The Digital Divide: Differences Between Online and Offline Direct Marketing
Since you are reading DM News, it's reasonable to assume you are a direct marketer. But are you a traditional direct marketer or a digital marketer? Too few marketers in either discipline realize just how big the difference is.
The true divide between digital and direct marketing is driven by one simple economic fact: cost per incremental online contact is effectively zero. Once you have set up an e-mail program and a Web site, each incremental e-mail or page view can be delivered for tenths of a penny (or even less).
Compare this to direct mail, where the cost of each incremental delivery is exponentially higher when paper, printing and postage are included.
Due to the cost of offline contact, traditional direct marketers must carefully select their target audience for maximum potential response.
The typical direct marketing campaign starts with an offer and the universe of consumers. Direct marketers then "cut a list" - a small subset of the prospect universe - by carefully eliminating great swaths of the population who are less likely to respond to the offer. Thus the key to good direct marketing is good list selection.
"The true divide between digital and direct marketing is driven by one simple economic fact: cost per incremental online contact is effectively zero."
Good e-mail marketers, on the other hand, take precisely the opposite approach. They start with every person for whom they have permission to mail and then carefully select the best offer for each individual on the list - every ZIP code, DMA, Simmons segment, Personicx cluster, every single address.
Digital marketers have no economic reason not to contact everyone, short of increasing opt-outs through over-mailing. Hence the key to good digital marketing is good offer selection.
The difference in imperatives has broad implications.
Direct marketers moving online must reverse their marketer-centric approach. In fact, the concept of a campaign is almost losing its meaning online.
Today's dynamic content technology allows a single communication to contain multiple offers specific to each individual. And the best marketers allow individual customer profiles to determine the precise selection of those offers.
Just as customers drive content, they also drive the timing of communications. Of course, marketers still have a marketing calendar that drives campaigns according to company imperatives, but an increasing share of messages are driven by prospect and customer actions.
Virtually any prospect or customer action - purchases, registrations, downloads, abandoned purchases, Web inquiries, telephone calls and e-mails - can trigger single or multi-stage communications appropriate to each individual's situation. As you would expect, such customer-triggered messages generate far higher response rates than an old-fashioned weekly blast.
Segmentation is still valuable online, but not to eliminate potential targets. Instead segmentation should be used to imply individual preferences where they are not available and to guide the development and presentation of content.
For example, if "toys & tots" is a dominant segment in your list, you will need to be sure you develop offers appealing to parents with school age children and present them with family-friendly imagery and text.
The good news for traditional marketers shifting online is that you have the data. Direct marketers use richer data than digital marketers have typically had, including multichannel purchase, demographic, psychographic, indexing and other information. All of which can be used to develop rich and robust content to match individuals for a maximum response.
While digital marketers may have mastered the concept of mailing everyone, and may even let data drive content and customers drive campaigns, few use all data available to drive relevant communications.
Most are using a mere fraction at best, such as (online) stated preferences, click behavior, basic demographic and a subset of purchase data. Too few are using the sophisticated demographic and psychographic, scoring/indexing/profiling data traditionally used offline.
Of course, all this is about to change now that every major and some minor e-mail service providers have been acquired by database marketing companies. More detail on offline/online data combinations is something to look out for in the near future.