08th October 2003, Marketing Week
Marketing
Week Factfile
The
direct marketing industry is moving towards
permission based methods. The EU regulations
that will be imposed this month for email
marketing will no doubt be mirrored in SMS
and mail marketing in the near future. This
may prove to be very soon if the industry
doesn’t take a more responsible attitude
with its campaigns. The Preference Service
is an advocate of permission based marketing.
It was established in October 2000 and since
then has been collecting information on
the preferences of over three million UK
households with the aim of creating a
consumer-fair
exchange of information between advertisers
and consumers.
September
2003 saw the release of the results of The
Preference Service’s second Permission
Marketing Index 2003. They strengthen the
belief that to succeed in the current climate
(and for the reputation of the industry),
direct marketing campaigns must be accurately
targeted. To do this you must understand
your customer.
An
email questionnaire was sent to 7,000 direct
mail buyers. The Preference Service used
a two tier email approach, with a reminder
email sent after the initial one. The research
aimed to discover how direct marketers are
using their data, what the current use of
permission marketing is within the industry,
to establish views towards the introduction
of compulsory opt-in on-line and to discuss
opinions on the decision to remove the use
of electoral role data for mailings and
cleaning of files, and how this will affect
future direct mail campaigns.
The
research showed that a large proportion
(77%) of respondents have internal databases.
Most of this data was collected via client
transaction (25%) or via direct response
advertisements (23%). Although the majority
of respondents said that their mailings
are distributed in order to cross sell to
existing clients (41%), greater volumes
of mailings are distributed for customer
retention or prospect acquisition. Similarly,
the research showed that most of the data
held on an internal database is used for
customer retention (25%). Data is also used
heavily for profiling (20%) and segmentation
(17%) too.
Regarding
data that marketers purchase, the Permission
Index 2003 showed that the majority of respondents
(31%) purchase lifestyle data. This was
followed by mail order data (21%) and only
2% electoral role data. This indicates that
advertisers are concerned with growing their
customer base as well as being committed
to building stronger relationships with
their existing customers from internal data.
When
asked how their direct mail budget is broken
down, marketers said that the majority (37%)
is spent on print and production, 24% is
allocated to distribution and 22% allocated
to data. Creative accounts for 9% and 8%
is spent on data management.
When
evaluating campaigns, the majority of respondents
said that they judge the effectiveness of
data either through the response rates they
gain (25%) or the cost per response that
they undertake (24%).
Optimistic
findings from the research suggest that
UK consumer confidence in direct marketing
is likely to increase thanks to the introduction
of compulsory EU email opt-in legislation
this month. Some 85% of direct marketers
questioned agree the introduction of the
EU regulation will keep consumers happy,
81% agree it will make direct marketing
more credible and 90 % believe direct marketing
will become more targeted.
Despite
the overall positive attitudes to the EU
regulation, some concern and confusion is
apparent too. Some 42% of respondents think
that the regulation will make leads more
difficult to acquire.
Currently,
direct mail remains the medium of choice
for half of the respondents, followed by
email marketing (11%) and then use of the
Internet (7% - such as pop-ups, etc.). But
this may be set to change. The majority
of respondents (73%) felt the EU’s
proposals are confusing and will make direct
marketers more likely to use permission
data through other routes such as mail or
SMS.
Unsolicited
SMS, however, was deemed the biggest threat
to today’s DM industry by 58% of respondents.
Clearly the use of this medium should be
approached with the utmost consideration
for mobile phone users. This attitude should
be extended to every medium – the
research revealed that 52% of respondents
agree that if the amount of untargeted communication
continues at today’s rates, SMS, email
and traditional lifestyle lists will be
legally removed from commercial use, as
the ER has been, within the next 5 years.
So,
permission based direct marketing is the
only way forward if we want to remain a
successful, effective and credible industry.
Good news is that evidence of its wide ranging
use is already emerging. Some 73% already
use an opt-in option in online communication,
with the figure at 60% for offline-communication.
Most also stated that they used some kind
of suppression file for their mailings including
TBR, GAS and NCOA (although no clear industry
standard emerged).
However,
when asked if they have any plans to use
opt-in data for offline communication, 37%
said they have no plans and 25% of respondents
are indifferent indicating that the industry
is still unsure as to the benefits of opt-in,
despite positive opinions elsewhere in the
research.
Perhaps
the benefits of opt-in and its ease of use
are not as well known as they should be.
We as an industry need to pull together
and unite in voice. This will ensure that
the DM industry continues to prosper. Best
practice will mean more effective campaigns,
higher response rates and will prevent even
tighter regulations (or even removal of
certain lists) from being enforced. If we
want to continue as a self regulated industry
then let’s take the issue seriously
and start adopting best practice now.
©
Centaur Communications Ltd 2002 Copyright
statement, Registered in England No. 1595235
Registered office: 50 Poland Street, London
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