From search box to letterbox

The dramatic rise in spending on sponsored links in Web searches over the past three years signals a fundamental shift in the dynamics of direct marketing.

With marketers using new technology and real-time data to find sales leads, mass mailings seem outdated. But modern methods can help the effectiveness of mail campaigns. By David Benady

The dramatic rise in spending on sponsored links in Web searches over the past three years signals a fundamental shift in the dynamics of direct marketing.

Why bother with large scale mailouts to millions of homes when you can communicate with potential customers while they are online and actually looking for the products they want?

For instance, people seeking a credit card with a zero introductory rate can type those words into the search bar on Google and alongside the results, a list of “sponsored links” to related providers pops up. If the searcher clicks on one of these, the advertiser gets the opportunity to communicate with the prospect at the same time as they are looking for a product. This is known as “real-time” marketing and its advantages are obvious. Sending out mass mailings at times convenient for the brand owners in the hope of catching a householder’s attention looks unappealing by comparison.

Lifeline for mass mailings

There have been stark warnings that the mass mailout is on its last legs. But more targeted mailouts based on real-time sales leads offer an alternative for direct mailers. Some argue that once you know someone is seeking a particular service or product, there is nothing more persuasive than getting a three-dimensional marketing pack into their hands, something they can touch and feel as opposed to a virtual image on a screen. There will always be a role for targeted direct mail, they argue.

Even so, the central question is how you find out exactly who is in the market for a product, in other words working out the most effective ways of uncovering real-time sales leads.

The main routes include following internet clicks, e-mail, mobile phone texting, interactive television and contacts with call centres. There are also “event-triggers” such as moving home (thus being in the market for all sorts of services), having a baby (entering the market for nappies), buying a new car or reaching the age of 18, 21 or 40.

Real-time marketing could involve suggesting a product when a customer is making a transaction, such as offering a higher rate savings account when someone is withdrawing money from a cashpoint machine.

According to Tony Coad, chairman of data management company CCB, it is the rise of paid-for search advertising that suggests that real-time marketing will obliterate traditional “push” marketing.

He says: “We have to operate to the consumers’ timetable. The impact of paid-for search advertising and real-time on the internet is a revolution in the way we promote goods and services.” The weakness of mass mailing is underlined by the declining responses achieved by the mailouts, according to Martin Boddy, managing partner at Jaywing Data Services. He points to the growth of preference services that consumers sign up to in order to prevent direct marketing coming to them.

React to consumers

Boddy believes that in the real-time marketing environment, data should only be used to react to customers when they are already in the market.

“Pulling data from a range of sources when it is needed results in significant benefits in cost and opportunity,” he says. This takes away the need to create a huge database so processing data becomes easier and quicker, he adds.

One method of maximising real-time sales leads is through “predictive analytics” where the behaviour of previous customers is grouped under headings like age and geo-demographic profile. When a prospective customer approaches a company, it can predict their behaviour and which products they are most likely to buy.

Marcel Holsheimer, vice- president of marketing at predictive analytics company SPSS, says the predictive method can be used across different forms of direct marketing.

On one level, call centre staff can use his company’s software to assess whether a customer phoning in – whether to complain, ask a question or provide information – is in an appropriate category to sell them a related product. However, some may find this even more irritating than receiving inappropriate direct mail.

Driving response rates

But Holsheimer claims that proposing products to customers in real-time increases response rates compared with mailing. “Using the real-time approach, response rates go up to 50%,” he says.

SPSS also offers Web analytics, matching the routes people take through a website with those of previous customers, helping with predictions of likely purchases.

However, the predictive method has shortcomings and in reality, real-time marketing only appeals to certain people, according to Jo Short, business development director at data software provider Alchemetrics. She says/ “You can get it wrong. The disadvantage of real-time marketing is it doesn’t allow you to step back and do qualitative research.”

Reputations at risk

But she adds: “Marketers who are still carrying out bulk mail campaigns are definitely risking their brand reputations and credibility in the long term. It’s our responsibility to take note and re-develop strategies that result in more instant and repeated targeting,” she says.

Even so, there is still a danger that using real-time information can backfire on companies if it is perceived as irrelevant.

The challenges of real-time marketing also mean that the way different departments in an organisation work together becomes a key factor. All the different members of staff responsible for various jobs handling data should work together in a “virtual team,” according to CACI client services director Shelagh Regester.

“Data and information must flow seamlessly along the conversion journey so that at each point in the process, and at every relevant touch point, the consumer is appropriately recognised by the organisation,” she says.

Truthful consumers?

One potential problem for real-time marketing and promotions based on collecting data about individuals is the tendency for members of the public to give false information.

Steve Tuck, chief strategy officer of data cleansing and auditing specialist Datanomic, says it is important not to push the customer too far. “Make it clear what data you are asking for and how the information will be used and provide people with the ability to opt-in or out of marketing correspondence,” he says.

Mass mailouts are undoubtedly a declining medium in the digital age.But for all the talk of “pull marketing” where the consumer is in charge, selling in real time still requires significant interventions by marketers. These will only be welcome if they are based on accurate and timely information.

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