Germany is saddled with some of the most stringent legislation
related to direct marketing of anywhere in Europe. Despite that, it’s
the largest market for direct mail in the European Union with more than
DM12.74 billion (pounds 4.3 billion) spent on direct mail in 1998 - over
a quarter of the total spend monitored across Europe by the Federation
of European Direct Marketing.
Germany’s restrictions include strict data protection rules and onerous
competition laws which make it illegal to put psychological pressure on
consumers to buy a product. Under the Rabattgesetz dating back to 1933,
advertisers are prohibited from offering discounts of more than 3 per
cent on goods. This makes price-slashing direct marketing campaigns a
near impossibility, open only to those companies prepared to circumvent
the rules by offering products with different specifications from
Although that might be an option for car manufacturers, it is hardly
practicable for fmcg brands hoping to stimulate sampling. But there is a
possibility that some of these restrictions will soon be lifted.
’Top companies in the marketplace no longer accept this legislation.
I think the crash of these historic laws is close,’ Johnny Limba, a
managing partner of the direct marketing agency, LPP, says.
Companies such as PolyGram, which is looking to establish a CD music
club in Germany, have complained to the European Commission - which, of
course, is pushing for greater regulatory harmonisation across the EU.
The UK’s Advertising Association has also campaigned against the
But the indications are that change may not come as quickly as Limba
would like and some agencies say the lobby for reform has lost momentum.
However, a group of client companies spearheaded by Visa International
is understood to be making preparations to revive the lobby.
Yet the many restrictions in the German market have not hampered direct
According to the German direct marketing association, the DDV, direct
marketing has grown at more than 10 per cent for each of the last four
years. DDV’s figures for 1998 put direct marketing spend at DM36 billion
(pounds 12.4 billion), which would suggest that half the adspend in
Germany is now on direct media. This is up from a direct marketing spend
of just DM12.8 billion a decade before.
But to take the 1998 total at face value would be misleading. The DDV
figures embrace press ads with direct response mechanisms and also cover
catalogue marketing - a sizeable element in Germany, which is the
largest home-shopping market in Europe. ’There is a long tradition of
distance selling and mail order in Germany,’ Holger Albers, the DDV’s
general manager, says.
That tradition is now being translated into more direct marketing
campaigns by agencies. Monica Beuners, chairman of the Munich agency,
BAS Direct, says that one factor behind this is that clients are
demanding ever more information on the effectiveness of their
communication. Direct marketing, with its quantifiable response rates,
is well placed in this regard.
Another stimulus to growth is that direct marketing has, in real terms,
become less expensive over the past five years. Germany has always had
relatively high postal costs, but these are proving less of a hindrance
because falling technology costs for database modelling are making
direct mail a more financially attractive proposition. An upsurge in
customer loyalty schemes is also fuelling growth.
’Customer relationship marketing is becoming more of a reality,’
Christoph Stadeler, the president and CEO of Wunderman Cato Johnson
’More and more sectors are moving from an above-the-line dominated
approach to a more integrated approach.’
Frequent traveller programmes blazed the trail, but other sectors such
as retail, financial services and automotive have followed this
Kaufhof, Germany’s biggest department store chain, is a good
In November 1998 it launched a customer relationship programme featuring
a store card, supported by OgilvyOne.
’When the task is to attract customers into a relationship programme, I
think the UK might have an edge over Germany,’ Rolf-Dieter Hoelzel,
OgilvyOne Germany’s chairman, says. ’But when it comes to running
customer relationship programmes, where you have the profile of the
people in them, I would say the levels of sophistication are more or
Dieter Zorn, general manager of MSBK Team, believes that despite the
rules on price cutting, fmcg clients are increasingly turning to direct
marketing. MSBK Team is a Hamburg-based agency owned by BBDO and is one
of Germany’s top three direct marketing specialists. Its clients include
Mars Effem, the German petfood division of the US giant. ’The law makes
it difficult for fmcg clients, but a lot of them are coming to direct
marketing now,’ Zorn says. ’They really feel that they can’t win using
only above-the-line budgets.’
There also appears to be a trend towards cross-border campaigns. The
launch of the Euro currency and other moves towards enhancing European
integration are persuading some clients to take a regional view with
their marketing communications. Clients whose European headquarters are
in Germany tend to favour cross-border campaigns controlled by
’More and more clients are using below-the-line companies as lead
agencies in the Euro zone,’ Ottfried Fritsch, a managing partner of
Fritsch Heine Rapp Collins, says. By way of example he cites his
agency’s own clients, Electrolux and Sony.
Internet penetration in Germany is, by European standards, fairly
In the case of those consumers who consent to supply personal
information, the data collected is proving very useful for
However, companies using this data still have to tread carefully, not
just because of the privacy legislation but also because of the
attitudes of German consumers. ’If you overdo the data capture and then
feed back to the consumer what you know, Germans, because of their
national character, get quite suspicious,’ Stadeler points out.
Yet despite consumer wariness and restrictive legislation, the prognosis
for direct marketing in Germany is for the steady growth of the last few
years to continue. And should the Rabattgesetz finally be repealed,
there is certain to be a surge in activity, particularly from fmcg
clients looking to engineer consumer brand switching through enticing,
cut-price introductory offers.