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Developed by CMAâs Direct Marketing Council
Tags: Direct Marketing, Strategy, Best Practices
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Direct marketing is a form of advertising which allows businesses and nonprofit organizations to communicate directly to customers through a variety of media including cell phonetext messaging, email, websites, online adverts, database marketing, fliers, catalog distribution, promotional letters and targeted television, newspaper and magazine advertisements as well as outdoor advertising. Among practitioners, it is also known as direct response. Direct marketing focuses on the customer, data,[1] and testing.
Hence, besides the actual communication, a direct marketing campaign will incorporate actionable segments and use pre- and post- campaign analytics to measure results. Characteristics that distinguish direct marketing from other types of marketing are: A database of names (prospects, customers, businesses, etc.), often with certain other relevant information such as contact number/address, demographic information, purchase habits/history, and company history, is used to develop a target market with common interests, traits or characteristics.
Generating such a database is often considered part of the direct marketing campaign. Marketing messages are addressed directly to this list of customers and/or prospects. Addressability comes in a variety of forms including email addresses, phone numbers, fax numbers, postal addresses, and web browser cookies[how?]. Direct marketing seeks to drive a specific "call to action." For example, an advertisement may ask the prospect to call a free phone number, mail in a response or order, or click on a link to a website. Direct marketing emphasizes traceable, measurable responses. It also emphasizes maximizing response rates by testing while minimizing advertising expenses when engaging prospective customers, regardless of the medium used. Direct marketing is practiced by businesses of all sizes.
A direct advertising campaign aims to deliver a good return on investment by showing how many potential customers responded to a clear call to action. This is in contrast to general advertising, which eschews calls for action in favor of messages that build prospectsвÐ⢠emotional awareness or engagement with a brand. Popularity[edit]A 2. Direct Marketing Association reports that in 2. United States. Measured against total US sales, these advertising expenditures generated approximately $1. In 2. 01. 0, direct marketing accounted for 8.
US gross domestic product. In 2. 01. 0, there were 1. US. Their collective sales efforts directly supported 8.
US jobs.[2]History[edit]Mail order pioneer Aaron Montgomery Ward believed that using the technique of selling products directly to the customer at appealing prices could, if executed effectively and efficiently, revolutionize the market industry and therefore be used as a model for marketing products and creating customer loyalty.[3] The term "direct marketing" was coined long after Montgomery Ward's time. In 1. 87. 2, Ward produced the first mail- order catalog for his Montgomery Ward mail order business. By buying goods and then reselling them directly to customers, Ward was consequently removing the middlemen at the general store and, to the benefit of the customer, drastically lowering the prices.[3] The Direct Mail Advertising Association, predecessor of the present- day Direct Marketing Association, was first established in 1. Third class bulk mail postage rates were established in 1. In 1. 96. 7, Lester Wunderman identified, named, and defined the term "direct marketing". WundermanвÐâconsidered[by whom?] to be the father of contemporary direct marketingвÐâis behind the creation of the toll- free 1- 8. Columbia Record Club, the magazine subscription card, and the American Express Customer Rewards program.[6]Benefits[edit]Direct marketing is attractive to many marketers because its positive results can be measured directly.
For example, if a marketer sends out 1,0. This metric is known as the 'response rate,' and it is one of many clearly quantifiable success metrics employed by direct marketers. In contrast, general advertising uses indirect measurements, such as awareness or engagement, since there is no direct response from a consumer. Measurement of results is a fundamental element in successful direct marketing. The Internet has made it easier for marketing managers to measure the results of a campaign. This is often achieved by using a specific website landing page directly relating to the promotional material.
A call to action will ask the customer to visit the landing page, and the effectiveness of the campaign can be measured by taking the number of promotional messages distributed and dividing it into the number of responses. Another way to measure the results is to compare the projected sales or generated leads for a given term with the actual sales or leads after a direct advertising campaign. Challenges and solutions[edit]While many marketers recognize the financial benefits of increasing targeted awareness, some direct marketing efforts using particular media have been criticized for generating poor quality leads, either due to poor message strategy or because of poorly compiled demographic databases. This poses a problem for marketers and consumers alike, as advertisers do not wish to waste money on communicating with consumers not interested in their products. Success of any Direct Marketing campaign, in terms of number of times the desired response may vary between the best vs.
List or targeting (best targeting may yield up to 6 times the response, as compared with the worst targeting)Offer (best offer may yield up to 3 times the response, as compared with the worst offer)Timing (best timing for the campaign may yield up to 2 times the response, as compared with the worst timing)Ease of response (best/multiple ways offered to respond may yield up to 1. Creativity (most creative messaging may yield up to 1. Media employed. The medium/media used to deliver a message can have a significant impact on responses. It is difficult to truly personalize a DRTV or radio message. One can even attempt to send a personalized message via email or text message, but a high quality direct mail envelope and letter will typically have a better chance of generated a response in this scenario.
In sum, choosing the best of all the above parameters may yield up to 5. Addressing these helps assuage the concerns of the marketers. Some of these concerns have been addressed by direct marketers by the use of individual "opt- out" lists, variable printing, and better- targeted list practices. Additionally, in order to avoid unwanted mailings, members of the marketing industry have established preference services that give customers more control over the marketing communications they receive in the mail.
The term "junk mail," referring to unsolicited commercial ads delivered via post office or directly deposited in consumers' mail boxes, can be traced back to 1. The term "spam," meaning "unsolicited commercial e- mail," can be traced back to March 3.
Use. Net that the repetitions effectively drowned out the normal flow of conversation. To address the concerns of unwanted emails or spam, in 2. The US Congress enacted the Controlling the Assault of Non- Solicited Pornography and Marketing (CAN- SPAM) Act to curb unwanted email messages.
Can- Spam gives recipients the ability to stop unwanted emails, and set out tough penalties for violations.[9] Additionally, ISPs and email service providers have developed increasingly effective Email Filtering programs. These filters can interfere with the delivery of email marketing campaigns, even if the person has subscribed to receive them,[1. There are a range of email service providers that provide services for legitimate opt- in emailers to avoid being classified as spam.
Consumers have expressed concerns about the privacy and environmental implications of direct marketing. In response to consumer demand and increasing business pressure to increase the effectiveness of reaching the right customer with direct marketing, companies specialize in targeted direct advertising to great effect, reducing advertising budget waste and increasing the effectiveness of delivering a marketing message with better geo- demography information, delivering the advertising message to only the customers interested in the product, service, or event on offer. Additionally, members of the advertising industry have been working to adopt stricter codes regarding online targeted advertising.[1. Channels[edit]Any medium that can be used to deliver a communication to a customer can be employed in direct marketing, including: Email marketing[edit]Sending marketing messages through email or email marketing is one of the most widely used direct- marketing methods.[1. One reason for email marketing's popularity is that it is relatively inexpensive to design, test, and send an email message. It also allows marketers to deliver messages around the clock, and to accurately measure responses.
Online tools[edit]With the expansion of digital technology and tools, direct marketing is increasingly taking place through online channels. Most online advertising is delivered to a focused group of customers and has a trackable response. Display Ads are interactive ads that appear on the Web next to content on Web pages or Web services. Formats include static banners, pop ups, videos, and floating units.
Customers can click on the ad to respond directly to the message or to find more detailed information. According to research by e. Marketer, expenditures on online display ads rose 2.