DIRECT MARKETING: E-MAIL HITS HOME - Holly Acland looks at why advertisers such as Dulux and P&O are changing their strategy to spend more money on electronic targeting

There has been a tendency in the direct marketing industry to play

down the significance of e-mail marketing with practitioners rather

sniffily pointing out that it is, after all, "just another marketing

channel".



This reluctance to wholeheartedly embrace e-mail into the direct

marketing fold is not that surprising.



Here was a new communication channel that threatened to divert spend

away from direct mail. And direct mail is big business, fuelling a large

network of companies including direct marketing agencies (many of which

charge commission on the print and distribution costs), mailing houses

and printers.



E-mail, in comparison, costs virtually nothing to transmit. It is fast,

it can elicit an immediate response courtesy of the "reply to sender"

button and, most importantly, it is about as direct as it can get. An

e-mail pings straight into someone's inbox. Get the message right and it

is one of the most affordable and effective ways of striking up a

dialogue with customers.



So e-mail may indeed be "just another channel", but it is a very

compelling channel, particularly for companies which may have been

priced out of direct mail. There's growing evidence of a commitment

among companies to e-marketing. P&O Ferries announced earlier this year

that it was scrapping direct mail in favour of e-marketing. Dulux has

just embarked on its first viral e-mail campaign dovetailing with its

"You find the colour and we'll match it" TV ads. And the NSPCC is

diverting spend into e-mail following its first successful campaign

aimed at attracting new donors.



But while e-marketing is undoubtedly gaining momentum, direct mail

evangelists will be reassured by the fact that mailing volumes are

rising unabated.



The latest figures from the Direct Mail Information Service reveal that

volumes for April to June 2001 rose year on year by 4.5 per cent to 1.25

billion. Expenditure over the same quarter rose by 7.5 per cent to

£480 million. So, rather than eating into a company's direct mail

budget, e-mail is actually growing the overall direct marketing pie - a

fact born out by more figures, this time from the Direct Marketing

Association.



Its annual census this year revealed that the UK's direct marketing

industry had hit the ten billion-pound mark for the first time, fuelled

in no small measure by emerging new-media channels.



The message is clear: online and offline channels co-exist, they

complement rather than cannibalise each other. Victoria Moffatt, the

senior CRM consultant at the WPP-owned OgilvyOne, endorses this view:

"One of the best ways of using e-mail is in conjunction with direct

mail. E-mail is the quick hit, alerting someone to a product or an

offer, followed by direct mail which gives the depth."



Increasingly, companies are adopting this multi-channel stance. The

Chrysalis-backed sports network Rivals.net supported the launch of a new

SMS service for football fans with a 250,000-strong e-mail campaign as

well as ads in fanzines, an SMS to 50,000 fans, banner ads and a

promotional campaign.



But with such a wealth of media channels at a company's disposal, it is

all too easy to treat on- and offline communications in the same

way.



Steve Barton, the chief executive officer at Leonardo, the direct

marketing and digital arm of Leo Burnett UK, describes this as

"mail-pack thinking in a digital environment". He adds: "It doesn't

work. You have to take the direct marketing principles but reapply them

in a very different environment with different expectations."



One of the DM principles to have received the most attention in relation

to e-mail is permission marketing.



It's a straightforward notion (ask an individual's permission before you

communicate with them) but one at odds with traditional DM. Direct mail

has always been about interruption marketing. If your targeting is good

and your message relevant, there's a good chance the recipient will

respond despite the fact that permission has been neither sought nor

given.



Barton, however, argues that this approach is beginning to change

offline. "Companies are asking customers what they are interested in

hearing about, how they want to be communicated with and are honouring

those requests," he says. "It's happening, but it's making a lot of

people nervous because you're closing down channels. The fact is,

though, that it works. The increase in response is not incremental but

goes up dramatically."



However, Barton admits this approach "is not happening as much as it

should". He adds: "You still have the point at which it's more cost

efficient to dump mailings on people and some sectors have bought that

model for far too long."



Lisa Thomas, chief executive of M&C Saatchi's DM division, LIDA, says:

"I'm no supporter of cold blanket direct mail but for some companies the

return on investment model works. E-mail is a chance to get it right in

terms of permission."



And there's the rub. E-mail is a channel that demands permission has

been given. Unlike DM, the personal nature of an individual's inbox

means that unsolicited contact infuriates, frustrates and alienates. For

a company with any concern for its relationship with customers, that's

bad news. For the DM industry, it's a chance to prove the permission

model works. By putting control in a consumer's hands, the industry can

distance itself from accusations of scatter-gun techniques which show

little concern for the individual.



Of course, how companies actually seek permission has been the subject

of much debate in the industry with the new trade body, The E-mail

Marketing Association, advocating opt-in while last month the European

Parliament postponed making a final decision on Europe-wide policy for

e-mail marketing until later this month. Moffatt argues that opt-out is

adequate, adding: "The key thing is to make sure marketers are

compliant, to make it an effective law so that we don't need to go to

extremes."



Best practice clearly dictates that, regardless of whether an opt-in or

opt-out mechanic is used, companies are absolutely transparent about how

the information given is going to be used as well as making it very easy

to unsubscribe. Only then will the consumers' trust be won and only then

will the long-term effectiveness of e-mail marketing be secure.



CUSTOMER COMMUNICATION: E-MAIL'S BRANDING POTENTIAL



The e-mail branding and marketing specialist Mailround has discovered

that 75 of the world's most valuable brands, as defined by Interbrand,

are not using e-mail marketing to its full capacity.



Earlier this year, the company sent one enquiry by e-mail and one

enquiry by post to each of the 75 companies.



Not one of the 87 responses received by Mailround from the top 75 brands

displayed any form of branding, despite companies being twice as likely

to respond to e-mail enquiries than to requests for information by

post.



Eldar Tuvey, the managing director of Mailround, commented: "Companies

with employees that regularly use e-mail are missing a communication and

marketing trick. Companies send out tens of thousands of e-mails a

month.



"They can be as uniformly branded as print media, and yet they have the

added potential for holding interactive messages and reinforcing key

elements of the brand."



KODAK CAPTURES CUSTOMERS - AND SMILES AT PROFITS



Kodak Digital and Applied Imaging launched a pan-European

permission-marketing programme, involving e-mail and online advertising

across seven markets to support the roll-out of the shop@kodak

(www.kodak.co.uk/go/shop), as well as to boost site traffic and online

spending.



The Interactive Agency combined new technology and traditional DM

techniques to segment Kodak's customer and prospective base while

developing its acquisition programme. Results demonstrate a significant

click-through rate across all countries, rising as high as 26 per cent

in the Netherlands.



The e-mails were tested in html and achieved a 30 per cent greater

response rate over plain text e-mail.



Meanwhile, e-mail response rates have improved and now reach more than

25 per cent.



Kodak exceeded its first-quarter profit target by 107 per cent proving

that, for this brand, it has been more cost effective to use e-marketing

than offline DM.