entering the digital direct marketing space
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Entering theDigital Direct Marketing SpaceAn Introduction
June 2010
Joep Hutschemakers
1
Market definitionDirect Marketing Definition
Traditional DM Channels
Direct Mail (Catalog)
Direct Mail (Non-catalog)
Telephone Marketing
DR* Television
DR* Radio
DR* Magazine
DR* Newspaper
Insert Media
*DR=Direct Response
Digital DM Channels
Internet Display
Internet Search
Internet Other
Mobile
Social Networking
Source: The power of direct marketing - 2009-2010 edition by DMA; Principles of Marketing Engineering by Gary Lilien
Purpose
Solicit an order (Direct Order)
Generate a lead (Lead Generation)
Drive purchases at retail outlets (Retail Purchase)
Raise funds for nonprofit organizations (Fundraising)
Direct Marketing Definition
An interactive non face-to-face process of
addressable communication …
…that uses one or more advertising media…
…to effect, at any location, a measurable sale, lead,
retail purchase, or charitable donation…
… with this activity analyzed on a database for the
development of ongoing mutually beneficial relationships
between marketers and customers, prospects, or donors.
2
Market
Fundamentals
3
The World Is Moving DigitalRelevance, Interactivity and Measurability!
Source: US Dep of Commerce/NTIA, InfotTrends, TREKK Cross Media, The Media Audit 2009
From: To:
Mass
Offline
Single
One way push
Art
Targeted
Online
Multi Channel
Two-way dialogue
Science (by the numbers)
Today it is all about Relevancy, Interactivity and Measurability
4
The need for personalized 1:1 communication after the digital revolution is the reason Direct Marketing outgrows traditional expenditures fast as marketers continue to shift away from traditional mass media
Source: Outsell Annual Advertising Study 2010, The Power of Direct marketing 2009-2010 edition by DMA:
Direct Marketing Spend outgrows mass marketing spend
48%
52%
52%
48%
50%
54%
46%
Mass
DM
5
Digital Direct Marketing is expected to surpass Direct Mail in 2014…
Source: Outsell Annual Advertising Study 2010, The Power of Direct marketing 2009-2010 edition by DMA:, expert interviews
CAGR ‘04-’09
(1.1)%
20%
Traditional
Other
Digital
Total US DM Expenditures in $b
(3.3)%
Direct Mail
CAGR 09-’14
.5%
16%
2.2%
6
… as Digital will continue to capture share from traditional mediaBut Direct Mail is not going to disappear overnight
Source: Outsell Annual Advertising Study 2010, The Power of Direct marketing 2009-2010 edition by DMA:, Winterberry Group Survey
CAGR ‘09-’14 DM Expenditures per Channel
DM (non-catalog)
DR Newspaper
DR TV
Telephone
DR Magazine
DM (catalog)
DR radio
7%-14%
9%-18%
11%-22%
13%-24%
13%-26%
15%-30%
29%-60%
Traditional
Media
Losing
Share
Digital
Media
Capturing
Share
7
It is all about ROI – Digital channels give highest ROIROI: DM driven sales per dollar of DM advertising
Source The Power of Direct marketing 2009-2010 edition by DMA, eMarketer cited by ExactTarget, „08 Channel Preference Survey
ROI by Medium
11.7 Avg across all
verticals
Average ROI across all verticals
$1 invested in DM results in $11.7 of sales
8
Customer
Needs
9
Marketers felt relatively comfortable with the traditional direct marketing and mass marketing channels
10
In the last decade there has been a rise in new interactive media channels marketers need to keep up with
11
And with these new interactive channels the dynamics of the marketing communications landscape has become quite complexLack of knowledge, time and optimization
Impacts all aspects of the Direct Marketing Value Chain…
12
Biggest challenge for marketers is obtaining quality data to identify prospects and bring relevancy
Unfulfilled Important Needs Comments Opportunity for SR
Up-to-date lists • Physical addresses go out of date 1%/mo• E-mail addresses go out of date 3%/mo
• SR will plow back the immense
amount of response data that SR
gather s via registration
tools/through deploying digital
media
Sufficient data and analytic
tools to come up with more
relevant offerings
• Databases are still too transactional and
not suitable for truly 1-1 marketing
Build &
Execute campaignTrack Results
Source: : 1)The power of direct marketing - 2009-2010 edition by DMA 2) QBR – Current Economic trends in Direct and Interactive Marketing by DMA/WinterberryGroup Q4 „09
Analyze Data &
Identify ProspectsDesign CreativeSet Campaign
Strategy
“Being relevant is key” , “people give so
much data away these days, we should use
that to be relevant to them in our
communication” (CMO quote)
13
Lack of cross media optimization as well as lack of knowledge But appetite to experiment
Unfulfilled Important Needs Comments Opportunity for SR
Enough time to keep up with
the meteoric rise of new
channels and media types• As technologies quickly mature,
marketers look to consolidate purchase
decisions with single supplier
• Print providers are seen as
technical companies, marketers
and agencies expect us to educate
them on the use of latest
technologies!
• Offer end-to-end solutions instead
of point solutions
Technical savvy - marketing
teams
Innovate • Appetite to experiment. Fear factor: “if I
don‟t do it someone else is going to eat
my lunch”
Cross media optimization as
marketers organized in silos
• they are site- and channel- centric
instead of a customer- centric‟
relationship marketing‟ view
• Each online marketer trying to
understand ROI from efforts in their
channel
• Provide education and insights in
performance of all building blocks in
a cross media campaign (channel,
response type, lists, etc)
Track ResultsAnalyze Data &
Identify Prospects
Set Campaign
StrategyDesign Creative
Build &
Execute campaign
Source: A.T. Kearney CMO Summit, OD Conference 2010: CMO Spotlight panel, 1) QBR– Current Economic trends in Direct and Interactive Marketing by DMA/WinterberryGroup Q4 ‟09;
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Turning data into action is hard so is the integration of traditional and emerging dataROI, ROI, ROI
Unfulfilled Important Needs Comments Opportunity for SR
ROI, ROI, ROI • Marketers are being held accountable
like never before
• Help them to keep their job, by
showing how their money is spend
and what the return is
Turning data into action • Multitude of online channels leaves
marketer adrift in sea of data
• Provide insightful dashboards
Integration of Traditional and
Emerging data
• pURLs remove the lid of the black
box in direct marketing, it helps you
to optimize moving forward
Analyze Data &
Identify Prospects
Set Campaign
StrategyDesign Creative
Build &
Execute campaignTrack Results
Source: 1) Key Online Marketing Trends for 2010 Unica survey 155 marketers, interviews
“Channels will always change, the
need for data doesn‟t nobody wants
less data.”
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Product
Solution
16
Print providers can take the driving seat steering the DM value chainExpand from a strong print position to capture more value upstream and/or downstream
DirectMail
All responses collected in one database. Real Time,
Centralized, Online, Qualified
Response
Fulfillment:
Kitting, Email,
Electronic, VDP,
POD, Mail, etc.
Measure:
Marketing Report
Dashboards
automatically
generated
Lead Distribution
Sales Reports
Design CreativeAnalyze data &
identify prospects
Set Campaign
StrategyBuild & Execute
CampaignTrack Results
Choose Media Type Choose Response ChannelChoose Channel
Social network
Newspaper/ magazine
TV/Radio Telephone
MobileInternetQR Codes
Survey Business Reply Card
Fax Data Import
Call centerWeb
registration
Contest/ Trade Show
pURLS
Postcard Flyer
Banner Letter
Newspaper Ad
HTML
Webinar Insert
17
Integrated cross media solution for commercial print companiesBuild on key elements of supply chain mgt, incl reducing printed inventory with POD capabilities, warehouse mgt and fulfillment
Time
Co
re c
om
pe
ten
cie
s
Today:
Mail/fulfillment/print service
provider. By providing
customized document mgt and
workflow solutions. Printing on
digital press, offset, packing
and shipping orders. (“We can
do Direct Mail too)
Best-in-class prepress and print production
Mailing & Fulfillment
Digital asset mgt systems/inventory mgt
Web To Print
1to1 ROI-driven multi-channel marketing solutions
Comprehensive marketing program
measurement metrics and analytics
Data modeling and data
mining
Ambition:
Communication Service
Provider
By building, executing
and measuring
integrated cross channel
direct marketing
campaigns. (“I still do
your printing and
fulfillment too”)
18
Marketing
& Sales
19
Multi-Channel Communications – A Different Kind of SaleDifferent kind of culture
Sales: Different DMU
Need to get past the print buyer and get to the marketing
leadership
Sales: Different pitch
Commodity based sales marketing solutions
Transactional consultative solution discussion
Machinery marketing
Marketing:
– Up-to-date knowledge need
Educate, educate, educate production, sales and
customers on a religious bases
not a one push at the start
Executive staff:
– needs to be the major fanatic to drive this
Source: Multi-Channel Communications Measurement & Benchmarking. InfoTrends, 2008., client and expert interviews
20
Sales: Different Decision Making UnitRoles involved in buying DDM solutions
Role Responsibility Look for in DM solutions Sales pitch focus
Marketing
leadership
(CMO, VP)
Overall marketing
strategy and budget
Integrating processes across
channels and departments,
enhance collaboration and
productivity, measure overall
performance
Strategy,
measurement,
marketing
optimization
Relationship
marketer
(direct and
database
marketers)
Develop targeted marketing
programs aimed at sustaining and
growing customers‟ or prospects‟
interest in a firm‟s products or
services
Functionality that supports
segmentation, campaign mgt, and
customer analysis
Personalization, dialog marketing,
event triggers, and contact
optimization
Emphasize
customer insight
and value mgt
Appetite for
technology
Interactive
marketer
Monitor and apply new and emerging
channels and technology solutions mostly
delivered by smaller vendors focused on
specific niche /area of expertise
Alignment of internal and external
activities, centralize measurement,
and optimize spend
• Integrating
interactive
channels
Marketing
operations
Manage marketing budgets, establish standards, close
the measurement loop
Manage and maintain marketing content
Manage/ coordinate relationships with broader
marketing ecosystem of vendors, suppliers,
distributors, and service providers
Simple, intuitive user interfaces that
support many users with varying
levels of analytical and marketing
demands
Budgets,
processes,
fulfillment
Source: The Forrester Wave :Enterprise Marketing Platfroms Q1 2008, Marketing Automation Indsytry Spotlight by TM Capital, Client interviews
21
Strategic
Aspects
22
Personalized digital 1:1 communication is an extension of the traditional commercial print direct marketingCommercial printers are in the communication business
Entry Level –
Simple Business
Communications
Web-to-print
Advanced VDP –
1:1 Personalized
Communications
TransPromo
Communications
Multi channel
Communications
Integrated
Marketing
Campaign Mgt
Value
Com
pe
tencie
s/S
kill
s
Time
Simple name
and address info
Some targeted
images and text
Browser based
application
Incl. page design,
order entry, job
tracking, template
libraries, soft
proofing online
payment
Beyond mail
merge and
simple business
correspondence
Completely
unique content
based on specific,
detailed profile
info
White space in
billing docs,
statements, other
transaction docs
to deliver
targeted
messages with
full color images
and text
Personalized
docs delivered
via multiple
media, incl. print,
email, web,
mobile, etc
Point solutions
Completely integrated
management and
tracking of message,
time, person and
media
Ongoing live
interaction with
enterprise marketing
systems
The Customized Communications Continuum
23
Offering integrated cross media solutions will secure VDP sales and accelerate profitsDirect Mail (VDP) is and will be the largest spend bucket in DM in the short term
25
Sale
s v
alu
e in
$1,0
00
Gro
ss m
arg
in in
% o
f sale
s
100 100 100 95
80
15 20 45100 100
115
135
150
0%
5%
10%
15%
20%
25%
30%
35%
40%
45%
50%
0
20
40
60
80
100
120
140
160
2005 2007 2009 2011 2013
20
Integrated
Campaign
Roadmap, mgt &
dashboard
• Sellable chartable items
• drive the sales of all
media, incl VDP
Digital solutions
(email, pURL,
mobile, etc)
• Every Direct Mail
campaign must have an
online response option
• Marketers do not want
point solutions
Variable Data
• VDP is the standard
• Monochrome & 4/C
devices that run VDP
need to be fed as they are
underutilized
Traditional print• Traditional Direct Mail
is/will disappear
Source: DMA,, Romano & Broudy, expert interviews
Response
Rate
.5-1.5% 3-5% 7-9% 10%+
24
Competitive landscape is characterized by commercial printers, agencies and direct mail companies trying to enter the marketing/communications solutions marketMost print companies are still waiting at the side line
Credibility in market
as a Marketing
Solutions Provider
Media Offering
Commercial Print
Companies
Media Agencies
(Incumbent / Start-ups
Size of bubble illustrates
relative TOTAL revenues
of the company
Lo
wH
igh
Print Print & Digital
• knowledgeable
marketing &
sales
organization
• effective cross
media platform
• Infrastructure in
place
• processes
streamlined
• Although the train has
already departed still
many commercial print
companies are waiting
on the platform
• A handful of players that
started 2-3 yrs ago are now
harvesting their efforts.
• Success stories are mainly
coming from medium
sized/small companies
25
Many players are testing the waters and/or planning to enter the market for cross media direct marketing solutionsNeed to differentiate and to enter aggressively to capture market share
Integrated
Cross Media
Direct
Marketing
Campaign Mgt
Commercial Printers
Mailing and fulfillment, Print production
Perceived as technology company
Lack of (Direct) marketing knowledge
Large asset base
Direct Mail providers
DDM is a “natural” extension from DM
Direct Mail is and will be largest bucket of DM spend in the coming years
Large asset base makes them less flexible and biased towards the print channel
+
-
+-
-
+
+
Marketing Automation Vendors
Strong technology base
Vendors of campaign mgt platforms also have
strong market expertise
Lack of sales force
+
-
Companies doing it in-house
Direct control, leveraging marketing automation investments
Lack of resources
Lack of knowledge-
+-
Traditional Agencies
Already at table with marketing DMU
Focus too long on mass media
Clients moving away from purchasing
media via agencies and hire them for
their creative strenghts
-
+
-
New breed
Very flexible due small size, lack of
legacy and low overhead
Lack of scale
Lack of in-house print capabilities-
+-
+
