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Direct Mail Out-muscles Mass Advertising
There's no denying the recent economic slowdown has made a dent in marketing budgets -- but direct marketing channels appear to be faring better than the mass media.
In a recent national survey, 45 percent of agency and brand reported that they're seeing a spending decline in mass media advertising. In the same survey, 66 percent that a primarily mass media marketing approach is not feasible for most brands today. However, 35 percent of agency and marketer respondents noted increased spending in direct mail and online advertising.
The survey was conducted by Reveries.com/IntelliSurvey for Veridiem Inc., a provider of software and services for Marketing Performance Management (MPM).
These trends tend to emerge in economic slowdowns, said Veridiem vice president Don Ryan.When budgets and outlooks are tight, he often sees businesses shift money from hard-to-measure mass media activities to direct marketing, "where they know from tracking work ...that they're getting a significant return."
The Veridiem survey seems to bear Ryan's observation out: 80 percent of respondents said they believe pressures to demonstrate marketing performance have increased over the past year. And when asked to name the biggest benefit of knowing the ongoing effectiveness of marketing investments, the largest response -- 47 percent -- was "the ability to reallocate dollars to vehicles that are working."
Another study, by Pitney Bowes, suggests that direct mail is the most effective customer relationship management (CRM) tool to reach customers. The firm -- in conjunction with management consulting firm Peppers and Rogers Group (www.1to1.com), surveyed a sample of U.S. households with annual incomes greater than $35,000.
Of respondents, the majority -- 34 percent -- said direct mail contributes most to establishing a relationship and keeping them involved and informed. This was followed by:
Eighty-two percent of respondents said they enjoy having the control in choosing when to open a direct mail piece; 78 percent like its non-intrusive nature; 65 percent feel positive about its security; 56 percent feel more involved with an organization that stays in touch using the mail.
"It is critical for companies to realize that CRM is not a simple tool to be installed, but a process companies can use to build solid relationships with customers," said Don Peppers, partner with Peppers and Rogers Group."Direct mail has the potential to enable companies to effectively build that relationship, especially when companies use the information from their customers to provide more customized services either by mail or other forms of interaction."
Last year the value of directmarketing-driven U.S. sales totaled about $1.73 trillion, up from $1.57 trillion in 1999, according to the Direct Marketing Association (DMA). The association forecasts a total of $1.91 trillion for this year, and $2.74 trillion by 2005.
Overall media spending for direct marketing initiatives reached $191.6 billion in 2000 -- up from $176.6 billion in 1999 -- and is forecast to reach $205.2 billion this year. Direct marketing advertising expenditures now represent more than half of total U.S. ad expenditures, said the DMA.