25th Anniversary Issue: The World Has Changed, So Has International DMTo look backward for a while is to refresh the eye, to restore it, and to render it more fit for its prime function of looking forward.
- Margaret Fairless Barber
Any economic environment results from two major factors: demography and technology. Those elements describe and dictate an economy. Since 1979, changes in those two foundations have revolutionized international direct marketing.
Direct marketing hasn't changed in its principles: right offer, right person, right time. But the tools and the prevalence of those tools have changed beyond recognition, becoming vastly more common than in 1979. As is evident, DM is no longer an exclusive American club. The majority of the Direct Marketing Association's Echo entries are now from outside the United States.
Technology, Infrastructure and Tools
The infrastructure for every aspect of the direct business has changed, allowing possibilities that were dreams then. And the world has changed, creating opportunities that were beyond even dreams.
Thanks to digitalization and the mass production of optical cable, call centers and data processing can be located cost effectively nearly anywhere. In 1979, a trans-Atlantic telephone call cost more than $5 a minute. Ireland then became the call center capital of Europe and followed this with other technological improvements. As a result, the Irish diaspora came home. Now, India thinks it has found a comparative advantage based on language and some training. In 1979, according to Freddy Rosales of di Paola & Asociados, there were no Argentine call centers. They began appearing in 1989 with two companies and 150 seats. Now, Argentina is internationally competitive.
Digitalization makes the Web possible. The Web itself was for a few scientists at major universities working to build a network of easy communication for scholars. America Online started business as Quantum Service in 1985. Netscape was founded in 1989, and it still took another 10 years for critical commercial mass to occur. It would not be until the late 1990s that merchants began to understand that the Internet was a real-time interactive shop window.
The late '70s saw experimentation with "videotext," which never took off here. However, in 1978, France Telecom began installing mini-tel machines in French homes mainly to be electronic phone number lookup services, but they soon evolved into precursors of online shopping. Their ubiquity even delayed the appearance of PCs in French homes until recently.
Computerization has changed the world. Most of us can articulate the many benefits of having a 1979-era mainframe computer fit on our desktop. We can perform database management, analysis, segmentation and regression analysis with relative ease.
I could go on about digital photography and catalogs, digital printing and new inks. But there is a context in which all of this occurred that made it all so much more ubiquitous.
Economic and Political Deregulation
The deployment of cable created potential. But the potential was not realized until AT&T broke up and the liberalization and privatization wave swept the telecoms. This lowered prices and let companies provide customer service globally, 24 hours a day, seven days a week.
Customers, be they consumers or businesses, could be touched, assisted, upsold and mollified at any time for mere pennies a call. I remember being a student in Paris in 1968 and calling home once, by appointment, on Christmas. The cost was prohibitive. Now I call home every night from wherever I am.
Deregulation occurred in the air, too. Airlines were freed to compete, first in the United States, then Europe. Government-controlled pricing ended, and new entrants appeared to carry people and cargo around the world. It now costs, in constant currency value, less to ship a 10-pound product by FedEx or even the U.S. Postal Service than it did in 1979. And the package arrives in two or three days, not two or three weeks. As shipper or addressee, you can track its progress on the Internet from your desktop computer.
People and goods travel farther, faster and cheaper than ever. I wrote this article on a computer in a plane that was flying nonstop from Shanghai to New York. My roundtrip ticket cost $1,308, about the price of a good Italian suit in Milan, a month's rent in a New York studio apartment or six months' salary of a recent computer science graduate from a Chinese university.
That last example hints at a revolution of a political nature: the opening of China. This is proving to be one of the most phenomenal developments of all and is one example of the other great deregulation that began with the Uruguay Round of trade negotiations and the creation of the World Trade Organization.
Like the North American Free Trade Area and the creation of the European Common Market, the passage of investment funds and goods has been eased incredibly in the past generation.
One European Economy
The greatest of these deregulations is the creation of one European economic area. In 1979, there were real borders for people, money and goods in each European country, each with its own economic policy. In 1992, the borders fell. And with the euro's introduction in 2002, one of the most astounding peaceful revolutions took yet another major step. This is one that increasingly makes a marketer's dream of Europe-wide campaigns and consumer business possible.
Finally, one of the greatest, most peaceful revolutions of the century occurred in 1989 when the Berlin Wall was smashed, the Cold War ended, Russia started to develop and Eastern Europe began its interrupted journey toward fulfilling its pre-World War II promise as a thriving modern economic area.
With the end of Russia's controlled economy, Finland had to learn a trade other than being an entrepot trader between Russia and the world, and the Finns have unleashed their technical excellence and given us Nokia and Telia and myriad technological forerunners.
Direct marketing now thrives in Eastern Europe and the Baltics. This is illustrated by the success of DRTV company Studio Moderna and by the creation of at least four DMAs in that region in the past few years.
China was a grim place in 1979. Shenzhen was a farming village with no hotels, just a government rest house. I stayed there. Now the village and surrounding Guangzhou Province originate 47 percent of all merchandise sold in consumer catalogs in the United States or Japan. China has two fledgling DMAs, competing post offices, at least four nationwide catalog companies, offices from all of the major DM agencies and a population so cell phone-crazy that some people have four or five.
Also under the "deregulation" heading, two quiet but important demographic changes must be noted. In the developed world, women entered the workforce in large numbers, transforming the size, makeup and dynamics of family life in Japan, the United States and Europe. This year, one-third of the commissioners of the European Commission are women.
As a corollary, families have become smaller, more urban and wealthier. In all but a few of these regions, smaller families mean a shrinking population whose average age is rising. What these families buy, and how, has changed.
Women have a new image of themselves as independent and self-actualizing members of the wider community. They work in offices and need business attire. More of them raise their children as single parents. Families need prepackaged meals. Paradoxically, in Japan and the United States, what these families have less of is time, which DMers help save by providing distance-purchasing options through catalogs and the Internet. And with smaller families, we have the graying of the workforce in industrialized countries. Graying and rich: that's the trend. According to the OECD, people older than 50 own 75 percent of the assets and two-thirds of the stock market wealth of the 29 wealthiest countries. In short, the average age of the consuming public in the best markets for the consumer side of our industry has increased 15 years in the past 25 years.
DM Finds New Niches
Finding lists was tough if you wanted to do a mailing promoting into Asia, Europe or Latin America. Little existed except the usual magazine suspects. You probably couldn't even find many of those, and what you did locate was on huge tapes that were bulky and slow to ship.
Technology today is phenomenal: no shipping tapes around at great expense; click "attach" and "send" or simply paste to the SMTP address and it's done.
The European list industry is healthy and growing, except in Spain, Italy and Greece. International executive and English-language magazine subscriber lists are bigger and cleaner than ever. More countries have legal systems and ethical standards that embolden owners to share data to enable merge/purge and personalization. Abacus is in Japan and Germany for the catalogers, and companies in other fields have begun to trust their partners.
Of course, some paranoid markets still exist where you have to trust your mailing to a lettershop that literally applies the labels - markets like China and sometimes Brazil.
Even the post services have changed. The Russian Post, China Post, Brazil Post, not to mention nearly every post in Europe, teach direct mail courses to businesses to try to raise mail volumes. Nearly all of them are rushing to develop address codes and databases to support commercial mailers.
Credit and debit cards have flooded Europe and Japan. They are making headway in Brazil, making purchases at a distance more secure for companies and more convenient for consumers. China is starting down that road. All those changes make for more effective, economical and more international direct marketing.