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Stan Rapp (Ridgefield, CT) is chairman an CEO of McCann Relationship Marketing, Worldwide, (MRM, Worldwide) a global consulting firm with offices in 30 countries.

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Reinventing Interactive and Direct Marketing

The McGraw-Hill Companies, Inc.

Contents

Chapter One

John Greco President and CEO, Direct Marketing Association

Today, we find ourselves living in a world that's changing in profound ways. The same thing is absolutely true in marketing. Even before all the current economic challenges facing us began, marketing was already in the throes of a paradigm shift that had been steadily gaining steam for several years. Now the enormous impact of macroeconomic changes and market restructuring has accelerated this changeover, intensifying its effect.

In this transition, marketing dollars are shifting from general advertising to measured direct marketing practices. Brand advertising has moved away from one- way, mass media in favor of twoway, one-to-one interactive marketing. Marketing managers are being held increasingly accountable for results, and organizations are making higher and higher demands for obtaining measurable return on investment.

Advances in data processing, list compilation, and digital asset management are feeding this appetite for accountability. As a result, much of today's advertising carries at least one direct response option. All types of marketers are applying new digital technology to begin a conversation with prospects and customers—they're "marketing directly" both online and offline to create data-informed, one-to-one relationships with customers, donors, and prospects.

At the same time, consumers are increasingly comfortable in their new and evolving role as citizens of the constantly expanding multichannel universe. They increasingly live, work, and play through multimodal, multimedia experiences, enabled by the emergence of apparently limitless networking and bandwidth. Successful marketers recognize that today's consumers have an unprecedented range of choices available in both their personal and professional lives for receiving information and making buying decisions. Readers and viewers ultimately make a decision about media, mode, and channel—whenever they choose to engage with a marketer—online or offline, on paper or on screen, at home, at work, or anywhere else.

The primary function of marketing at its heart is to create value for both buyer and seller in any transaction, purchase, donation, or query. This is an ever- changing process, and victory in marketing is accorded to those who do the best job of keeping up with and responding to the changing requirements of consumer preferences and internal accountability. This is the time for marketing pros to seize the moment by really getting direct—truly putting to work all the interactivity and intelligence pervasive in what direct marketing offers.

We have tremendous possibilities right now for accomplishing this change and to really move ahead with ideas and actions that marketers have only talked about for years. This will not be easy. It requires melding the knowledge and discipline of the direct marketing process with breakthroughs in digital interactivity, data gathering, and analytic capabilities. The value we can create by marketing directly will far outweigh the time and cost that go into the effort.

We know from many years of experience that the traditional direct marketing tools of addressability, personalization, direct response, relationship building, testing, and measurement constitute an approach that can be effectively applied across all communication channels. The direct marketing process can be used to add value in many different channels, from direct mail to e-mail, from postcards to catalogs and Web sites, from text messages to online video, social networks, mobile services, addressable cable, and beyond. Beginning with the original non-face-to-face, interactive communications channel—postal mail—direct marketing has morphed as it has moved along, first to the telephone, then to the personal computer, and now on to the mobile device and the set-top box. Today we have a multichannel interfacing world, and marketing must be fluent and facile in all the ways to market directly, from the multidimensional mail stream to the digital bit stream.

At a macroeconomic level the direct marketing process is huge, adding incremental final demand of nearly 10 percent of the entire U.S. gross domestic product (GDP). Direct marketing campaigns in all channels drive well over $2 trillion worth of annual sales. Sales driven by Internet and e-mail direct marketing have grown very quickly over the past few years and now exceed $500 billion. At the same time, the mail channel is driving a total of more than $700 billion in sales—including nearly $155 billion in catalog sales. Telephone marketing delivers more than $360 billion in additional sales, and direct response advertising in newspapers, on television, and in other media drive more than $450 billion. Even under difficult economic conditions, direct marketing–driven sales continue to grow at a pace that's faster than the overall B-to-C and B-to-B sales growth rate.

This advantage represents an enormous opportunity for direct marketing—and the people who know how to make it work effectively. This is also precisely why more than 52 percent of all advertising spending now goes into direct marketing channels—over $176 billion in 2008. Direct mail campaigns and catalogs make up more than $56 billion of that amount, with growth rates in the low single digits. Much higher growth rates are associated with e-mail and Internet marketing, which last year attracted more than $24 billion of ad spending.

Even with the cuts in traditional advertising budgets made in the downturn, we fully expect to continue seeing increases in key direct channels. Growth is likely to be spectacular in the newest direct channels: social networks and addressable cable. Direct marketers will continue to use data and analytics across every one of these new marketing channels and traditional channels alike, online and offline, to hone customer relationships in ever more precise measurable levels of value.

Marketing directly is the most powerful force in lifting return on investment (ROI). How do we know? Here at the Direct Marketing Association (DMA), we keep a close watch on the sales driven by direct marketing campaigns and the spending that goes into them. Across all channels, every dollar spent in 2008 on direct marketing advertising returned $11.63 of incremental sales on average. Commercial e-mail produces a return of $45, while Internet marketing returns almost $20. Direct mail commands more than $15 in returns. On average, direct marketing advertising returns more than twice the average for nondirect general advertising. More than anything else, this fact explains the shift of advertising dollars to direct marketing. Recently, tough conditions have increased the pace of this changeover.

Marketers need to ensure the ability to survive and thrive in good times and bad by investing in the latest technology, constantly educating and reeducating staff, and nurturing a mindset that focuses on value. We need to engage customers in a dialogue in order to understand how they use evolving media and learn their personal preferences. We need to be open-minded in every aspect of our approach to the future and to test and evaluate everything we do. We need to learn to do more with less through the use of analytics, targeting, versioning, and variable segmentation, even as we raise response rates in each of the channels. Faced with these complex responsibilities, marketing people need to learn how to constantly reevaluate past practices as they also keep up with the latest consumer-to-consumer, shared information trends.

Marketing must have access to both the infrastructure and the data that allow delivery of relevant, addressable communications of all kinds. We must also maintain an excellent reputation for responsible behavior and respect for each person's time and preferences. We must have continuous learning about the transformation in best practices as well as sharing knowledge and experience with others. Successfully meeting all these challenges, from keeping the channels open and economically viable to enhancing marketing's good reputation, represents a demanding task that no individual entity can accomplish entirely alone.

There's a lot of value to be gained in the cooperation within the marketing community that DMA works to facilitate. Our members represent all the vertical industries, such as financial services, pharmaceuticals and health care, retailers, magazine publishers, travel, hospitality, fast-moving consumer goods, electronics, e-commerce, and so on. They are also the users and providers of every media mode, from traditional channels such as mail, telephone, and direct-response TV to the newer cable, satellite, and mobile platforms. Our members provide the many and varied services, specialties, and technologies that make up the entire direct marketing supply chain, from data compilers and list providers, printers, and mailers to analytic services, search specialists, mobile innovators, word-of-mouth marketers, and digital interactive agencies that tie it all together.

Now the exciting vision of the future described in Stan Rapp's Introduction, embodied in the concepts of iDirect and iBranding, provides a strong call to action for marketers to think and act differently and thereby succeed in a profoundly changing world. By pursuing these advanced goals, I believe that our direct marketing community is well positioned today to help businesses and nonprofits of all sizes and shapes to grow and recharge the economy. While we don't know exactly what's ahead in the next economic cycle, we believe that what you will find in the following pages of this book will be extremely helpful.

DMA members come together to open up this whole new world of possibilities for integrated marketing strategies that are truly on-demand, driven by the interests and convenience of consumers, business customers, and donors. We foster the use of all the available data in order to create truly personal communications, with relevance that goes far beyond just a greeting or headline to offering an engaging, "sticky" experience for each contact with each customer, donor, or prospect. We're helping protect and enhance brands as they move into the direct marketing process in pursuit of faster, smarter, and more profitable results. We're very much looking forward to building multifaceted direct relationships between buyer and seller, enhanced by a panoply of digital tools for driving insightful, interactive, Internet-centered involvement. Online or offline, it's all about building one-to-one relationships with your customers—the most important people in your business life. Enjoy and profit from what you will discover in this remarkable anthology and whatever may lie ahead in your marketing future.

Chapter Two

Richard Cross CEO, Cross World Network and Coauthor of Customer Bonding

As we approach the second decade of the twenty-first century, marketers are coping with the greatest shift in marketplace fundamentals since the invention of the printing press. Think that's overstating it a bit? Check the newsstand in your town. The familiar printed page of your daily newspaper is disappearing in city after city with the relentless advance of everything digital. No longer do you deal with customers at arms' length. Instead, the customer is more likely to be in your face on your Web site or on a Web publisher's irate blog.

Marketers, and out-of-touch ad agency CEOs, who stayed too long with legacy business models, are yesterday's news on Yahoo Finance and in Advertising Age. Tech-savvy, innovative competitors dominate the business buzz on MSNBC.com. But before you give the pace of change on many fronts credit for upsetting long-held beliefs, take another look. What put an end to the usefulness of the 4As comes down to a single, impactful, precedent-shattering event—the grand opening of the Internet's infinite shared space. In this digital wonderland, buyers and sellers from every nation on every continent have all the square "byteage" needed to populate an endlessly scalable brand-new "content nation" (thank you for the book, John Blossom).

In this shared wild-west space, staking out a claim for your brand succeeds or fails based on your ability to get along famously with the content nation's consumers/citizens. It's an untamed "wacky wishful wilderness," where consumers have an iBrand of their own (see Chapter 12) and gain fame and fortune by slamming your brand on YouTube or writing a scathing customer review.

The opening of a free-for-all land rush in cyberspace has spurred a new consumerism. Shoppers increasingly devote their most precious asset—time—to seeking the best deals online. Then, after completing a transaction online or offline, more time is spent helping others do the same with openly shared opinions about products used or services received.

This new consumerism along with new information and communication technologies changes the rules of business competition. In today's fiercely competitive environment, gaining market share is less about bombarding the public with intrusive advertising and more about launching a high-tech breakthrough for holding relevant conversations with people to whom you hope to sell something very soon.

The purpose of this chapter is to shine light into the dark corners of the infinite shared space and all that goes on there. So much once taken for granted is no more, so many new findings need to be digested, and there is so much to relearn. It's no wonder you see so many muddled marketers stumbling about. Take heart. If some days of the week you secretly admit to a degree of bewilderment in sorting out what's worthwhile in the "next thing" and what's worth retaining from the old, you've got lots of company. Short-term bewilderment is a natural human reaction to monumental change.

As you will see, the solution calls for adopting an iconoclastic approach of your own. To appreciate the scope of the challenge all of us face these days, it's useful to take a close look at these three perplexing new realities:

1. Vendors now know best, not the marketers or their agencies.

2. Success begins with understanding the technology, not just in understanding the consumer.

3. Infinite shared cyberspace is where brands prosper, not on TV screens.

VENDORS NOW KNOW BEST, NOT THE MARKETERS OR THEIR AGENCIES

iDirect marketing grows out of the explosive growth in powerful, digital technologies that add value to all the tried-and true direct marketing practices. Fortunately, there are dozens of entrepreneurial vendors ready to help with the next inventive tools aimed at providing a better customer experience, delivering more accurate measurement of performance, tracking every move made on the WEB, providing extraordinary market insights, or gaining some other competitive advantage.

It is the iDirect technology vendors who open the door to great leaps forward not dreamed of by the vast majority of marketers focused on gaining marginal improvements. They shun the risky "newest of the new" or are just not aware of what's available at a time when so much is happening so fast. All the more reason to add the capabilities of a chief keeper-upper (CKU) as Stan Rapp suggests in the Introduction to this book.

Today's new digital marketing technologies—the drivers of iDirect Marketing success—almost always require a heavy dose of buyer educaton in the form of white papers, seminars, presentations, experiential blogs, and new forms of Web-based learning. What I hear from the smartest vendors is that it is not uncommon to make product presentations to the CEO, CFO, CMO, and IT brass before a sake is made. They all need to be educated.

In those sessions the potential buyer is learning how the new development can solve fundamental marketing problems. Horizons are being expanded. Entirely new selling strategies can emerge. The vendor now can be the emissary of what will make a startling difference in the outcome. The vendor is no longer just the best-price supplier of a resource. Yes, to some degree, this may have been true in the olden days as well. The difference is that today change is constant. In the new iDirect world, automatic reliance on long-established norms doesn't cut it.

Scott Brinker, founder of Ion interactive, best known for its post-click marketing application Live Ball, makes the company's product available with and without creative support. Buyers who take just the software product without the right-brain imaginative execution usually falter because they do not take a whole-brain approach. "Businesses buy our product because they want an easy way to test landing pages," says Brinker. "Our technology does that. But once they start testing, they discover that the limiting factor is not the existence or absence of technology at all. It is the creativity involved in putting together the program's execution and devising paths to test."

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Excerpted from Reinventing Interactive and Direct Marketingby Stan Rapp Copyright © 2010 by Engauge Marketing LLC. Excerpted by permission of The McGraw-Hill Companies, Inc.. All rights reserved. No part of this excerpt may be reproduced or reprinted without permission in writing from the publisher.
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