Direct marketing has had another good year. The sector continues to grow and new-business tables are brimming with significant wins. But what is the truth behind the figures? Has the industry matured and realised DM's ability to grow clients' businesses or has the long-term decline of advertising forced direct and digital into the limelight?
Has DM, with its apparent superiority when it comes to targeting and managing return on investment, exposed advertising as the emperor's new clothes?
The problem with these rather simplistic and slightly antagonistic views is that they ignore the most important element in the equation - the consumers.
They are happily living in a multimedia, multi-perspective, multi-choice world, ignoring much of the work we ask them to consider.
These same consumers are becoming increasingly resistant to precision marketing in the same way they tired of blockbuster ad campaigns. Sooner or later, DM will lose its ability to prompt response and return on investment will disappear with it.
Why is this likely to happen and, crucially, what should we be doing to protect DM's future? For starters, we should never forget that consumers are defined by how they interact and whom they interact with. Consumers place a disproportionate value on the information that they glean from these relationships.
This would seem to undermine all our previous talk about isolating the individual - the DM industry has bragged for years about "one-to-one" marketing being its silver bullet.
A recent headline in The Independent claimed: "Gossip is good for you." The article referred to research carried out by the Journal of Human Nature, which suggested that adults spend between one-fifth and two-thirds of their time gossiping to help them build a moral code, strengthen relationships and to circulate information unavailable anywhere else.
Communities have become much more fragmented and the distance between individuals and their valued support networks (such as family and religion) has never been greater.
The problem with the "one-to-one movement" is that it assumes consumers do everything on their own. The truth is, almost all adult decisions are taken after a period of careful collaboration - with partners, children, friends, mothers etc. Sometimes this collaboration consists of conscious information-gathering techniques, seeking the approval of others or even exerting influence on them. But more often than not, it's an unconscious process whereby we try to work out what we should and should not be doing.You only need to look at the rise of Google. Consumers want direction and trusted sources to provide it.
Now I'm not for one minute suggesting that targeting is wrong. It's just that with most DM programmes, after a certain point, the law of diminishing returns strips out most of the benefits.
As consumers, we just won't be told (or, perhaps, sold to). Consumers build up a resistance to marketing campaigns. Humans, it seems, prefer the seemingly motive-free support, direction and opinion of their friends to the DM industry's attempts to divide and conquer and the one-size-fits-all tactics of advertising.
This is very important for the high-volume direct marketers in the IT, financial services, charity and car sectors. These advertisers often have very similar propositions to their competitors. Which means consumers need help from trusted advisers to help them make choices.
A recent book sheds some light on our need for real advice from real people. The Influentials, by Edward Keller and Jonathan Berry, claims one person in ten influences the other nine on most facets of life, such as what to wear, what to eat and drink, where to go, what to watch or how to vote.
The book, which has been compiled after 20 years of quantitative research, contrasts the power of personal recommendation with the influence delivered by advertising and DM.
The research suggests that for advice on what car to buy, word of mouth can be 22 per cent more persuasive; for advice on where to buy financial service products, it can be 44 per cent more persuasive; for advice on what do in retirement, it can be 49 per cent more persuasive; for advice on places to visit, 38 per cent more persuasive.
But who are these influential people? Apparently, they are more open- minded, active, trusted and connected than average. They tend to be normal, middle-income, middle-ranking professionals. But they also read more, sign more petitions, do community work, are "officers"of local groups, captains of sporting teams and so on.
DM, with its ability to build complex profiles and understand the relationship between different consumer groups, should be able to build, manage and track the advocacy of these "influentials". This should affect consequent marketing programmes.
This ability should not only affect any "decay" curves in direct response campaigns by extending consumer interest, but it should affect the baseline of consumer predisposition. In other words, brands should be able to spend less money to get a better return.
DM should take control of its own destiny. It should see the bigger picture and offer some leadership to the marketing industry at large. It should harness the power of disciplines such as PR, promotional marketing, brand and product development. By bringing these disciplines into the equation, DM could boost its strategic significance and its ability to deliver longer-lasting, more profitable campaigns built around these super consumers.
- Ian Millner is the managing director of Iris.