Panel: DM Accountability Surrounded by Challenges
However, troubles at the U.S. Postal Service, a tough regulatory climate, the structure of ad agencies, aggressive retailers and divisions of companies that don't share data with one another all present challenges to the industry.
"All the burgeoning technologies out there at their core are direct marketing," Lawrence Kimmel, chairman/CEO of Grey Direct, told 115 attendees. "If you can tell the chairman of AmEx, 'You give me a dollar and I'll give you three,' you're likely to get those [budget] dollars again."
The discussion was billed as an examination of the direct and interactive marketing industry in the current economy.
Kimmel said permission e-mail to consumers of M&Ms suggesting recipes during times of peak usage, such as Halloween, have shown "incredible" return on investment.
However, while the discussion touted direct marketing fundamentals, Russell Stravitz, chairman/CEO of specialty cataloger Brylane Inc., said he worries that focus on recency, frequency and monetary value is not enough in the current economy. Focus on "content, offers and merchandising" are also key, he said, adding that retailers are direct marketers' biggest competitors, not e-commerce or other catalogers.
"Target is a threat. Worry about them," he said.
Indeed, John Hayes, executive vice president, global advertising and brand management at American Express, echoed Stravitz's sentiments and cited Costco Wholesale Corp. as an example of marketing done well.
Costco's challenge, Hayes said, was "how do you get people to come back when they're buying toothbrushes by the dozen or by the pallet?" The answer, he said, is the "treasure hunt," as the tactic is known internally at Costco.
The wholesaler buys "seasonally relevant items" and sells them at bargain prices until they're gone, Hayes said. As a result, customers repeatedly return for bargain hunting.
"I know people who go in and call their sister or their brother and say, 'You've got to come down and see what they have here,' " he said.
During a question-and-answer period, Stravitz said his company is focused on boosting average order sizes.
"In this economy, we see a big opportunity to grow wallet share," he said.
All the panelists named the postal service's dismal financial condition and the current regulatory environment as key challenges to the industry.
"It is incumbent upon us to be at the forefront of postal reform," said David Sable, president/CEO of Wunderman, New York, adding that the postal service's semi-regulated
business model is fundamentally flawed.
Another industry hurdle is information stored in databases that "don't talk," according to the panelists. Sable said he has spoken with representatives of countless companies who have spent "a zillion dollars" on customer relationship management technology and then complained it doesn't work.
"It's like buying Microsoft Word, installing it on your computer, going to bed and then waking up pissed off that the great American novel hasn't magically appeared on your screen," he said.
Hayes conceded that organizations such as American Express often don't share enough information but that agencies' structure must change as well, so that they are "agnostic across channels."