DMA Chief Raises Data Security, Consumer Trust Issues at DM Days
John A. Greco Jr. is president/CEO of the Direct Marketing Association and host of the DM Days New York Conference & Expo at New York's Jacob K. Javits Center. Here is a transcript of his opening remarks June 21 - day two of the three-day event for direct, database and interactive marketers from the region.
On behalf of the Direct Marketing Association I am very pleased to add my welcome to DM Days New York for 2006.
DM Days is a great New York City tradition, it holds a place of historical significance in the direct marketing community. Direct Mail Day was launched with 800 attendees exactly forty years ago, in the spring of 1966. It quickly became a well-established New York favorite every year, over at the Hilton Hotel. In 1971, the legendary Lester Wunderman led a huge symbolic transition when he convinced the planners to change the name of the event from Direct Mail Day to Direct Marketing Day.
That same year, I was a college freshman, struggling with my own transition, from a slide rule to a TI-SR10. Lester Wunderman and others recognized the emergence of a new way to sell response-driven, multimedia advertising using the mail, the telephone and the newspaper. Back then, looking ahead to the changes he saw coming in the seventies Wunderman said this: "Marketing and advertising must increasingly become a conduit for the increasing information dialogue between the producers of goods and the consumers more and more, we in marketing must realize that we represent the common needs of both."
Today, in this world transformed by digital technology his words ring more true than ever. In 2006 the information dialogue between buyers and sellers is carried on 24/7 in the digital, multichannel universe that has changed our lives so much in recent years.
Keeping track of change is interesting. We tend to mark change in large, influential trends and paradigms. How about this one: my kids have no concept whatsoever of life without remote control. Think about that. Their experience of watching TV, for instance, is totally based on "flipping" from channel to channel. They have no clue what the TV experience was like when someone had to get up off the couch and walk all the way across the room to change the channel. That's a major change, a shift that I daresay has driven a complete transformation of television advertising over the years.
So what's the next big change that will compare with the flipper? I think it will be search. Say what you like about blogs, podcasting and RSS, these are all important developments. But search is a fundamental change, a true paradigm shift. And just like today's kids can't imagine watching TV without the remote, future generations will have no conception of an information dialogue without search.
In other words, I think searching will become as automatic and natural for people as flipping has become today. Search will become so integral to nearly every type of communications experience that it will eventually recede into the background of network infrastructure. In this way, search will ultimately become one more technology wonder that we all just take for granted even as we use it constantly.
But as marketers, we cannot afford to take anything for granted right now. We have a lot to learn about how to use these valuable tools. More importantly, we have a lot to understand about how the ever more powerful consumer will use their new capabilities, including search results, in daily life.
With all this in mind, we have taken DM Days New York to a new level of focus and content this year. We recognize that today, marketing professionals need skills and knowledge they can use to maximize the results of multichannel direct marketing. So we've added extensive programming dedicated to interactive media and online marketing. Our Interactive Marketing Pavilion has the latest online and e-mail tools and resources, all in one place. This reflects the trends that have transformed direct marketing into a widely used strategic process. A process used by more and more marketers in virtually every vertical sector of the economy.
Spending on the multichannel direct marketing process in the United States today is about half of all advertising expenditures and it's growing at a healthy rate. And this process drives over $1.8 trillion dollars every year in incremental sales that's a full 10.3 percent of GDP. This kind of economic muscle makes multichannel direct marketing a big segment by any definition, and like any big segment we have big opportunities and big challenges. Let me mention a few.
Postal Rates and Reform
One major challenge that impacts all of direct marketing is postal rates and regulation. We've just seen one major rate increase take effect in January. Now the Postal Service has filed its next rate case, seeking even more, an 8.5 percent average rate increase and 9 percent for standard mail.
Faced with continued costly price increases, many business and nonprofit mailers will ultimately be forced to limit campaigns or seek less expensive ways to communicate with current and potential customers. Such cutbacks would also affect downstream players, such as paper mills, printers and list providers. Less commercial mail would also reduce postal revenues, potentially causing a spiral of additional rate increases, or even service cuts, just to keep the post office afloat.
Postal reform to help control this kind of erratic rate activity has passed both the House and Senate, but the bills are still waiting for markup in joint committee. We've seen a few signs of progress, but some major financial hurdles remain in place.
Potential Restrictions On The Mail
Another key challenge stems from the popular success of the do not call registry. While still at a relatively early stage, we are beginning to see some legislation proposed at the state level that would create similar registries for postal mail and even e-mail. A handful of states have considered such bills over the past few years, including New York and Massachusetts.
Fortunately, all of the bills have been voted down so far. But they'll be back next year, driven by both privacy advocates and environmental groups. The discussion is clearly expanding. This issue could raise tremendous consequences for not only the direct marketing community but across the entire economic landscape. More than 9 million jobs and $900 billion in commerce depend in some way on a having a viable postal service. Maintaining that viability is an important challenge for all marketers.
One of the most pressing issues we currently have is our responsibility to help protect consumers from identity theft. Securing data, or the failure to do so, is hotter than ever as a news story in recent weeks. I want to stress that protecting data security is everyone's responsibility. Financial information, medical records, and human resources files are all just as subject to being breached as marketing data is.
Close to 30 states have enacted laws on handling sensitive information and nearly all the rest are considering them. On Capitol Hill, six different House and Senate committees are working on data security, spurred on by the latest incidents. They may not iron out their many differences before the end of this Congressional session, but their dialogue will clearly continue.
DMA is working to draw a strong distinction between personal, identity-specific data and the data about shopping habits we call "marketing data." These two get mixed up frequently so it's vital we emphasize that marketing data isn't useful to steal identity. As we do, direct marketers must be more responsible than ever in handling their marketing data. This is truly a key to the future of marketing, and I can't stress the importance of it highly enough.
I saved the most important challenge for last: securing consumer trust. Customers, donors and prospects are increasingly concerned about the level of trust they can place in marketing. As marketers, our ability to calm those concerns will in many ways define our prospects for the future.
The best way to build confidence and trust is by demonstrating that we are responsible stewards of the marketer-consumer relationship. That means informing consumers about their choices and their rights. It means honoring their preferences, being responsive to their concerns, and safeguarding their data, as I just discussed.
Make no mistake, if we do not do all that there are many in the public policy world standing ready to legislate or otherwise regulate our ability to build and maintain marketing relationships. At DMA, we have been addressing the need to raise confidence and consumer trust in marketing in a number of key areas.
New Best Practices For Online
Our DMA Interactive Marketing Advisory Board has been focused on a win-win commitment to both protect the rights of direct marketers and to build consumer trust. Today, they've released two brand new "best practices" documents, one for online advertising networks, and a second for online affiliate marketing.
Both guides will assist marketers who seek to protect the security and integrity of their brands and to foster an online environment in which both brands and customer relationships can flourish. And both provide prescriptive guidance to marketers with either online ads or affiliate marketing in their media plans.
Identity Theft Partnership With FTC
We are also reaching out to consumers with efforts to make the marketing environment, both online and offline, safe and inviting for consumers. Our latest effort is partnering with the Federal Trade Commission on a new consumer education campaign they're rolling out on fighting identity theft. The new campaign was unveiled last month at the White House.
Using elements of the campaign, we will offer templates for DMA members to use as they see fit in millions and millions of daily touch points with consumers. The message is practical, clear and concise. We're committed to the challenge of helping the FTC get the word out to as many consumers as possible. Now it may seem to you like we have a lot of challenges on the horizon.
Opportunities For Direct Marketing
But the opportunities of multichannel direct marketing far outweigh any potential roadblocks. The power of direct marketing is in the opportunities it provides to identify leads more effectively and to nurture customer relationships more productively. Communicating relevant information in a responsible way and producing great results for both buyer and seller in the process are key opportunities. They relate to another major opportunity, which is to use multichannel direct marketing as a catalyst for innovation.
Few business processes are more vital than marketing, and few marketers are better positioned than direct marketers to inject innovation into customer relationships. There's an exciting pool of new ideas circulating around the direct marketing process right now about how best to take advantage of all our opportunities.
And multichannel direct marketers are way ahead of the curve because in direct marketing, the customer has always called the shots. Mail, catalogs and the telephone open the door to a direct marketing process that's driven by customer response. Today, the Internet and globalization have widened the possibilities for having an information dialogue with customers far beyond anyone's expectations back in 1971. And that's the basis of our greatest opportunity to provide a new way of thinking and executing in advertising and marketing.
The ability to use information to assure relevance to customers is clearly elevating the strategic value of direct in the marketing communications mix. Navigating these opportunities and challenges of the digital, multichannel universe is central to the updated mission and strategy we have launched for a new, multichannel DMA.
Although we have no shortage of challenging work to do, the direct marketing community has great strength with which to do it. We need to leverage our strength so we can withstand the challenges we see in this increasingly complex public policy environment. If your company is already a DMA member, I thank you very much. If not, now is a good time to think about the benefits of joining and adding your support to the strength we derive from unity across the direct marketing process.
Direct marketers need to work together to do everything we can to ensure that we keep all our channels open and productive from the post office to the Internet gateway. DMA membership supports those crucial efforts, in addition to other important benefits and services. If you're interested in finding out more, please talk to any DMA staff member and we'll be glad to help you.
And before I leave the subject of opportunities for direct marketing, it is not too soon to start thinking about DMA06, the world's largest event for marketers. This year, the DMA Annual moves to the city by the bay, San Francisco.
The program advisory committee has come up with more than 140 great sessions addressing the latest trends and developments in marketing. To increase the opportunities for professional education and training, we've scheduled both pre- and post-conference "intensives" in the hottest areas. And, as always, we'll have the latest and greatest solutions, lots of new ideas and innovations, and some of the best minds in marketing.
I look forward to seeing all of you and thousands and thousands of our friends and colleagues in San Francisco this October.