Content Wraps Saatchi, Zenith and Toyota partnered with The CW Network, D.C. Comics, and Warner-Brothers Studios to develop a customized experience 11-1

Product Placement

3-*** C3 Retention Rates Any Surprises?

3-*** Creative Execution Assignment Kate will send out schedule 15-4

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Direct-Response Marketing Advertising Principles and Practices

Questions We’ll Answer How do we define direct marketing and explain the process? How are databases used in direct marketing? Who are the key players in direct marketing? 15-7

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Who am I? 15-9

Hand Out 15-10

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Advertising and DR Art vs. Science Soft measures vs. hard measures Stickiness vs. awareness building (hand out #2) Now starting to blend, esp with growth of digital

What is direct marketing? Connecting sellers and customers to deal with each other directly rather than using an intermediary, like a wholesaler or retailer. Designed to elicit an immediate response. Emphasis on tested methods and an iterative process to develop strategy. Database, database, database! 15-13

Case Study Meredith Corporation 15-14

The Gecko Goes Direct Gecko, Caveman, celebrity testimonials Their share of premiums grew from 4.6–6.9% from 2001 to Visit the Site

15-5 Direct Marketing Industry

Advantages of Direct Marketing Can be personalized to be more persuasive. Results are measurable; ROI is more easily known. Relevant customer information can be collected to produce more useful databases and selective reach, reducing waste. Convenient to purchase; not restricted to a location. The marketer controls product until delivery

 Consumers are reluctant to purchase a product they can’t touch or feel.  Annoyances associated with direct marketing (junk mail, telemarketers).  Customer privacy, data sharing, and identity theft issues.  Tension between building long-term brand image and driving short-term sales Disadvantages of Direct Marketing

1.Setting objectives and making strategic decisions (research helps advertisers target, segment, prospect, and set objectives). 2.The communication of an offer (the message) by the seller through the appropriate medium. 3. Response, or customer ordering. 4. Fulfillment, or filling orders and handling exchanges and returns. 5.Maintenance of the company’s database and customer service (relationship building) Steps in the Direct Marketing Process

The Direct- Marketing Process 15-10Prentice Hall, © 2009

Objectives/Strategy Provide product information Create sales Retain and strengthen customer relationships Develop leads Generate traffic Test offers 15-21

Targeting Identifies who is to receive the offer. Important because the Cost Per Thousand is very high. Current customers are the best prospects. Order products, visit a dealer, return a response card, visit a website Three criteria (RFM) predict who is most likely to buy again: Recency—they purchased recently Frequency—they purchase often Monetary—they spend a lot of money Profiling For acquiring new customers, a targeting strategy is to profile current customers and look for potential customers with similar profiles

Measurement and Evaluation Principle: Because direct-marketing messages are constantly being measured, it is easier to learn what works and modify succeeding campaigns based on results than with advertising.

Branded Content-Absolut 8-24

Using Databases  Marketers use databases to:  Keep track of customers  Identify prospects  Segment groups into customers and prospects, to send relevant offers to each group  E.g., Carnival Cruise Lines segments customers into new customers, returning passengers, and frequent cruisers.  Each group gets a different “Sail and Sign” card, each with different perks and privileges  Direct marketers use the same strategy when sending offers to customers or prospects.  Better customers get more premium quality pieces than lower-usage customers who get a more modest piece

A Circular Process Primary database objectives: 1.Record names of customers 2.Store and measure ad results 3.Store and measure purchasing performance 4.Vehicle for continuing direct communication Principle: A reliable database of customer and prospect contact information lies at the heart of effective direct marketing.

Database Management Process 1.Collection Point Completed warranty card, contest entry, trade show card 2.Data Entry Entered into computer and merged with other information 3.Data Assessment Determine relevant level of detail 4.Data Clustering Create clusters of characteristics and behaviors for segmenting or targeting 5.Data Application Apply to marketing strategy or problem (e.g., send coupons) 6.Data Sharing Manufacturer shares info with retailers 7.Data Refinement Corrections, updates, additions, deletions 15-27

15-21 Database Management Process Prentice Hall, © 2009

Lists Customer and prospect information including addresses, phones, s. Can be purchased or rented from list brokers. Lists tied to demographics, psychographics, geography, hobbies, affiliations, postal routes. New lists are crated by merging and purging Three types of lists: House lists: marketers own customers or members Response lists: people who respond to some type of direct-response offer Compiled lists: specific categories such as new homebuyers, graduating seniors, new mothers 15-29

1.Advertisers 2.Agencies 3.Media Companies 4.Customers Four Key Players in Direct-Response Marketing

Key Players: (1) Advertisers Companies whose primary business is selling products and services by mail or phone, or direct response advertising. Retail stores who use direct marketing as a supplement to other forms of marketing. Dell, GEICO 15-31

Key Players: (2) Agencies Advertising agencies— department or separate direct-response company owned by the agency Direct marketing agencies—independent, full-service agencies specializing in direct response Service firms—printing, mailing, list brokering, data management Fulfillment houses— store/ship requested information/products 15-32

Key Players: (3) Media Companies The media that deliver messages by phone, mail, or the Web Used to make an offer with a prospect U.S. Postal Service 15-33

Key Players: (4) Customers Dislike intrusiveness, but appreciate convenience Types of customers Push-button shopper (phone) Mouse-clicking shopper (computer) 15-34

Tools of Direct Marketing 1.Direct Mail 2.Catalogs 3.Telemarketing 4.Direct-Response Advertising 5.Web-based e- marketing 15-35

A print advertising message for a product or service, delivered by mail Most popular method Variable data use digital printing to highly personalize messages Uses bulk mail rates Response is 2–3% Fairly high CPM, but easy to calculate payout rate The Tools of Direct Marketing: (1) Direct Mail

15-37 Advantages Tells a story Engages attention Personalizes message Builds in feedback Reaches the unreachable Description The medium offers a variety of formats and provides enough space to tell a complete sales story. Because direct mail has little competition when it is received, it can engage the reader’s attention. Because of the use of databases, it is not possible to personalize direct mail across a number of consumer characteristics, such as name, product usage, purchase history, and income. Direct mail is particularly conducive to marketing research and can be modified until the message design matches the needs of the desired target audience. Direct mail allows the marketer to reach audiences who are inaccessible by other media. Table 15.1Advantages of Direct Mail

15-38 Advantages Negative perceptions Cost Mailing list Response rates Vulnerability Description The main drawback of using direct mail is the widespread perception that it is junk mail. According to a Harris-Equifax Consumer Privacy Survey, about 46 % of the public see direct-mail offers as a nuisance, and 90% consider them an invasion of privacy. Direct mail has a higher cost per thousand than mass media. A great deal of this high cost is a result of postage. (However, it reaches a more qualified prospect with less waste.) Another cost factor is the maintenance of the database. To deliver an acceptable response rate, the quality of the mailing list is critical. It must be maintained and updated constantly. Because of the changing nature of mailing lists, as well as the difficulty of keeping relevant data in the database, the response rate can be a slow as 2 or 3%. Even with that low response, however, database marketers can still make money. Direct-mail delivery is vulnerable to natural disasters as well as catastrophes such as the 9/11 terrorist attacks. Table 15.1Disadvantages of Direct Mail

Creating Effective Direct Mail Get the attention of the targeted prospect as the envelope comes from the mailbox. Create a need for the product, show what it looks like, and demonstrate how it is used. Answer questions, as a good salesperson does, and reassure the buyer. Provide critical information about product use. Inspire confidence, minimize risk, and establish that the company is reputable. Make the sale by explaining how to buy, how to order, where to call, and how to pay for the purchase. Use an incentive to encourage a fast response

Writing Effective Letters Attention Pictures and benefit-oriented headlines to grab attention or generate curiosity. Personalize Use a name or, if not available, a topic (“Dear Cat Lover”). Lead in A brief yet compelling or surprising statement—“Dear Friend: I could really kick myself!” The Offer Make it as early in the letter as possible. The Letter Use testimonials or other specifics to describe benefits. The Closing Repeat the offer, add incentives or guarantees, and include a clear call to action

Issue: Trees, Water, and Waste Direct mail uses an estimated 100 million trees and 28 billion gallons of water per year Plus disposal and recycling costs; in Colorado, direct mail accounts for 340 million pounds of trash per year. Should direct mail be banned? Would this infringe on advertisers’ rights to commercial free speech? What do you do if you’re an environmentally responsible advertiser? 15-41

A multiple-page direct mail publication showing a variety of merchandise Increasing in number; even while marketers are refining databases, cutting back on no. of recipients Catalogs can drive e-commerce, Web site purchases Specialty catalogs are growing in number The Tools of Direct Marketing: (2) Catalogs

15-43 Advantages Targeted Engages attention Complete information Convenience Description Can be directed at specific market segments. Employs high-quality design and photography (see Alsto’s cover). Extensive product information and comparisons are provided. Offer a variety of purchase options. Table 15.2Advantages and Disadvantages of Catalogs Disadvantages Negative perceptions Costs Response rate Mailing list Description Catalogs are viewed as junk mail by many recipients. The cost per thousand of catalogs is higher than mass media. The response is relatively low at 3 to 4%. Databases must be constantly maintained.

Almost as persuasive as personal sales, but a lot less expensive. Inbound vs. outbound. Message must be simple, compelling, and short. Issues include intrusion, privacy, and fraud. Predictive dialing can call even unlisted numbers Fraudulent behavior has tarnished telemarketing’s image Do Not Call registry, “Privacy Manager,” and Caller ID The Tools of Direct Marketing: (3) Telemarketing

Print Media Ads in newspapers and magazines feature a coupon, order form, address, toll-free number; ask for response. Broadcast Media Radio provides targeted audiences, especially mobile audiences. Cable is targeted to particular interests. TV uses infomercials and direct-response ads The Tools of Direct Marketing: (4) Direct-Response Advertising

Combines strengths of direct mail and telemarketing. Moves marketers closer to one-to-one marketing. Combines database information and technology for highly personalized, low-cost messages to mass audience. Spam is an issue. Permission marketing gives recipients the choice to “opt in” or “opt out.” The Tools of Direct Marketing: (5) Internet

15-47 Eddie Bauer Visit the Site The Eddie Bauer Web site lets site visitors “try on” clothes in a virtual dressing room” and also sends messages offering special prices based on customers’ past purchases.

Integrated Direct Marketing: A systematic way to get close to your best current and potential customers. Seeks to achieve precise, synchronized use of the right media, at the right time, with a measurable return on dollars spent. Direct mail with a reply card and an 800 number, followed by a phone call. Lifetime Customer Value (LCV) is an estimate of how much a purchase volume a customer or target market will generate over a length of time

Global Considerations The use of databases, credit cards, toll-free numbers and the Internet are driving direct marketing growth in Far Eastern and European countries. Direct marketing is especially important in countries where advertising is tightly regulated. Government postal regulations also limit the use of direct mail. Regulations, standards, and cultural meanings vary greatly from country to country. Creative messages, visuals, and words often don’t easily translate across cultures

Discussion Questions

Discussion Question 1 Most people hate telemarketing. Say you work for the local campus environmental organization. How could you conduct a campus and community telemarketing effort that would not generate resistance? Apply your ideas to developing a telemarketing program to promote campus fund-raising for a good cause, such as a campus Habitat for Humanity project? Your primary targets are students, faculty, and staff