for direct marketing.
Wednesday, February 6, 2008
History
The term "direct marketing" is believed to have been first used in 1961 in a speech by Lester Wunderman, who pioneered direct marketing techniques with brands such as American Express and Columbia Records. Although Wunderman may have been the first to use the term "direct marketing", the practice of "mail order selling" (direct marketing via mail) essentially began in the U.S. upon invention of the typewriter in 1867. The first mail-order catalog was produced by Aaron Montgomery Ward in 1872. The Direct Mail Advertising Association, predecessor of the present-day Direct Marketing Association, was first established in 1917. Third class bulk mail postage rates were established in 1928.
Direct marketing's history in Europe can be traced to the 15th century. Upon Gutenberg's invention of moveable type, the first trade catalogs from printer-publishers appeared sometime around 1450.
Recently, political campaigns have begun to appropriate the methods of direct marketers (or to employ direct marketing firms) to raise money and foster activism.
Direct marketing's history in Europe can be traced to the 15th century. Upon Gutenberg's invention of moveable type, the first trade catalogs from printer-publishers appeared sometime around 1450.
Recently, political campaigns have begun to appropriate the methods of direct marketers (or to employ direct marketing firms) to raise money and foster activism.
Overview of Benefits and Drawbacks to Direct Marketing
Direct marketing is attractive to many marketers, because in many cases its effectiveness can be measured directly. For example, if a marketer sends out one million solicitations by mail, and ten thousand customers can be tracked as having responded to the promotion, the marketer can say with some confidence that the campaign led directly to the responses. By contrast, measurement of other media must often be indirect, since there is no direct response from a consumer. Measurement of results, a fundamental element in successful direct marketing, is explored in greater detail elsewhere in this article. Yet since the start of the Internet-age the challenges of Chief Marketing Executives (CMOs) are tracking direct marketing responses and measuring results.[citation needed]
While many marketers like this form of marketing, some direct marketing efforts using particular media have sometimes been criticized for generating unwanted solicitations. For example, direct mail that is irrelevant to the recipient is considered "junk mail", and unwanted email messages are considered "spam". Consumers are demanding more personalized direct marketing, which some advertising agencies are able to provide by using variable data printing and targeted mailing lists.
While many marketers like this form of marketing, some direct marketing efforts using particular media have sometimes been criticized for generating unwanted solicitations. For example, direct mail that is irrelevant to the recipient is considered "junk mail", and unwanted email messages are considered "spam". Consumers are demanding more personalized direct marketing, which some advertising agencies are able to provide by using variable data printing and targeted mailing lists.
Direct mail
Basics
Any medium that can be used to deliver a communication to a customer can be employed in direct marketing. Probably the most commonly used medium for direct marketing is direct mail, in which marketing communications are sent to customers using the postal service. The term junk mail is used in common parlance to refer to direct mail, which may also be referred to as admail or bulk mail.
Direct mail includes advertising circulars, free trial CDs, pre-approved credit card applications, and other unsolicited merchandising invitations delivered by mail to homes and businesses. Bulk mailings are a particularly popular method of promotion for businesses operating in the financial services, home computer, and travel and tourism industries.
In many developed countries, direct mail represents such a significant amount of the total volume of mail that special rate classes have been established. In the United States and United Kingdom, for example, there are bulk mail rates that enable marketers to send mail at rates that are substantially lower than regular first-class rates. In order to qualify for these rates, marketers must format and sort the mail in particular ways - which reduces the handling (and therefore costs) required by the postal service.
Advertisers often call direct mail "targeted mailing", as mail is usually sent out following database analysis. For example a person who likes golf may receive direct mail for golf related products or perhaps for goods and services that are appropriate for golfers. When direct mail uses database analysis, it is a type of database marketing. The USPS prefers to call it "advertising mail" (admail for short), noting that some people might find offers of interest to them in it. [1]
Recent changes in direct mail technology
Advances in computing and communications technology have significantly impacted the direct mailing industry in recent years. As computers become more powerful and databases become larger, new opportunities arise for direct mail companies to perform more in-depth processing of their mailing lists. Mailings can be targeted based on location and demographic data. This allows mailings to be targeted more specifically and potentially increases response rates. Web sites are appearing which allow clients to create their mailing lists interactively using map-based interfaces.
Types of Direct Mail
Formats
Direct mail permits the marketer to design marketing pieces in many different formats. Indeed, there is an entire subsector of the industry that produces specialized papers, printing, envelopes, and other materials for direct mail marketing. Some of the common formats, include:
-Catalogs: Multi-page, bound promotions, usually featuring a selection of products for sale.
-Self-mailers: Pieces usually created from a single sheet that has been printed and folded. For instance, a common practice is to print a page-length advertisement or promotion on one side of a sheet of paper. This is then folded in half or in thirds, with the promotional message to the inside. The two outside surfaces are then used for the address of the recipient and some "teaser" message designed to persuade the customer to open the piece.
-Clear bag packages: Large (often 9x12 or bigger) full-color packages sealed in a clear, plastic outer wrap. The contents show through the clear bag, giving the potential for maximum initial impact. Clear bag packages can be extremely effective and are very affordable based upon the campaign open-rate.[citation needed]
-Postcards: Simple, two-sided pieces, with a promotional message on one side and the customer's address on the other.
-Envelope mailers: Mailings in which the marketing material is placed inside an envelope. This permits the marketer to include more than one insert. When more than one advertiser is included, this is often called "marriage mail". Valpak is one of the largest examples of a marriage mail service.
-Snap Mailers: Mailers that fold and seal with pressure. The sides detach and the mailer is opened to reveal the message.
-Dimensional Mailers: Mailers that have some dimension to them, like a small box.
-Intelligent Documents: Programmable mail pieces built dynamically from database information, and printed digitally for faster production.
Business-to-Business Mailings (B2B)
Business products and services have long used direct mail to promote themselves. Traditionally, this worked in one of two ways. As a direct sale, therefore precluding the use of a salesperson or a retail store, or as a method of generating leads for a salesforce. The former method was ideally used by products that were easy to sell, were familiar to the prospect and needed no demonstration. The latter method was used for large ticket items or for those that needed demonstration for example.
Unaddressed mail
Delivery of unaddressed items through letterboxes ("direct mail without the stamp") takes place in large numbers throughout the western world. Deliveries are either made via the postal service, independent delivery companies or local newspaper publishers.
It is a lower-cost alternative to direct mail and therefore can produce a lower cost per response for the advertiser. It can be used as part of a mixed media campaign, e.g. with TV or Radio. It should be noted though that unaddressed mail is considered illegal by the United States Postal Service and can result in fines, but not imprisonment, of up to $5,000 for individuals and $10,000 for businesses. This includes items that are placed upon, supported by, attached to, hung from, or inserted into a mailbox. [2]
In Australia, unsolicited unaddressed mail is called "junk mail", unsolicited addressed mail is comparatively rare.
Advantages and Disadvantages of Direct Mail
Some people respond positively to direct mail advertising and find useful goods and services on offer. Traditionally, this was more true in rural areas where people had to travel many miles to do their shopping and direct mail and mail order shopping was a major convenience. However, many people dislike it, in the same way as with telemarketers' calls and e-mail spam, and some jurisdictions like the US have laws requiring junk mailers to withhold their offerings from residents who opt out.
Advantages for marketers include the following:
-Targeting - Historically, the most important aspect of direct mail was its ability to precisely target previous customers. If a suitable list was available, it could do a good job of targeting prospects.
-Personalization - Direct mail can address the customer personally and be tailored to their needs based on previous transactions and gathered data.
-Optimization - Because of its direct accountability, direct mail can be tested to find the best list; the best offer; the best timing (and many other factors). Then the winning tests can be rolled out to a wider audience for optimal results.
-Analysis - The bulk mailing is large enough to allow statistical analyses. For example the results can be analysed to see in detail the performance of individual offers in say a squinch report which shows sales per square inch. With suitable media or source codes, the performance of lists can be captured. These enable better selection of offers and lists for future mailings.
-Accumulation - Responses (and non-responses) can be added to the database, allowing future mailings to be better targeted.
Disadvantages include:
-Cost - The cost per thousand will be higher than almost any other form of mass promotion (although the wastage rate may be much lower). Also, development costs in database acquisition/development.
-Waste - Large quantities of paper are thrown away (see below).
-Alienation - Some recipients resent direct marketing being "forced" upon them, and boycott companies that do so. Moreover, they may obtain Prohibitory Orders against companies whose direct marketing mail they find offensive.
Critiques of Direct Mail and the Movement Against it
Many consumers, as well as environmental protection groups, are concerned about the environmental impact generated by junk mail. According to 50 Simple Things You Can
Do To Save The Earth:[1]
-Each year, 100 million trees are used to produce junk mail.
-250,000 homes could be heated with one day's supply of junk mail.
-Americans receive almost 4 million tons of junk mail every year. [3]
-The yearly production and disposal of junk mail consumes more energy than 2.8 million cars.
Opting Out
An organization called the Mailing Preference Service allows people in the United Kingdom to register with them for free and they will ensure those people's addresses are removed from 95% of mailing lists.
A similar service is provided by Junkbusters for removal from the USA's Direct Marketing Association members' and other mailing lists. In the United States, some junk mail can be avoided by registering with the Direct Marketing Association Mail Preference Service, similar to Do not call registries, though mailer participation is voluntary.
Several websites critical of junk mail have guides for people interested in reducing the amount of junk mail they get. Examples include the Big Green Switch (UK-based) and the Center for a New American Dream.
Any medium that can be used to deliver a communication to a customer can be employed in direct marketing. Probably the most commonly used medium for direct marketing is direct mail, in which marketing communications are sent to customers using the postal service. The term junk mail is used in common parlance to refer to direct mail, which may also be referred to as admail or bulk mail.
Direct mail includes advertising circulars, free trial CDs, pre-approved credit card applications, and other unsolicited merchandising invitations delivered by mail to homes and businesses. Bulk mailings are a particularly popular method of promotion for businesses operating in the financial services, home computer, and travel and tourism industries.
In many developed countries, direct mail represents such a significant amount of the total volume of mail that special rate classes have been established. In the United States and United Kingdom, for example, there are bulk mail rates that enable marketers to send mail at rates that are substantially lower than regular first-class rates. In order to qualify for these rates, marketers must format and sort the mail in particular ways - which reduces the handling (and therefore costs) required by the postal service.
Advertisers often call direct mail "targeted mailing", as mail is usually sent out following database analysis. For example a person who likes golf may receive direct mail for golf related products or perhaps for goods and services that are appropriate for golfers. When direct mail uses database analysis, it is a type of database marketing. The USPS prefers to call it "advertising mail" (admail for short), noting that some people might find offers of interest to them in it. [1]
Recent changes in direct mail technology
Advances in computing and communications technology have significantly impacted the direct mailing industry in recent years. As computers become more powerful and databases become larger, new opportunities arise for direct mail companies to perform more in-depth processing of their mailing lists. Mailings can be targeted based on location and demographic data. This allows mailings to be targeted more specifically and potentially increases response rates. Web sites are appearing which allow clients to create their mailing lists interactively using map-based interfaces.
Types of Direct Mail
Formats
Direct mail permits the marketer to design marketing pieces in many different formats. Indeed, there is an entire subsector of the industry that produces specialized papers, printing, envelopes, and other materials for direct mail marketing. Some of the common formats, include:
-Catalogs: Multi-page, bound promotions, usually featuring a selection of products for sale.
-Self-mailers: Pieces usually created from a single sheet that has been printed and folded. For instance, a common practice is to print a page-length advertisement or promotion on one side of a sheet of paper. This is then folded in half or in thirds, with the promotional message to the inside. The two outside surfaces are then used for the address of the recipient and some "teaser" message designed to persuade the customer to open the piece.
-Clear bag packages: Large (often 9x12 or bigger) full-color packages sealed in a clear, plastic outer wrap. The contents show through the clear bag, giving the potential for maximum initial impact. Clear bag packages can be extremely effective and are very affordable based upon the campaign open-rate.[citation needed]
-Postcards: Simple, two-sided pieces, with a promotional message on one side and the customer's address on the other.
-Envelope mailers: Mailings in which the marketing material is placed inside an envelope. This permits the marketer to include more than one insert. When more than one advertiser is included, this is often called "marriage mail". Valpak is one of the largest examples of a marriage mail service.
-Snap Mailers: Mailers that fold and seal with pressure. The sides detach and the mailer is opened to reveal the message.
-Dimensional Mailers: Mailers that have some dimension to them, like a small box.
-Intelligent Documents: Programmable mail pieces built dynamically from database information, and printed digitally for faster production.
Business-to-Business Mailings (B2B)
Business products and services have long used direct mail to promote themselves. Traditionally, this worked in one of two ways. As a direct sale, therefore precluding the use of a salesperson or a retail store, or as a method of generating leads for a salesforce. The former method was ideally used by products that were easy to sell, were familiar to the prospect and needed no demonstration. The latter method was used for large ticket items or for those that needed demonstration for example.
Unaddressed mail
Delivery of unaddressed items through letterboxes ("direct mail without the stamp") takes place in large numbers throughout the western world. Deliveries are either made via the postal service, independent delivery companies or local newspaper publishers.
It is a lower-cost alternative to direct mail and therefore can produce a lower cost per response for the advertiser. It can be used as part of a mixed media campaign, e.g. with TV or Radio. It should be noted though that unaddressed mail is considered illegal by the United States Postal Service and can result in fines, but not imprisonment, of up to $5,000 for individuals and $10,000 for businesses. This includes items that are placed upon, supported by, attached to, hung from, or inserted into a mailbox. [2]
In Australia, unsolicited unaddressed mail is called "junk mail", unsolicited addressed mail is comparatively rare.
Advantages and Disadvantages of Direct Mail
Some people respond positively to direct mail advertising and find useful goods and services on offer. Traditionally, this was more true in rural areas where people had to travel many miles to do their shopping and direct mail and mail order shopping was a major convenience. However, many people dislike it, in the same way as with telemarketers' calls and e-mail spam, and some jurisdictions like the US have laws requiring junk mailers to withhold their offerings from residents who opt out.
Advantages for marketers include the following:
-Targeting - Historically, the most important aspect of direct mail was its ability to precisely target previous customers. If a suitable list was available, it could do a good job of targeting prospects.
-Personalization - Direct mail can address the customer personally and be tailored to their needs based on previous transactions and gathered data.
-Optimization - Because of its direct accountability, direct mail can be tested to find the best list; the best offer; the best timing (and many other factors). Then the winning tests can be rolled out to a wider audience for optimal results.
-Analysis - The bulk mailing is large enough to allow statistical analyses. For example the results can be analysed to see in detail the performance of individual offers in say a squinch report which shows sales per square inch. With suitable media or source codes, the performance of lists can be captured. These enable better selection of offers and lists for future mailings.
-Accumulation - Responses (and non-responses) can be added to the database, allowing future mailings to be better targeted.
Disadvantages include:
-Cost - The cost per thousand will be higher than almost any other form of mass promotion (although the wastage rate may be much lower). Also, development costs in database acquisition/development.
-Waste - Large quantities of paper are thrown away (see below).
-Alienation - Some recipients resent direct marketing being "forced" upon them, and boycott companies that do so. Moreover, they may obtain Prohibitory Orders against companies whose direct marketing mail they find offensive.
Critiques of Direct Mail and the Movement Against it
Many consumers, as well as environmental protection groups, are concerned about the environmental impact generated by junk mail. According to 50 Simple Things You Can
Do To Save The Earth:[1]
-Each year, 100 million trees are used to produce junk mail.
-250,000 homes could be heated with one day's supply of junk mail.
-Americans receive almost 4 million tons of junk mail every year. [3]
-The yearly production and disposal of junk mail consumes more energy than 2.8 million cars.
Opting Out
An organization called the Mailing Preference Service allows people in the United Kingdom to register with them for free and they will ensure those people's addresses are removed from 95% of mailing lists.
A similar service is provided by Junkbusters for removal from the USA's Direct Marketing Association members' and other mailing lists. In the United States, some junk mail can be avoided by registering with the Direct Marketing Association Mail Preference Service, similar to Do not call registries, though mailer participation is voluntary.
Several websites critical of junk mail have guides for people interested in reducing the amount of junk mail they get. Examples include the Big Green Switch (UK-based) and the Center for a New American Dream.
Direct Response Television Marketing
An important element of Direct Marketing is the TV driven marketing. Major players are firms like QVC, Thane Direct, and Interwood Marketing Group.
Legislation Regarding Direct Marketing
In the United States, the United States Postal Service maintains that direct marketers pay the majority of the costs of mail[citation needed]. Bulk mail thereby subsidizes low cost stamps for letter, magazine, and book mailing. However, no such compensatory relationship exists with e-mail or faxes, which require the receiver to pay for bandwidth, storage space, or paper and toner, and some of the solutions to e-mail spam in the United States have involved instituting a freight cost on mass e-mail to make it productive. Such solutions have not been universally lauded, as they leave the recipients of unsolicited e-mail with the problem of storage and bandwidth consumption and would increase costs to companies that send only solicited mass mailings.
In response to a US Supreme Court Ruling (Rowan v. United States Post Office), the United States Postal Service offers a form called a Prohibitory Order (also known as Form 1500). The Prohibitory Order gives consumers the power to stop non-governmental organizations from sending them mail, and to demand such organization remove the consumer's information from their databases.
The United States telemarketing industry was affected by a national do-not-call list, which went into effect on October 1, 2003. Under the law, it is illegal for telemarketers to call anyone who has registered themselves on the list. After the list had operated for one year, over 62 million people had signed up [4]. The telemarketing industry opposed the creation of the list, but most telemarketers have complied with the law and refrained from calling people who are on the list.
Canada has passed legislation to create a similar Do Not Call List. In other countries it is voluntary, such as the New Zealand Name Removal Service.
In response to a US Supreme Court Ruling (Rowan v. United States Post Office), the United States Postal Service offers a form called a Prohibitory Order (also known as Form 1500). The Prohibitory Order gives consumers the power to stop non-governmental organizations from sending them mail, and to demand such organization remove the consumer's information from their databases.
The United States telemarketing industry was affected by a national do-not-call list, which went into effect on October 1, 2003. Under the law, it is illegal for telemarketers to call anyone who has registered themselves on the list. After the list had operated for one year, over 62 million people had signed up [4]. The telemarketing industry opposed the creation of the list, but most telemarketers have complied with the law and refrained from calling people who are on the list.
Canada has passed legislation to create a similar Do Not Call List. In other countries it is voluntary, such as the New Zealand Name Removal Service.
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