Direct Marketing

The stories tell a tale that starts badly, goes downhill from there, and currently leaves us wondering if that spot of light at the end of the tunnel is simply an oncoming train.

Last year the UK advertising industry shrank, in terms of expenditure, by 2.6 per cent – the first time in a decade that it failed to record growth. The frowns of the ad execs were then exacerbated by 2002’s first quarter results, which showed a further fall in spend of 6 per cent. Then, to top it all, the Bellwether Report attempted to drag the sides of the industry’s mouth beneath its quivering chin with news that marketing directors had pared back their spend for the sixth successive quarter. Those looking to the future were not wearing shades.

Last month things got a little bit better. The Advertising Association’s second quarter results illustrated a stabilising of ad expenditure with a slight decline (in real terms) of only 0.1 per cent. Hardly time to break out the bubbly, but not a reason to reach for the noose either. TV spend grew by 5.4 per cent, after a traumatic time last year when the medium lost £425m.

National newspaper spend decreased by a further 6.5 per cent, although this marked a slow-down in its decline, and radio stayed tuned in to a revenue of £121m, almost exactly the same figure as it broadcast the year before.

Overall, it was a landscape of incremental gains and losses, boasting few peaks and troughs ... with one Himalayan exception.

Whilst the excrement’s been hitting the extractor for the rest of the advertising industry, one discipline seems to have consistently come up wafting a flowery fragrance. Direct mail has actually spent the last 18 months or so harvesting increasing yields whilst competing media have found their traditionally bountiful land strangely barren.

In 2001, expenditure on DM rocketed by 9 per cent on a year on year basis and the latest quarterly figure of a 9.7 per cent increase suggests that the burgeoning discipline hasn’t run out of steam just yet. But why? Why, when the rest of the marketing horizon is obscured with ominous black cloud, do we have this one shimmering silver sliver of hope? The Marketeer thought it was time to don its deerstalker and find out.

According to Marie Ashurst, head of customer recruitment at home shopping giant Grattans, the answer is elementary, dear reader. “I think that past evidence clearly illustrates that it’s a cyclical pattern and direct mail always seems to do best in times of recession,” she declared. “It’s nothing scientific. When times are tough it tends to be the ‘unquantifiable’ spend that is an easy target to cut back on.”

“Unquantifiable” – I can picture those who have spent years fighting to prove that their medium is accountable spitting their coffee across offices in fits of apoplectic umbrage-taking. Nevertheless, Ashurst is adamant:

“Nothing is as accountable, in the truest sense of the word, as direct mail. It’s possible to directly measure the profitability of each individual activity, and that can drive, in a very powerful way, all your investment decisions.”

And she isn’t ploughing a lone furrow with this opinion. Many other clients are sowing their investment seeds in the DM field for exactly the same reason.

“The advantage of investing in direct mail,” purred Andy McLaughlin, head of direct marketing at HBOS, “is that it’s one of the rare media that allows you to get a concrete perception of exactly what results are being delivered.

“Now, more than ever, we need to be continuously transparent in terms of illustrating the effectiveness of the spend, and direct mail is without a doubt one of the best media for demonstrating this.”

So, is accountability the force that’s powering the DM tractor beam? Is this the attraction that’s pulling ever more client ships into the mailing fold?

“I think it is,” was the logic of Highland Distillers direct marketing manager Jason Craig. “Direct mail has long been seen as the poor cousin of the marketing family, but nowadays that’s almost come full circle. With the financial constraints that businesses are under, more and more people are turning to it as they look for more ‘bang to their buck’. These days any client with an ounce of sense in their head has to consider using direct mail.” Strong sentiments but, from the figures quoted previously, more and more clients obviously agree.

Direct mail isn’t just a one-trick pony though. It can jump through the accountability hoops with consummate ease, but that shouldn’t overshadow the fact that it can also juggle creativity with an ability to connect with the audience one to one. Grattan ringmaster Marie Ashurst highlighted some of the medium’s many talents.

“From a competitive point of view direct mail is also a very discreet method of reaching the consumer. If we send out a targeted campaign our key competitors won’t necessarily know what we’re doing. It would be a bit more obvious if we posted a series of billboards outside their houses instead.”

She added, “Targeting is also an invaluable way to make your money work that bit harder. If times are tough you can just mail the most highly profiled group of consumers – that way it might be possible to generate, say, 70 per cent of the benefit for only 50 per cent of the expense. It’s far harder to refine other media to hit specific groups in the same way.”

McLaughlin shifted the spotlight to illustrate another talent. “In today’s society, when people are constantly on the move, direct mail can often be the best method of connecting with them. Get the targeting right, get the creative approach right, and people will often put a piece aside to sit down and consider the proposition at a time that’s right for them. There’s always the chance your piece of mail is going to get put behind the clock for later in the day and that provides an opportunity to get your message across.”

But of course, that’s only going to happen if everything is “right”. And increasingly these days more and more people seem to be getting it wrong. The wider deployment of DM as a marketing medium has coincided with a landslide of complaints flowing through the letterbox of the ASA. Complaints relating to direct mail actually rose by an astonishing 50 per cent last year – somewhat dwarfing the 9 per cent upturn in activity. This is clearly a worrying trend for the advocates of DM and something that won’t help its effectiveness as junk hardened consumers file an increasing number of pieces directly in the bin. So why is it happening and what can be done to safeguard the medium?

Jason Craig appeared to put the blame at the feet of the new direct devotees. “Newer companies are sometimes guilty of diving in headfirst without being aware of all the guidelines,” he said. “The industry is now quite a mature one and bodies like the DMA are there to advise you how to go about it in a responsible and effective manner. It’s not surprising consumers are getting cheesed off if people aren’t adhering to these guidelines.”

He concluded: “The bottom line is, businesses that conduct a lot of direct mail activity have to get people to opt in – there’s a real need for that. I’m not interested in talking to people who don’t want to talk to me.”

Sentiments Ashurst and McLaughlin concur with. Both stressed unwanted communications were a waste of everyone’s time and, importantly, their money. As a result, they deemed it essential to have systems in place to ensure their communications were '‘appropriate”.

At this stage of the feature it’s probably “appropriate” to wrap things up with the question of “What does the future hold for direct mail?” In the short term the answer to that seems to be, more of the same.

“If you look at the economy in a wider context,” mused Ashurst, “taking into consideration the stock market’s current six year low for example, it seems obvious that it’s going to continue having a major effect on micro-marketing decisions. In this sense I see no reason why the investment in direct mail won’t continue to grow.”

But that doesn’t mean to say that if the economy does show signs of recovery the spend in direct mail will automatically dry up. As distillery denizen Craig surmised, “As companies become more and more sophisticated in their communications, they’re increasingly adopting integrated approaches. Direct mail is often the foundation of integrated campaigns and because of this I don’t see its popularity waning.”

So, recession or not then, an increasing number of people look set to continue taking a direct approach.