25th Anniversary Issue: Database Gives Mail a Makeover
In 1979, direct mail expenditures were slightly over $6.6 billion. In 2003, direct mail spending reached $49 billion, up 6.5 percent from the previous year. Direct mail's history in this period is not only one of explosive growth, but also one of exciting changes.
Twenty-five years ago, several trends were about to intersect and change direct marketing forever. The confluence of technology was turning the corporate world upside down. The days when IBM meant computers, AT&T meant telephones and Xerox meant copiers were about to change.
Computers were moving rapidly from room-sized monoliths to small, smart, super-fast and affordable. The lower costs and larger capacities made the collection, storage and manipulation of data a natural fit with the highly addressable and personal medium of direct mail.
Media Industry Fragments
Another trend was the fragmentation of media. Cable television's success proved that "narrowcasting" could be profitable. Driving this was the very selective boomer generation as they swelled the ranks of the desirable 18- to 35-year-old audience segment. The narrowcasting concept quickly influenced other media.
Special-interest magazines and catalogs appeared almost overnight and provided a wealth of new mailing lists and targeting opportunities for mailers.
Another trend was the entry of mass marketers and business-to-business giants into the DM industry in a big way. While these companies generally had used some mail to wholesalers/retailers or to gather leads for salespeople, the 1980s and '90s saw a huge rise in the number of mass marketers who wanted to begin direct sales and direct relationships with end consumers.
The BTB giants, suddenly facing much more competitive arenas, saw the chance to use mail to sell new products designed for the small to midsize business. These marketers brought tremendous resources with them, including big budgets, a love of research and a new focus on the importance of the brand.
One such Fortune 500 advertiser was AT&T and the 23 Bell Operating Companies. AT&T's breakup had yet to occur when they started moving into direct mail in a big way. In 1980, C&P Telephone and its agency, Kobs & Brady Advertising, developed and refined a direct mail program using new techniques that took advantage of the emerging technologies in database and printing.
Beginning with a highly personalized monarch-size mailing that looked more like a personal letter than a piece of direct mail, the small-business owner was advised that a special package was on its way that could revolutionize his business.
The second mailing arrived in a colorful 9-by-12-inch see-through envelope containing an actual-size pop-up of the telephone that would sit on his desk if he purchased this new phone system. The various feature buttons on the phone could be "customized" with peel-off stickers. The point was made that self-programming each phone was a great new benefit of this system and as easy to do as putting on the stickers.
This self-programming ability was revolutionary in 1980. C&P wanted to use the mail piece to demonstrate the features and benefits of the system. Equally as revolutionary was its attempt to sell this business equipment direct, without the involvement of costly salespeople.
Maybe it was the movement of budgets to the little direct mail shop down the street, or maybe it was a desire to get in on the fastest-growing part of the advertising business. Whatever the rationale, general ad agencies in the 1980s started buying direct response agencies or hiring away talent and starting their own direct response divisions. This, too, affected direct mail. General agencies didn't just buy a profitable new subsidiary; they insisted on being part of the process and brought their disciplines to bear on our craft.
There was pressure from large corporate clients and their agencies to incorporate research and use time-tested methods for evaluating the competition, determining strategies and establishing the best branding and positioning. This raised the mail's level of quality and helped increase response and profit.
Enter the Database
All of these trends and technological achievements have made possible the direct mail practices that we take for granted today. The single most influential of these practices is the ubiquitous database.
By 1979, the transformation of the database from a name and address list to a knowledge base had begun. By the early 1980s, we were dreaming large about the level of personalization, customization and tracking we would be able to accomplish. This was with the help of the increasing amount of actionable data we could acquire about prospects and customers. Targeted customer relationship marketing was about to take off like a rocket ship.
A pioneer in using direct mail to convert prospects into lifetime customers was Ford Motor Co. With its agency, Wunderman, Ricotta & Kline, Ford created a successful direct mail program to sell Mustangs to women in Southern California. This was during the gas crisis, so talk about a challenge.
The agency used a sophisticated series of contacts starting with a "census" that collected the preferences and buying cycle of each targeted prospect. Its mailing program then acted upon the intelligence to send invitations and special offers to the right prospect at the right time, directing them to the right dealer.
Acting on information it gleaned from the project's early research, the automaker even incorporated the ability of the prospect to "grade" the dealer. That was 20 years ago. Today, Ford continues to use direct mail for prospecting and building relationships with its customers and prospective buyers.
By the late 1980s and '90s, direct mail was really changing. Mail became personalized, relevant, targeted and truly customized. Mailers could afford to let prospects tell them their preferences. Then they created a customized persuasion stream that was mailed at the best time for success, sometimes in a certain sequence, much like a good face-to-face salesperson would do.
And, of course, the discreet nature of mail let a marketer keep it all under the radar screen of any competitor.
At the same time, the printing industry benefited from advancements in the digital world, providing the ability to insert the "knowledge" into individual mailings. Direct mail now could "market with a memory." Second and third mailings could insert personal information provided by the prospect and continue the dialogue.
The Internet is the newest entry changing the face of direct marketing. The growth of direct mail, however, seems unaffected. Smart marketers use the Internet's ability to gather immediate and personal information to develop powerful direct mail.
As we consider the next 25 years, the power of targeted, personal, relevant and discreet direct mail to get opened, read and acted upon appears as strong as ever.