I walk by a large storefront with a giant awning that says “Tacito Direct.” I assume it is some kind of Mexican food restaurant or maybe a tamale factory. From studying Spanish, I know that when you add “ito” or “ita” to the end of a word, it either means “dear” or a smaller or younger version of the original word. For example, the word for grandmother is “abuela,” but “abuelita” means dear grandmother. Or if a father’s name is Carlos, his son’s name could be Carlito. But Tacito Direct means none of these things. When I look up its website, I discover that it is a direct response marketing company. According to Investopedia, direct marketing is any marketing that relies on direct communication or distribution to individual consumers, rather than through a third party such as mass media. Mail, email, social media and texting campaigns are among the delivery systems used. It is called direct marketing because it generally eliminates the middleman, such as advertising media. I’m sure all of us have been the recipient or victim — depending on your point of view — of some form of direct marketing. Let’s find out more about it.
According to Wikipedia, direct marketing is a form of communicating an offer, where organizations communicate directly to a pre-selected customer and supply a method for a direct response. Among practitioners, it is also known as direct response marketing. By contrast, advertising is of a mass-message nature.
Response channels include 800-numbers, reply cards, reply forms to be sent in an envelope, websites and email addresses.
The prevalence of direct marketing and the unwelcome nature of some communications has led to regulations and laws such as the CAN-SPAM Act, requiring that consumers in the United States be allowed to opt-out.
Intended targets are selected from larger populations based on vendor-defined criteria, including average income for a particular ZIP code, purchasing history and presence on other lists. The goal is "to sell directly to consumers" without letting others "join (the) parade."
Popularity A 2010 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 advertising expenditures in the United States. Measured against total U.S. sales, these advertising expenditures generated approximately $1.798 trillion in incremental sales. In 2010, direct marketing accounted for 8.3% of the total U.S. gross domestic product. 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 U.S. jobs.
History Direct marketing, using catalogs, was practiced in 15th-century Europe. The publisher Aldus Manutius of Venice printed a catalog of the books he offered for sale. In 1667, the English gardener William Lucas published a seed catalog, which he mailed to his customers to inform them of his prices. Catalogs spread to colonial America, where Benjamin Franklin is believed to have been the first cataloger in British America. In 1744, he produced a catalog of scientific and academic books.
Following the Industrial Revolution of the late 18th century, a growing middle class created new demand for goods and services. Entrepreneurs — including Matthew Boulton and pottery manufacturer Josiah Wedgwood — pioneered many of the marketing strategies used today, including direct marketing.
The Welsh entrepreneur Sir Pryce Pryce-Jones set up the first modern mail order in 1861. Starting off as an apprentice to a local draper in Newtown, Wales, he took over the business in 1856 and renamed it the Royal Welsh Warehouse, selling local Welsh flannel.
Improvements in transportation systems combined with the advent of the Uniform Penny Post in the mid-19th century provided the necessary conditions for rapid growth in mail order services. In 1861, Pryce-Jones hit upon a unique method of selling his wares. He distributed catalogs of his wares across the country, allowing people to choose the items they wished and order them via post; he would then dispatch the goods to the customer via the railways. It was an ideal way of meeting the needs of customers in isolated rural locations who were either too busy or unable to get into Newtown to shop directly. This was the world's first mail-order business, an idea which would change the nature of retail in the coming century.
One of Price-Jones most popular products was the Euklisia Rug, the forerunner of the modern sleeping bag, which Pryce-Jones exported around the world, at one point landing a contract with the Russian Army for 60,000 rugs. By 1880, he had more than 100,000 customers, and his success was rewarded in 1887 with a knighthood.
In the 19th century, the American retailer Aaron Montgomery Ward believed that using the technique of selling products directly to the customer at appealing prices could — if executed effectively and efficiently — revolutionize the market industry and therefore be used as a model for marketing products and creating customer loyalty. The term "direct marketing" was coined long after Montgomery Ward's time.
In 1872, Ward produced the first mail-order catalog for his Montgomery Ward mail order business. By buying goods and then reselling them directly to customers, Ward was consequently removing the middlemen at the general store and — to the benefit of the customer — drastically lowering the prices. The Direct Mail Advertising Association, the predecessor of the present-day Direct Marketing Association, was first established in 1917. Third class bulk mail postage rates were established in 1928.
In 1967, Lester Wunderman identified, named and defined the term "direct marketing." Wunderman — considered to be the father of contemporary direct marketing — is behind the creation of the toll-free 1-800 number and numerous loyalty marketing programs including the Columbia Record Club, magazine subscription card and American Express Customer Rewards program.
Benefits Direct marketing is attractive to many marketers because its results — positive or otherwise — 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 the campaign led directly to a 10% conversion. 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. One of the other significant benefits of direct marketing is that it enables promoting products or services that might not be known to consumers. Products or services with a sound value proposition, matched with an attractive offer, supported with effective communication, delivered through a suitable direct marketing channel and targeting the relevant customer segment can result in a very effective cost of acquisition. Relative to other channels of distribution like retailing, direct marketing as a practice principally relies on the proposition, offer, communication, choice of channel and the target customer. So, it is less dependent on the brand strength. Despite the proven ability of direct marketing to generate measurable results, most companies continue to use general or branding advertising to market their products or services. 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 and dividing it into the number of responses. 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. Some companies use conversion rate as a key metric while others use revenue as the key metric.
Challenges and solutions List brokers provide names and contact information, but their services need to be contrasted to expected "return on investment." Success can vary based on factors such as:
- Offer — Best offer may yield up to 3 times the response, as compared with the worst offer.
- Timing — Best timing for the campaign may yield up to 2 times the response, as compared with the worst timing.
- Ease of response — Best/multiple ways offered to respond may yield up to 1.35 times the response, as compared with not-so-friendly response mechanism(s).
- Creativity.
- Media employed — The medium/media used to deliver a message can have a significant impact on responses. It is difficult to truly personalize a direct response television or radio message. One can even attempt to send a personalized message via email or text message, but a high-quality direct mail envelope and the letter will typically have a better chance of generating a response in this scenario.
- Fulfillment — Mail fulfillment is the physical act of printing, along with the postage and distribution of it. It is an important stage within the direct marketing process. This stage is known as direct mail fulfillment and includes tasks such as data cleansing, material preparation, collation, folding, closing, bundling, packaging and courier collection. This stage is also something that cannot be overlooked, as it can truly define the success of a direct marketing campaign.
Some direct marketers use of individual "opt-out" lists, variable printing and better-targeted list practices to improve success percentages. Additionally, 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' mailboxes, 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 U.S. Congress enacted the Controlling the Assault of Non-Solicited Pornography and Marketing or 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, internet 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.
Channels
Channels available include a variety of media: cell phone text messaging, email, websites, online advertisements, database marketing, fliers, catalog distribution and promotional letters. Use of television advertisements, newspapers, magazine advertisements and outdoor advertising are not direct, although they may have a direct response aspect, such as an 800- number.
Email marketing
Sending marketing messages through email or email marketing is one of the most widely used direct-marketing methods. One reason for email marketing's 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 webpages 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, display advertising — including social media display ads — was 45.9% of all ad spending in 2018 and is expected to grow to 60.5% of ad spending by 2023.
- Search – 49% of U.S. 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 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 marketing
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 or short message service where marketing communications are sent in the form of text messages, also known as texting, or MMS or multimedia message service where marketing communications are sent in the form of media messages.
In October 2013, the Federal Telephone Consumers Protection Act made it illegal to contact an individual via cellphone without prior express written consent for all telephone calls using an automatic telephone dialing system or a prerecorded voice to deliver a telemarketing message, known as robocall, to wireless numbers and residential lines. An existing business relationship does not provide an exception to this requirement.
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 which are marketing messages delivered directly to a mobile device based on the user's location and QR codes or quick-response barcodes which are types 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 are like standard banner ads for desktop webpages but smaller to fit on mobile screens and run on the mobile content network.
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.
In the United States, the National Do Not Call Registry was created in 2003 to offer consumers a choice of whether to receive telemarketing calls at home. The Federal Trade Commission created the National Do Not Call Registry after a comprehensive review of the Telemarketing Sales Rule. The do-not-call provisions of the TSR cover any plan, program or campaign to sell goods or services through interstate phone calls.
The 2012 modification, which went into effect on October 16, 2013, stated that prior express written consent will be required for all autodialed and/or pre-recorded calls/texts sent/made to cellphones and for prerecorded calls made to residential land lines for marketing purposes.
Further, a consumer who does not wish to receive further prerecorded telemarketing calls can "opt-out" of receiving such calls by dialing a telephone number — required to be provided in the prerecorded message — to register his or her do-not-call request. The provisions do not cover calls from political organizations or charities.
Canada has its own National Do Not Call List or DNCL. In other countries, it is voluntary, such as the New Zealand Name Removal Service.
Voicemail marketing
Voicemail marketing emerged from the market prevalence of personal voice mailboxes and business voicemail systems. One particular form is known as ringless voicemail, a method in which a pre-recorded audio message is placed in a voicemail inbox without the associated telephone ringing first. Voicemail courier is a similar form of voicemail marketing with both business-to-business and business-to-consumer applications.
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 store's checkout 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 marketing Direct response marketing is designed to generate an immediate response from consumers, where each consumer response and purchase can be measured and attributed to individual advertisements. This form of marketing is differentiated from other marketing approaches, primarily because there are no intermediaries such as retailers between the buyer and seller, and therefore the buyer must contact the seller directly to purchase products or services. Direct response marketing is delivered through a wide variety of media, including direct response television, radio, mail, print advertising, telemarketing, catalogs and the internet. Direct response mail order Mail order in which customers respond by mailing a completed order form to the marketer. Mail order direct response has become more successful in recent years due to internet exposure.
Direct response television 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 Rhode Island. 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. Forms of direct response marketing on television include standard short form television commercials, infomercials and home shopping networks. Short-form direct response commercials have time lengths ranging from 30 seconds to 2 minutes. Long-form infomercials are typically 30 minutes long. An offshoot of the infomercial is the home shopping industry. In this medium, items can potentially be offered with reduced overhead.
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.
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. By 1982, "the rising cost of an industrial sales call" — compared to 1971 — led to business press outlets becoming a primary reference for buying.
Direct mail
The term advertising or 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. 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 U.S., 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" or admail for short.
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