“Count Down to Profits”

The 7 Profit Drivers of Direct Marketing

                        Presenters:
   Bill Tyson      ...
Agenda


• 2008 Direct Marketing Review & Outlook
• Change Drivers that will Affect Direct
  Marketing - Long Term
• The 7...
“Internet advertising over the
  past 2 years has outpaced
 forecasts by 25% and 40%”


   Source: IBM Institute for Busin...
Advertising Spend to Media Consumption

                      Media Consumption vs. Advertising Dollars Spent

           ...
2008 Direct Marketing Production Trends
• Decline of Middle market service
  providers
• Digital print technologies
• Smar...
3 Macro Trends in
Direct Marketing in 2008
2009 Direct Marketing Outlook
 Vertical Specific trends:
 • US economic concerns
 • Retention
 • Multi-channel solutions
 ...
“The trends toward creative populism, personalized
  measurements, interactivity, open ad inventory
      platforms and gr...
Advertising Industry Changes
     that will Affect Direct Marketing
• Digital, Mobile and interactive formats
  (incl. ads...
Shift in Control in the Ad Industry
• Fragmentation
• 4 change drivers:
         • Control of Attention
         • Creativ...
Driver #1: Control of Attention

• Consumers are in control
• Ad-skipping, sharing and rating tools.
• Half of DVR owners ...
Driver #2: Creativity

• From campaigns that “Create
  Awareness” to those that “Drive
  engagement”
• Creative Populism
•...
Driver #3: Measurement
• Shift to “Outcome based” marketing
  • Tied to ROI
  • Individual-specific (including
    messagi...
Driver #4: Ad Inventories

• Convergence – Media Delivery
• Open Ad Platforms
3 Critical Success Factors

Creativity

Business Model Changes

Business Re-Design



             *IBM Global Business Se...
THE “7 PROFIT DRIVERS”
 OF DIRECT MARKETING
The “7 Profit Drivers”
• A Business Review Model that uses a simple and
logical approach toward improving direct
marketing...
“Move the needle” by Focusing on 7 Profitability Drivers

Rank               Level 1   Level 2   Level 3   Level 4    Leve...
7 Profit Drivers of Direct Marketing
1.   Audience
2.   Offer
3.   Contact Strategy (and Customer Experience)
4.   Media
5...
Building ROI
   What Makes People Respond?


       20%= Creative/Graphics                40%= The piece gets to the
     ...
1. Audience
• Know your customer
• Determine the value of segments
• Work the most profitable segments
Where are your Integrated database marketing capabilities?
 Reporting Stages 1-4
  1.   Standard reporting – by segment   ...
2. Offer
    • Make selling superfluous
    • Two key ingredients every successful offer delivers:
       • Value and
    ...
3. Contact Strategy
• Contact optimization strategies should vary by:
   • Product
   • Segment/sub-segment
   • Must addr...
4. Media - Outbound
•   Evaluate ROI
•   Dominate with distribution.
•   Align media spend
•   Leverage Word of Mouth
5. Channel - Inbound
• Measure and optimize leads, conversion rates and sale
  rates through all inbound channels.
6. Message
•   Impact quotient
•   Positioning
•   Tailor your message to #1, your Audience.
•   Testimonials
7. Creative
• Creative has only a 20% impact on your ROI.
• Utilize an organized approach for “Beating the control”
In the Words of Richard Cytowic
“The true marks of creativity are:
• the ability to sense which problems are likely to yie...
Web 2.0
The Impact of Social Networking
               on
       Direct Marketing
Web 2.0 – The Impact of Social
Networking on Direct Marketing




     Malibu, CA – Near Point Dume
Web 2.0
• What is Web 2.0?
• 3 Drivers:
   • People’s desire to connect
   • New and improved interactive
     technologie...
May 12, 2008
Web 2.0 – A Groundswell?

• Key characteristics
• Growth of Social Networking sites
7 Categories of Social Media
1. Publishing platforms
2. Social Networking Sites


2. Social Networking Sites
3. Democratized Content
Networks
4. Virtual Networking Platforms
5. Information Aggregators
6. Edited Social News Platforms
7. Content Distribution Site
$150 Million in Ticket Sales!
7 Social Media Marketing Principles
•   Relinquish Control over the message
•   Honesty, ethics and transparency
•   Parti...
Energizing the Base –
          Through Word of Mouth Marketing

• Word of mouth succeeds because:
   • It is believable –...
5 Common Objectives
                   Companies Pursue
•   Listening
•   Talking
•   Energizing
•   Supporting
•   Embrac...
Recommendations for the Direct Marketer
• Phase 1: Discovery
• Phase 2: Planning
  • People
  • Objectives
  • Strategy
  ...
“You can’t behave in a calm,
rational manner; you’ve got to be
 out there on the lunatic fringe.”

            -Jack Welch
Open Discussion
References/Acknowledgements
• “Vertical Market Trend in Direct Mail” - January 2008
  Winterberry Group.
• “The End of Adv...
http://groundswell.forrester.com
Definitions and Consumer Usage
•   Social networking sites – content generated web sites that are used to connect
    peop...
Abia   Direct Marketing Presentation   Final
Abia   Direct Marketing Presentation   Final
Abia   Direct Marketing Presentation   Final
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Abia Direct Marketing Presentation Final

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Features major direct marketing and advertising trend with long term impact, details the 7 profit drivers for insurance direct marketing and explores Web 2.0 opportunities for direct marketers.

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Abia Direct Marketing Presentation Final

  1. 1. “Count Down to Profits” The 7 Profit Drivers of Direct Marketing Presenters: Bill Tyson Teressa Sund Executive Vice President Vice President AMPAC Insurance Marketing U.S. Bancorp Insurance Services, LLC
  2. 2. Agenda • 2008 Direct Marketing Review & Outlook • Change Drivers that will Affect Direct Marketing - Long Term • The 7 Profit Drivers of Direct Marketing • Web 2.0 as a Direct Marketing Tool • Open Discussion
  3. 3. “Internet advertising over the past 2 years has outpaced forecasts by 25% and 40%” Source: IBM Institute for Business Value analysis
  4. 4. Advertising Spend to Media Consumption Media Consumption vs. Advertising Dollars Spent Time Spent Ad Spend Area of Areas of Inefficiency Opportunity 34% 35% 30% 26% 25% 23% 23% 22% 20% 18% 18% 15% 13% 10% 8% 4% 4% 5% 3% 3% 2% 0% Network Cable Radio Magazine Newspaper Internet Other 4 Sources: Time Spent: SRI Knowledge Networks, Spring 2007; Ad Spend: TNS Media Intelligence, Strategy 2007 YTD (1/1/07-9/30/07) Total Spend by Media
  5. 5. 2008 Direct Marketing Production Trends • Decline of Middle market service providers • Digital print technologies • Smart statements • Variable, data driven fulfillment • Customer service Vertical Market Trend in Direct Mail - January 2008 Winterberry Group
  6. 6. 3 Macro Trends in Direct Marketing in 2008
  7. 7. 2009 Direct Marketing Outlook Vertical Specific trends: • US economic concerns • Retention • Multi-channel solutions • Postal optimization • Marketing automation Vertical Market Trend in Direct Mail - January 2008 Winterberry Group
  8. 8. “The trends toward creative populism, personalized measurements, interactivity, open ad inventory platforms and greater consumer control will generate more change over the next 5 years than the advertising industry has seen in the last 50 years.” Dr. Saul J. Berman, IBM Global Media Practice
  9. 9. Advertising Industry Changes that will Affect Direct Marketing • Digital, Mobile and interactive formats (incl. ads in games) are clearly the key to overall ad-industry growth. • Four Change-Drivers • 3 Critical Success Factors *IBM Global Business Services report, “The End of Advertising As We Know It,” 2007.
  10. 10. Shift in Control in the Ad Industry • Fragmentation • 4 change drivers: • Control of Attention • Creativity • Measurement • Advertising Inventories *IBM Global Business Services report, “The End of Advertising As We Know It,” 2007.
  11. 11. Driver #1: Control of Attention • Consumers are in control • Ad-skipping, sharing and rating tools. • Half of DVR owners watch 50% or more of programming on re-play (enables ad-skipping). • Personal PC time now rivals TV time • The biggest marketer challenge
  12. 12. Driver #2: Creativity • From campaigns that “Create Awareness” to those that “Drive engagement” • Creative Populism • User Generated Content
  13. 13. Driver #3: Measurement • Shift to “Outcome based” marketing • Tied to ROI • Individual-specific (including messaging) • Involvement-based (3-D interaction with the brand)
  14. 14. Driver #4: Ad Inventories • Convergence – Media Delivery • Open Ad Platforms
  15. 15. 3 Critical Success Factors Creativity Business Model Changes Business Re-Design *IBM Global Business Services report, “The End of Advertising As We Know It,” 2007.
  16. 16. THE “7 PROFIT DRIVERS” OF DIRECT MARKETING
  17. 17. The “7 Profit Drivers” • A Business Review Model that uses a simple and logical approach toward improving direct marketing results. • Involves a process of rigorously reviewing and rating the profitability of your direct marketing results. •Developing action plans to improve key the 7 Profit drivers.
  18. 18. “Move the needle” by Focusing on 7 Profitability Drivers Rank Level 1 Level 2 Level 3 Level 4 Level 5 Audience/SoM X Offer X Contact/Personal X Experience Media X Channel X Message X Creative X
  19. 19. 7 Profit Drivers of Direct Marketing 1. Audience 2. Offer 3. Contact Strategy (and Customer Experience) 4. Media 5. Channel 6. Message 7. Creative
  20. 20. Building ROI What Makes People Respond? 20%= Creative/Graphics 40%= The piece gets to the right person 20% 40% 40% 40%= Relevancy Source: PODI 2006
  21. 21. 1. Audience • Know your customer • Determine the value of segments • Work the most profitable segments
  22. 22. Where are your Integrated database marketing capabilities? Reporting Stages 1-4 1. Standard reporting – by segment • What happened? 2. Ad Hoc reporting – by segment • How many, how often, where? 3. Query/drill down • Where exactly is the problem? 4. Alerts • What actions are needed? Analytics Stages 5-8 5. Statistical analysis • Why is this happening? 6. Forecasting/extrapolation • What if these trends continue? 7. Predictive modeling • What will happen next? 8. Optimization • What is the best that can happen? Source: Competing on Analytics by Davenport and Harris
  23. 23. 2. Offer • Make selling superfluous • Two key ingredients every successful offer delivers: • Value and • Satisfaction • Marketers can enhance the value of an offering to the customer by: • Raising benefits. • Reducing costs. • Raising benefits while lowering costs. • Raising benefits by more than the increase in costs. • Lowering benefits by less than the reduction in costs. *
  24. 24. 3. Contact Strategy • Contact optimization strategies should vary by: • Product • Segment/sub-segment • Must address lifecycle needs. • Contact Optimization Formula
  25. 25. 4. Media - Outbound • Evaluate ROI • Dominate with distribution. • Align media spend • Leverage Word of Mouth
  26. 26. 5. Channel - Inbound • Measure and optimize leads, conversion rates and sale rates through all inbound channels.
  27. 27. 6. Message • Impact quotient • Positioning • Tailor your message to #1, your Audience. • Testimonials
  28. 28. 7. Creative • Creative has only a 20% impact on your ROI. • Utilize an organized approach for “Beating the control”
  29. 29. In the Words of Richard Cytowic “The true marks of creativity are: • the ability to sense which problems are likely to yield results, and so, are worth tackling, • confidence that you can solve the problems that you single out for a solution, and • a dogged persistence that keeps you going when others would give up.”
  30. 30. Web 2.0 The Impact of Social Networking on Direct Marketing
  31. 31. Web 2.0 – The Impact of Social Networking on Direct Marketing Malibu, CA – Near Point Dume
  32. 32. Web 2.0 • What is Web 2.0? • 3 Drivers: • People’s desire to connect • New and improved interactive technologies • Online economics • There is a revenue model in there somewhere!
  33. 33. May 12, 2008
  34. 34. Web 2.0 – A Groundswell? • Key characteristics • Growth of Social Networking sites
  35. 35. 7 Categories of Social Media
  36. 36. 1. Publishing platforms
  37. 37. 2. Social Networking Sites 2. Social Networking Sites
  38. 38. 3. Democratized Content Networks
  39. 39. 4. Virtual Networking Platforms
  40. 40. 5. Information Aggregators
  41. 41. 6. Edited Social News Platforms
  42. 42. 7. Content Distribution Site
  43. 43. $150 Million in Ticket Sales!
  44. 44. 7 Social Media Marketing Principles • Relinquish Control over the message • Honesty, ethics and transparency • Participation in the community is marketing • Communications to audiences is outdated • Build value for the community • Inspire your community with real, exciting information • Intelligently manage media
  45. 45. Energizing the Base – Through Word of Mouth Marketing • Word of mouth succeeds because: • It is believable – testimonials are far more credible than any media source. • It is self-reinforcing – if you hear the same thing from multiple sources – then it must be true • It is self spreading – if a product or service is great, its word of mouth generates more word of mouth and the effect is exponential.
  46. 46. 5 Common Objectives Companies Pursue • Listening • Talking • Energizing • Supporting • Embracing
  47. 47. Recommendations for the Direct Marketer • Phase 1: Discovery • Phase 2: Planning • People • Objectives • Strategy • Technology • Phase 3: Execute – Start Talking to the Groundswell • http://www.willitblend.com/videos.aspx?type=unsafe&vid eo=glowsticks
  48. 48. “You can’t behave in a calm, rational manner; you’ve got to be out there on the lunatic fringe.” -Jack Welch
  49. 49. Open Discussion
  50. 50. References/Acknowledgements • “Vertical Market Trend in Direct Mail” - January 2008 Winterberry Group. • “The End of Advertising As We Know It,” IBM Global Business Services report,” 2007. • “Groundswell – winning in a world transformed by social technologies”, Charlene Li and Josh Bernoff. Harvard Business Press, 2008, Forrester Research, Inc. • Develop a customer profile at http://groundswell.forrester.com • “Now is Gone”, A Primer on New Media, Geoff Livingston, Bartelby Press, 2007. • “Social-networking sites work to turn users into profits”, USA Today, by Jon Swartz, May 12, 2008.
  51. 51. http://groundswell.forrester.com
  52. 52. Definitions and Consumer Usage • Social networking sites – content generated web sites that are used to connect people. Facebook, MySpace, LinkedIn and Spoke. • Blog - A blog (an abridgment of the term web log) is a website, usually maintained by an individual, with regular entries of commentary, descriptions of events, or other material such as graphics or video. 25% read blogs, 14% comment on blogs and 11% write a blog. • Wiki – (from the Hawaiian word “quick”) A wiki is a collection of web pages designed to enable anyone who accesses it to contribute or modify content, using a simplified markup language. 22% visited wikipedia –the 8th most popular site on the web; only 6 % of consumers added content to a Wiki. • Tags - A tag is simply a word you use to describe a piece of content – bookmark a web site, photo or an article. Unlike folders, you make up tags when you need them and you can use as many as you like. 7 % of US consumers use tags. • Widget – desktop item that streams content. • Forums and ratings reviews – with posts and responses threaded together into a discussion. 1 in 5 US consumers are involved in forums. • RSS (really simple syndication) feeds and Widgets (i.e. weather widget) – giving people the content, in the form of updates, they want . 8% of US Consumers use RSS.

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