Coupons Work in this Economy

A weak economy presents challenges to all marketers. How do we do more with less? How do we sell things to people, or companies, who can’t afford them?

But sometimes, this type of economic environment presents unique opportunities for direct marketers. After all, our results are measurable. Marketing costs can be justified by clear, countable results.

This point is highlighted pretty nicely in this recent NY Times article: This Season’s Must-Have: The Humble Coupon

From the article:

The faltering economy could mean renewed interest in coupons as shoppers refocus
on the cost of the products they buy — that is, if they do actually buy anything
these days.

Coupons that offer cents off — or percents off — the price of things like groceries, clothing and restaurant meals are particularly popular when consumers need to stretch their dollars. So word that a recession began last December could bring an increase in the number of coupons offered by marketers, as well as redemption rates by consumers.

“Thrift is the new normal,” said Lance Saunders, executive vice president and head of account planning at Campbell Mithun in Minneapolis, an agency owned by the Interpublic Group of Companies.

“There’s no stigma to getting anything on discount,” Mr. Saunders said. “Instead, there’s a sense of pride.”

The article goes on to discuss unique couponning strategies, from some unusual suspects (high end Lucky Jeans, for example) and more usual suspects (P&G).

It also discusses the use of new marketing channels such as mobile marketing.

New technologies are also helping to renew interest in coupons, especially
for younger consumers. There are scores of Web sites where coupons can be
obtained by clicking rather than clipping; among them are coupons.com,
couponcabin.com, couponcode.com, couponmom.com, 8coupons.com, fatwallet.com and shortcuts.com. Many also deliver coupons by e-mail messages.

And coupons are increasingly available on cellphones and other mobile
devices from companies like Cellfire and Outalot. Among the marketers offering
mobile coupons are Arby’s, Caribou Coffee and GameStop.

An advantage of coupons delivered through new technologies is that they can
be customized and personalized, which could help make them more effective
and efficient for the sponsors.

Ah, trackable, customized and personalized—music to this direct marketer’s ears!

Another lesson learned: even if your marketing strategy has never included couponning, simply because it didn’t seem to be the right fit for your products and/or your customer-base, you may want to rethink that strategy in this economy.

Direct Marketing Employment Projections

You know I hate to add to the economic doom and gloom news... But, I guess it's no surprise that the most recent Bernhart and Associates survey reports: Direct Marketing Industry Cutting Back Sharply On Hiring Plans.

Direct marketers are coping with the slumping economy by making deep cuts in their hiring plans for the remainder of 2008, according to the latest Bernhart Associates employment survey. "Every one of our major employment indicators showed significant declines compared with summer and now stand at their lowest levels since the survey began 8 years ago," said Jerry Bernhart, owner of Bernhart Associates Executive Search.

There is a slight bright side to this story, however.

"Despite the gloomy outlook, nearly one-third of survey participants are still hiring and most don't have a hiring freeze," Bernhart added. "Certain job categories are holding up much better than others." When asked what positions employers intend to fill during the coming fourth quarter, Bernhart said sales and analytics dominated the list.

Marketing is always hit hard when the economy softens. Typically direct marketers are a tad safer than other disciplines that aren't able to justify their activities with hard facts--numbers and results. Yet, this news is disturbing.

It will be interesting to gauge the mood at the DMA conference next week (that is, if anyone shows up...). Look for live reports from DMA on this blog!

Mortgages, Finance, Home Prices--OH MY!

Throughout my career, I've provided direct marketing services to the mortgage and financial services industry. I've had some excellent years and other years where times were tough. I understand the cyclical nature of things and am usually grateful that the accountability of direct marketing programs helps ensure their (and my!) survival.

But, I have to say that this is about the weirdest time I can recall for the financial services industry.

• Just reported a few hours ago: Consumer borrowing slows to weakest in 7 months.
• Pending US home sales are down. The AP reports that "The National Association of Realtors said its seasonally adjusted index of pending sales for existing homes fell 3.2 percent."
• The government is taking over Fannie Mae and Freddie Mac. The cynic in me wonders how the government is going to be able to run these agencies efficiently (let me be blunt--it'll never happen!). This new government backing may give us a short boost of consumer confidence and some newly funded mortgages. But, I fear that long-term government involvement will simply lead to higher interest rates for home loans--not good for anyone.
  
• The financial services sector is laying people off right and left. Some of my colleagues--highly experienced direct marketers--have been impacted by these layoffs.

Anyone who's read this blog knows that I'm typically an optimist. Yes, I'm the type of person that truly believes that the glass is half full. But continued news and personal experiences tell me that this time the financial services sector isn't gonna recover as quickly as it has in the past.

Tell me, am I being too pessimistic here? Are there lights at the end of the tunnel that I'm missing?

Economic forecast for marketing spend

"Direct's annual survey of e-commerce practices shows continued investment in digital strategies, with additional spending anticipated for 2009."

The above is a quote from the leading paragraph in a Direct Magazine article, titled "What Downturn?". The article reports on results of a recent survey that measured online and other marketing spending trends.

It should be no surprise that in this tough economy companies are looking for a measurable return on their marketing investment.

According to Direct's research, 29% of all marketers have shifted marketing dollars from traditional channels to online media, a figure comparable to last year's study.

Of course, online media is augmented with off-line. Marketers are embracing a multi-channel approach, with a slightly different 'spin' for B2B vs B2C marketers.

Consumer firms indicate direct mail is their key Web site traffic driver, with e-mail a close second. Natural search (as a result of search optimization), paid search listings and word-of-mouth referrals follow.

B-to-B firms rely more on word of mouth — so much so that it's the top-cited channel for generating Web traffic. E-mail and direct mail campaigns are gaining fast, though, while search engine optimization trails, a distant fourth.

Some other interesting findings:

• Just over half of B-to-B respondents optimize their Web sites in order to boost rankings in search engine queries, compared with more than two-thirds of consumer companies.

• Consumer marketers are more diligent about collecting and analyzing clickthrough data than B-to-B firms. Better than three out of four consumer respondents do this, vs. 57% of B-to-B DMers.

• Just over one out of five respondents say staffing in their online marketing departments was up during the last 12 months, while nearly two-thirds note that it stayed the same. As in 2007, only 4% lost employees.

My take: Overall, direct marketing, as an industry, is alive and kicking. We're poised for growth in key areas (analytics is one of them) and a multi-channel approach is important.

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!