Traditional DM Alive and Well Despite the Internet
"It's been really interesting just to watch what's happened in direct marketing over the last six to 12 months," said Dave Florence, CEO of Direct Media Inc., Greenwich, CT. "Now it looks like the traditional direct marketers are going to be the winners when a year ago they were in the dumps."
During the last holiday season longtime direct marketers were surrounded by dot-coms with seemingly endless supplies of money to spend, rising stock prices and no regard for how much it cost to acquire customers.
"The mind-set a year ago was that anything online was valued much higher by Wall Street," said Richard Baumer, president of VentureDirect Worldwide, New York. "That was a bad business proposition that was bound to fail."
Subsequently, a disastrous 1999 holiday season for Internet order fulfillment taught online marketers that there was more to it than driving traffic to their sites and making sales.
Seven Internet retailers, including CDNow Inc., KBkids.com LLC, Macys.com Inc. and Toysrus.com Inc., agreed to change their fulfillment procedures and pay a total of $1.5 million in civil penalties for failure to comply with the Federal Trade Commission's Mail and Telephone Order Rule during the 1999 holiday shopping season.
The FTC had alleged that the e-tailers provided buyers with inadequate notice of shipping delays or continued to promise specific delivery dates when timely fulfillment was impossible.
"Web marketers' holiday fulfillment problems last year were like the problems in 1950s direct mail," said Jerry Foote, president of Names and Addresses Inc., Wheeling, IL.
Many Internet marketers started out with a good front-end business model but had no model for back-end operations such as customer service and fulfillment, said Herb Torgersen, vice president of management services at Response Media Products Inc., Atlanta.
As a result, those sites that are still around probably won't get those customers to come back, Foote said.
A year later, traditional direct marketers have been sought out by many of the surviving dot-coms to educate them in the ways of offline direct marketing.
"Most Internet companies are learning now that they need direct mail to survive," Torgersen said.
Although most dot-coms aren't flashing as much cash around these days, they are putting some of the money they have into traditional direct marketers' pockets.
"The Internet has actually been a boon to direct marketing," said Steve Roberts, president of Edith Roman Associates Inc., Pearl River, NY. "A lot of dot-com companies are using postal lists to drive traffic to their Web sites."
Also, a lot of former Internet pure plays have started catalogs, said Howard Kupfer, executive vice president at Mokrynski & Associates Inc., Hackensack, NJ.
Meanwhile, traditional direct marketers have built successful Web presences on established brand equity, Torgersen said.
Just as catalogs and retail stores have peacefully co-existed over the years, most marketers now believe that the Internet is just another channel that can be used to their benefit.
"Integrated marketing is not a new concept," Baumer said. "It's an old concept that's always been difficult but not impossible to execute well."
This integration of marketing channels has benefited traditional direct marketers in other ways as well.
When more offline mailers started using e-mail lists, it took some of the pressure off overused postal files, Roberts said. He added that many of those fatigued files have come back strongly.
Also, the Internet has generated many new e-mail files as well as postal files, which is always good news for marketers, said Roberts.
It now seems to be the general consensus that the most savvy marketers are doing a combination of offline and online marketing no matter which one is their primary channel.
Baumer said even marketers that do not have a presence both offline and online at least need to have marketing efforts in both channels.
"The best bet is retail, catalog and Web site," Kupfer said. "You need to give the consumer a choice in where they want to buy their products when they are ready to buy."