1. Direct Marketing Overview Advertising University April 6, 2006

2. Agenda Introductions Definition of direct marketing Customer lifecycle stages What makes a successful direct mail effort? –The mailing list (or database) –The offer –The creative How it comes together When should you use direct? Review samples brought in by class The direct marketing mantra: test-measure-refine Key metrics How to tell if you will love direct marketing like I do Suggested reading, etc.

3. Introductions Me: –15 years in direct marketing Specialize in direct marketing strategy Currently Direct Mail General Manager at Lexicon Marketing Former VP/Direct Marketing here at TPG! You? –Anyone on a direct marketing driven account? –Do share!

4. Definition of direct marketing Targeted Response vehicle: BRE, BRC, 800#, fax, web form

5. Customer lifecycle stages We market to people differently based on where they are in their lifecycle: Lifecycle StageTerminology in “the biz” ProspectAcquisition LeadConversion Responder non- converter CustomerRetention LapsedRecapture WinBack

6. Q: What makes a successful direct mail effort? The mailing list (or database)? The offer? The creative? Note to self: Stop here so you don’t give away the answer A: All three, to various degrees. – Conventional wisdom says: The mailing list (or database) – 40% The offer? – 40% The creative? – 20%

7. The List Srds.com

8. The Offer An offer is a promotion –It is not the product itself –It is what you do to get the prospect to want to buy the product What are some examples from your sample mailings? Always use a “Call to Action” (CTA) Expiration dates work!

9. The Creative Why is the creative a relatively small factor in direct marketing performance? (Discuss) –Opportunity to really tell a story – you have more real estate –Test results have told us this time and time again –The “What’s in it for me?” factor Visual look and feel depends on the target –Doesn’t have to be “ugly” –2 color can be as good as 4 color Copy –Don’t spill your guts on the outer envelope –Don’t be afraid to tell the prospect what to do –Be clear about what the prospect gets when they respond Mailing Format –Letter/Envelope vs. Self-mailer –Additional components: BRE, buckslip (lift note), brochures –USPS adding a surcharge for certain formats

10. How it Comes Together Acquisition (Lowest response) ConversionRetention (Highest response) List Source Usually rented (or acquired via space ads, web forms, promotions…) Database OfferOften gives prospects a better deal than customers. Why? “Second best” offers Send out as soon as possible Vary offers to keep customers enticed Loyalty programs CreativeEconomical format Limited personalization opportunities Exception: B2B Can thank for previous response Can often spend a bit more on interesting formats Greatest personalization opportunities

11. Q: When should you use Direct? A: When the Goal = Increased Sales Are there specific sales opportunities in a particular lifecycle stage… ACQUISITION? –Generate leads CONVERSION? –Convert leads RETENTION? –(Key question: How big is your customer database? The bigger it is the more opportunity) –Increase sales from current customers RECAPTURE –Reactivate lapsed customers

12. Target must be specific Behavior/Trigger Event? (example: Newborn baby, new mover) Demographic? (example: Age 65+, in certain zip codes) Currently use direct successfully? What are the other delivery systems? Product needs explanation? If yes Other types of direct media may work too, particularly in B2B If no Would tweaks make it work? Look for “nuggets” Try a whole new approach Electronic Internet (Email) Radio Phone DRTV Print Magazine Newspaper Brochures Can be detailed DRTV May be a candidate B2B Products/services often need explanation. Multiple direct media often used: phone, email, intrusive direct mail

13. Mailing Sample Review

14. The DM Mantra Test-Measure-Refine Test Measure Refine

15. Key Metrics Every company tweaks the definitions, so it is important to ask how a metric is calculated – don’t assume –Response Rate –Conversion Rate –Cost per Acquisition –Lifetime Value (ROI)

16. How to tell if you will love Direct Blend of creative/analytical skills (but more analytical) No burning desire to raise creative to the “next level” Don’t mind learning a lot of rules (before breaking them) Detail oriented Can communicate with with both nerds & creative types, bring them into a room, and actually make something productive happen! Thick skin (especially if you work at a general agency) Desire to prove your theories with numbers, yet understand that not everyone believes statistics (hopefully not your client!)

17. Suggested Reading, etc. “The New Direct Marketing” –by David Shepard Associates the-dma.org –The Direct Marketing Association’s website Srds.com –Datacards for thousands of lists and databases –List brokers, managers, compiler “On the Art of Writing Copy” –by Herschell Gordon Lewis Inside Direct Mail –Sometimes they even give results