Do-not-call puts $28 bil up for grabs

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Some of the $28.4 billion spent on telemarketing to consumers will flow into advertising, direct mail and sales promotion, following the implementation of national do-not-call rules. But a considerable portion of the total, mainly from smaller marketers, may simply vanish.

With 16.9 million numbers hitting the do-not-call list late in the first week alone, industry executives expect some telemarketers to turn to other venues to pitch their wares. "They are going to have to learn to be marketers again," said Jon Hamilton, former president of the American Teleservices Association and now president of JHA Telemarketing.

The Federal Communications Commission on July 3 formally released its version of the rule, setting the stage for do-not-call to take effect Oct. 1 for all consumer marketers.

Those who wish to continue using calls are likely to focus on getting consumers to call in, and those looking to continue making outbound calls will likely latch onto exceptions to the do-not-call list.

Consumers requesting information from a company can be called for three months. Consumers with "existing business relationships" with a marketer-defined as those who have bought, received or paid for something from the marketer within the past 18 months-can also be called even if they are on the list. Consumers who bought on installment can also be contacted up to 18 months after the last payment.

`loopholes'

That appears to leave the door open for sweepstakes entries that include a "request for information," allowing marketers to call consumers for three months. Buying a catalog would also appear to qualify marketers to call consumers for 18 months.

"When you create these loopholes," said Jack Trout, president of Trout & Partners, "it is an invitation for people to use them, and this is an aggressive crowd."

Marketers may also try other means to establish a prior business relationship with consumers. Louis Mastria, a spokesman for the Direct Marketing Association, said the group expects some marketers to take steps to stimulate inbound calling with direct mail, voice communications tied to Web sites, more prominent display of phone numbers in other ads and infomercials among possibilities.

Some marketers said last week they intend to take some of those steps.

Jim Danz, exec VP of Princeton Resorts Group, a Phoenix timeshare and resort developer, said his company is looking at giveaways, free offers and direct-mail pieces. "Our strategy," Mr. Danz said, "is to have 100% of our database be opt-in moving forward, which would mean no more cold calling."

But experts said those means won't be cost effective for smaller marketers. "A lot of the telemarketing that is annoying people, the marginal programs, will get chopped," said Mr. Hamilton, citing as examples buying clubs that try to sell to bankcard holders and brokers who try to get a commission for selling satellite TV.

"If you increase the clutter of the other [direct] mediums, you still end up with a net loss ... you can't add to infinity," said ATA Executive Director Tim Searcy. "They are using telemarketing because it is the most cost-effective means of generating sales."

Even for those who can change their marketing, do-not-call could have significant financial effect. "While telemarketing will remain a viable sales source [for newspapers], the regulations will raise the cost and newspapers' ability to cost-effectively reach consumers that want to subscribe," said John Murray, the Newspaper Association of America's VP-circulation.

Marketers contacted last week, however, said they were still evaluating the effect of the list. "There are a number of ways for reaching customers and right now it is too soon to tell what we will do," said AT&T spokesman Bob Nersesian.

more infomercials?

Tim Hawthorne, chairman-executive creative director of Hawthorne Direct, a large producer of infomercials, said he had seen no increase so far in requests, but thinks they will be coming. "I think it is inevitable," he said. "Our local Iowa paper had a story on a local telemarketer taking some of its callers and sending them out to do door-to-door sales."

Time Inc. said it may be forced to abandon predictive dialing, which drives up selling costs. Telemarketers normally dial a number of phones at once, expecting many won't get answered and they'll have sufficient staff to cover those that are. Sometimes too many get answered and calls are dropped. Time said many of those are picked up by answering machines with the "drop" never registering. The new requirement means the company will now have to leave messages each time, which Time fears will infuriate consumers. "Although we are calling the same number of times, the customer could perceive it as more," said Ernest Vickroy, director-telemarketing for Time.

Fast Facts

104 million: Number of calls telemarketers make to consumers and businesses each day

$660 billion: Amount telemarketing generated in sales in 2001

6 million: Number of people employed by telemarketers

60 million: Number of households the FTC estimates will join the federal Do-Not-Call Registry in its first year.

Source: Direct Marketing Association

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