The Direct Approach: Roundtable discussion - Shout DM's credentials

With direct marketers feeling the effects of the economic downturn, the industry must tackle its weaknesses and find ways to compete with digital, while becoming more forthright in communicating what it brings to the table, Stuart Derrick writes.

When direct marketers get together, you can be sure that they will rail against the iniquity of marketing's hierarchy that sees the majority of below-the-line disciplines kowtowing to the creative lead of ad agencies.

Campaign's second direct roundtable is no exception, but with the industry's thought leaders gathering as marketers stare into the jaws of a recession, there are bigger issues to be tackled, not least the economy. Budgets, creativity, positioning, digital, the environment and recruitment are all subjects that provoke keen debate.

Yet given the current downturn, it's not surprising that talk turns first to DM's perspective on the state of the economy. In the past, direct has proved remarkably recession-proof; however, the latest Bellwether Report made depressing reading, with almost 19 per cent of companies polled saying they were cutting direct spend. With the continuing ascendancy of digital marketing, which seems to be stealing some of DM's thunder as the most accountable medium, direct practitioners are surely worried. Or are they?

Perhaps not. Carlson Marketing's president for EMEA, Jonathan Harman, says budgets have held this year, although he admits the jury is still out on 2009. Mel Cruickshank, the managing director of LIDA, says clients are switching budgets to digital to achieve direct objectives. "People are trying to do more cost-effective things to acquire customers, so they are using e-mail in cleverer ways. We haven't seen a drop in budgets," she says.

It is all a matter of definition, Ben Rachel, the planning director of CMW, says, and if digital is included as part of the direct offering, the sector has actually gone up. It's a point taken up by Hugh Bishop, the chairman of Meteorite, who says that studies fail to understand what direct marketing is today. "Brands no longer use massive direct mail campaigns to acquire customers. That's the old school. Spend is not down, but mailings are."

The volume of mail produced by financial services carpet-bombers such as Capital One has nosedived in recent years, but it is not missed, according to Martin Nieri, CMW's managing director: "Those mailings may be down, but we are now doing more of the strategic work that we want to be doing. One of our clients has taken e-mail production in-house and left us with the strategy."

The rise of such digital techniques has presented a challenge to marketing agencies of all stripes, but surely none more so than DM agencies, which have seen their proposition threatened most as all agencies skill up for digital. Campaign's editor, Claire Beale, asks: "Won't the term 'digital' be obsolete in a few years' time because everything will be digital? Then essentially everything is direct, and that's a positioning problem for DM."

Although few other professional services spend as long defining what they do as direct marketers, Harman says that terminology matters, because budgets are still allocated under these headings in many companies.

Gavin Wheeler, the managing director of WDMP, says that although digital presents a threat, there is clear blue water between the various marketing disciplines: "Not everybody is direct. Ad agencies are preaching content and engagement, and it's all about creating awareness. When it comes to the behavioural stuff, they lose interest."

Bishop adds that there is a distinction between the type of marketing that changes awareness and that which changes behaviour. "We are in the business of changing behaviour; maybe ten years ago we should have been calling it behavioural advertising."

For now, though, there remains a marketing class structure, which stubbornly resists attempts to break it down, Rachel, who bridles at the term "creative agency", claims. "Are we not creative?" he asks. "It's not very meritocratic, and there is still a two-tier structure in marketing."

Part of the problem is that direct marketing has long been prized for its analytical skills and customer insight, rather than its creativity. With marketing this targeted, who needs pretty pictures? The result is that there is a lot of uninspiring paper flying about out there, and the industry is partly to blame for this, Nieri says. "We didn't say no five years ago when credit-card companies were banging out two million mailings with '0 per cent' interest offers. We didn't help ourselves."

Rachel agrees there is still an issue with creativity in DM. "Storytelling is what it's all about, and we haven't been great at it. In advertising, they say 90 per cent of the ads are rubbish and 10 per cent great, and it's the 10 per cent that people concentrate on. In direct marketing, it's the other way round."

DM's place in the marketing pecking order is a factor, Amanda Phillips, Proximity's chief executive, says. Often clients don't have the same zeal for the direct component of a campaign by the time they've been through the advertising. "If you are at the tail end of the relationship with the creative agency, then its appetite has gone."

Whoever owns the moving image, owns the high ground creatively, according to Dan Douglass, the creative director at Meteorite, which has launched its own film division. Technological changes mean consumers will soon be able to directly receive rich-media messages at many touchpoints. It's a great opportunity, but few direct agencies are geared up for it. "We need to do more of this. It's very rich ground for us," he says. "However, the AAR does not allow direct agencies to show reels of their work. It's extraordinarily unreconstructed and sends out the message that DM agencies are not creative, spirited or passionate about their work."

Carlson's head of planning, Guy Culshaw, agrees that this is short-sighted. "In a few years' time, everything will be about the moving image, but we are still viewed as the print guys, and it's a challenge for us."

Despite their calls for parity, part of the problem for DM is an inherent humility, Bishop says. "We try to prove ourselves to clients in a way that ad agencies do not. Too often we forego the gut feeling that something is a great idea and get too tied up in the mechanics of proving it will work. They don't do that. They make good ideas work, and so should we."

Although it is felt that DM agencies should be more arrogant, their inbuilt meekness sometimes gets in the way, WDMP's executive creative director, Gary Sharpen, says. "There is a side to us that's always asking 'is it OK if we are arrogant now?'."

Rather than trying to reinforce their creative credentials, direct shops are better off playing to their strengths, LIDA's chief executive, Lisa Thomas, says. "Clients are not interested in the detail - it's dull. But they are interested to hear how we are going to make a difference to the bottom line. They talk to us for something different - the perspective of the customer and ROI."

Sam Williams-Thomas, the deputy managing director of OgilvyOne London, adds direct marketers shouldn't throw out the baby with the bath water. "The marketing environment's changing, but we must be aware that direct skills remain as relevant as ever. It's more a case of making sure that they keep pace with the technology that's available to us than reinventing DM."

Direct agencies should be proud of what they do, Phillips says. "Clients want work that works, and we have more measurability than advertising. They're jealous of us in that respect."

Focusing on better measurement tools is an area where direct can build differentiation. With this, DM can own ROI, Bishop says. In this area too, new technology represents both challenge and opportunity. Phillips cited a Proximity campaign for a charity which had used bloggers, resulting in a hugely dynamic response. And while such amorphous techniques might seem at odds with a robust data environment, they help marketers understand complex consumer behaviour.

"We have an advantage in the ethnographic approach because we have been doing it for years," Culshaw says. "The challenge is to do it better and quicker in different media."

Understanding technology is particularly pressing for direct marketers due to a shift in the business landscape that sees clients bypassing DM to go direct to Microsoft or Google, Rachel says. "There is change in the way people are consuming. In Japan, if you want to buy a washing machine, you don't go into an electrical retailer. You go to an original equipment manufacturer showroom, scan the barcode and Google it to see where it's cheapest."

Another area where digital was challenging DM was in attracting talent.Training in all areas is a drum beaten by Neil Morris, the deputy managing director of the Institute of Direct Marketing, who wasn't at the lunch.

Despite many DM shops having integrated digital to their offering, their heritage is off-putting, Thomas admits. "We need to be loud and proud, otherwise nobody will be interested in entering the industry. We need to reposition to look at how we can make it more engaging. People want to be in advertising to be John Hegarty, but graduates think of us as junk mail."

The message should go out that graduates will be given more responsibility in DM than in advertising, Bishop says. "If you work for Bartle Bogle Hegarty, the reality is that you'll probably be doing Tampax ads for Poland. You get much more interesting work in DM."

Sharpen says art-school graduate attitudes are beginning to recognise this. "Five or six years ago, they all wanted to be in advertising because they were exposed to TV. Recently, it's become more about making ideas, and they are playing back to us what we've been telling them."

The Department for Culture Media and Sport's "Creative Britain" programme is praised as a powerful initiative for presenting marketing services as a serious career, but it was felt that some of the fun and glamour has since been lost. Agencies have realised today's graduates are not interested in a standard career plan. "When we have graduates come here, their eyes are agog," Phillips says. "It still seems a lot more sexy than some of their options."

From the sexy, to the mundane issue of waste. The environment is a subject that continues to dog direct marketers, and while some may think that labelling their mailings as recyclable ticks all the boxes, the pressure to be seen to be green continues to build. Kevin Lavery, the agency group managing director at the Direct Marketing Group, says clients increasingly want to know about green credentials, especially in sectors such charity and government.

Phillips, who chairs a working party on the issue, says direct mail's visibility, with 78,000 tonnes hitting landfill each year, makes it an easy target. "I am worried the European Union could introduce draconian measures and that would affect clients' channels to market. The Direct Marketing Association is doing a poor job of raising this issue."

Other media are slipping under the radar, Thomas says, and there is a need to rebalance the argument by looking at the impact of media choices.

Finally, it's back to the economy. With budgets being cut, Beale asks if there is pressure on agencies that are part of a marketing group to stay in their direct boxes.

Anything but, Thomas says, whose LIDA agency is part of the M&C Saatchi group. The appetite for money means it can go anywhere. "The important thing is you don't replicate skills. If you're competing for the same business, there is usually a way of ensuring that nobody's toes are stood on."

Phillips agrees: "It's a revenue grab, so there are no constraints. When it's new business, it's a free-for-all."

This final image certainly presents an industry that is moving from worthy and humble to self-confident and dynamic. And, as this supplement's essays prove, today's best practitioners are looking forward, while holding on to the best of DM's heritage.