Direct Marketing Essay Example for Free

Direct Marketing Essay Direct marketing is a channel-agnostic form of advertising that allows businesses and nonprofits organizations to communicate straight to the customer, with advertising techniques that can include Cell Phone Text messaging, email, interactive consumer websites, online display ads, fliers, catalog distribution, promotional letters, and outdoor advertising. Direct marketing messages emphasize a focus on the customer, data, and accountability. Characteristics that distinguish direct marketing are: 1. Marketing messages are addressed directly to the customer and/or customers. Direct marketing relies on being able to address the members of a target market. Addressability comes in a variety of forms including email addresses, mobile phone numbers, Web browser cookies, fax numbers and postal addresses. 2. Direct marketing seeks to drive a specific call to action. For example, an advertisement may ask the prospect to call a freephone number or click on a link to a website. 3. Direct marketing emphasizes trackable, measurable responses from customers — regardless of medium. Direct marketing is practiced by businesses of all sizes — from the smallest start-up to the leaders on the Fortune 500. A well-executed direct advertising campaign can prove a positive return on investment by showing how many potential customers responded to a clear call-to-action. General advertising eschews calls-for-action in favor of messages that try to build prospects’ emotional awareness or engagement with a brand. Even well-designed general advertisements rarely can prove their impact on the organization’s bottom line. A recent study by the Direct Marketing Association reports that in 2010, marketers – commercial and nonprofit – spent $153.3 billion on direct marketing, which accounted for 54.2% of all ad expenditures in the United States. Measured against total US sales, these advertising expenditures generated approximately $1.798 trillion in incremental sales. In 2010, direct marketing accounted for 8.3% of total US gross domestic product. Also in 2010, there were 1.4 million direct marketing employees in the US. Their collective sales efforts directly supported 8.4 million other jobs, accounting for a total of 9.8 million US jobs. Direct marketing is attractive to many marketers because its positive results can be measured directly. For example, if a marketer sends out 1,000 solicitations by mail and 100 respond to the promotion, the marketer can say with confidence that campaign led directly to 10% direct responses. This metric is known as the response rate, and it is one of many clearly quantifiable success metrics employed by direct marketers. In contrast, general advertising uses indirect measurements, such as awareness or engagement, since there is no direct response from a consumer. Measurement of results is a fundamental element in successful direct marketing. The Internet has made it easier for marketing managers to measure the results of a campaign. This is often achieved by using a specific website landing page directly relating to the promotional material. A call to action will ask the customer to visit the landing page, and the effectiveness of the campaign can be measured by taking the number of promotional messages distributed (e.g., 1,000) and dividing it by the number of responses (people visiting the unique website page). Another way to measure the results is to compare the projected sales or generated leads for a given term with the actual sales or leads after a direct advertising campaign. While many marketers recognize the financial benefits of increasing targeted awareness, some direct marketing efforts using particular media have been criticized for generating poor quality leads, either due to poor message strategy or because of poorly compiled demographic databases. This poses a problem for marketers and consumers alike, as advertisers do not wish to waste money on communicating with consumers not interested in their products. Some of these concerns have been addressed by direct marketers by the use of individual opt-out lists, variable printing, and better-targeted list practices. Additionally, in order to avoid unwanted mailings, members of the marketing industry have established preference services that give customers more control over the marketing communications they receive in the mail. The term junk mail, referring to unsolicited commercial ads delivered via post office or directly deposited in consumers mail boxes, can be traced back to 1954. The term spam, meaning unsolicited commercial e-mail, can be traced back to March 31, 1993, although in its first few months it merely referred to inadvertently posting a message so many times on UseNet that the repetitions effectively drowned out the normal flow of conversation. To address the concerns of unwanted emails or spam, in 2003, The US Congress enacted the Controlling the Assault of Non-Solicited Pornography and Marketing (CAN-SPAM) Act to curb unwanted email messages. Can-Spam gives recipients the ability to stop unwanted emails, and set out tough penalties for violations. Additionally, ISPs and email service providers have developed increasingly effective Email Filtering programs. These filters can interfere with the delivery of email marketing campaigns, even if the person has subscribed to receive them, as legitimate email marketing can possess the same hallmarks as spam. There are a range of email service providers that provide services for legitimate opt-in emailers to avoid being classified as spam. Consumers have expressed concerns about the privacy and environmental implications of direct marketing. In response to consumer demand and increasing business pressure to increase the effectiveness of reaching the right customer with direct marketing, companies specialize in targeted direct advertising to great effect, reducing advertising budget waste and increasing the effectiveness of delivering a marketing message with better geo-demography information, delivering the advertising message to only the customers interested in the product, service, or event on offer. Additionally, members of the advertising industry have been working to adopt stricter codes regarding online targeted advertising. Any medium that can be used to deliver a communication to a customer can be employed in direct marketing, including: Email Marketing Sending marketing messages through email or Emailmarketing is one of the most widely used direct-marketing methods. One reason for email marketings popularity is that it is relatively inexpensive to design, test, and send an email message. It also allows marketers to deliver messages around the clock, and to accurately measure responses. Online Tools With the expansion of digital technology and tools, direct marketing is increasingly taking place through online channels. Most online advertising is delivered to a focused group of customers and has a trackable response. * Display Ads are interactive ads that appear on the Web next to content on Web pages or Web services. Formats include static banners, pop ups, videos, and floating units. Customers can click on the ad to respond directly to the message or to find more detailed information. According to research by eMarketer, expenditures on online display ads rose 24.5% between 2010 and 2011. * Search: 49% of US spending on Internet ads goes to search, in which advertisers pay for prominent placement among listings in search engines whenever a potential customer enters a relevant search term, allowing ads to be delivered to customers based upon their already-indicated search criteria.This paid placement industry generates more than $10 billion dollars for search companies. Marketers also use search engine optimization to drive traffic to their sites. * Social Media Sites, such as Facebook and Twitter, also provide opportunities for direct marketers to communicate directly with customers by creating content to which customers can respond. Mobile Through mobile marketing, marketers engage with prospective customers and donors in an interactive manner through a mobile device or network, such as a cellphone, smartphone, or tablet. Types of mobile marketing messages include: SMS: (short message service) — marketing communications are sent in the form of text messages, also known as texting. MMS: (multi-media message service) — These messages use elements such as images, video, and audio; Mobile Applications: Smartphone-based mobile apps contain several types of messages. Push Notifications are direct messages sent to a user either automatically or as part of a campaign. They include transactional, marketing, geo-based, and more. Rich Push Notifications are full HTML Push Notifications. Mobile apps also contain Interactive ads that appear inside the mobile application or app; Location-Based Marketing: marketing messages delivered directly to a mobile device based on the users location; QR Codes (quick-response barcodes): This is a type of 2D barcode with an encoded link that can be accessed from a smartphone. This technology is increasingly being used for everything from special offers to product information. Mobile Banner Ads: Like standard banner ads for desktop Web pages but smaller to fit on mobile screens and run on the mobile content network Direct Mail The term direct mail is used to refer to communications sent to potential customers or donors via the postal service and other delivery services. Direct mail is sent to customers based on criteria such as age, income, location, profession, buying pattern, etc. Direct mail includes advertising circulars, catalogs, free-trial CDs, pre-approved credit card applications, and other unsolicited merchandising invitations delivered by mail to homes and businesses. Bulk mailings are a particularly popular method of promotion for businesses operating in the financial services, home computer, and travel and tourism industries. In many developed countries, direct mail represents such a significant amount of the total volume of mail that special rate classes have been established. In the United States and United Kingdom, for example, there are bulk mail rates that enable marketers to send mail at rates that are substantially lower than regular first-class rates. In order to qualify for these rates, marketers must format and sort the mail in particular ways – which reduces the handling (and therefore costs) required by the postal service. In the US, marketers send over 90 billion pieces of direct mail per year. Advertisers often refine direct mail practices into targeted mailing, in which mail is sent out following database analysis to select recipients considered most likely to respond positively. For example, a person who has demonstrated an interest in golf may receive direct mail for golf-related products or perhaps for goods and services that are appropriate for golfers. This use of database analysis is a type of database marketing. The United States Postal Service calls this form of mail advertising mail (admail for short). Telemarketing Another common form of direct marketing is telemarketing, in which marketers contact customers by phone. The primary benefit to businesses is increased lead generation, which helps businesses increase sales volume and customer base. The most successful telemarketing service providers focus on generating more qualified leads that have a higher probability of getting converted into actual sales. The National Do Not Call Registry was created in 2003 to offer consumers a choice whether to receive telemarketing calls at home. The FTC created the National Do Not Call Registry after a comprehensive review of the Telemarketing Sales Rule (TSR). The do-not-call provisions of the TSR cover any plan, program, or campaign to sell goods or services through interstate phone calls. The provisions do not cover calls from political organizations, charities, telephone surveyors, or companies with which a customer has an existing business relationship. Canada has its own National Do Not Call List (DNCL). In other countries it is voluntary, such as the New Zealand Name Removal Service. Voicemail Marketing Voicemail marketing emerged out of the market prevalence of personal voice mailboxes, and business voicemail systems. Voicemail marketing presented a cost effective means by which to reach people directly, by voice. Abuse of consumer marketing applications of voicemail marketing resulted in an abundance of voice-spam, and prompted many jurisdictions to pass laws regulating consumer voicemail marketing. More recently, businesses have utilized guided voicemail (an application where pre-recorded voicemails are guided by live callers) to accomplish personalized business-to-business marketing formerly reserved for telemarketing. Because guided voicemail is used to contact only businesses, it is exempt from Do Not Call regulations in place for other forms of voicemail marketing. Voicemail courier is a similar form of voicemail marketing with both business-to-business and business-to-consumer applications. Broadcast Faxing Broadcast faxing, in which faxes are sent to multiple recipients, is now less common than in the past. This is partly due to laws in the United States and elsewhere which regulate its use for consumer marketing. In 2005, President Bush signed into law S. 714, the Junk Fax Prevention Act of 2005 (JFPA), which allows marketers to send commercial faxes to those with whom they have an established business relationship (EBR), but imposes some new requirements. These requirements include providing an opt-out notice on the first page of faxes and establishing a system to accept opt-outs at any time of the day. Fax senders must begin complying with these new requirements, which are described in this fact sheet. Roughly 2% of direct marketers use fax, mostly for business-to-business marketing campaigns.[16] Also, due to the popularity of a variety of digital communication methods, the overall use of faxes is less than in the past. Couponing Couponing is used in print and digital media to elicit a response from the reader. An example is a coupon which the reader receives through the mail and takes to a stores check-out counter to receive a discount. Digital Coupons: Manufacturers and retailers make coupons available online for electronic orders that can be downloaded and printed. Digital coupons are available on company websites, social media outlets, texts, and email alerts. There are an increasing number of mobile phone applications offering digital coupons for direct use. Daily Deal Sites offer local and online deals each day, and are becoming increasingly popular. Customers sign up to receive notice of discounts and offers, which are sent daily by email. Purchases are often made using a special coupon code or promotional code. The largest of these sites, Groupon, has over 83 million subscribers. Direct Response TV Direct marketing via television (commonly referred to as DRTV) has two basic forms: long form (usually half-hour or hour-long segments that explain a product in detail and are commonly referred to as infomercials) and short form, which refers to typical 30-second or 60-second commercials that ask viewers for an immediate response (typically to call a phone number on screen or go to a website). TV-response marketing — i.e. infomercials — can be considered a form of direct marketing, since responses are in the form of calls to telephone numbers given on-air. This allows marketers to reasonably conclude that the calls are due to a particular campaign, and enables them to obtain customers phone numbers as targets for telemarketing. One of the most famous DRTV commercials was for Ginsu Knives by Ginsu Products, Inc. of RI. Several aspects of ad, such as its use of adding items to the offer and the guarantee of satisfaction were much copied, and came to be considered part of the formula for success with short-form direct-response TV ads (DRTV) Direct Response Radio In direct response radio, ads contain a call to action with a specific tracking mechanism. Often, this tracking mechanism is a call now prompt with a toll-free phone number or a unique Web URL. Results of the ad can be tracked in terms of calls, orders, customers, leads, sales, revenue, and profits that result from the airing of those ads. Insert Media Another form of direct marketing, insert media are marketing materials that are inserted into other communications, such as a catalog, newspaper, magazine, package, or bill. Coop or shared mail, where marketing offers from several companies are delivered via a single envelope, is also considered insert media. Out-of-Home Out of home direct marketing refers to a wide array of media designed to reach the consumer outside the home, including transit, bus shelters, bus benches, aerials, airports, in-flight, in-store, movies, college campus/high schools, hotels, shopping malls, sport facilities, stadiums, taxis — that contain a call-to-action for the customer to respond. Direct Response Magazines and Newspapers Magazine and newspaper ads often include a direct response call-to-action, such as a toll-free number, a coupon redeemable at a brick-and-mortar store, or a QR code that can be scanned by a mobile device — these methods are all forms of direct marketing, because they elicit a direct and measurable action from the customer. Direct Selling Direct selling is the sale of products by face-to-face contact with the customer, either by having salespeople approach potential customers in person, or through indirect means such as Tupperware parties. Grassroots/Community Marketing The door-to-door distribution of flyers and leaflets within a local community is a business-to-consumer form of direct marketing used extensively by restaurants, fast food companies, and many other business focusing on a local catchment. Similar to direct mail marketing, this method is targeted purely by area and community, and costs a fraction of the amount of a mailshot, since it is not necessary to purchase stamps, envelopes, or address lists with the names of home occupants.