Direct Marketing Special Report

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With marketers tightening their budgets during the down economy, more and more direct response campaign work has been brought in-house. Industry experts are divided over whether such moves are a good idea.

Those companies closely watching their costs—and who isn’t?—point out that the marketer is the one who knows its brand most intimately, so it’s usually the one best qualified to shepherd direct messaging to employees, clients and prospects. And, of course, creating the campaign internally is often cheaper than outsourcing it.

Also, they argue, the Internet has ushered in a whole new avenue of communications—one where rules are still being written—so there’s no guarantee a typical agency effort would be any better than an in-house one.

Some b-to-b direct marketing executives, however, believe that it is in the best interest of marketers to use agencies when they can, especially to develop compelling brand and one-to-one marketing campaigns directly tuned to return on investment.

Now more than ever, b-to-b marketers might need to rally behind qualified agencies to begin personalized dialogs with employees, customers and prospects, they said.

"The main reason for a company to go outside for help on a direct marketing campaign is to get fresh ideas and a broader and deeper expertise across industries," said Ruth Stevens, an independent direct marketing consultant. "Good direct response agencies can provide invaluable service to a marketer."

Other experts, including agency executives, say that some companies just arent skilled or focused enough to keep the bulk of their campaign work in-house without making major marketing blunders or missing out on opportunities.

"A client can figure out the targeting and buying of some lists on their own, but we pay attention from the beginning to research techniques and database skills that identify where opportunities lie and how to convert them," said David Florence, president of the New York office of direct response agency DraftWorldwide. "Focusing opportunities is what we are all about.’’

Agencies can boost ROI for a direct campaign simply by ensuring a marketer does not do the one thing that must never be done—turn afoul a trusted relationship with a b-to-b client, said Steve Geiger, exec VP-marketing strategy for Carlson Marketing Group, a Minneapolis-based marketing services agency.

"Our customers are asking less and less for just direct marketing, but rather for a thoughtful and cost-effective balance of marketing to consumers, channels and employees,’’ Geiger said.

"The bottom line is relationships always drive business results. Good relationships have positive results," he said. "The problem is, the same is true about bad relationships and negative results.’’

These new, integrated direct marketing campaigns are much more
complex and thus easier to have gone off course when an in-house marketer does not have someone to bounce ideas off of, Geiger said.

Carlson Marketing Group, which has recently run campaigns on behalf of the hospitality industry’s Radisson Hotels & Resorts and the

chemical industry’s BASF Corp., and other agencies come in handy when integrating consumer marketing, corporate brand identity, b-to-b print, b-to-b TV campaigns, direct marketing and interactive marketing, Geiger said.

"Ever wonder what makes a good b-to-b campaign these days?" asked David Sable, president-CEO of marketing services agency Wunderman.

The key is actionable data, Sable said. "But the marketing company has got to be willing to give something to get information," especially from a precious b-to-b sales prospect, he said. Marketers planning direct mail and direct interactive campaigns on their own have "so far been pretty weak’’ when it comes to this information transaction, Sable said.

"The biggest problem today is we ask for too much information,’’ Sable said. "There’s been a seduction of data. Marketers have been trying to figure out how that quarter of an eighth of nanosecond on a Web site can be recorded and confirmed. But no one has proven you can sell one penny’s worth of product with that information.’’

On the other hand, lure the customer to the site through an e-mail newsletter offer, Web banner advertisement offer or a direct response offer with a URL—and compel them to actually come—and you’re beginning to create a structured relationship bound to provide dividends, Sable said.

In a recent Wunderman campaign conducted for IBM Corp., prospects were offered an area rug—yes, an area rug—in return for the beginning of a customer dialog. The opt-in solicitation delivered a high-value product to the customer and has been highly successful because it was professionally presented and came from a trusted brand. If IBM had simply shipped the area rugs today, the campaign would have been a disaster, Sable said.

The recent anthrax scare is another reason why marketers might want to stick with direct marketing agencies—to take advantage of surprising opportunities and build direct mail campaigns with caution.

Leaders in the industry say traditional b-to-b direct mail campaigns might be more successful in the future because the audience will help filter out the clutter on the market. The use of the U.S. Postal Service as a carrier for bio-terrorism will likely have a chilling effect on the efficacy of mass mailings that bear no return address, and truly professional pieces will have the most chance of being opened, they say.

"Some of those identified direct mail practices probably will never recover, but direct b-to-b might prove stronger than ever,’’ Sable said.

Here’s the thinking: With less clutter in traditional direct mail, trusted b-to-b marketers with strong corporate brands, able presentations and a willingness to barter information for goods and services are expected to get even more attention, said DraftWorldwide’s Florence.

Even so, creative material from a b-to-b direct marketing campaign needs to be more considerate of people’s fears—warranted and unwarranted—than ever before, he said. Agencies are best prepared to handle the messages with caution, Florence said, because they’ve already started doing it for all their clients, while an individual marketer may have little experience in such delicacy.

In-house intimacy

Peter Horan, president of DevX Inc., a Palo Alto, Calif.-based information technology content site, said b-to-b direct marketing expenditures are up at his company, which spent $6.9 million in direct marketing in fiscal 2000 and is on track to do $9 million in b-to-b Internet marketing and advertising sales expenditures in fiscal 2001.

Sometimes it makes sense for a company to go without an agency, Horan said. Recently, DevX presented an Internet
direct marketing package from Microsoft Windows XP, which was produced directly by the Redmond, Wash.-based software developer. Designed to evangelize use of the
Microsoft Windows XP operating system to software developers, the campaign showcased audio-video presentations.

Since April, 39,000 users have been attracted and registered. Because Microsoft Corp. knew its audience and had the resources to carefully develop creative materials and levy Web programming, it was a good candidate to go it alone, Horan said.

"One of the challenges of working with [direct marketing] agencies is they’ve resisted measurement,’’ Horan said.
"Microsoft has closely linked its programs to [the measurement of] the sales process. As a result, they’ve done well in a choppy market.’’

A matter of measurement

But direct marketing agencies don’t resist measurement in the ways that an advertising agency might, said Carlson’s Geiger.

In fact, they can often recommend measurement tools to clients for their own personal use, and develop a strategy that allows in-house corporate marketers to adjust postal and Web campaigns based on the earliest respondents, he said.

Don Neal, senior VP-marketing director at Rapp Collins Worldwide, New York, said measurement capabilities of agencies are among their greatest assets.

For a direct marketing agency, analysis is often as easy as a lay-up is for a basketball pro, he said. Structuring the ROI and measuring it through a mail or Internet campaign is the best reason to sign on with an experienced company, Neal said.

For example, a b-to-b marketer working with an agency might get a chance to tailor campaigns for unique audiences earlier than they might do so in-house, he said. Prospects most interested in cost versus value should receive messages tailored toward their interests. At the same time, another key audience might be most interested in environmental safety, and a campaign can run concurrently based on their needs. When tied together, those two campaigns build goodwill among two customer sets at the same time, Neal said.

"The best b-to-b marketing unpacks the brand promise and delivers the most relevant message to a recipient that cares most about that message,’’ Neal said. "Direct marketing is the best method to deliver these different messages at the lowest cost and experienced agencies are the best at executing these messages."

Consultant Ruth Stevens, however, offers up another alternative for cash-strapped marketers who want outside expertise. "It’s common wisdom that some of the best direct marketing creative comes from star free-lancers who cut their teeth at agencies," she said. "They’re usually less expensive and more focused on individual clients."

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