Caught in the web

The speed of the Internet revolution almost left direct marketing behind. It’s time for DM agencies to fully develop their online skills before IT outsourcing steals their thunder

To listen to some agencies, you might be forgiven for wondering how direct marketers occupied their time before the arrival of interactive channels. In reality, however, most direct marketers are recent converts to new media – not pioneers. Only two or three years ago, many agencies saw the Internet as something separate from conventional direct marketing (DM) – a territory best inhabited by small under-capitalised agencies with specialist skills in website design.

With clients struggling, often unsuccessfully, to recoup an acceptable return on their website investment, it has become clear that new media strategies need to be rooted in the same core principles that underlie DM. Such factors include: the ability to segment the customer base by value and behaviour, communications that embody a clear call to action, effective mechanisms for measuring response, and the impact that online media have on consumer attitudes and behaviour.

Exploiting technology

Direct marketers possess the classical skills in abundance. What they have to prove now is that they are able to translate this know-how to a multichannel environment that depends critically on the effective exploitation of technology.

Marketers have a tendency to play down the technological aspect of new media. In reality, however, most agencies are struggling to work out what it is that they need to know to operate effectively across new media channels and how best to acquire the required skills. A number of options exist: to contract the services of a specialist agency, as and when necessary, or to bring the requisite skills in house, either by recruiting professionals with appropriate experience, or by acquiring or merging with a new media company.

All the options are being tried. Not surprisingly, there is fierce debate over which strategy is most effective. For example, Mike Colling, partner at WWAVRC.digital – an offshoot of the WWAV Rapp Collins Group – talks of agencies which contract the production of digital communications to external specialists as “abrogating their responsibilities”.

From the perspective of a small marketing agency, Ian Milner, managing partner at Iris, argues that outsourcing the technical side of digital campaigns to interactive specialists produces a better outcome for the client than relying on the talents of a few individuals employed in-house. “Using external specialists gives you the freedom to unite the most effective people in the market for a particular job.”

Being cynical of the current rush to acquire digital credibility is no bad thing. As the spectacular failure of Boo.com has demonstrated, a technically advanced website which is beyond the PC capabilities of potential users is the worse sort of insult that a company can deal to would-be customers. That notwithstanding, it has to be recognised that the execution of strategy, and the customer’s experience of brands, is becoming increasingly dependent on the effective use of technology – and that has implications for the skill-set requirements of DM agencies.

Technological challenge

To exploit the marketing opportunities of new media, direct marketers have to understand what the underlying technology can and cannot deliver. And, as direct marketing evolves beyond direct mail and telemarketing to encompass the Internet, interactive TV, and mobile e-commerce, through wireless application protocol (WAP), more complex issues come into play.

“As clients implement blended channel systems, direct marketers will be forced to abandon their hands-off approach to technology, because the technology becomes part and parcel of the customer’s experience,” says Gray Sycamore, director of digital at Tequila Payne Stracey.

Marketing professionals with experience of both online and off-line communications are a rare breed. And, unsurprisingly, agencies which have brought in professionals, who command both sets of skills, are quick to claim an advantage over their competitors. “Teaming up with a US company which expanded into digital media, from an original base in DM and database hosting, has given us a more coherent client focus than agencies which have merged with pure online specialists that lack a DM heritage,” argues Colling.

A common heritage is generally an advantage in agency mergers. However, its absence is not necessarily the disaster that Colling implies. What is crucially important is that the professionals from either camp want to learn from each other – and share an absolute commitment to building a culture that maximises consumer response and the client’s overall return on investment.

Structural problems

Although DM agencies invariably pay lip service to the concept of fully integrated channels, many fail to reflect this aspiration in their structure and processes. A prime example of this is when new media professionals are concentrated in so-called digital divisions that operate as an add-on function to the main agency.

“That is great for capturing the attention of clients,” says Charles Warren, managing director at Tullo Marshall Warren. “But in the long run the more realistic approach is to follow the example of agencies, such as ehsrealtime, that have opted for full integration of new and conventional DM media.”

Creating a fully integrated agency requires a fusion – not just a balance of new and conventional DM skills. In practical terms, that means physically locating new media people with DM people. “What we are aiming to do is to take the best practice in direct marketing and integrate it with the most advanced digital media skills”, says Louise Wall, managing director of ehs-realtime, which came about through the merger of the DM agency Evans Hunt Scott and the new media agency Real Time Studio. “That implies that we have to have integrated creative teams, integrated account management and integrated planning.”

Assimilating new media people and their skills into mainstream agency functions is inherently more challenging than launching a digital division that operates at arm’s length from the rest of the agency. Accomplishing the task in full requires a willingness to discard processes and structures that create barriers to communicating with customers – coupled with a persistent effort to close the skills gap between new media and conventional DM people, through training and job rotation.

Building a genuinely integrated organisational structure and culture is difficult; but ultimately it is the route that has to be followed. Many agency clients now regard channel integration – giving customers the freedom to transact through the channel of their choice, when and wherever they choose – as a key strategy for acquiring and retaining good customers. To remain in step with this business objective, DM agencies have to become equally focused on making their communications fit the lifestyle requirements of individual consumers.

Showing a preference

What that means in practice is inviting customers to specify when, and in what media format, they wish to receive DM communications, and then allowing them to change these preferences, as and when required. Integrated DM campaigns also involve giving customers the freedom to respond to communications by any route that they choose, regardless of whether the initial contact was made through direct mail, e-mail, a website promotion, interactive TV or WAP.

Converting the ideal of seamlessly integrated communications into reality presupposes that agencies have the creative skills to address multiple media. However, in a world in which communication has become part of customer service, creativity alone is no longer enough. To add greater service value, agencies need to be in a position to spot the IT problems and organisational barriers that frequently frustrate channel integration. Otherwise, the whole process is in danger of unravelling, with potentially disastrous consequences for the credibility of the client’s brands.

Direct marketers often assert that they, rather than new media professionals, possess the brand literacy and segmentation skills that are needed to develop integrated communication strategies based on an understanding of customer preferences and behaviour. In reality, however, the arrival of digital media is radically extending the marketer’s ability to understand consumers, and the way in which they relate to and derive value from brands.

“Interactive communication encourages consumers to enter into a dialogue with brands over issues that concern them as individuals”, says Nigel Howlett, chairman of OgilvyOne.

“That opens the way to a more personal style of direct marketing that engages with consumers on their own terms.”

DM agencies vary greatly in their new media capabilities. While some are already testing consumer response to interactive advertising campaigns through digital television, others are still struggling to develop a credible strategy for engaging consumers over the Internet. However, as the range of interactive media continues to expand, it has become clear that the goal is not simply to extend the reach of DM into the interactive world.

Understanding how consumers derive value from different media, both online and offline, and converting this insight into integrated communications that develop customer profitability over the long-term is what matters.v

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