And still they keep coming, these record-breaking direct marketing
statistics. ’A double figure percentage increase in the volume of direct
mail sent in the first half of 1997 has put the medium on course to
smash all annual volume and expenditure records,’ boasted the Direct
Mail Information Service in August. A few days later, in early
September, the Direct Marketing Association sounded even more ecstatic:
’pounds 4.5 billion (annual direct marketing expenditure) in 1994,
pounds 5.5 billion in 1995 and pounds 6.1 billion in 1996,’ it
trumpeted.
The DMA added that this growth was achieved despite a ’significant
proportion’ of press advertising being excluded from the calculations
for the first time. It also noted that the two fastest growing areas
were DRTV and direct response radio, although tried and tested direct
mail is still growing at a cracking 31 per cent a year, despite postal
strikes.
The DMA chairman, Colin Lloyd, comments: ’The willingness of consumers
to deal with companies directly is a reflection of changing social
attitudes and lifestyles.’ And the DMIS has yet more figures to prove
that companies are becoming increasingly wise to this: total spend on
direct mail in the second quarter of this year grew by 18.5 per cent,
while spend on production was up by 19 per cent. Two of the biggest
jumps in direct mail investment came from the manufacturing and banking
sectors.
It’s heady stuff, but there is perhaps one even better indication that
direct marketing is now truly out of the closet. The DMA/Royal Mail
Direct Marketing Awards, which used to be shunned by the advertising
community, are now ’the most important in the industry’, according to
recent Royal Mail research. It even, implausibly, puts awareness of this
below-the-line bash above that of the ad fraternity’s beloved D&AD. Ad
agency awareness of the DMA/RM Awards has been boosted by the fact that
last year’s recipient of the Gold gong was - shock horror - an ad agency
(Duckworth Finn Grubb Waters, which created the Daewoo DRTV
campaign).
This dramatic mellowing of mood in the agency world has no doubt played
a role in the decision by major UK advertisers to inject so much more
money into their direct marketing over recent years.
Unilever is a classic example. It’s been experimenting with all manner
of weird and wacky new channels of communication to a degree that would
have seemed alarming not so long ago. When it relaunched its Radion soap
powder earlier this year, high-profile TV was jettisoned in favour of
radio, posters and direct mail (not forgetting those scented bus
tickets).
The campaign did wonders for the brand’s flagging market share. Radion’s
brand manager, Toffael Rashid, reveals: ’It has certainly made us
realise that we have more weapons in our marketing armoury.’
Unilever has also been looking into the possibility of a regularly
mailed customer magazine, covering more than 30 different Unilever
brands.
Meanwhile, its arch-rival, Procter & Gamble, has been making forays into
this new terrain. Its marketing services director, Gary Cunningham,
admits: ’Given the rampant inflation in the TV advertising market, it
should come as no surprise that P&G, like other advertisers, has made
more use of direct marketing and other communication channels.’
Another big advertiser which now feels more at home below the line is
Mars. ’Building strong relationships with our trade partners has always
been a priority for us,’ a spokesman says. ’Direct marketing, in
particular, offers benefits in terms of obtaining feedback through the
use of interactive techniques.’
The private medical care company, PPP Healthcare, is also a recent
convert, and added more direct marketing to its communications mix when
it relaunched two years ago. ’The attraction of below the line is its
accountability, the fact that you can measure return on investment and
your ability to build one-to-one relationships with customers,’ Paul
Leadbitter, the head of direct marketing at PPP, says. ’In the past we
used direct marketing only as a sort of mail-order technique, but now we
recognise its strengths for long-term brand building.’
While most big advertisers have quietly increased their direct marketing
expenditure, some, like Cable & Wireless Communications, have been
caught in the glare of publicity. The newly formed merger of Mercury,
Videotron, Bell Cablemedia and Nynex appointed the DM agency, Rapier
Stead & Bowden, to handle a national direct mail campaign, supported by
above-the-line advertising.
Jonathan Stead, chief executive of the agency, believes the boom in
direct marketing is the result of marketing departments working much
more closely with IT and customer service departments, as well as
distribution channels.
’C&W has had to make a massive investment in TV and press in order to
make its mark as a new company,’ he points out. ’But it’s also sending a
clear signal to the marketing world by recognising the integral
importance of below the line from day one.’
A similar, if less dramatic, signal was sent by Renault after it was
privatised about 18 months ago. Its UK direct marketing agency, WWAV
Rapp Collins, recently launched a redesigned Espace (the ’people
carrier’) solely via direct marketing. ’It takes a certain amount of
faith to put all your money below the line,’ explains the WWAV client
services director, Andrew Kennett. ’But Renault is looking for a maximum
of only 10,000 sales a year so why bother talking to ten million people
through above-the-line advertising?’
Renault, he says, will ’continue to gradually spend more of its budget
on direct marketing’ because, in its post-privatisation incarnation, the
company has had to look much more carefully at cost-effectiveness. ’It
would rather mean more to a smaller number of people,’ Kennett
concludes.
This statement might sum up the new philosophy of many big clients,
battling against fierce competition, mature markets, escalating airtime
costs and fragmented media. In this very changed marketing environment,
it’s no longer good enough to make jokes about which half of your
advertising is working.
THE DAILY MAIL AND MAIL ON SUNDAY
’In the past six years we’ve gone from doing a few ad hoc vouchers,
distributed through the field, to regular 250,000 direct mail
campaigns,’ notes Sally Wolfenden, deputy marketing manager of the
Mail’s circulation department.
The regular direct marketing campaigns, featuring special offers,
collectables, book offers, subscription and free copy offers, have
unquestionably played a part in the Mail’s strong sales rise during the
90s, up from around 1.4 million to 2.2 million. But Wolfenden claims
it’s not easy to pinpoint one specific factor as the most significant in
the Mail’s success story: ’Our sales pattern shows some of the rise has
to be attributed to direct marketing but it’s hard to say how much
exactly since what we produce is effectively a different product every
day, albeit with the same brand values.’
What she can say about the direct marketing work is that the response
rate has grown over the years to a very gratifying 30 per cent on
average.
Much of the credit here must go to HH&S, which began as the Mail’s sales
promotion agency but metamorphosed into its DM agency somewhere along
the line. The direct mail work has been backed up, right from the start,
by extensive telemarketing activity.
Wolfenden predicts: ’We’re going to get increasingly sophisticated about
direct marketing. We’ll know more about the people who have responded to
individual campaigns so we can apply that consumer profile to get even
better targeting and higher returns on our investment.’
The Mail’s arch-rival, the Express, has also increased its direct
marketing activity, but it has opted for lower cost mail-shots. Where
the Mail has sent out an envelope stuffed with up to five separate
insertions, the Express has posted perforated postcards.
Moreover, Wolfenden reveals, the Mail’s direct marketing budget has
’increased year on year for the past six years’.
HEINZ
In 1994, Heinz started a massive direct marketing programme. Now that a
substantial database has been built, the company intends to increase
above-the-line activity once more.
Heinz said its change of direction was prompted by media inflation and
fragmentation which ’made it more difficult to get the cover we
needed’.
But DM was also much more attractive because of technological
improvements.
The strategy has been to use above the line to focus on a much stronger
corporate message, notably in the two TV campaigns ’united nation’ and
’toast to life’, and for below the line to tailor messages and offers
depending on the consumer.
The main thrust of the DM work has been the Heinz At Home magazine, sent
out to 4.6 million households. It is not a magazine in any conventional
sense of the word, since everything in it - from editorial through to
promotions and incentives - is customised.
Heinz almost appointed the contract publisher, Redwood, recently and is
still looking around because it believes the At Home product could be
enhanced further by stronger editorial. In the meantime, it continues to
work closely with its long-standing agency, WWAV Rapp Collins.
Heinz’s DM budget has dropped substantially this year because most of
its upfront database investments have now been made. Between 1994-6, DM
spend was about pounds 12 million a year - about half of the total
marketing budget. Spend will be skewed more towards above the line this
year but it’s ’too early to say’ how the budget will balance in future
years.
’I think we’re quite a way ahead of the competition,’ a Heinz spokesman
says, ’but I don’t pretend for one moment that we’re getting maximum
value for money out of our database.’
Meanwhile, in the US Heinz is using the Net to sell its baby foods.
FORD
’The key thing is to build relationships with our customers - that’s the
reason why we’ve put more focus into our below-the-line activity,’ Jon
Williams, manager of marketing programmes and communications at Ford,
explains.
Like Heinz, Ford’s direct route to the consumer’s heart and mind has
centred around a bespoke publication, the simply titled Ford Magazine,
now three years old. This is regularly mailed out to customers and
prospects on Ford’s ’comprehensive’ database. Williams says the
manufacturer is ’certainly spending a lot more money now’ on DM
activities, and the budget has grown steadily over the past five
years.
Ford’s enthusiasm for new media has also put it at the front of the
starting grid in the race for dominance of the Internet. It’s animated
advertising banners are ubiquitous on Websites, and feedback from this
new communication channel will undoubtedly have boosted the
database.
But despite all these marketing techniques, Williams asserts: ’I still
have great belief in above the line, particularly when you are bringing
new products to the market and there’s a branding job to be done. But
below the line is definitely becoming more important in the mix and in
the future both it and above the line will be used in different
ways.’
This changing relationship was recognised in March of last year when
Ford reorganised its marketing department so that brands became the main
focus of management structure. Individual teams now have responsibility
for the complete marketing mix as it affects their brand.
SCOTTISH WIDOWS
Steve Gapper, direct marketing manager at Scottish Widows, is in no
doubt. ’Our direct marketing activity has definitely grown over the past
five years,’ he says. There has, however, been a concerted effort to
ensure that the new work does not conflict with the carefully evolved
above-the-line branding. ’We use a lot of follow-through imagery, such
as the famous Widow symbol, to create a seamless feel across our
advertising and direct marketing campaigns.’
However, the move below the line has not all been plain sailing.
Although the company now uses a lot of direct response press ads for its
pensions products, it has stopped sending out direct mail. ’We did a bit
but found that the response rates were not very good,’ Gapper says.
Lead generation is now also sought through national press inserts and
DRTV, using the cheaper daytime and late-night slots, mainly on
satellite and Channel 4. A customer database has been built up, which
includes hot and warm prospects. This is managed in-house, using
home-grown software.
The direct marketing activity is self-financing, Gapper says, as it is
funded from the new sales it creates.
But, unlike some in the financial services industry, he is not overly
obsessed with the wonders of this low-profile marketing tool. ’We don’t
see our direct sales taking over completely from our traditional trade
sales (via Independent Financial Advisors). In fact, the whole market is
increasing and is polarising into two very different types of consumer:
the more traditional one, who still likes the reassurance of using an
IFA, and the more modern one, who has no qualms about picking up a phone
and doing it all themselves.’
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