Entering The Digital Direct Marketing Space


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Entering The Digital Direct Marketing Space

  1. 1. June 2010Entering theDigital Direct Marketing SpaceAn IntroductionJoep Hutschemakers
  2. 2. Market definitionDirect Marketing Definition Traditional DM Channels Direct Marketing Definition Digital DM Channels  Direct Mail (Catalog)  Email  Direct Mail (Non-catalog)  Internet Display  An interactive non face-to-face process of  Telephone Marketing addressable communication …  Internet Search  DR* Television  …that uses one or more advertising media…  Internet Other  DR* Radio  …to effect, at any location, a measurable sale, lead,  Mobile retail purchase, or charitable donation…  DR* Magazine  Social Networking  … with this activity analyzed on a database for the  DR* Newspaper development of ongoing mutually beneficial relationships  Insert Media between marketers and customers, prospects, or donors. *DR=Direct Response Purpose  Solicit an order (Direct Order)  Generate a lead (Lead Generation)  Drive purchases at retail outlets (Retail Purchase)  Raise funds for nonprofit organizations (Fundraising)Source: The power of direct marketing - 2009-2010 edition by DMA; Principles of Marketing Engineering by Gary Lilien 1
  3. 3. MarketFundamentals 2
  4. 4. The World Is Moving Digital Relevance, Interactivity and Measurability! From: To: Mass Targeted Offline Online Single Multi Channel One way push Two-way dialogue Art Science (by the numbers) Today it is all about Relevancy, Interactivity and Measurability 3Source: US Dep of Commerce/NTIA, InfotTrends, TREKK Cross Media, The Media Audit 2009
  5. 5. 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 Direct Marketing Spend outgrows mass marketing spend Mass 52% 48% 46% 50% 54% 52% DM 48%Source: Outsell Annual Advertising Study 2010, The Power of Direct marketing 2009-2010 edition by DMA: 4
  6. 6. Digital Direct Marketing is expected to surpass Direct Mail in 2014… Total US DM Expenditures in $b CAGR ‘04-’09 CAGR 09-’14 2.2% (3.3)% Traditional Other .5% (1.1)% Direct Mail 16% 20% DigitalSource: Outsell Annual Advertising Study 2010, The Power of Direct marketing 2009-2010 edition by DMA:, expert interviews 5
  7. 7. … as Digital will continue to capture share from traditional media But Direct Mail is not going to disappear overnight CAGR ‘09-’14 DM Expenditures per Channel DR Newspaper DR radio Traditional Media DM (catalog) Losing Share DR Magazine Telephone 7%-14% DR TV DM (non-catalog) 9%-18% 11%-22% Digital 13%-24% Media 13%-26% Capturing Share 15%-30% 29%-60% 6Source: Outsell Annual Advertising Study 2010, The Power of Direct marketing 2009-2010 edition by DMA:, Winterberry Group Survey
  8. 8. It is all about ROI – Digital channels give highest ROI ROI: DM driven sales per dollar of DM advertising ROI by Medium Average ROI across all verticals $1 invested in DM results in $11.7 of sales Avg across all 11.7 verticalsSource The Power of Direct marketing 2009-2010 edition by DMA, eMarketer cited by ExactTarget, „08 Channel Preference Survey 7
  9. 9. Customer Needs 8
  10. 10. Marketers felt relatively comfortable with the traditional direct marketing andmass marketing channels 9
  11. 11. In the last decade there has been a rise in new interactive media channelsmarketers need to keep up with 10
  12. 12. And with these new interactive channels the dynamics of the marketingcommunications landscape has become quite complexLack of knowledge, time and optimization Impacts all aspects of the Direct Marketing Value Chain… 11
  13. 13. Biggest challenge for marketers is obtaining quality data to identify prospects and bring relevancy Analyze Data & Set Campaign Build & Design Creative Track Results Identify Prospects Strategy Execute campaign Unfulfilled Important Needs Comments Opportunity for SR Up-to-date lists • Physical addresses go out of date 1%/mo • SR will plow back the immense • E-mail addresses go out of date 3%/mo amount of response data that SR gather s via registration Sufficient data and analytic • Databases are still too transactional and tools/through deploying digital tools to come up with more not suitable for truly 1-1 marketing media relevant offerings “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) 12Source: : 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
  14. 14. Lack of cross media optimization as well as lack of knowledge But appetite to experiment Analyze Data & Set Campaign Design Creative Build & Track Results Identify Prospects Strategy Execute campaign Unfulfilled Important Needs Comments Opportunity for SR Enough time to keep up with the meteoric rise of new • As technologies quickly mature, • Print providers are seen as channels and media types technical companies, marketers marketers look to consolidate purchase decisions with single supplier and agencies expect us to educate Technical savvy - marketing them on the use of latest teams technologies! Innovate • Appetite to experiment. Fear factor: “if I • Offer end-to-end solutions instead don‟t do it someone else is going to eat of point solutions my lunch” Cross media optimization as • they are site- and channel- centric • Provide education and insights in marketers organized in silos instead of a customer- centric‟ performance of all building blocks in relationship marketing‟ view a cross media campaign (channel, response type, lists, etc) • Each online marketer trying to understand ROI from efforts in their channelSource: 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; 13
  15. 15. Turning data into action is hard so is the integration of traditional and emerging dataROI, ROI, ROI Analyze Data & Set Campaign Build & Track Results Design Creative Identify Prospects Strategy Execute campaign Unfulfilled Important Needs Comments Opportunity for SR ROI, ROI, ROI • Marketers are being held accountable • Help them to keep their job, by like never before showing how their money is spend and what the return is Turning data into action • Multitude of online channels leaves • Provide insightful dashboards marketer adrift in sea of data Integration of Traditional and • pURLs remove the lid of the black Emerging data box in direct marketing, it helps you to optimize moving forward “Channels will always change, the need for data doesn‟t nobody wants less data.” Source: 1) Key Online Marketing Trends for 2010 Unica survey 155 marketers, interviews 14
  16. 16. ProductSolution 15
  17. 17. 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 Analyze data & Set Campaign Build & Execute Design Creative Track Results identify prospects Strategy Campaign Choose Channel Choose Media Type Choose Response Channel Web Social Postcard Flyer Call center registration DirectMail network Contest/ Banner Letter Trade Show pURLS Newspaper/ Email magazine Newspa Fax Data HTML QR Codes Internet Mobile per Ad Import Webinar Insert Survey Business TV/Radio Telephone Reply Card Response Measure: Fulfillment: Marketing Report Lead Distribution Kitting, Email, All responses collected in Dashboards Electronic, VDP, one database. Real Time, automatically Sales Reports POD, Mail, etc. Centralized, Online, generated Qualified 16
  18. 18. Integrated cross media solution for commercial print companies Build on key elements of supply chain mgt, incl reducing printed inventory Ambition: with POD capabilities, warehouse mgt and fulfillment Communication Service Provider By building, executing and measuring integrated cross channel Data modeling and data direct marketing mining campaigns. (“I still do Core competencies your printing and Comprehensive marketing program fulfillment too”) measurement metrics and analytics 1to1 ROI-driven multi-channel marketing solutions Web To Print Digital asset mgt systems/inventory mgt Mailing & Fulfillment Best-in-class prepress and print productionToday:Mail/fulfillment/print serviceprovider. By providingcustomized document mgt andworkflow solutions. Printing on Timedigital press, offset, packingand shipping orders. (“We cando Direct Mail too) 17
  19. 19. Marketing & Sales 18
  20. 20. Multi-Channel Communications – A Different Kind of Sale Different kind of cultureSales: Different DMU Need to get past the print buyer and get to the marketing leadershipSales: 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 thisSource: Multi-Channel Communications Measurement & Benchmarking. InfoTrends, 2008., client and expert interviews 19
  21. 21. Sales: Different Decision Making Unit Roles involved in buying DDM solutions Role Responsibility Look for in DM solutions Sales pitch focus Marketing  Overall marketing  Integrating processes across  Strategy, leadership strategy and budget channels and departments, measurement, (CMO, VP) enhance collaboration and marketing productivity, measure overall optimization performance Relationship  Develop targeted marketing  Functionality that supports  Emphasize marketer programs aimed at sustaining and segmentation, campaign mgt, and customer insight (direct and growing customers‟ or prospects‟ customer analysis and value mgt database interest in a firm‟s products or marketers) services  Personalization, dialog marketing,  Appetite for event triggers, and contact technology optimization Interactive  Monitor and apply new and emerging  Alignment of internal and external • Integrating marketer channels and technology solutions mostly activities, centralize measurement, interactive delivered by smaller vendors focused on and optimize spend channels specific niche /area of expertise Marketing  Manage marketing budgets, establish standards, close  Simple, intuitive user interfaces that  Budgets, operations the measurement loop support many users with varying processes, levels of analytical and marketing fulfillment  Manage and maintain marketing content demands  Manage/ coordinate relationships with broader marketing ecosystem of vendors, suppliers, distributors, and service providers 20Source: The Forrester Wave :Enterprise Marketing Platfroms Q1 2008, Marketing Automation Indsytry Spotlight by TM Capital, Client interviews
  22. 22. StrategicAspects 21
  23. 23. Personalized digital 1:1 communication is an extension of the traditionalcommercial print direct marketingCommercial printers are in the communication business The Customized Communications Continuum Value Integrated Competencies/Skills Marketing Campaign Mgt Multi channel Communications TransPromo Communications Advanced VDP – 1:1 Personalized Communications Web-to-print Entry Level – Simple Business Communications Time  Simple name  Browser based  Beyond mail  White space in  Personalized  Completely integrated and address info application merge and billing docs, docs delivered management and simple business statements, other via multiple tracking of message,  Some targeted  Incl. page design, correspondence transaction docs media, incl. print, time, person and images and text order entry, job to deliver email, web, media tracking, template  Completely targeted libraries, soft mobile, etc  Ongoing live unique content messages with proofing online based on specific,  Point solutions interaction with 22 full color images payment detailed profile enterprise marketing and text info systems
  24. 24. Offering integrated cross media solutions will secure VDP sales and accelerate profits Direct Mail (VDP) is and will be the largest spend bucket in DM in the short term 160 50% 150 45% 140 135 25 Integrated • Sellable chartable items Campaign 40% • drive the sales of all 115 20 Roadmap, mgt & 120 media, incl VDP Gross margin in % of sales dashboard 35% Sales value in $1,000 100 100 15 20 45 • Every Direct Mail 100 30% Digital solutions campaign must have an (email, pURL, online response option 80 25% mobile, etc) • Marketers do not want point solutions 20% • VDP is the standard 60 • Monochrome & 4/C 100 100 100 Variable Data 95 15% devices that run VDP Print need to be fed as they are 40 80 underutilized 10% 20 5% • Traditional Direct Mail Traditional print is/will disappear 0 0% 2005 2007 2009 2011 2013 Response .5-1.5% 3-5% 7-9% 10%+ Rate 23Source: DMA,, Romano & Broudy, expert interviews
  25. 25. Competitive landscape is characterized by commercial printers, agencies and direct mail companies trying to enter the marketing/communications solutions market Most print companies are still waiting at the side line • A handful of players that started 2-3 yrs ago are now harvesting their efforts. • Success stories are mainly coming from mediumCredibility in market sized/small companies as a Marketing Solutions Provider High• knowledgeable marketing & sales organization• effective cross media platform• Infrastructure in Commercial Print Companies place Low• processes Media Agencies (Incumbent / Start-ups streamlined Size of bubble illustrates relative TOTAL revenues of the company Print Print & Digital • Although the train has Media Offering already departed still many commercial print companies are waiting on the platform 24
  26. 26. Many players are testing the waters and/or planning to enter the market for crossmedia direct marketing solutionsNeed to differentiate and to enter aggressively to capture market share Commercial Printers Direct Mail providers + DDM is a “natural” extension from DM+ Mailing and fulfillment, Print production Direct Mail is and will be largest bucket of+ Perceived as technology company + DM spend in the coming years- Lack of (Direct) marketing knowledge Large asset base makes them less flexible- Large asset base - and biased towards the print channel Traditional Agencies Integrated New breed+ Already at table with marketing DMU Cross Media Focus too long on mass media + Very flexiblelow overhead lack of due small size,- Clients moving away from purchasing Direct legacy and - Lack of scale- media via agencies and hire them for Marketing - Lack of in-house print capabilities their creative strenghts Campaign Mgt Marketing Automation Vendors Companies doing it in-house + Strong technology base + Direct control, leveraging marketing automation investments Vendors of campaign mgt platforms also have + strong market expertise - Lack of resources - Lack of sales force - Lack of knowledge 25
  27. 27. Questions?Email: Hutschemakers@gmail.com 26 26