424 CHAPTER 13 DIRECT MARKETINGThere are a number of fundamental differences between direct marketing media com-
munications and traditional mass media communications. They are given in Table 13.1.
The basic philosophy of direct marketing is to consider each customer as an investment.
Identification of each customer means that the most appropriate communications can be
targeted in an interactive way. Customers are personally addressed and are able to respond.
Data involved with these transactions are stored in the database and may be used to establish
long-term relationships by adapting a company’s offer to the needs of the customer. Con-
sequently the main goal of a direct marketer is to increase customer share (i.e. the quantity
and frequency of purchases of each individual customer) rather than market share.
The importance of direct marketing in European countries has been increasing con-
sistently since the late 1990s. Even during years of economic recession, direct marketing
expenditures kept rising. In October 2011, the Direct Marketing Association (DMA) released
The Power of Direct Marketing, a biennial forecast of direct marketing’s economic impact on
the US economy. Direct marketing continues to grow faster than the US economy. In 2012,
sales as a result of direct marketing activities grew 7.1% to nearly $2 trillion, while overall
sales in the USA only grew by 5.1%. Direct marketing spending grew by 5.6% to $163 billion
in 2011 and in the USA accounts for 52.1% of total advertising spending. Over the past five
years this share has increased year by year, a trend expected to continue through to 2016.
A parallel trend may explain this: in 2011 the ROI of direct marketing was projected at
$12.03, compared with $5.24 for general advertising. Much of the spending growth is led by
digital channels, which continue to outpace other channels in expenditure growth. It is expected
that their share of the marketing budget will increase from 19% in 2011 to 21% in 2012. The
total spend on digital marketing (mobile, social network, search engine, display, advergaming,
blogs, etc.) has grown by $14.5 billion since 2006. Digital marketing is widely covered later
under e-communications. Direct mail (+4.6%) and DRTV (+6.1%) both bounced back
strongly in 2011. Direct response magazine ads, direct response radio commercials, inserts
and telephone marketing will all experience negligible growth. Spending on direct response
newspapers will continue to fall.^5
In the UK, a recent IPA Bellwether study revealed that there is a trend in marketing com-
munications spend towards online advertising, direct marketing and sales promotions, while
spend on traditional media (broadcast and print advertising) is going down.^6 According to the
predictions of Advertising Association/WARC, spending on direct mail in the UK will fall 1%
to £1.71 billion in 2012, after growing 1.5% in the previous year. Royal Mail has claimed that
in the half year ended 25 September 2011 its UK letter volumes dropped 6%.^7 However, in the
UK, the e-mail marketing industry recorded in 2010 its most successful half-year to date, due
to an increase in website traffic generated by e-mail, an increasing number of e-mail addresses
(90.2 million in Q1 2010 to 101.7 million in Q4 2010) and a rise in the number of campaigns
being run. The volume of e-mails being sent during the second half-year of 2010 grew by
35%. The DMA’s e-mail tracking study in early 2011 showed that consumers are receiving
more e-mails of interest to them. E-mail is driving more traffic to websites than ever before.^8
During the last decade direct marketing has moved from a typical and traditional mail
order company activity to an important communications tool for many other company types.Table 13.1 The difference between mass and direct mediaMass media Direct media
Segmenting
Recall, recognition and image measurement
Mass one-way communications
Market share Individualising
Response measurement (per client)
Targeted two-way communications
Customer shareM13_PELS3221_05_SE_C13.indd 424 6/5/13 2:56 PM