DEFINITION

Arriving at an exact definition for direct marketing is becoming more difficult all the time. The Direct Marketing Association (DMA) defines direct marketing as ". . . an interactive system of marketing which uses one or more advertising media to effect a measurable response and/or transaction at any location." This can be boiled down even further to the three basic properties of direct marketing: a definite offer is made; all the information necessary to make a decision is provided; a response mechanism is provided. Within that general framework fall all types of direct marketing options: sales letters, catalogs, telemarketing, direct response TV ads, the Internet.

Direct marketing is the most versatile of all advertising options: You can reach 10 people or 10 million, anywhere in the world. It is the best way short of personal sales contact to make a transaction, to ask for, and receive a specified amount of money for a specific product or service. And direct marketing is the most effective way to sell a specific product or service to a highly targeted audience. Perhaps the most satisfying benefit of direct marketing, from a business standpoint, is that its effectiveness can be measured to the last cent.

Businesses that rely heavily on direct marketing include magazine and newsletter publishers, mail-order merchandisers, fundraisers, book clubs, and specialty gift companies, insurance companies, credit-card compannies, and others. Direct marketing is used effectively for both consumer and business-to-business advertising. There are many different direct marketing methods, and marketers often find that employing a combination of them in a given campaign works best. The parameters are changing daily, as new technologies come on line that speed up the process of making a transaction and enhance the efficiency of direct marketing. The concept of integrated communications looking at all forms of marketing communication with an eye toward combining them to maximize impact is gaining favor as marketers seek to maximize their return on investment. Still, there are direct marketing basics to be mastered, and most have changed little over the years.

Direct mail remains an extremely popular option for marketers for a number of reasons: 1. Marketers can literally pick the households/businesses they wish to speak to and can choose from an almost unlimited choice of formats. Typical choices include: the "classic" package, consisting of envelope, business letter, and response vehicle; enhanced packages with brochures and even premiums; selfmailers; flyers, and catalogs. 2. Mailing is personalized and can speak confidentially to the recipient. 3. There is less competition for the reader's attention. And, despite the growing glut of junk mail, there is still less clutter in the mailbox than on TV. 4. "Interactive" has become a buzzword, but to this day, mail has a hard-to-match ability to engage the recipient, giving him/her many engaging options (e.g., tokens, puzzles, contests, etc.). 5. The advertiser controls the timing. 6. Direct mail is self-testing. Direct mail customers are much more likely to become repeat customers.

TELEMARKETING

Whether you employ telemarketing that is outbound (where the advertiser contacts the prospect) or inbound (where the prospects call the advertiser, usually the result of an 800 number in an ad), the advantages of using telemarketing are: 1: It takes less time to set up a telemarketing program than a direct mail program. 2. Response is immediate. 3. Contact is highly personal and interactive. 4. It is easy to modify or expand a telemarketing program. 5. Changes in script, list, and other campaign elements are made easily, quickly and at relatively low expense. 6. It is much easier to increase the size of an order when you have someone on the line.

IIn 2003, after an extensive review of the its Telemarketing Sales Rule, the Federal Trade Commission (FTC) created the National Do Not Call Registry, prohibiting most interstate calls to consumers to sell goods or services to individuals who elect not to receive such calls by adding their name to the registry. Telemarketers who violate the prohibition by calling names on the list can be subject to fines of up to $11,000. Companies can access the registry and download names on the list from the Do Not Call Registry website at www.telemarketing.donotcall.gov. Marketers can get information on compliance with the Telemarketing Sales Rule and the federal Do Not Call Registry from the FTC website at www.ftc.gov/donotcall/.

Since the launch of the federal Do Not Call Registry in 2003, some states have discontinued their own Do Not Call lists and merged them with the federal list. Other states continue to maintain separate lists. For marketers interested in additional information on state requirements, the Direct Marketing Association provides links on its website to appropriate state agencies.

• FTC Handbook: Complying with the Telemarketing Sales Rule, by the Federal Trade Commission in cooperation with the Direct Marketing Association, outlines every aspect of the telemarketing regulations.
  

ADVERTISING

Direct marketers use print, TV, and radio advertising much as their mass advertising brethren do, but with a critical difference: With direct response advertising there is an offer made and a response vehicle provided. Typically, response is obtained by providing an 800 number or (in the case of print) by including a coupon. Major media categories include magazine advertising, newspaper advertising, AM/FM radio, broadcast TV (both spot and national buys), and cable TV (more highly targeted; includes the many special-interest channels). Also emerging are interactive TV, more sophisticated digital broadcasting technologies, as well as computer networks. Currently, it is quite inexpensive to sell via a home page on the Internet, but website selling has only a few major success stories so far.

CRITICAL ISSUES

1. Research.The starting point for any successful direct marketing program is knowledge. Some questions research will help you answer: Have you done enough research into your target audience? What product/service is most viable for what market? Do you know enough to be speaking to an individual rather than a market segment? Do you know the most profitable price points for a given product or service, and what product attributes can be most effectively converted to selling features? Do you know everything about the competition? How are they marketing?
   
   
2. Planning. Determine the break-even point for your promotion; know what you should spend on each inquiry and on each order. Here you must arrive at the likely scope of your direct marketing effort. You should know how much you should be spending to achieve a desired result.
   
   
3. Media selection/planning. Media can include print, TV, or radio advertising, direct mail and, increasingly, the Internet. Using the right combination of media to achieve the desired result is a matter of understanding the properties of each, both in terms of a given product/service and in terms of cost. For instance, if the goal is to generate leads for telemarketing, print ads running in a trade journal may be determined to be more cost-effective than mailing to that journals subscriber list. Once media are selected, further research will determine the proper media strategy, (e.g., which publications to place ads in, frequency of insertion, etc.).
   
   
4. List selection. This can be the single most critical issue, accounting for 40 percent of a campaign's effectiveness.
   
   
5. The offer. Arguably, this is the second most important aspect is the offer (some say it is the first). What are you offering, and how will it be presented creatively? The challenge in direct marketing is to compel the target to act immediately. If you can't do this even with the right product in the right market at the right time using the right media your effort is wasted.
   
   
6. The package. Once you have arrived at methodology and determined the best offer, you must execute the campaign creatively, employing copywriters, art directors, and designers to create a mailing package, telemarketing script, etc. Look at the pros and cons of using agencies and freelancers vs. employing in-house talent, as well as the importance of matching the talent to the job. Know what has worked in the past (e.g., the use of teaser copy on envelopes; the use of color in brochures), but beware of simple rules of thumb (e.g., the use of teaser copy on envelopes is often a bad idea when mailing to senior executives; the misuse of color in brochures can decrease their effectiveness).
   
   
7. Testing. Developing a control (the highest-pulling mailing, script, spot TV buy, ad, etc.) and testing against it regularly is money well spent by even small-scale direct marketing practitioners. It is the key to fine-tuning your creative, as well as your media strategy. Variables include lists, the offer, formats, creative approaches, etc.
   
   
8. Fulfillment. You should have a plan for making good on your offer once your direct marketing program is a success. This includes delivery within the time you specify, collection of money, and any followup service required by the nature of the transaction or the offer.
   
   
9. Analysis. Know how to interpret the data you collect on your direct marketing program. You should be aware the second your program breaks even, know what type of responses you've generated, and know what to do about it. Misinterpreting, or failing to properly collect, marketing data is a sure-fire way to lose money or even sink your business.

VITAL STATISTICS AND RULES OF THUMB

• Total U.S. direct marketing revenue was estimated to reach close to $1.85 trillion in 2005, according to the Direct Marketing Association (DMA).
  
  
• The most heavily used direct marketing channels continue to be direct mail ($49.8 billion) and telephone marketing ($47 billion).
  
  
• In 2005, more than 10.6 million workers, approximately 7.7 percent of all U.S. workers were "directly supported by direct marketing advertising expenditures," according to the DMA.
  
  
• An increasing number of direct marketing orders are being placed via the Internet.
  
  
• The states with the largets volume of sales driven by direct marketing are California, Texas, and New York.
  
  
• The 40/40/20 rule: Direct mail success can be divided into three segments: 40 percent to using the right mailing lists; 40 percent to who the mailer is and what he has to offer; 20 percent for creative.
  
  
• The "2 percent" myth: There is no typical response rate for a direct mail piece. Response depends on many factors. Your success rate will depend on your costs and revenue per sale.
  
  
• All else being equal, a two-page sales letter will have more selling power than a one-page sales letter.
  
  
• When properly used, sweepstakes can increase the pull of a mailing by 50 percent.
  
  
• When ranked in order of effectiveness, your best mailing lists are: 1. Your own mailing list of previous customers. 2. Lists you have generated by advertising. 3. Lists you rent from a list broker.
  
  
• A half-page ad is typically two-thirds as effective as a full-page ad running in the same publication. The best ad page in a magazine, in terms of readership, is the page facing the table of contents.
  
  
• According to DMA's "2005 Response Rate Report," telephone marketing received the highest ROI index driving direct-order purchases, followed by email, dimensional mail, and direct mail.
  
  
• Telephone, dimensional mail, email, and coupons provided the best response rate results for generating leads, according to the DMA.

THE ROLE OF INTERACTIVE MARKETING

Use of the Internet is booming in the direct marketing industry as more and more companies are utilizing this form of media. Given the ever-growing number of individuals and companies using the Internet, businesses today have the ability to reach millions of potential customers at a fraction of the cost of some traditional advertising methods. DMA's "Multichannel Marketing 2005 Report" notes the following on this growing and useful marketing tool:

• Internet sales, as a percentage of total sales, are projected to increase to 43 percent in  2007 and to 46 percent by 2009.
  
  
• Research shows that 33 percent of Internet sales are incremental -- meaning they are sales that would not otherwise have occured.
  
  
• 65 percent of the companies contributing data to the "Multichannel Marketing 2005 Report" believe that a better ROI is yielded when a multichannel approach is incorporated into their direct marketing campaigns.
  
  
• The top benefits of online marketing, according to the report, are increased revenue (73 percent), greater visibility (58 percent), cost savings (56 percent), and reaching new customers (54 percent).

In addition, given the interactive nature of this media, use of the Internet enhances communications between companies and their customers and can increase customer loyalty. It is used to:

• gather information about customer demographics and buying preferences, making databases more timely and relevant
  
  
• target new goods and services to customer
  
  
• reach new markets
  
  
• expedite the purchase process, delivery, customer service, and feedback from customers
  
  
• personalize pricing
  
  
• manage back-office functions more efficiently by, for instance, providing company-wide access to real-time data and facilitating transmission of that data.

Given these statistics and the growing interest and use of the Internet for personal and professional use, interactive marketing will surely play a key role in direct marketing success for businesses in the future.

KEY RESEARCH

• U.S. Direct Marketing Today: Economic Impact 2005. This report accurately examines the entire scope of the direct marketing industry.  Members only can access it on the DMA website. $395 nonmembers, $195 members. Call 212-768-7277 for info; 301-363-8180 to order.
  
  
• The DMA 2005 Multichannel Marketing Report offers best practices and trends in channel integration -- within catalog, retail, and e-commerce infrastructure. This report supersedes DMA's "State of the Catalog Report" and "State of E-Commerce Report."  $495 nommembers, $295 members. Call 212-768-7277 for info, or 301-362-8180 to order.
  
  
• The DMA 2005 Statistical Fact Book is an annually updated book that includes industry growth, usage trends, and production and operating cost figures. $395 nonmembers, $195 members. Direct Marketing Association. Call 212-768-7277 for info; 301-362-8180 to order.
  
  
• The DMA 2005 Response Rate Report offers response rate benchmarks across 18 media applications, by four different campaign objectives, in 21 industries. $395 nonmembers, $195 members. Call 212-768-7277 for info, 301-362-8180 to order.
  
  
• D&B's Desktop Marketing Software and U.S. Marketing Lists product line consists of two software/online products (Marketplace and Marketplace Gold) and building lists from among 10 million U.S. business records. Price depends on the type of business and usage. Dun & Bradstreet Information Services. Call 866-794-1580 or go to http://www.dnb.com
• Direct Marketing Marketplace is a source reference of the direct marketing industry. Includes information on over 9,000 companies, including direct marketing firms, list sources, and creative professionals. List price $345. National Register Publishing. Call 800-473-7020 or go to http://www.nationalregisterpub.com.

BOOKS

World's Greatest Direct Mail Sales Letters, by Herschell Gordon Lewis, Carol Nelson. Practical tips on writing sales letters in many industries, with extensive samples and background information. A great asset for copywriters. Hardcover. 468 pp.

How to Find and Cultivate Customers Through Direct Marketing, by Martin Baier. This is for people ready to get serious about implementing a customer-focused direct marketing strategy. The author addresses: building useful databases, using research, developing marketing programs, segmenting markets, and estimating customer value. Hardcover. 245 pp.

Direct Marketing Rules of Thumb, by Nat G. Bodian. Laymen and experienced pros will benefit from this concise reference that covers all the basics. 448 pp. McGraw Hill.

Power Direct Marketing, by "Rocket" Ray Jutkins. Both neophytes and pros will benefit from this book. Good chapters on creative, the offer, and planning. 314 pp.

Guerrilla Marketing Handbook, by Jay Conrad Levinson. This is great for small businesses, but anyone can benefit from the "guerrilla" point of view. Gives a great view of basic database and research goals. 396 pp.

Successful Direct Marketing Methods, by Bob Stone. This is a landmark book from one of the profession's legends. New edition includes information on integrated communications. Hardcover. 654 pp.

The Complete Database Marketer, by Arthur M. Hughes. Hughes walks you through the essentials of building and maintaining an effective database. 610 pp. Probus Publishing.

Integrated Direct Marketing, by Ernan Roman. Experienced marketers, especially senior managers, will benefit from the author's strategies for integrating direct mail, advertising, telemarketing, and field sales for maximum impact. Hardcover. 240 pp.

Secrets of Successful Direct Mail, by Richard V. Benson. Anyone who is running a direct mail program will get a lot out of Benson's shared experience, triumphs, failures, and rules of thumb. 182 pp.

Sales Letters That Sizzle-All The Hooks, Lines and Sinkers You'll Ever Need to Close Sales, by Herschell Gordon Lewis. This is a must-read for anyone who uses the classic sales letter package in direct mail. This book goes through styles, teasers, and underlines-telling you what works and what doesn't. 288 pp.

Readings & Cases in Direct Marketing, by Herbert E. Brown and Bruce Buskirk. Experienced marketers will get the most from this book. Two sections include articles by various authors on a wide variety of direct marketing issues, followed by 22 complete case studies. 334 pp.

Creative Strategy In Direct Marketing, by Susan K. Jones. Written for creative marketing professionals, this book covers the basics of turning copy and graphics into sales. Also contains useful production information. 502 pp.

Commonsense Direct Marketing, by Drayton Bird. This is for anyone whose business depends on direct marketing. Particularly useful are the chapters dealing with the agency/client relationship. 352 pp.

Direct Marketing Success Stories-and the Strategies that Built the Businesses, by Bob Stone. Stone shares why companies like Quill, Lillian Vernon, and Spiegel have achieved phenomenal success with direct marketing. 278 pp.

Profitable Direct Marketing, by Jim Kobs. This book provides both basic and advanced strategies. Includes chapters on business-to-business, catalogs, and database marketing. 416 pp.

Beyond 2000--The Future of Direct Marketing, by Jerry I. Reitman. Here are the forward-looking views of 28 leading experts. Especially interesting are the many takes on where technology will take marketers. 268 pp. NTC Books.

Business to Business Direct Marketing, by Robert W. Bly. Professional marketers whose targets are other businesses should read this book. Bly explains how business-to-business marketing really is different. 416 pp.

See also the DMA's Online Bookstore's selection of useful books on direct marketing. Go to http://www.the-dma.org/.

ONLINE RESOURCES

http://www.BuildingBrands.com has been set up by a small team of long-term marketing professionals which offers information on building brands that build business. The site covers every aspect of brands and brand building, including: brand strategy, marketing, communications, and customer relationship management.

DMA Web Site offers information about Direct Marketing Association membership, conferences, workshops, seminars, research, an online bookstore, a job bank, and more. Go to http://www.the-dma.org.

At ListsNOW.com, you can get mailing and telemarketing lists without the usual minimums (a boon for smaller direct marketers), and you'll also find links to other useful services and information sites. Go to http://www.listsnow.com.

infoUSA.com is a business-to-business center for sales and marketing information on the Internet with an extensive database of consumers and businesses. Customers can use their proprietary databases for a variety of programs including generating sales leads, finding new customers, developing direct mail or telemarketing campaigns, and conducting market research. Call 800-321-0869, or go to http://www.infousa.com/.

RELATED SMN ARTICLES

For more information related to direct mail, see article #1011, Part 2 of this Direct Marketing Overview.