For agencies, direct marketing is not just about keeping up with changes among consumers and in the marketplace. It means having to regularly interrogate and re-evaluate their own skills and methods of working. Developments in media, database and e-technology are increasing the expectations of customers and prospects. Competition is spiralling. Offers are diversifying. Communications are more numerous. Channels to market are more complex. Customers are more fickle. These changing market dynamics require agencies to vigorously appraise how marketing campaigns are planned and implemented.
Planning, of course, is nothing new; but it has been increasingly overlooked. As a result the capability is becoming thinner on the ground, not only within agencies, but also within client companies . Since lucid, memorable and profitable direct marketing is more than ever dependent on first class planning, the skill is fast becoming as crucial as it is scarce. It is now time for a planning renaissance. Reviving it will enhance the effectiveness of individual DM campaigns, while maximizing accurate learning to ensure long-term business objectives are met. Currently, decisions are being made where the requirements of short-term bottom line figures outweigh the requirements of long-term strategic business objectives. A key difficulty is that marketing personnel at all levels generally feel more comfortable challenging creative executions than data analysis. Response rates are falling often because creative-led communications are being implemented without the proper support of data and planning insight.
Every DM campaign must have an element of evolutionary testing no matter how tight the trading conditions of a business. Ideally, companies should set aside a sufficient budget for an additional more-radical testing stream. It is important to achieve step changes in addition to evolutionary improvements, in order to put a halt to declining DM response rates. The planning function ensures testing is rigorous by addressing a number of influencing factors--ensuring that the samples are statistically robust, that the source of data is consistent, that the elements which change in head to head tests are monitored, and that differences are pinpointed between test, validation and roll-out across all parameters--covering creative, offer, data and timing. It can then present conclusions which are meaningful, and offer proposals for significant changes. Here are some examples of analytical questions that need to be asked to ensure correct decisions are made in evolving a long-term strategy:
• What other surrounding "noise" is prevalent both within and outside the client's control at test and roll-out stages?
• How intensively has the company's and competing companies' prospect lists been mailed subsequent to test?
• Has the follow up been consistent in a two-step offer that requires outbound telemarketing and/or fulfilment packs be sent?
• Have images been changed (for cost reasons) between test and subsequent promotions of the same offer, and therefore distorted the effect?
• In driving up the proportion of responders by telephone, through the use of clever copy, image and artwork layout, what is happening to the overall total response?
The impact of planning is clearly wide-ranging, so what practical measures can agencies put in place in order to deliver the service to clients? Essentially, the function must be central to the agency proposition, and to achieve this Data and Creative need to be integrated at all levels. The planning director needs to be something of a hybrid with both creative and analytical abilities, and a track record that combines agency and client-side experience. He or she needs an exceptional eye for detail for short term requirements, as well as a visionary capacity for the broader picture and longer term. In addition, agencies need to recognize that the planning offer must be tailored to three different types of companies. Mail Order and Home Shopping companies such as Reader's Digest and Britannia Music are "database marketers," and generate 95% of their revenue through DM. For these businesses, the planning function within agencies has always been seen as the primary skill set, and one which relies heavily on interpretation of their captured data.
In contrast, "brand marketers," such as FMCG manufacturers, have little DM activity and consequently no marketing databases. The planning function then relies on available market research information. When historical and statistical data are not available the planning function becomes more dependent on "soft" data. In between are the "direct marketers" who have very developed DM propositions, but consider them as only one of several channels to market. Financial Services typically fall into this category, with branch networks, IFAs and direct sales forces serving to add muscle to direct marketing initiatives. For these types of companies, planning must take into account brand sensitivities: the number of transactions with a customer are fewer and yet the long term value of the customer must still be addressed.
As clients find it harder to find, develop and keep skilled marketers, so the urgency for planning input from their agencies is growing. The pressure is firmly on agencies to fill the gap. In these times of rapid change in customer behavioral patterns it is crucial for the industry that planning skills are regained, and the focus is delivered. The time is right for a planning renaissance. Agencies will benefit through making decisions based on accurate analysis, building and learning between one campaign and the next. Clients will enjoy better service through the delivery of more profitable marketing campaigns that encompass all elements necessary for DM strategy success.
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