On the Bright Side
Issues? Heck yeah, we’ve got issues.
The do-not-call list. Can Spam. Rising paper prices. A lack of new direct-responsive names. Mailbox clutter, online and off. Tight budgets. Consumers distracted by the Olympics, the elections and an ongoing war. Small staffs stretched to the limit. Competition from big-box retailers. E-mail deliverability. And so on, and so on.
But we’ve also got a lot of good things going on. In this special report, Direct surveyed professionals from all areas of the direct marketing community to get their take on the state of the industry as well as their little corner of the world.
We’re pleased to report that despite our shared laundry list of problems, constituents ranging from retailers, catalogers and publishers to printers, database consultants and association leaders shared that business is on the upswing.
Mail volumes for many are up, investments in programs and technology are increasing, and integrated marketing initiatives are going gangbusters.
As Seth Radwell, president of the marketing and editorial group at Bookspan put it, “Obviously there’s a lot of concerns, but I think we’re on a good track.”
CATALOGS
Roger Bensinger
senior vice president for marketing
The Sharper Image
2004 has been “a bit of a roller coaster ride” for the San Francisco retailer and cataloger, says Bensinger.
“We had a fantastic first quarter with record sales and then suddenly hit a wall during the summer months,” he says, hypothesizing that a pent-up demand for travel since 9/11 moved a lot of discretionary dollars to vacations this summer. “Now that families are back to work and school, sales have picked up nicely. We’re anticipating an excellent holiday season.”
While the company expects to be strong in toys for kids, electronic games for adults and digital audio accessories for the holidays, he acknowledges there is increased competition in some key product categories. “Our competitors are mailing more catalogs and DRTV advertising space availability is tighter during this election year,” he notes.
But the company sees the increased competition as an opportunity. He says it’s working to align itself to specialty retailers and broaden their audience beyond “early adopter males.”
“Our opportunities lie with the middle-tier shopper who aspires to have something special,” says Bensinger. “We’ve broadened our assortment to be more attractive to both men and women at price points more can afford.”
SWEEPSTAKES
Pete Pedersen
executive director of publisher relations
Publishers Clearing House
Putting aside the problems that have plagued the world of sweeps, “Business has actually been pretty decent,” says Pedersen. “We seem to be on a bit of an uptick and have been since probably the mid-part of last year. [Of course], it’s all relative to what the benchmarks are, as opposed to what it would have been a few years back.”
January of this year was a little slower than normal, thanks to a deviation from the traditional PCH strategy of emphasizing the happy experience of winning the company’s sweepstakes in its promotions.
“We went a little bit afield and in retrospect that may have caused the dip, because once we got into our spring mailings, from late January on, we did start to tick back up again,” he notes. “And that’s continued. Our second largest [annual] mailing, which this year delivered in early July, again looks pretty good. It’s probably up a little bit more from where we expected it to be.”
Mail volumes for PCH have remained relatively consistent, says Pedersen. But while sweeps continue to work extremely well for the company, the problem is that there are fewer sweeps-responsive lists on the market thanks to the demise of companies like American Family Publishers.
“That’s been the challenge for us. Where do we go to replace those names? Obviously we’ve had to work a lot harder at that. We’re doing a lot more modeling, we’re trying to develop working relationships with other marketers to identify names that perhaps may not be sweeps-responsive but exhibit many of the same characteristics of a sweeps buyer. We’ve had some successes and we’ve had some [disappointments] in that area.”
And, he adds, “We’re starting to be encouraged because we’re hearing [mainstream] marketers and magazine marketers expressing interest in perhaps [trying] sweeps again. So we’re cautiously optimistic.”
DATABASE MARKETING
David Shepard
president
David Shepard Associates
According to a new best-practices survey conducted by the Direct Marketing Association, the trend of databases being managed in-house is continuing.
The survey showed that one-third to half of the B-to-B and B-to-C companies surveyed are planning to rebuild their databases over the next 12 months. “This is a very significant number,” says Shepard.
About a third of the databases in use today were introduced in the last four years, while another third debuted between 1995 and 1999. The amount of money spent on maintaining a database varied greatly for respondents, from $100,000 to more than $500,000 annually.
Timeliness and accuracy of data is still an issue, he says, since only about a third of respondents felt their queries were coming back as quickly as they’d like.
Shepard says most average marketers still don’t have ready access to files. About 25% to 50% of the companies surveyed have specialists on board to deal with database issues.
One of the most surprising figures in the survey was the lack of companies that link their database with their Web site or call center. “There’s still a lot of work to be done in the database area,” he says.
Results of the poll will be presented during a Tuesday afternoon session at the DMA’s annual conference in New Orleans.
FINANCIAL SERVICES
Karen Gopalan
vice president, direct strategy and customer integration Chase Home Finance
Following its merger with Bank-One, Chase will see a significant increase in its combined direct mail and online marketing efforts next year, says Gopalan. “I’d say that overall we’re increasing our [DM] efforts. Leveraging the best parts of both organizations has resulted — at least in the home equity area — in much higher volume and much more sophisticated direct marketing.”
Chase is working on moving towards a “much more channel-neutral approach,” she says. “Whether you come to us through direct marketing or online, you’ll have many more options to continue your experience either face to face, on the phone or [on the Web].”
“And brand differentiation and product differentiation is just plaguing the retail banking and home equity industry,” she adds. “To be able to come up with a different brand positioning that is clear, a different product set or consumer offer is just extremely challenging in this environment because interest rates have remained low.
“In home equity in particular, there are so many new players and it’s still a very hot market,” she says. “Consumers have become so much more savvy.”
DRTV
Richard D. Sangerman
senior vice president/director of client services
A. Eicoff & Co.
Yet another area that has seen growth thanks to the fallout of the do-not-call list is direct response television. “People have had to move away from that channel in terms of generating leads and orders,” says Sangerman.
On the media-buying front, the third quarter has been strong for clients, as inventory continues to be available on many cable networks. The Olympics weren’t much of an issue this year, he says, likely because most events weren’t shown in real time, so many people knew the results in advance. The elections will make the fourth quarter challenging.
“The candidates have discovered cable, which is a little bit of a different strategy than in the past, when primarily network or spot [advertising was] used,” says Sangerman. “It won’t be the end of the world — the big battles are in individual states, while in DRTV most of the money [will be] spent in cable, syndication and network.”
Pharmaceuticals continues to be a hot category for DRTV, as are products targeting those age 55 and up. “Those people watch a lot of television and are good responders,” he says.
Directing DRTV watchers to the Web has also become more of a trend, as companies use unique URLs for their television campaigns to help track results, he says. Many are taking this technique to the next stage by having individual URLs for each station airing a spot.
CONTINUITIES
Seth Radwell
president, marketing and editorial group
Bookspan
Despite factors like the ongoing war that hurt the book industry and direct marketing, Bookspan and its more than 30 different clubs — including Book-of-the-Month and Doubleday Book Club — has had a good year.
“We’ve started new programs both in terms of our core activities with our existing clubs, as well as new businesses we’ve been building,” says Radwell, who adds that clubs started in submarkets like Black Expressions (targeted to African Americans) and Mosaico (targeting Hispanics) performed well. The company also launched its first conservative club this year, American Compass.
The last few years have brought dramatic changes in book clubs, thanks in large part to the emergence of the Web as a bookselling venue, he says. The success of sites like Amazon.com and BarnesandNoble .com became both a threat and an opportunity for Bookspan to enter that space.
A more recent challenge has been discount retailers like Wal-Mart and Costco making aggressive moves in bookselling. “They offer books at a very low price and they’ve increased the amount of books they’ve offered, so that’s also hurt,” he says. The trend of used book sales online and off also has been a detriment.
The biggest concern going into the fourth quarter is the presidential race. “The election this year has been very volatile and distracting,” says Radwell. There’s just a lot of issues dominating the news. When people are distracted by something like an election, they typically read less and are less responsive to their mail, so direct response generally suffers. We’ve seen some slowness in September already.”
Bookspan has cut down on its outbound telemarketing in the wake of the do-not-call list, and has seen e-mail responsiveness drop thanks to the preponderance of spam. Direct mail and print have continued to perform well, but there are concerns in that space thanks to rising paper prices, a lack of new lists and the looming postal rate hike.
“Obviously there’s a lot of concerns, but I think we’re on a good track,” he says.
INTERNATIONAL
Charles A. Prescott
vice president, international business development and government affairs
Direct Marketing Association
The level of U.S. direct marketers looking for opportunities overseas continues to increase in all markets and sectors, but one of the most surprising is the heightened interest among fundraisers, says Prescott.
The DMA’s recent trade mission to China had two major fundraisers participating, UNICEF and the National Cancer Research Foundation. Overall, interest among service providers is increasing fastest in anticipation of developments and expansion of DM activity overseas.
“The world-class service providers to the U.S. industry are taking their skills to those markets that have developed enough to need more sophisticated service,” he says. “We see this especially in logistics, data processing, and database management and analysis.
“The biggest stumbling blocks for U.S. companies abroad continue to be the company’s own mindset and — let’s face it — lack of time,” says Prescott. “Many companies don’t have personnel with international experience and knowledge, and they naturally are reticent about venturing abroad.”
In 2005, the DMA’s trade mission program will visit the International Direct Marketing Fair in London and the German marketing fair, DIMA. The latter trip will be in conjunction with IIC, the German government’s investment support arm. “We intend to increase our visits to China, and hope to do something in Japan in the near future,” he adds.
B-TO-B TELEMARKETING
Michael A. Brown
president
Redwood Training Associates
The business-to-business side of the call experienced minimal fallout from the do-not-call list, with the exception that many formerly business-to-consumer telemarketing service bureaus decided to try their hands at B-to-B.
This had mixed results, says Brown, who notes that many rely on predictive dialers, “which have no place in B-to-B.”
A looming problem for B-to-B telemarketers might be that in any future legislation, Congress is unlikely to recognize differences between B-to-B and B-to-C marketing
On the non-legislative front, Brown is seeing some B-to-B marketers phoning earlier in the sales cycle.
“The early call often is an invitation to a Web site to promote some kind of substantive dialogue,” he says. “And sometimes there’s a call after a visit to the site, provoked by the prospect’s request. Or even if it’s not provoked, a follow-up call to say ‘Thank you for visiting. What did you find that piqued your interest.’ That tends to ferment some nice conversations.”
In contrast, some marketers are calling later in the process, waiting until after a prospect has visited a Web site or responded to a direct mail piece, says Brown, who adds that overall, the “old days” of mass cold calling in B-to-B are history.
“It’s fair to say the old ways of ‘Let’s get on the phone, drum up some business and see how it goes’ doesn’t seem to be producing the kind of results that anybody can rely on anymore.”
PRINTING AND PRODUCTION
Jim Cyze
president, direct marketing group
Banta Corp.
In the core sectors he operates in — financial services, retail, ad agencies and consumer packaged goods — Cyze sees a resurgence of activity.
“Some of it is the cyclicality of the year-end part of our business, which always hits in this season, but I think there was a tremendous pent-up demand in the past few years,” he says. Mailers are getting more ambitious in their direct mail initiatives, he adds, and use of personalization has increased.
“I think what has happened finally is databases have started to get to a point of sophistication where we can truly take advantage of targeted marketing in a positive way without being too intrusive,” notes Cyze.
There has been a tightening of paper availability and capacity over the last few years. Going into next year there may be some market frustration as mailers see printing lead times go up, he says. “I think it will be an education process for our customers.”
In the fourth quarter the tightening of paper quantities is normal given the amount of catalog paper eaten up in the market. “My hope,” says Cyze, “is that we don’t see the paper mills getting too aggressive in their price increases and killing the opportunity.”
CIRCULATION
Susan Allyn
consumer marketing director
FHM
While the war in Iraq hasn’t exactly helped newsstand sales, FHM is having a very strong year, particularly on the subscription side, notes Allyn.
The men’s magazine has done significant testing in the four years since its U.S. launch, resulting in a circulation of 1.2 million. FHM has worked with ParadyszMatera to do different ZIP penetrations and regression modeling to expand into fresh list environments. That’s helped in this time of decreasing new list availabilities.
“Because people weren’t dong a lot of mail in the last four or five years, that decreases the amount of direct-to-publisher names out there,” Allyn says. “It hasn’t been [a problem] for us, perhaps because we’re not mailing 50 million pieces a year. We’re getting upward in the 8 million to 10 million range.”
Payup has been good, and the magazine hasn’t yet beat its self-mailer control piece. FHM is looking at testing premiums that would have more relevance to its audience, such as downloadable photo galleries and screen savers, as well as non-virtual offers like datebooks that could be evergreens and not require a lot of expensive editorial content.
TELEMARKETING
Tim Searcy
executive director
American Teleservices Association
“As we come up on the one-year anniversary of the do-not-call list, we’re seeing a lot more optimism than we did before,” says Searcy. “During the first six months, I think a lot of folks were just trying to understand what the impact was going to be on their business.”
He says that outsourcers probably have just begun to benefit from the registry since many in-house operations are deciding they don’t need to spend all their time managing the risk of dealing with the regulations.
Some outsourcers are starting to explore new uses of the channel, like collections and charities. Of course, not all is rosy. “We’ve seen a number of centers that have closed, or decreased their number of employees,” says Searcy. “There have been several telecom companies and financial institutions as well as publishing groups that have closed call centers and said they’re no longer going to be in the teleservices components of the business.”
LISTS
Adrea Rubin
president
Adrea Rubin Marketing Inc.
List managers and brokers are experiencing the same problem mailers have when it comes to the name game, says Rubin: a dearth of new files on the market.
“A lot of the lists we see are in the compiled arena or they’re databases that have been repackaged or enhanced, and that’s a real problem,” she says. “If you take a look at the key data-card systems, MIN and SRDS, every single thing that’s coming out is in the compiled sector and it’s not in direct response. That’s a concern.”
When brokers are making list recommendations, they’re forced to look at lists that have been on the market a long time and re-segment them or tweak them to help a client, notes Rubin.
On the brokerage side, financial services is still strong, even with increased banking competition, and insurance companies are moving into using compiled data in a big way, she says. And despite uncontrollable challenges, like mailings deterred by the fall spate of hurricanes, Rubin is optimistic for the catalog business.
Tami Monahan Forman
director of consulting
ReturnPath
Regardless of concerns about spam and mailbox clutter, marketers aren’t pulling back from e-mail.
“We’re definitely seeing more, particularly with house files to market to existing customers,” says Forman. “Recent DMA stats shows over 80% using house files.”
Travel is one sector in particular that’s embracing e-mail, she says, pointing to a recent travel industry association survey which showed that over 3.5 million travelers had signed up to receive travel offers online. “And nearly a third had been influenced by an e-mail promotion to take a trip they otherwise wouldn’t have taken.”
Retailers are getting promising results from e-mail use, and publishers are starting to see more ad revenue coming from that channel as well, she says.
Deliverability and staying on top of what you need to know and do to get delivered by the ISPs remains essential. “It’s always ironic that the spammers are the first ones to figure out what the rules are and exploit them, while legitimate marketers are desperately trying to keep up,” notes Forman.
There is concern about growing e-mail lists, because as spam increases, people become more hesitant to opt in, she says. “What we’re seeing there is having a good content strategy can be helpful in growing a list. If you have really enticing content, that makes it easier for you to present a unique value proposition to potential subscribers.”
MOBILE MARKETING
Tom Burgess
CEO
Third Screen Media
Companies with an existing set of members or customers, like credit card and insurance firms, are showing increased interest in using mobile phones to connect with consumes, says Burgess.
“[Many] people have three to five e-mail addresses. On mobile phones, you only have one phone number,” he says. “Once you get somebody to sign up, you have a true one-on-one connection. And you also have that ubiquitous connection to them, whether they’re at home, in their office or in their car on the weekend.”
A major roadblock to mobile marketing is wireless carriers, who are concerned about opening the marketing floodgates on their users.
“It’s a challenge to work with the carriers and make sure we are bringing solutions so they are comfortable allowing advertisers and marketers to get to their subscribers,” Burgess notes.
B-TO-B
Bernice Grossman
president
DMRS Group Inc.
Grossman says she’s seeing a lot more business-to-business marketers doing modeling and analysis, as well as a blurring of the line between B-to-B and B-to-C.
“They’re morphing, and I don’t know what this third category will be,” she says. “I think because employees are spending so much more time working at home, when you want to reach those B-to-B individuals it’s no longer clear where to find them.
“This is going to have an impact on how we store information on the customer,” Grossman adds. “There’s an opportunity for a lot of B-to-B marketers to take advantage of using a lot of proven tactics on the B-to-C side.”
Sales and marketing have to work together much closer than ever before to help maintain accurate data. “The salesperson’s black book really has to be shared with the marketer, and the marketer has to be smart enough to start to expand its data repository so that when the sales guy says, ‘Well, what’s in it for me,’ [everyone] will be smarter and more successful.”
DR PRINT
Lawrence Peters
managing director, DR ad sales
Hachette Filipacchi Media US
Peters projects that he’ll not only hit but go over budget this year.
At Hachette, he’s seeing some changes in the run-of-book business, with more testing of different-size formats and options like bind-in cards. There are some areas not doing as well, such as a lack of smaller “mom-and-pop” advertisers gravitating to general-interest titles.
Gains are being seen in home furnishings. “We saw an uptick for At Home and Elle Décor, and have certainly also seen movement into Home as well,” he says. “Shelter is big, and the next big category has been in automotive.”
A continuing challenge is showing potential advertisers that leads do indeed come from print, he says. Because now many readers go to a Web site rather than call an 800 number to respond to an ad, many companies aren’t able to track the ROI of their print efforts effectively. And, adds Peters, just because the customer doesn’t go for an ad’s specific offer, it doesn’t mean they aren’t buying at all.
Getting Internet pure-plays to see the value of magazine advertising and a real-world presence is also an issue, he says.
NONPROFITS
Michelle Clayton
director of membership
Lincoln Park Zoo
Chicago’s Lincoln Park Zoo went into the fiscal year concerned because of the state of the economy. But the nonprofit has seen an increase in visitors and membership.
“[There’s] a higher response to membership [efforts] and our capital campaign is very close to meeting its goals,” says Clayton. “In terms of our membership program, in the last six to eight months we’ve seen close to 20% growth, which is really, really exciting.”
In the past 18 months, membership has grown from roughly 17,000 to close to 23,000, she says. “We’re excited because membership is the basis for all our philanthropic giving.”
While the average gift has been lower in general contributions, the overall number of gifts has risen, she says. “I think people are slowly getting back into wanting to give something, even if it isn’t at the level they were before. They do want to participate and support the institution.”
The zoo has cut back on mailings to give its house file a rest, targeting more of the ZIP codes that performed well in the past. “And that has been working for us,” Clayton notes. “We’ve see an increase in our response rate because of it.”
PAPER
Tom Hansen
vice president
Bradner Smith & Co.
Thanks to an increase in direct mail activity fueled partly by a reduction in telemarketing, Hansen says 2004 has been a good year. “Things are definitely better than they were at this time a year ago.”
But the continuing rise in paper costs has continued to be difficult, he says. “End users purchasing printing hasn’t necessarily budgeted for this kind of an increase.”
Some mailers are also facing problems, as they need to make decisions on requirements much further in advance than in the past. And the mills themselves are facing crunches, with orders exceeding capacities. “[If mailers] move from one paper mill to another right now, it’s difficult to find the right paper at the right price at the right time.”
Hansen says he isn’t necessarily seeing mailers cut back on mail volumes because of the paper price increases. But they have discussed other tactics, such as dropping down in brightness or grade level, or exploring a change in base weight to potentially save on postage and transportation costs. “But the reality for large mailers and publishers is that something has to give, and they may have to cut circulation to keep their budgets in line.”
LEGISLATIVE
David W. Bertoni
partner
Brann & Isaacson
Can Spam does not appear to have had a significant impact on inappropriate — and often illegal — messages coming from non-legitimate sources, says Bertoni.
“I think one of the big concerns is where we go from here in terms of e-mail marketing,” he says. “There may be another attempt by the government to step in and find another solution that isn’t friendly to legitimate marketers. One of the underlying important parts of Can Spam is it provides a predictable, solid framework for those who wish to comply — but there’s a bunch of people who don’t.”
Overall, Bertoni says he’s hearing positive thoughts from his clientele on the state of direct marketing. But when it comes to telemarketing, many are gun-shy. “I think in the end we’re going to see a steady decline in the use of outbound telemarketing centers,” he notes. “The regulations have created such as cumbersome backdrop, and the do-not-call list is increasing with each passing month. I think clients are [hesitant to go] down that road.”
One area the FTC is looking at closely is whether companies are living up to the privacy policies they’ve posted on their Web sites: “It requires a level of diligence in making sure your privacy policy keeps up with your practices.” He says he’s heard the FTC is also looking at firms that change their policies on the fly.
“It creates enormous difficulties. If you’ve collected information under a privacy policy and changed it, do you need to segregate the names you collected before the change from those [you’ve gathered] after? And how do you communicate changes to those who visit your site?”
AGENCIES
Pam Larrick
CEO
MRM Partners Worldwide
MRM is anticipating double-digit growth this year, says Larrick. The proof? The agency has open hires in numerous locations.
Technology, financial services and consumer packaged-goods firms are expanding their CRM work, she says. Overall, while North America and Europe are still driving the lion’s share of that work, a significant upswing is happening in the Asia Pacific region, as well as in Latin American countries like Mexico, Brazil and Argentina.
The agency is seeing clients looking for a consistent global strategy. “They want to transfer what’s working in one region to another, because clearly that helps their ROI.”
Another trend is that higher-ups at many large companies are now taking more of an interest in direct marketing. “This is becoming part of the corporate strategy,” says Larrick. “It’s no longer an adjunct or an add-on — and that’s a big step.”
RETAIL
Dave Ratner
Owner
Dave’s Soda and Pet City
Partly because big-box pet supply retailers Petsmart and Petco haven’t opened new locations in his category in recent years, business has been good, says Ratner.
His chain of four stores in Massachusetts is ramping up direct marketing efforts, doing extra data mining and segmentation to target more existing customers. Ratner is experimenting with offers, testing a coupon good for $5 off a bag of dog food vs. one for $5 off any product in the store with the purchase of a bag of food.
A major dilemma for Ratner as a small retailer is getting reasonably priced software that can slice and dice data. “It’s a huge challenge. The software we’ve built into our point-of-sale system can’t do what we want it to do. We can’t afford to go out and have someone do it, and we can’t afford to spend $1,500 a month to have an outside firm manage the data.”
For 2005, a goal for the chain is to get customers in for at least one more visit on an annual basis. The number of visits depends largely on the type of pet the customer owns, but a typical best customer visits every five or six weeks, while an average customer might stop by every couple of months.
The problem, he says, is that often when a customer runs out of pet food, they pick up supplies at the grocery store until they can get back to Dave’s. The challenge is to get them to come back before they run out. “It would [bring us] a huge increase in volume,” he says.
SEM
Laura Galante
Internet marketing strategist
Prime Visibility LLC
One of the biggest obstacles — and opportunities — Galante sees to search engine marketing is that many traditional marketers still don’t understand the value of search.
On the plus side, she says consumers are becoming more savvy. They realize that the more specific their search is, the more successful it will be.
“The most important thing we’re seeing is that the people who contact us know more. They’ve done their homework, they’ve done their research, they ask better questions, they’re more aware of the industry.”
Keywords are becoming more of a high commodity, according to Galante, as companies pay higher and higher prices in the pay-per-click world.
CRM TECHNOLOGY
Robb Eklund
vice president CRM product marketing
Oracle Corp.
With the economy rebounding, Eklund says customers are focusing on applications for growing their business, instead of just on products designed to reduce expenses and drive efficiencies.
“We’re definitely seeing the pendulum swing the other way,” he says, noting an increased interest in sales force and marketing automation.
Areas strong in CRM include consumer packaged goods, financial services and telecom, particularly outside North America, says Eklund.
Overall, marketers are becoming more opportunistic about customer interactions, trying to take better advantage of general inquires or sales calls. “I’ve noticed a theme of companies trying to intelligently steer customers and responses to lower-cost sales channels,” he adds.
Companies also are looking to better align their marketing with the sales agenda, he says. “They want to be sure their investment in marketing coincides with the overall corporate objectives.”
DIRECT MAIL
Lois K. Geller
president
Mason & Geller
Geller’s clients are once again making investments in DM, particularly in direct mail.
“More than we’ve seen in a long time, they are doing a lot of acquisition in direct mail and a lot of strategic planning,” she says. “I think we’ve been more reactive in the last three or four years. This year there’s been a lot of calls for direct marketing plans that incorporate direct mail.”
And there’s a sharper focus on using the Web for retention and customer relationship management, she continues. “Clients may have put their site up three or four years ago, but now they’re starting to take a look at it and strategize for the first time.”
She estimates that about 30% of her clients are devoting time to developing their corporate brand and voice. But for many companies, tracking results is still an issue. “They need to know the fundamentals, that’s what is missing.”
DM INVESTMENT
Michael Petsky
CEO
Petsky Prunier
For the most part, says Petsky, 2004 has been very strong. “Marketers are expanding their budgets, putting more money [into] new customer acquisition programs and also looking to step into joint ventures and partnerships — things you like to see when the economy is doing well.”
After a very exuberant first half of the year, the summer slowed down a bit, he notes, pointing out that “the merger and acquisition business rises and falls with one company’s financial performance.”
A major challenge remains: finding new databases to tap into to convert non-DM consumers to DM buyers. “The Internet has opened up a brand-new group of people who never thought of themselves as mail order buyers,” he says.
The next postal rate increase is also going to be a significant stumbling block. “Many consumer DM companies operate on 10% or smaller operating margins,” he says. “The challenge for these folks is determining the most efficient channel for acquiring new customers and then developing smart retention programs to continue to stimulate demand from them.”
Many consumers — both on the B-to-B and B-to-C sides — are also looking to streamline the number of relationships they have with companies, which could be an opportunity for smart marketers. “Consumers want single-source solutions,” Petsky says.
CRM
Dennis Armbruster
vice president of consumer marketing
Carlson Marketing
More and more, Armbruster observes, marketers are demanding to know what effect direct marketing strategies can have on their return on investment.
“There’s still an ongoing demand for customer-based strategies, but the recurring theme is results, metrics — ‘Show me the impact this could have on my business,’” he says.
Another big trend is integrating multiple touch points and emerging technologies into campaigns, and utilizing more sophisticated analytical tools to optimize what that campaign looks like at an individual customer level.
A huge issue, says Armbruster, is getting executives to test new concepts. “It’s a risk, so it’s a challenge to build confidence in new approaches. How do you break out of the paradigm of the past?”
Likewise, getting customers to opt in continues to be an issue. “[Companies need to learn] what it takes from a value perspective to get customers to raise their hands and engage them,” he says.
