Tuesday, June 17, 2008
Direct Marketing and This Flippin' Economy
As you probably know by now, we tend to be pretty darn optimistic bloggers! In previous posts, we've discussed how this slowing economy is impacting direct marketing, and most of the press we've posted has said while it's hurting short-term revenues, we remain quite positive about the long-term.
Then, here comes an article from Advertising Age that really focuses in on what the short-term hurting is all about . . . damn their eyes! Seriously, the article makes some very good points. As an industry, us direct marketing types do tend to be more positive than most. However, even we have to admit that things are slowing -- and where they are the slowest is in the area of acquisition programs -- data, new expenditures on prospect database tools, and direct mail.
Well, think about it . . . with the decrease in mortgage lending alone, acquisition has fallen to record lows, especially when you compare campaigns over the last five years or so when lenders were mailing millions of pieces each month and enjoying wonderful response rates. Ah, the good old days . . .
Anyway, the article talks about how direct marketing isn't as recession-proof as we originally thought. Further, loyalty campaigns to existing customers have become more important than ever, as companies seek to keep and grow their existing customer relationships. According to the article, here's what Steve Cone, chief marketing officer at Epsilon, had to say about it: "The focus is now on making sure they [financial services marketers] keep their existing customers as engaged as possible in this type of economic climate, communicating with them regularly and giving them an incentive to doing more business with us and less with anybody else through some kind of loyalty program."
The good news is all of this is that the emphasis on intelligent direct marketing, via the use of analytics, has continued to grow. Now, more than ever, marketers are taking a step back from the frenzied marketing of the past to ensure that their campaigns are targeted and relevant to those to whom they market. The article goes on to quote Gary Laben, CEO of Knowledgebase Marketing. Laben is quoted as seeing a huge increase in the analytics, reporting and insights parts of the business. "It's our largest growth area and is defying all negative economic outlooks," he said. "It's better than anticipated and we did not expect it to be as robust."
When you look at it from this perspective, it occurs to me that the economy has forced marketers to market more efficiently. It is no longer OK to mass market or over-mail to a prospect database repeatedly. Now, in order to be effective (i.e., increase response rates, improve ROI) you've just got to market smarter.
Now, maybe this is just the optimist in us trying to make an economy made of lemons into lemonade. We'd love to hear your thoughts on this subject!