Use lessons of past to shape future strategy

The direct marketing industry is going through a digital revolution, according to the latest Marketing Week Direct Marketing Attitudes research, which reveals that 97% of companies use email and 83% use online direct marketing techniques.

Email is a popular method for direct marketers because it can reach a large audience, offers value for money and can get a brand message out quickly, say advocates of the technique. Thirty-two per cent believe it is the most effective method they can use, while 19% believe that online DM is the most effective way to reach their audience.

Email is being used more frequently across a variety of different sectors, such as travel and leisure, media and retail. A marketing manager who works in training and development notes: “It’s cost-effective and, after the initial outlay, it is cheap. It adds credibility to our brand and promotions are easily integrated with our other marketing methods.”

Others believe the future of direct marketing is online. One respondent says: “We need to get information to people quickly and efficiently. Digital marketing is practically instant.”

Direct response television is used by just 12% of marketers, according to the research, but users believe it offers something different from the other methods available. One marketer at a not-for-profit organisation argues that this method drives “greater donor engagement without the pressure of face-to-face”.

Telemarketing is now used by 55% of marketers. One respondent working at a small organisation reports that direct response marketing over the phone “allows relationships to be built with customers” and believes that paper direct mail “isn’t eco-friendly and has also been badly hit by recession”.

However, 70% of marketers still use paper mail and 13% believe it is still the most effective way to reach their audiences. A business development manager for a marketing services company argues: “[Mail] is the most efficient, consistent and reliable channel based on tangible and measurable results.”

While many marketers acknowledge that direct mail campaigns can be more expensive to executive than other forms of DM, they suggest that the results are much more impressive. “The volume of response and sales are that much higher than email. Even though costs are higher, the return on investment (ROI) is quite good,” says one retail DM manager.

With such importance being placed on mail, marketers seem to have mixed feelings about proposals to part-privatise Royal Mail. These plans are likely to affect the direct mail industry, but marketers are still unclear how this will work.

Forty-three per cent believe that full or part-privatisation will benefit the direct mail industry, compared with 24% who don’t think the industry would benefit and 33% who say they don’t know if it will benefit them or not. One marketer says: “There may be short-term gains, but the fragmentation of services will raise the cost of universal delivery in the long term.”

Direct mail could be badly affected if private companies take charge of Royal Mail, worries one marketer. “Other private companies will cream off the profitable parts of Royal Mail and a privatised service will want differential pricing for harder-to-reach letter boxes.”

Some respondents, however, feel that any future changes to Royal Mail will only be good for the DM industry. One comments: “The current service can’t get any worse.”

Although the direct mail industry is in a state of flux in terms of Royal Mail, it seems more settled in other ways. Marketers are happy in general with the response rates they receive from both paper mail and other forms of direct marketing. Forty-seven per cent say they see a response of between 0.6% and 5% from the majority of their direct marketing campaigns and 44% consider this an acceptable return on their campaign.

Response rate satisfaction is reflected in the respect for direct marketing in the boardroom. Sixty-six per cent of top executives are now taking direct marketing more seriously than ever, up from 56% in the first wave of the Direct Marketing Attitudes research, carried out in November last year.

While the boardroom might be taking DM more seriously, some marketers remain concerned it does not get the respect it is due. One reports that DM is sometimes considered a “really good way to use up extra budget”.

The same respondent admits that DM can also be used more strategically in the organisation, saying: “At other times, it forms a really strong anchor for a campaign.”

Another marketer explains that the department has had to work hard to convince the rest of the business of DM’s worth. “There was considerable resistance to DM due to its relatively high cost when I joined the organisation,” the respondent reports. “This has been reduced in the face of positive results from direct mail campaigns.”

While most marketers and senior executives are now convinced of the worth of DM, they suspect the future will look very different from the current landscape. Many marketers feel that DM will move increasingly towards being a distinctly digital discipline. “Less print,” predicts one marketer, adding there will be a combination of email and social media.

However, some are cautious about the long-term future of email marketing. “People are looking for alternatives due to inbox overload,” says one.

But with the lower cost of digital DM methods, concerns about overburdening customers may be pushed aside. Another marketer reports: “There will be more online lead campaigns and a move away from postal DM due to costs.”

Other marketers predict that innovations around social networks will be the future of DM. Because the social network environment – like email – also offers far lower costs than print and television campaigns, many more may be motivated to switch to this method in future.

Whatever environment ends up dominating the DM discipline, one marketer says that the lessons learned in more traditional media must not be lost. “As more marketers migrate to digital DM, this will be with increased adoption of the ’rules’ that exist in the paper world, such as targeting and data.”