From almost a standing start two years ago, the direct marketing
industry has undergone something of an epiphany. Surrounded by
get-rich-quick stories about the dotcom revolution, the truth slowly
dawned. As one industry veteran so elegantly put it at a recent
conference: e-commerce is simply a tarted-up version of mail-order.
Time, then, for DM agencies to clean up? In theory, yes, but there is a
severe skills shortage and the plain fact is that the average wage (and,
incidentally, the profit margin) at new-media agencies is higher than at
their DM counterparts. While DM agencies can offer the whole range of
customer relationship management skills so vital to a successful online
business strategy, the new-media skills are still sitting comfortably in
the digital agencies, most of which claim an acceptable level of CRM
But the DM agencies are beginning to put their money where their mouths
are, buying new-media shops, bringing in specialist skills from those
outfits to sit in the main agency, launching digital offshoots or going
the whole hog and merging with a digital agency.
It’s this last option that many predict will be the enduring business
model. While DM and new-media agencies scrap for every last digital
dime, when it comes down to it, it’s an effective symbiosis of each
one’s core skills that the client needs.
The first significant merger of this kind in the UK was two months ago,
between the Havas-owned Evans Hunt Scott and its sister new-media and
design outfit, Realtime. The chairman of the new agency, Terry Hunt,
explains why it was timely: ’For the commercial websites to survive,
they have to do business, and it’s about the quality of visitor, not
So all the skills of targeting, loyalty and general relationship
management are crucial.’
Barraclough Hall Woolston Gray is another agency that has formed a close
strategic alliance with its sister digital agency, Traffic Interactive,
and its chief executive, Simon Hall, explains: ’We are still going to
maintain specialist skills in the on- and offline areas in the same way
that a media agency will have people who are good at TV, press and
outdoor. The danger with interactive agencies is that they are a
one-horse stable. Offline is still an absolutely vital ingredient in all
communications; what we can do is bring it together with online.’
Nigel Grimes, the head of direct marketing at BT, uses a combination of
DM and new-media agencies, but strategically it’s the former that take
the lead. ’The internet is about building long-term relationships and
the DM agencies are the only ones that know how to do this,’ he
’Online agencies know the technology, but they don’t have skills to
Conversely, of course, there are things that a digital shop can do over
and above a DM agency. Digital agencies are exposed to the online market
full-time, which is key in an environment that evolves by the
And the high volume of website development they undertake provides them
with an in-depth knowledge of which elements make a customer click
through to the next level, and which make them turn off altogether.
As Nigel Sheldon, the head of MindShare Digital, says: ’We have access
to all the media owners and web entities, creating and negotiating
If ever there was a medium formed on the back of partnerships, it’s the
It’s perhaps these unique specialisms that deter some slower-thinking DM
agencies from getting involved in the revolution. Grimes agrees that
some are being left behind. ’They are either being put off by the
mystique of the web or they just feel that they should concentrate on
their core direct marketing skills,’ he says, adding: ’What they don’t
realise is that that’s exactly what online is.’
JASON GOODMAN, BMP Interaction
Is new media the birthright of direct marketing? Anyone who thinks they
have a right to own a market in the current digital economy has missed
the point about revolutions - particularly this one.
Client companies and brands have asked and are still asking a lot of
questions about how the digital revolution affects their business. In
the professional and marketing services sectors, all manner of companies
are capable of answering these questions. But clients looking for
solutions want answers tomorrow and will, inevitably, turn to those
companies they see to have the requisite knowledge and experience.
So here’s a guide to what clients want and who can give it to them. If
DM agencies are not in some of the following lists, then it’s because
they lack one or both of the necessary qualities.
The first question you tend to hear from clients is: how will new
digital technologies affect my business? The answer to this can be
provided by management consultancies, technology consultancies and
The second question is usually: can I use digital channels to extend my
business/brand and how? The companies providing these answers are the
same as for the first question, plus advertising and media agencies.
The answers to the third question - how do I develop this reinvention of
my business or completely new digital business? - are again provided by
those answering question one.
Finally, question four. How do we build relationships with empowered
consumers in this increasingly open and personalised economy? This is a
question for the new-media agencies, but it also provides a window of
opportunity for traditional direct marketers. The good ones have both
the knowledge and experience to manage the two-way flow of data required
to sustain the relationship between brand and consumer.
New-media agencies know that data specialists are a valuable resource in
the full-service digital mix, which is why BMP Interaction recently
purchased the leading Danish direct marketing consultancy Generator. But
the opportunity is closing for many direct marketing agencies as clients
learn to rely on those companies capable and equipped to answer their
questions - today.
Jason Goodman is the managing director of BMP Interaction.
COLIN LLOYD, DMA
The online business model is selling goods and services, and collecting
and managing data. That sounds like direct marketing to me. The bottom
line is that DM is the commerce in e-commerce and only the DM and sales
promotion industries have the skill-set to make e-commerce
The DM industry has 25 years’ experience of selling goods and services
remotely. It has all the skills and knowledge to assimilate customer
information, manage data and create rich streams of business
So where has the DM industry been on the internet in the past three
Asleep as the train left the station.
Apart from a few enlightened suppliers, DM has been noticeable by its
absence and is now playing catch-up. The consequence of this is a list
of disastrous consumer experiences that are bringing e-commerce into
disrepute. A few gems: 27 per cent of consumers falsify online
registration because of privacy concerns. Across the EC, one in ten
goods never arrived. In two separate surveys, when product information
was requested online, 65 per cent and 42 per cent of companies
respectively failed to respond at all.
Of those that did, only half used e-mail.
Direct marketing has the knowledge systems and skill base to solve these
problems. My message is that the back end is more important than an
all-singing, all-dancing website if you want to do real business.
This is vital in the business-to-business sector, where the real
e-commerce opportunity lies. Nine-tenths of world trade is B2B and world
online sales in this sector is expected to be worth dollars 7.29
trillion by 2004.
I am concerned about the ability of the DM industry to respond to the
demand for secure e-commerce, especially given the skills shortage for
traditional DM. According to Barclays Bank’s HR department, the normal
routes for graduates have been usurped by the lure of dotcom millions.
This will have a serious effect on the whole marketing sector, let alone
Perhaps the glimmer of hope is in the DM support services area. This is
mainly where the fulfilment and processing skills are in abundance and
what is most needed. The e-commerce train may well end up in their
Colin Lloyd is the chief executive of the Direct Marketing
AMANDA MACKENZIE, Air Miles
The principles behind direct marketing should hold true whatever
revolution should come along.
I phoned a jeweller the other day to get an up-to-date valuation, the
previous one being 11 years old. I made a disparaging remark about there
being no way he’d have the original and offered to send a copy. Within
seconds, the voice on the phone said: ’Madam, I have it right here. We
don’t use computers.’ I was gobsmacked.
I think I’d forgotten what proper customer service was about. And it was
refreshing and delightful. For all the technical revolutions that have
beguiled and tempted us over the past ten years, what we want to achieve
as regards the customer is the same - it’s just that our tool-kit has
become more sophisticated.
With Air Miles, for example, you can now register and collect Air Miles
online with a new website to wrap it all up. These developments came
from a strategic decision to expand our business online and be able to
give customers more choice, flexibility and relevance to their lives.
Developing a new-media strategy wasn’t a question of just expanding
direct marketing, it was about seamlessly integrating the on- and
offline environments for all our customers.
Five years ago, new-media ideas probably needed to be incubated
separately as the two worlds were much more segregated. This is no
longer the case. It is important that there is a thread running through
the relationship we have with a customer (which, for them, doesn’t
differentiate by channel). What new media does is give them a host of
benefits they couldn’t access previously.
So where does that leave direct marketing agencies? On the whole, they
are still segmenting their world from the new-media world. While there
will always be room for specialism at the point of translating a
brilliant idea into a (technological) solution, the vision delivered is
what will drive a relationship for the customer and find a unique place
in their heart for your brand. There’s no time for navel-gazing.
Everyone can have good ideas, everyone can be audacious in their
thinking and we all know what a great customer relationship feels like.
New media can help us get there quicker.
Amanda MacKenzie is the marketing director of Air Miles.
JAY BINGLE, Impiric
The digital revolution has engendered a fundamental shift in
We are moving from ’push’ marketing, when the consumer was bombarded
with information, to ’pull’ marketing whereby, via the internet, our
response to the consumer’s needs can be almost instantaneous and can be
tailored to the individual. Consumers can post their needs
electronically and invite businesses to respond with appropriate and
individualised solutions. The job of our industry is to help companies
respond to these requests both in real time and with creative,
A strategy toward digital expertise must be based on the ability to
provide a complete set of marketing capabilities that help clients
better serve their customers in a digital economy. This necessitates
core competencies embodying a complex mix of human skills and
technology. In my view, these skills need to cover the spectrum of
e-business strategy consulting, complex account management, creative
design and copy writing, multimedia customer service functions, public
relations and online interactive capabilities for the internet,
intranets and extranets.
The transition of the old economy to the internet is a transition from
atoms to electrons. Instead of mailing physical documents to customers,
we are now able to send content-rich digital information directly to
consumers on behalf of our clients.
Increasingly, we are conducting multimedia interactions with our
clients’ customers combining internet functions, telephony and
Combined customer relationship and marketing services is a central
function in the new economy. Unfortunately - both for themselves and
their clients - there is a danger of some service organisations trying
to occupy this business space through hasty and opportunistic
acquisitions that they are ill-equipped to integrate. All the players in
this industry need to ensure that their offering is properly thought
through so that they are able not just to tick the box on a range of
marketing and technology competencies, but to implement them in a
controlled and integrated manner in their clients’ interests.
For sure, those organisations that do not embrace new-media methods to
communicate with customers will lose.
Jay Bingle is the worldwide president of Impiric.