NEW ORLEANS — Change is necessary to overcome several threats to direct marketing, Don Logan, chairman of Time Warner's media and communications group, stressed in his keynote session yesterday at the Direct Marketing Association's 87th Annual Conference and Exhibition here.
He cited concerns over telemarketing, e-mail, negative options, privacy and postal rates. Consumer attitudes also have changed through the years, something that affects even Time Warner, which last year generated $15 billion in direct marketing revenue.
“We're big in this business, and if we're going to be successful we've got to keep this business growing,” Logan said. “We've got to find new ways of selling. Consumers are more skeptical.”
Logan has deep roots in direct marketing. He started attending the Direct Mail Marketing Association's shows in 1971 when he was in the publishing business. Then as now, recency, frequency and affinity mattered. The problems were similar, too.
“How do you make your business grow? How do you make your controls better if you're going back to your magazine pool over and over again,” he said.
Time Warner is acutely aware of that issue. Its Time Inc. division has 50 million magazine subscribers. America Online has 30 million customers for its Internet access service. HBO has 11 million active subscribers for its cable channel brand.
But newer technology like the Internet has turned business models upside down. He called eBay the world's biggest yard sale. It altered the conventional model of selling few products to many by having many sellers sell small items to many customers.
Logan also lauded Amazon, not for being among the first online-only booksellers but for its customer service and one-click shopping ability. He actually had turned down Amazon founder Jeff Bezos' request for investment nearly 10 years ago.
“Turned out I was right and I was wrong,” Logan said. “I believe the real reason was the customer experience. It was a real experience they never had. It was choice, it was control.”
Logan suggested that DMers sell products in retail channels where customers are. He cited Time Inc.'s new All You women's magazine that sells exclusively in Wal-Mart stores.
Also, companies should explore using their existing channels for other services. Time Warner Cable is selling not just cable services, but also high-speed Internet access. And cable TV is becoming as segmented as magazines, making this a chance to deliver niche audiences.
Customer service is another area of opportunity, he said. Marketers should drive people online to solve issues, then upsell them in an environment they prefer. The telephone and its drill-down menu options only increased frustration.
Logan said cable channels were among the worst providers of customer service, with phone waits so long that callers either “died, gave up or canceled.”
