Direct to drive social and behavioral gains

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DMNews' DMA 2009 Crib Sheet

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As marketers convene in San Diego during the week of October 18 for the Direct Marketing Association's 2009 annual show, several trends have emerged in the direct and digital marketing space, which have the industry awash with buzz.

In fact, social media has bubbled to the surface in marketing conversations as a highly effective means to reach customers, and direct marketers are currently exploring ways to both exploit the medium and quantify its effectiveness. They are also looking closely at the delicate balance between gaining enough information to target customers based on behavior and interests, while not bumping up against privacy concerns.

Like e-mail, social media marketing's appeal lies in its relatively low cost barrier, and in these tough economic times, that has only accelerated interest as marketers gravitate to measurable media.

“Everyone is talking about social media in the direct space, but there is a more aggressive hunt right now for ROI through social networks,” says Mat Zucker, executive creative director at OgilvyOne New York, a direct marketing agency. “It is messier than e-mail or direct mail. Social media does not have e-mail addresses.”

Many in the industry think direct marketing professionals enjoy a distinct advantage in solving the ROI question when it comes to social media and digital marketing.

A commanding strength

In fact, contrary to most, one executive went as far as saying, “Direct marketing is stronger than it has ever been in the history of our country.” Rick Erwin, president of the data division at Experian Marketing Services, says he has never been more optimistic about direct marketing's future. He believes that direct marketers already take advantage of their ability to measure and now they can apply it across the marketing spectrum.

“We can use all these principles that served us in the past in terms of measuring direct marketing and apply those to the broad world of marketing,” Erwin explains. “Direct marketing is not an industry; it's a process. The process of direct marketing equals marketing, whereas it used to be considered one small portion of the marketing industry. Now, every ad medium has adopted the principles of direct marketing to some extent.”

The No. 1 challenge for marketers right now, Erwin notes, is attributing response to a particular ad impression.

“The solution to that problem lies in the longtime principles of direct marketing,” he asserts.

Michael Darviche, CMO at Acxiom, suggested Web marketing requires a shift in thinking about database marketing.

“We don't just shoot out a multichannel offer and design a multichannel campaign,” he says. “We ask, ‘How do we use the Web to gather and distribute data, and how do we use the cloud and Web services to facilitate [that]? How do we use data and analytics?'”

Darviche attributes the complexity of these questions to the multitude of data and channels available to marketers today.

“Because there's so much data and so many channels, and so many competitors trying to influence the buyers, there's an enormous amount of sorting out how the economics work [in terms of] customers, segments, tests, and all the permutations and ways that things can be done, he says.

This is an opportunity for clients, he adds, but “it is very hard to sort it out.”

Rick Erwin agrees that this is an opportunity for marketers.

“As partners in the marketing process, the goal is to accelerate the use of these direct marketing principles in various forms of advertising that haven't used them before,” Erwin says. “As we start to see convergence of things like Internet and television, how can we be ahead of that by a couple of years and already be measuring consumer behavior simultaneously?

“My peers and I are talking about getting ahead of that,” he continues. “We need to start preparing the information systems that measure customer behavior across those two media as though they are one.”

Putting it all together

David Williams, president-CEO at Merkle, a database marketing agency, says that any integration needs to have the customer at its center.

“The customer is the only integration point that can exist,” Williams says. “There's very little good integrated marketing going on, because people are not yet focused on a high enough central theme to integrate to. The customer is the only thing all the channels have in common.

“Most people talk about integration of advertising programs, not the customer experience that drives value over time,” he adds. “There's a focus and attention on [direct marketers] saying, “how do I become integrated?' The conversation level has elevated, but it hasn't really shifted yet.

I think we're looking at another decade of the journey, and there isn't a marketer today that isn't trying to figure that out.”

Zucker says that integration has quickly become imperative. Direct marketing, he notes, has long lived in a silo apart from above-the-line advertising — but that has to change.

Marketing “needs to add up to one story,” he says. “You can't just do what is right for direct marketing. You have to reinforce and extend the brand more than ever. It is a product of customers seeing communications from a brand across the myriad channels now used for marketing, so now everything needs to be consistent. Creative needs to be more highly valued.”

Given the amount of available data, targeting customers based on their behavior vs. their demographics has become a reality for many marketers. For example, Experian owns Hitwise, a company that collects intelligence on 10 million US Internet users. Those data inform Experian's strategy.

“By understanding [consumers], marketing can better market to them,” Erwin said.

“As different forms of media converge in the future, what is going to become relevant is understanding that consumer across all of these media simultaneously. At that point, there will be no line between direct marketing and any other form of advertising. We'll all be measuring.”

Crossing into other channels

Lines are blurring across the board in the direct marketing industry as companies adapt to that convergence.

“The list industry has changed dramatically,” says Jay Schwedelson, corporate VP at Worldata, a list management company.

“We don't call ourselves a list company anymore,” Schwedelson explains. “List companies have migrated to becoming data agencies rather than list organizations. The suite of services we are providing are very different from 24 months ago. We're in different businesses and competing against different organizations.”

Much of that work is related to Web services.

“We're creating Web environments rather than just saying, ‘here's a list, let me know how it goes,'” he adds. “We're involved from program development to execution and analysis. It's gone beyond simply providing data. We're competing more with ad agencies than we have in the past.”

Many companies in his sector, Schwedelson adds, are having a difficult time making the transition. However, even nontraditional companies are beginning to understand the value of direct marketing principles.

Ask, a search engine, is getting into couponing.

It announced the launch of Ask Deals, a proprietary database of more than one million savings offers from national and local merchants across hundreds of product categories.

The search engine scours the Web – online promotions, store circulars and more than 40 coupon sites – for all deals that are available online, aggregating and organizing what it deems “the best money-saving offers” on the search results page. Part of the impetus for the service comes from the number of its users' coupon searches, which increased by about 50% in 2009, according to Ask.

New reality

These blurred lines and convergence of services are nothing new to marketers, but Erwin said the difference is how close direct marketers are getting to realization.

“We've talked about this for many years, but it will be reality in the not too distant future. Almost everyone in the world of direct marketing already understands that, and they're excited about getting there.”

However, direct marketers need to temper that with attention to some of the challenges of behavioral targeting.

Jerry Cerasale, SVP of government affairs for the DMA, believes online behavioral advertising will be an important discussion among direct marketers at the annual meeting.

He says the issues around what kind of information advertisers use to send the most relevant ad to an individual on the Internet will be a key topic, one that DMA watches on behalf of its membership.

“We'll see a bill on that probably in the new year in 2010,” Cerasale says. The potential danger, he explains, is “if regulations become heavy-handed where you have to opt-in to things like that, it will change the nature and value of advertising on the Internet.”

Therefore, he continues, value “could be eroded significantly. That's a huge issue facing marketers across the board.”

Darviche agreed the danger is significant and advocated for balance.

“The really big challenge is how to absolutely positively continue to protect the consumer's privacy but at the same time keep advancing what everyone knows are the data sets that can do so much for marketers,” he explained. “There are many shades of gray. How to strike that balance is really important.

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