Evolution not convolution

With the increasingly important role of digital channels in direct marketing, and an emerging threat to practitioners’ data sources, the discipline is going through a period of change, says David Reed

Butterfly%20and%20Flower%20largeFor creationists, one of the flaws in the theory of evolution is that it does not always provide proof of cause and effect. Yet when Charles Darwin was formulating The Origin of Species, he often found evidence which implied the existence of a type of creature, even creatures he had never seen.

Take the foot-long, trumpet-shaped orchid angraecum sesquipedale. Darwin predicted that the flower would need to be pollinated by a moth which had a ten-inch proboscis. He never found this, but when the hawk moth was discovered decades later, it was named xanthopan morgani praedicta in his honour.

Direct marketers must often feel like Darwin with that orchid. Here they are in possession of a thing of beauty – in their case, the ability to understand and predict behaviour through the use of data. But to flourish, they need the right climate, in terms of client expenditure; and the right kind of moth, in terms of responsive individuals.

Just as climate change is putting many rare species at risk, so the shifts in marketing expenditure are challenging the DM industry. Even worse, the very responders they rely on are threatening to fly away, scared off by volumes of poorly targeted ads and lured by exotic propositions in digital channels.

So how can practitioners and service providers evolve in response? Digital Marketing Group chairman Ben Langdon believes many will struggle. "It is a challenge for groups that have historical investment rooted in brand advertising networks and marketing services empires. It is difficult with that heritage to adapt to future needs of consumers and brands," he says.

DMG is a recently-formed AIM-listed group which has been on the acquisition trail. It aims to create a network that reflects changed market conditions without the burden of history. That does not mean pursuing the marketing services cash cow which major groups have been milking for the past ten years.

"In the past two or three years, the marketing services game has changed fundamentally to the point where the principles of direct marketing are the principles that our industry has to focus on," says Langdon. His view of this new game is that digital marketing is not the new, unique activity that many of its practitioners claim. "Digital is clearly just an extension of old DM principles. The internet and the growth of online interactions mean that brands can do one-to-one communications that are data-rich," he says. The group’s purchase of Jaywing and its Digitalbrain software will create the platform for this approach.

Pure-play digital marketing agencies rarely accept they are just moving the DM model online. Equally, many agencies have been transfixed by the emergence of new media, often accepting the hype surrounding digital marketing and neglecting their core principles.

The outcome has been that much of the current expenditure online drives brand or product awareness, but little in the way of engagement, response and sales. If digital marketing as practised by pure-play agencies really was the better approach, then they would be the lead agencies in networks. The fact that they are not tells its own story.

Richard%20MarshallWhere the two disciplines are fused, however, it starts to have a real impact. "In terms of content and consumer engagement, digital brings the brand alive in the most exciting way," says Richard Marshall, client services director at Tullo Marshall Warren. He points to examples such as the St Patrick’s Day campaign for Guinness. This has been an iconic annual event for the brand which was previously conducted through physical channels alone. "Digital media give it more creative options so consumers interact more with the brand. It is also available for longer," says Marshall.

Always on and available
Availability is perhaps the most useful quality of digital media and one which considerably enriches the panoply of DM. A major problem for all direct campaigns in the past has been their start-stop nature. With an always-on channel like the Web, direct marketers can now target discrete segments more frequently, but at lower volumes. The richness of the digital experience creates a depth of brand experience that is more likely to convert to sales. And all at a lower cost than purely physical marketing.

"We never used to have a consistent way of talking and interacting with consumers," says Marshall. "Digital makes the customer centre stage." His agency is now taking this one stage further with user-generated content such as blogs and chat rooms, providing a service to introduce brand-positive comment to build advocacy online.

What brand owners and direct marketers alike have been terrified by is the possibility that consumer comment will run away from their control. Since comment is free online, controlling the positioning, imagery and tone of a proposition is impossible when a negative viral e-mail has gone around the world before your marketing meeting is even finished.

Word of mouth has always been the most powerful source of advice. With the growth of social networking, consumers are now three times more likely to seek opinion online than from family and friends. Instead of fearing this shift, Ash Snijder-Majumder, director of FullSix, believes it is just an evolution. "Social interactions have not changed much, they have just moved on in terms of our ability to perceive how others receive messages," he says.

"Individuals and society as a whole have become more empathetic, looking for cues from others as to how they are perceiving us. Marketers need to demonstrate the same qualities in the way they communicate. Relevance and immediacy are key, which is easier in digital. You can get through to a customer more quickly and create a dialogue. But you also have to understand people better without appearing to be too Big Brother."

Some in the industry now believe that it is precisely around data that DM is facing a fight for its life, rather than just competition for budget from digital channels. There are worrying portents of doom from the comments by Environment Secretary David Milliband, about moving direct mail to an opt-in environment to the 36.7% opt-out from the 2006 Electoral Register.

Data is the fuel that drives DM, whether through physical or virtual channels. If its availability and usage become more constrained, then the industry risks losing the very strengths that have created such a powerful model.

Impacts on development
Environmental and regulatory concerns are major issues facing Rosemary Smith, managing director of RSA Direct and newly-elected chair of the Direct Marketing Association. "The environmental impact of the industry is going to affect the way it develops," she says. Direct mail is an easy target, yet it generates only 2% of the household waste going to landfill sites. "The paper waste from direct mail is less than one-third of a Sunday newspaper, so it is disproportionate to attack it."

Consumer resistance to having data captured and used for marketing is more problematic, impacting on both digital and direct media. The over-use of certain data sources is a fact, but so is the over-exaggeration of the problem.

"In some ways, it is a wake-up call. The DMA has been aware of it. But there is an argument that the public isn’t quite as concerned as gets made out. There are only 3.3 million households registered on the Mailing Preference Service, just 12% of the total in the UK."

In Smith’s view, pressure to move the DM industry to an opt-in basis would be unfair. "You don’t opt-in to ads in newspapers, magazines, TV, radio or posters. Why should you with DM?" she asks.

Preventing commercial organisations – including political parties – from contacting customers who have forgotten to give their permission would be a bold step. But in the creation of the edited Electoral Register, while credit referencing had permission to use the full list of voters, this data is not available for identity validation, whatever the government’s concerns about ID theft.

To those working in the DM industry for a long time, such developments seem ominous. To new entrants, current conditions are just the climate in which they need to thrive. In many cases, the perception of DM is often at odds with the reality.

"When I started my career, I thought DM would be complicated. But its essence is straightforward. It is about understanding your audience and getting under their skin," says Amy Grundy, account director at Intelligent Marketing and the DMA’s Bright Spark of 2006.

Faced with a new evolutionary path, existing species either evolve or die. If the moths don’t come, orchids will develop stronger scents. Likewise, direct marketing is working out ways to spread nectar in new channels. Only history will tell whether it’s the right choice.

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