Nearly 4 billion pieces of direct mail are sent out to UK households each year (DMIS) – that’s almost 200 letters per home – and most reach their intended destinations.
But hundreds of millions of them don’t. Some of the mail is misdirected because people change address or householders die without databases being updated. Other errors occur because of poor information and targeting; there are frequent mistakes in selecting target groups of prospects as a result of agencies working under tight deadlines.
These mistakes result in the waste of huge portions of direct marketing (DM) budgets, and some industry sources say they often occur because brand owners fail to co-ordinate the different suppliers working on their accounts.
In some projects, up to seven separate organisations can have responsibility for different parts of a campaign, yet they may never all meet to discuss the aims of the mail-outs and the methods being employed. This is particularly true of large-scale campaigns targeting over 200,000 people, often carried out by financial services companies promoting credit cards.
A typical big-budget DM campaign might involve a brand owner hiring a DM agency to undertake the creative work, possibly a database management company to provide the data and an analytics services provider such as CACI, Experian or Claritas. Then there may be the services of list-brokers who act as agents for owners of lists of prospects, a mailing house to print letters and send them out and a data-capture house, which inputs information about prospects who have changed addresses or died. Oh, and then there’s possibly a telemarketing bureau involved as well.
Between them all, they can create cocks-up on a grand scale which may happen without the client even realising. But many believe the industry is bringing this confusion under control. “This is a mature industry and we are putting in place procedures to reduce the mistakes all the time,” says George Antoniou, chief executive of direct marketing bureau Alchemetrics.
Antoniou says that most of the campaigns he has worked on have campaign controllers, who work just like project managers in building projects. “If you have campaign controllers, they pull the whole thing together and nothing slips through,” he says.
But such controllers, who are usually appointed by the DM agency, will not be experts on all aspects of the campaign, so there is a possibility that slip-ups will happen. The controller may also represent yet another layer of bureaucracy, thus adding to the confusion rather than minimising it.
Too many cooks
Many do not share Antoniou’s rosy view of the efficiency with which campaigns are carried out. As Caroline Kimber, DM vice-president of analytics organisation CACI, says: “It is a big problem. You see so many parties involved and even different departments in companies. Often there’s a communication breakdown between parties and you get campaigns where the work has been duplicated and where you don’t always get the information you need.”
She says she has been involved in campaigns where mail-outs have been sent out to people who have already been targeted previously and have not responded. This can happen because no single agency is responsible for keeping tabs on all of the data and making sure that the database is updated.
“The client assumes that someone down the line has to make that decision, but it is not always clear who,” says Kimber. Many of the problems may surround “gone aways” – people who have changed address – without this information being updated on the contact list.
Often, letters to “gone aways” will be returned to the data house or agency but this information will not be passed back to the mailing house. “You tend to find that when there’s a lot of people in the supply chain, when you get ‘gone aways’ returned, it isn’t fed back into the system and you end up mailing them again,” she says.
Kimber believes the best way round the problem is for all agencies concerned to meet before any strategy is decided, for all to have some input in the process and then for the campaigns to be better co-ordinated. She doubts that having an overall consultant or controller for campaigns works very well.
One solution could be to use a one-stop shop that offers the different disciplines in a single organisation, though this can be problematic because the company can effectively set its own rates rather than tendering to competing suppliers to get the best value deal.
Millennium Direct, a specialist agency for the over-50s market, claims it can offer planning, creative, printing, mailing and fulfilment all with a fixed-price menu. “There is also an advantage to buying from medium-sized providers rather than big agency groups,” says the agency’s managing director Martin Smith. “Buyers do not become just another client within the big agency machinery where only the very biggest spenders get the attention of the agency’s best staff. It is better to be a big fish in a medium-sized pond than a medium-sized fish in a large one.”
But some argue that it is a mistake to suppose that large campaigns can be run with all DM needs outsourced to one shop. The problem is these outfits cannot claim to have the best possible solution in each area. They may be less efficient or cost-effective than getting agencies to bid for work in a competitive process.
“If you are looking to outsource both the creative and data sides of the campaign, make sure you brief separate experts/specialist agencies in the data and creative arenas. Agencies that claim to cover both can’t really do a proper job as both disciplines are too diverse,” says Data Direct managing director Gabe Cooney.
But he advocates the use of one-stop shops on the data side and pushes his own product, Suppression and Relationship Management, which he claims holds “the greatest range of suppression products in the industry” – in other words, it will spot gone aways and deceased names and erase them from lists.
No need for outsiders
He questions the need for such widescale outsourcing by clients, and believes that some may be able to do a number of the tasks themselves. “Overall, do marketers always need to outsource to a large number of suppliers when planning and implementing a DM campaign? Sometimes marketers already have data and the appropriate cleaning tools in house to carry out an effective campaign without needing to outsource to many suppliers, if any.
“Marketers should consider carefully what they need from outsourcing before they begin to plan a DM campaign. Their focus should always be on optimising what they get from suppliers – not maximising the number of suppliers,” he says.
There is much backbiting among agencies involved in the supply chain about who is to blame for mix-ups and inefficiencies, each agency accusing the other of failing to do their job. But it is clear that each is hired to undertake a specific task and is paid accordingly. They are not paid to pass on problems identified by another agency back to the client, so there is a tendency for data problems to arise and to be ignored.
This will not usually lead to a campaign being a complete failure – it is unlikely that a plan to target grannies will end up sending out mailings to young men – but there may well be subtle discrepancies between the target groups of the campaign and those who finally receive the mail-outs. They may have slightly different age profiles, geographic profiles or interests if one agency along the chain gets something wrong.
And in some companies, there can even be rivalries between different departments about the use of DM campaigns and this can further add to the confusion. A product manager at a bank, for instance, may be interested in pushing a savings product through a DM campaign, while the customer relationship marketing manager may wish to push mortgage products.
Counting the cost
As Richard Marshall, business development director of Tullo Marshall Warren, says: “Managing multi-supplier relationships is a complicated process for clients. Often, there will be internal buying functions that are responsible for areas such as print. Yet, are they always getting the best value for money from their own approved print rosters? In my experience, when campaigns have urgent deadlines, cost and efficiencies can often slip through the net.”
Brand owners will have to co-ordinate their agencies much better in future to avoid the pitfalls of having too many organisations involved. It may prove more expensive, and involve extra meetings and more communication between agencies, but ways must be found to ensure that each agency takes responsibility for passing on the information it receives about customer data. If agencies do this, there may be a chance for the industry to avoid sending out hundreds of millions of letters to the wrong addresses and false prospects.