I’m surprised when I read stories about business executives that dismiss the impact of the Internet by referring to the Web as simply the “dot-com bubble.” What those executives obviously haven’t recognized is that the Internet has fundamentally changed the way that the majority of companies interact with their customers.
Whether they know it or not, and whether they want to admit it or not, and whether they care to act like one or not, the Internet has turned every company into a direct marketer.
Why is this happening?
First, the mechanics are now ubiquitous. Pre-Internet, only specific categories of companies like catalogers or fundraisers employed direct marketing tactics.
Now, every company's Web site, every keyword to drive a customer to the site, every link to a customer service rep, every e-mail that goes out to a customer list, are all direct marketing mechanics. Every company now has to do these things as a cost of doing business.
Next, mass marketing is no longer quite so mass. Audiences are becoming fragmented across hundreds of television channels and millions of Web sites.
I heard a great speech recently by Strauss Zelnick, one of Return Path's investors and a media executive, which crystallized this point for me with the following example.
Twenty years ago, a mass marketer could reach 80 percent of American women by running a commercial on ABC, NBC and CBS at the same time at certain times of the day. In order to achieve that same reach today, a marketer would have to advertise on 120 channels, and I'd add, thousands of Web sites.
This fragmentation means that marketers have to get increasingly micro-targeted and innovative in order to reach customers and prospects.
Finally, the balance of power has shifted to consumers. Don't like that ad? Use TiVo to skip it. Hate pop-ups? Install Google's toolbar to block them. A company you've never heard of is e-mailing you? Report them as a spammer to your Internet service provider. Hate phone calls from telemarketers? Sign up for the Federal Trade Commission’s Do-Not-Call registry.
Permission is here to stay, and companies that “get it” will win the day with massive databases of customers who have requested to be marketed to via e-mail or other channels.
But all of that's direct marketing, and it’s not very reliant on the mass advertising machinery that propelled companies and products to greatness in the past.
What has propelled this phenomenon?
The shift that has made everyone a direct marketer is driven by new technologies that the Internet has brought us in the past 10 years. Those technologies have opened up the possibility for one-to-one communication between any company and its customers that was previously unaffordable to many industries with low-price-point products.
You never received a telemarketing call for a movie, because making the call costs $3, and all you will spend on the movie is $10. Procter & Gamble Co. never sent you a glossy direct mail piece for toothpaste, because they would spend $1 at a small chance you'll buy their $2.25 product. But the cost of a banner ad or keyword or an incremental e-mail is so low – virtually zero in some cases – that everyone can afford a direct presence today.
What lessons can companies who are new at direct marketing learn from traditional direct marketers? There are many, but four things stand out that good direct marketers do well that are different from the skills inherent in traditional marketing and advertising:
First, take the creative process seriously. Just because you can dash off an important e-mail to your staff in 30 seconds doesn't mean your marketing people should do the same to your customers.
So, put your e-mail campaigns or templates through a rigorous development and approval process, just as you would a newspaper ad or radio spot. There's just no excuse for typos, bad grammar, or sloppy graphics in e-mail or on a Web site.
Second, use live testing and feedback loops. It's hard to test two versions of a TV commercial without incurring significant extra cost. It's impossible to test 20. But with today's software, you can test 10 versions of your homepage, or 100 versions of your e-mail campaign almost instantly and refine your message on the fly to maximize response.
Third, make transparency part of your corporate culture. Just as you can have a one-on-one relationship with your customers, your customers expect a one-to-one relationship back.
If customers want to know what data you store on them, tell them. If they want you to stop e-mailing, calling or mailing them, stop. If they want to know more about your products or policies, let them in. Think about marketing more as a dialog with your customers, and less as you messaging them.
Fourth, merge content with advertising. Old-school advertisers didn't have to worry about this one, because their ads were always surrounded by other people's content – TV, newspaper, radio or magazines.
But in direct marketing, your message is sometimes the only message around. Make it interesting. Make it entertaining. The archetypical example of this is the old J. Peterman catalog, which sold clothing and accessories by creating stories and mystique around each product. But there are tons of other examples as well, especially around e-mail newsletters.
What does this mean for the way companies will be structured or operate in the future?
With every company operating as a direct marketer, and with – hopefully – every company embracing the best direct marketing principles, what does this shift mean for the way companies will be structured in the future?
First, let's talk about the internal structure of a company. The biggest shift going on is that customers are becoming a more important part of all employees' daily lives, not just those in the advertising department. More and more members of your organization are touching customers every day, and they need to be trained how to think like marketers.
But beyond that, companies will be constructed differently in the future as well. There are many industries founded on the “mass” that will never be the same again. Here are three examples of how direct marketing is infiltrating, but enhancing the opportunities of, corporate America.
Disney's film unit used to make movies only for theatrical release. Today, it has an enormous volume of direct-to-video (or DVD) movies that never see the big screen but that drive huge sales numbers when marketed to Disney's customer e-mail database.
Ralph Lauren used to make Polo shirts with a fixed number of configurations of shirt color and knitting color of the logo. Now, you can go to www.polo.com and custom design a personalized shirt for someone with the size and color combination of their college or company or favorite baseball team.
Barry Diller used to run a studio, then he bought a TV network called the Home Shopping Network and, I'd add, a lot of people laughed at him for doing so. He has now turned HSN into IAC Corp., a true convergence company that mixes content and media with commerce and direct marketing with brands like Match.com, Ticketmaster, Evite, CitySearch, Expedia and Ask Jeeves.
What opportunity does direct marketing open up for your company? Whatever the future holds, recognize that even now every one of your employees is a current participant on the direct marketing stage. Don’t ignore the current opportunities – take advantage of them.
