A 2-percent response rate is a 98-percent failure rate and the carpet-bombing tactics of traditional DM are outdated in Internet marketing, said direct marketing pioneer Lester Wunderman during a conference call last week in which he was introduced as the newest board member of Intellipost.
“Two percent may be profitable, but it's totally inefficient,” said the former chairman of Wunderman, Cato, Johnson.
Intellipost, San Francisco, is creator of the e-mail-based BonusMail program where consumers earn “Rew@rds” points for responding to targeted e-mail ads. In November, Intellipost acquired MyPoints and Direct Value.com, two Web-based incentive programs, from Experian in exchange for giving the wordwide data provider a 19.9-percent stake. Intellipost claims nearly 2 million members in its database.
One reason for joining Intellipost's board is that a database of opt-in commercial e-mail recipients offers the advantage of being able to track pitches that have been opened but discarded, said Wunderman adding that in mail, one can't measure the failure rate of opened envelopes.
An opt-in database allows marketers to observe consumer behavior and change their approaches based on what they see, he said.
The opt-in e-mail market is expected to grow from 3 billion pieces of commercial e-mail sent in 1997 to 250 billion in 2002, according to Forrester Research, Cambridge, MA. Forrester also predicts the opt-in e-mail market will grow to $900 million in revenue by 2003.
Along with that growth will come profound changes in prospecting tactics, according to Wunderman who is consulting and in the midst of launching an Internet-based marketing business on which he declined to elaborate.
“Prospecting has been a business … where the mailer goes downstream to find customers very expensively,” he said. “The Web is an upstream media. The advertisers become the database. The consumers are the people who are seeking the information they want.”
Also, unlike a traditional approach where brand image and product attributes are the center of the marketing universe, the brand experience is key to digital marketing success, according to Wunderman.
The brand experience includes advertising, packaging, where and how the product is sold, price, service, the product's uniqueness and the development of an interactive relationship between buyer and seller once the product is sold.
Who understands brand-experience marketing best? Dell Computer, according to Wunderman.
“Dell understands that you're not just buying a computer,” he said. “Things have changed from transactional to relational. When you get into a relational mode, you're in a service model. When you look at Dell, it isn't just their transactional capacity to make a computer serve you, but they're relational capacity to make credible service promises.”
Moving from a transactional business model to a relational business model is what advertisers are struggling with most, said Wunderman declining to name companies who aren't meeting the challenge.
Also introduced as new Intellipost board members last week were Tom Newkirk, chairman of Experian's direct technology solutions and marketing solutions division and Larry Phillips, managing director of Primedia Ventures.
