It’s Sunday morning and you’re waking up late with a hangover and only dim memories of the night before. You get a text message that reads: “Are you coming over to my place later?” Sender: God.
You’d sit up and take notice, wouldn’t you? This was a campaign run by OgilvyInteractive on behalf of a network of churches in Singapore and one in four who received the message subscribed to the service.
It is just one example of how technology is reshaping the direct marketing industry, allowing deeper relationships with customers and making campaigns ever more measurable. Many believe that marketing is at last becoming a predictive science. But marketers are discovering that technological advances bring as many challenges as they do opportunities.
According to a survey by Experian and the Direct Marketing Association (DMA) last year, 60 per cent of UK companies now run e-marketing campaigns. The Internet has been with us for a few years now, and marketers are familiar with its benefits: cheap, quick and easy to communicate. However, in the past 12 months the industry has begun to realise the full potential of marketing through new media channels.
Dennis Sheehan, chief operations officer of Cheetahmail UK, the recently launched subsidiary of US e-mail provider Cheetahmail, wants to make marketers more aware of this potential. “You can see what was sent and in what version. You can see how many e-mails bounced and why. You can see how many unique opens occurred and how many clicks on your website that produced. You can see the total number of transactions, amount spent, and number of referrals. You can track all of this data across time.
“Imagine for a moment if only one of these aspects was possible with traditional DM. Imagine you knew how many of your packs were opened and you’ll see why people are so excited about this,” he says enthusiastically.
It is not information for its own sake, but data which can allow marketers to test campaigns and precisely predict return on investment. Mike Colling, managing director of new media marketing agency MC&C, describes the process: “One of our clients, a specialist mail-order company, used to take two months to discover which were the best products in its catalogue. Now, using comparison shopping search engines, it can discover in three days which are the most popular and competitively priced products.”
There are a growing number of products available to enhance the quality of original data. Experian has long been one of the UK’s top providers of marketing data, and, as one of its clients, Nottingham Forest Football Club marketing manager Brandon Furse, explains, technology is having a radical impact in this area. “I sent Experian 10,000 records from our customer database. Within half an hour it came back to me with a menu detailing what it could clean, how many records each stage would leave, and how much it would cost. I was amazed. The great thing is that I can go to the board and say with confidence that if we spend &£3,000 on this we will save &£12,000 by not sending season-ticket marketing material to inaccurate addresses.”
For many, the growing quality of original customer data is just the beginning of a process that will lead to companies truly understanding and reacting to individual customer needs. Nick McConnell, UK general manager of Digital Impact, a marketing technology provider, argues: “We are seeing the beginnings of centralised customer databases in many UK companies, where marketing, customer services and technical support departments take a single view of a customer and begin to build in-depth qualitative data on that individual.”
Consumer electronics company, Panasonic, is exploring this area, as general manager for customer relationship management John Dixon explains: “We’ve begun to track what customers look at on specialist microsites. We use this information to alter the content of the microsite and to e-mail relevant newsletters. For instance, if someone has looked at plasma screens on the site we’ll send them something focused purely on that topic.”
Technology seems to be overcoming the two greatest problems for direct marketers. The Nirvana of sending the right information to the right person at the right time seems just around the corner. Return on investment is no longer a grey issue: it can be seen at the click of a button. Identex, a marketing technology provider, offers a campaign management tool that includes an ROI function.
Identex marketing director Geoff Downer explains: “You can set it up at the beginning of the campaign with fixed and variable costs and a definition of valid responses, and leave it to run in the background. As the system identifies responses, it updates the costs and calculates the returns. These tools really help marketers to manage complex communication programmes effectively.”
But, while many in the industry are embracing new technologies with enthusiasm, others remain cautious. As it becomes possible to interact more directly with customers, so customers will begin to expect high degrees of segmentation in marketing and personalisation in customer service and delivery.
MC&C ‘s Colling says: “There is great danger of marketers not understanding how to use these new technologies. Marketers need to think carefully about how they use new media channels.”
Forgetting the customer
Justin Anderson, managing director of Frontwire, a new media marketing agency, agrees: “Most companies are impressed by these tools and are rushing into using them as tactical devices with great returns. But, they are failing to adopt customer-centric approaches.”
Equally, the sheer quantity of data and number of media channels available can cause problems. As OgilvyInteractive managing partner Louise Ainsworth points out: “There are so many systems offering such a breadth and depth of data that it’s really easy to get swamped. You need to know, right from the start, what’s important to you and only buy systems that give you that.”
So, just as we need to understand the potential of technology, so we should remain aware of its limitations. Robert Colquhon, chief executive of Dream Direct, a software mail-order company, warns: “While we have found considerable benefits in using technology to predict order flows, understand our customers and manage the delivery process, I’ve also learnt the importance of remaining in control of technology.”
Science or art?
Finally, there are many in the industry who point out that DM has always been a mix of science and art, and that in relying too heavily on technology we may forget the need for creative input.
Professor Derek Holder, managing director of the Institute of Direct Marketing, concludes: “Too many people today believe that technology will allow us to predict everything in a mechanical and scientific way. They’re forgetting that the whole point of marketing is to galvanise people into action. Through unimaginative and formulaic campaigns they’re in great danger of boring consumers into complete inertia.”