DIRECT MARKETING: TV’S OLD GUARD LEARNS TO LIVE BELOW THE LINE - Mainstream advertisers traditionally turned to TV. But, Robert Dwek finds, many are now getting better results with a direct approach

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.

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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