Direct Marketing A Life Preserver in Tough Economic Waters

The Rodney Dangerfield of Marketing Disciplines

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Ten years ago, the Direct Marketing Association was like Rodney Dangerfield: It was low on collective self-esteem and needed a little respect.

Now the organization, like the industry it spearheads, is held in high regard by marketers worldwide.

That's the status of the direct marketing business as new appointee Robert Wientzen assumes the position of chairman-CEO of DMA-and as industry leaders congregate now through Oct. 30 in New Orleans for DMA's 79th annual conference.

AGENDA SET

The goals Mr. Wientzen has placed on the industry's agenda in 1997 include boosting direct marketing globally, increasing contact between marketer and consumer, and advancing direct opportunities through uses of new technology.

According to an industry study commissioned by DMA and conducted by consultant WEFA Group, direct will be a $1 trillion per year global enterprise by the turn of the century.

Mr. Wientzen believes this growth will be fueled by business-to-business direct expenditures. The WEFA study predicts this segment will grow 8.4% annually through 2000, compared with the consumer end's 6.2% annual predicted growth.

LOOKING TO THE WEB

But he also believes clients' direct strategies and ad agencies' rush to fulfill them through repositioning their direct services, and increasing the sophistication with which they use the Web and their databases, will play major roles in the industry's success.

"Business-to-business direct marketing has been growing faster. It's kind of been a sleeper in the industry because it's been moving along for so long at a steady pace," he says. "To a large extent it's been driven by the cost of calling on businesses, and the computer industry."

Mr. Wientzen, a Procter & Gamble Co. alumnus who served as chairman-CEO of Pompano Beach, Fla.-based Advanced Promotion Technologies for the past three years, has moved into a world his predecessor Jonah Gitlitz describes as one where databases and one-to-one marketing drive everything from the choice of an agency of record to growth of the Internet.

GITLITZ LED FOR 12 YEARS

Mr. Gitlitz served as chairman-CEO of the DMA for 12 years and retires at yearend. Mr. Wientzen, who has served on the DMA board for six years, was named to replace him on Oct. 1.

"I believe direct marketing is really growing as a global tool, particularly when you're opening a new market [for a product]," Mr. Wientzen says.

Direct agency revenues are certainly booming. During 1995, direct-response agency revenues in the U.S. grew 18% to $1.13 billion (AA, Aug. 5).

Agencies with established global direct clients are looking abroad to boost revenue, while major consumer agencies are out to build direct capabilities and offer integrated marketing programs to their clients.

Last month, New-York-based Deutsch announced plans to launch Deutsch Direct on behalf of clients like Ikea USA, Prudential Securities and Schieffelin & Somerset's Tanqueray, which are now using outside direct shops.

OGILVY RESTRUCTURING

And since this summer, Ogilvy & Mather has been restructuring the way its Ogilvy & Mather Interactive unit, the oldest interactive division among traditional U.S. agencies, will fit into the rest of the agency's account management. The change has come about in large part because of interactive media's potential for direct strategies and its success for client IBM Corp. The integration has altered the way the agency is pitching, and managing, business.

Meanwhile McCann-Erickson Worldwide, New York, brought direct legend Stanley Rapp back into the agency world earlier this month from an eight-year hiatus he spent lecturing, writing and consulting. As CEO of a unit that will oversee McCann Direct domestically, he is charged with tripling the agency's global direct revenues from $55 million to the $170 to $180 million range.

McCann, in particular, is working on strategies to service its biggest direct clients including Nestle USA, L'Oreal and General Motors Corp., and those working in 10 or more markets with a menu of new opportunities it plans to offer them in the coming weeks, according to one senior executive there. It has also identified key senior managers as regional leaders for Asia, Europe, and North America to organize global efforts under Mr. Rapp.

BETTER PROSPECTS

As for increasing contact, and improving relationships with the consumer, the retiring Mr. Gitlitz says he's seen that "people on the marketing end are looking at how to be more productive with their databases this year."

He adds that "a lot of companies are mailing less and discovering better prospects."

Mr. Wientzen and Mr. Gitlitz both say some of the best responses to direct campaigns in the current economic climate targeted the wealthiest or most-loyal consumers, rather than new prospects.

Both executives say this approach explained the success strategies behind many direct campaigns gaining top honors in DMA's 67th annual Echo Awards competition, in which direct campaigns are evaluated on creativity, cost and return.

"Relationship marketing and especially working the database harder came into play there," Mr. Gitlitz says.

"We saw a lot of that in winning campaigns, along with targeting your best customers," he continues. "This is a very uncertain economy. The consumer is tough to figure out right now, and when you have a market in which there's both a lot of competition and high paper and postage costs, I think the marketer is looking at these things."

HEALTH SWING

As for categories moving forward fastest in direct marketing, health services (which includes pharmaceuticals) is the fastest-growing category in the consumer direct marketing industry, according to the WEFA Group study.

Now the eighth-largest category, with a direct marketing sales volume of $27.7 billion, health services will be a $50.1 billion business by the year 2000.

With 12% sales growth between 1990 and 1995 and 15.3% growth expected between 1995 and 2000, the category will rank fourth on the list of heavy-hitting direct categories in the year 2000, following non-store retailing's $90 billion business, nonprofit organizations' $80 billion in sales and automobile dealers and services' $73.4 billion business.

For his part, Mr. Gitlitz can look back with pride at the growth of the industry group, which now reports $22.9 million in annual revenues, more than double its 1984 total of $10.3 million. Membership is up domestically by 41% to 3,600, and the organization has a strong voice that's heard both in Washington and on Wall Street.

INDUSTRY VOICE

"While he was head of that organization, it emerged from being a trade association to an organization that is very diverse," says David Scholes, president-CEO of Rapp Collins Worldwide, New York, the largest U.S. direct-response agency, with 1995 worldwide revenues of $174.7 million. "It went from being a tactical SWAT team to a real voice in the industry."

Mr. Wientzen can look forward to making the voice louder and clearer.

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