Back to basics – Direct Marketing that drives business

John Griffiths Oct 21st

Direct Marketing that drives business

DM(because it makes me money!!)

How I discovered Direct Marketing

Advertising strategist by day..

and then I had to manage a band

At first the fans made all the merchandise – tapes, posters even T shirts

But then we started to produce our own

Advertising worried me(because I never knew if it had worked and it was so expensive!)

I loved PR because it was fun, it was freeand journalists love something unusual

I loved Direct Mailbecause I always knew what it cost me –and it always made me money

the fan mailing list was our most valuable asset

Once I started measuring I noticed that at gigs 10% of the audience bought albums

Doing business from the gut

Satisfied Mailing

Is there anything as annoying as a spare cover with no music or case?

Results of the Satisfied Mailing

16% response Revenue paid for the all production and

duplication costs of the new album Postage costs covered by 3rd party who

wanted access to our mailing list! Every sale afterwards was pure profit

What I learned

The power of targeting – everyone on the mailing list was a potential buyer

The power of measuring – I knew how much to spend and risk

I wasn’t just communicating I was selling Leveraging existing low cost assets – the

mailing list, lots of spare tape covers – I started with a budget of zero!

Clear branding helps – couldn’t have come from any one else

Don’t do this!

NO targeting – I don’t buy wheels!

Clearly didn’t profile by company type

No personalisation No offer No brand distinctive

1 year later I was offered a job in adirect marketing agency

Which combined direct marketing with brand buildingWe couldn’t get clients quick enough

Direct Marketing is NOT an Ad in an envelope!

Direct Marketing Advertising

In my role as a planner I have to add value to the agency’s product

Advertising: value = the power of the creative idea Direct Marketing: value = targeting + the ability to generate

response

Which gives you better response?

Send great creative to the wrong target group

OR

Send terrible creative to the right target group

Contribution to response

Targeting40%

Offer25%

Creative20%

Tactical15%

Source: Direct Marketing Association

Correct Targeting - before everything else

Which is why we don’t mail just anybody Need to know how the list was recruited

and how often it is mailed Lists must be clean and cleaned regularly If there is an offer, then it too must be

relevant Creative is only worth investing in if the

targeting is right

The right audience and the right offer!

Condoms for horses!!

from the Society for the Protection of Equine Morality

SPEM

The client: Haunui Stud Farm

SPEM: Mails 200 horse breeders warning them of the ‘extreme fertility’ of Haunui’s ‘hot blooded young males’ includes 2 free horse condoms

Followup mailing from Haunui apologises, admitting the stallions are indeed very fertile – free service offered with a booking!

112 bookings – 1056% ROI return on investment and lots of word of mouth about stallions, fertility and LARGE condoms!

Agency: AIM Proximity New Zealand

What makes Direct Marketing different?

1. DM costs more2. DM is more complicated3. DM is more controllable4. DM and the internet5. InDirect Marketing

Direct Marketing costs more

Direct Marketing consistently costs more per head than any other communications medium

Henry Winterman needed to recruit cigar smokers before advertising and prospecting activity was banned so it could do loyalty activity with mailing list and local retailers

Ran a test to find the most efficient channelfor recruiting names, using money off vouchersin DM and 3rd party mailings. Also using press adsoffering free pack of cigars if you sent yourname and address!

Trying only to give 1 pack of cigars away per name – direct mail the only way to control multiple redemptions

Which channel shouldHenry Wintermans use?

Off the page Third Party Direct mailAdvertising mailing£13,000 £18,000 £26,000 940 2,800 3,150

£3.17 £3.02 £6.81

Total cost

Acquisitions

Net cost per AcqLess orig

DM test: Grey Integrated

Direct Mail the most expensiveand the most efficient

Off the page Third Party Direct mailAdvertising stuffer£81,000 £81,000 £81,000 26,000 27,000 12,000

£3.17 £3.02 £6.81

25.5 million 26.7 million 119,000

Total cost

Acquisitions

Net cost per AcqLess orig

TotalAudienceRequired

Direct Marketing ismore complicated

Takes more time More people needed to manage Because you aren’t renting someone else’s

medium or communication channel. You are creating a channel, using it, disassembling it and measuring how it performed – that’s why it costs so much more per person reached

great Direct Marketing manages the complexityand makes it look simple

How to get drinkers to taketaxis home instead of driving?

7 Leisures Group largest chain of nightclubs and pubs in Bahrein wants to reduce drunk driving

Bluejack drinkers’ mobiles as they are leaving to get them to think twice

Result: measurable increase in callout of Radio Taxis within 2 weeks

Agency: JWT Bahrein

Direct Response posters to makethe Government take action

NGO Women against violence creating public awareness by getting public to do something – sign a petition to the Malaysian government

Low budget high impact posters put up in shopping malls- take back the abusive words by removing them and signing them as a petition to promote better government support

58% completion of the yellow notes – massive publicity

Agency: ARC Malaysia

Take back your words – petition on sticky Postit notes

Direct Marketing ismore controllable

The additional cost gives you control The ability to test small quantities – YOU CAN’T DO THIS

WITH ADVERTISING Tone of voice can change between communications You can test variant offers, you can test different lists you

can test different copy You can send different offers to loyal customers and

lapsed customers, or people who live further away from the store

You can send a sequence of communications to lift response – can save you money!

Use direct marketing in conjunction with advertising to get additional response

Direct marketing gives you CONTROL

Case study IBM mailing -different sizes of business self-select

IBM simultaneously trying to recruit large medium and small businesses to a Solutions Day

Wanted to challenge perception that IBM only interested in big business

Target was 600 registrations – they got 900 and 60% of those who came were from small and medium sized businesses

Agency: Ogilvy One Malaysia

Direct marketing and the internet? The Internet brings out the best and worst in

Direct Marketing Generate response Controllable Shorter development process than direct mail Lower cost medium than sending direct mail BUT Internet has lower response levels cf to those

door to door flyers 0.1%-0.3% so the effiency does not necessarily mean a) more sales and b) comparable noting/opening

It is so easy to spam that overuse of email threatens long term viability

Build an ECRM database online cheaply

Calloway Golf wanted to build a pan European list of golfers – the use of mailing lists would have cost €10 per response to contact!

All the client had was a shoebox with 5000 names of amateurs who had entered competitions in the last 5 years.

Email campaign with a viral mechanism Gave them the chance win golfing accessories if

they became the Captain of a fourball – bring 3 friends.

Collected a database of 39,000 active golfers: 780% response at a cost of €50,000 less than €2 each!

Agency: Stephen Francis Whitson

Indirect Marketing(Direct Marketing’s hidden asset)

Direct marketing pays for itself by direct response BUT..

we need to consider the effect of a personal communication placed in the hand on the other 95-97% of those who do not respond

Studies shows a much stronger branded effect than you get from advertising

So direct mail does indeed build brands ( but is a very expensive way to do it if you don’t generate response as well)

A very expensive way of talking to a lot of people!

But unless you do follow up research you will never measure the branded effect

C & W Mercury ask questions to educate

The questionnaire is easy to do Mercury will learn a lot about the TV and

telephone services cable customers want from responders

BUT more important – those who read the questionnaire are being educated about the services the company offers.

It isn’t actually research – its an education and brand building campaign when cable companies had a big image problem

US political parties use surveys to tip respondents into voting in marginal areas

In summary – direct marketingis a key tool for driving sales

If you use it only to communicate (ad in an envelope) it will be very expensive for you

If you don’t work at improving targeting then it will be very expensive for you

One of the strengths of direct marketing is the relatively high cost!

Makes you use it carefully – with a proper strategy and test matrix

Thank you for your attention!

Any question

s?