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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?