Direct marketing is an interactive system of marketing that uses one or more advertising media to effect a measurable response or transaction at any location. Unlike traditional advertising and promotional activities, it attempts to develop an ongoing dialogue with an individual, household or business.
Direct-marketing materials are presented in a variety of formats, including a merchandise or service order form, a card for use in requesting further information, a solicitation for a contribution or an invitation to visit a specific store or site. A direct-marketing piece normally provides the recipient with extensive information about the product, service or organization being advertised along with a means to execute the sale, which could be a coupon, phone number or other device.
Direct marketing's early history began with catalog publishers. The first known catalog, Aldus Manutius' catalog of 15 books in Greek and Latin, was produced in 1498. The Business Address Co., established in 1880 in New York, is credited as the first mailing house in the U.S. However, the New York Life Insurance Co. was using direct-mail promotions as early as 1872, possibly designing and collating them in-house. Buckley-Dement, the first direct-mail agency, was founded in Chicago in 1905.
The Direct Mail Advertising Association was founded in 1917, helping to further organize the industry. Though other direct-mail agencies were established in the 1920s, the majority did not appear until the 1950s.
Direct mail traditionally appeared in the form of post cards, letters, folders, circulars, catalogs, invitations, product samples and research materials. By 1865, mail-order activity had expanded throughout the U.S. Sears, Roebuck & Co.'s credit card, introduced in 1910, paved the way for the permanent establishment of mail order as a way of doing business.
The Book-of-the-Month Club, launched in 1926, spearheaded so-called "continuity programs," in which successive items are shipped to a customer upon receipt of payment for a previous item. The National Foundation for Infantile Paralysis (later the March of Dimes), founded in 1938, cemented the use of direct mail for fund-raising purposes.
By the 1950s, credit cards became commonplace. Diners Club introduced the first travel and entertainment card; American Express and Bank of America followed with their own versions. Supported by the flexibility of payment offered by credit cards, direct marketing expanded to both the magazine publishing business (Publishers Clearinghouse) and the music world (Columbia Record Club).
The mail-order business surged during the 1970s as the growing number of working women took advantage of the convenience of catalog shopping. Companies such as Lands' End, Lillian Vernon and Spiegel became household names. Retail stores such as Neiman Marcus, Gump's and Tiffany & Co., known for their luxury goods, also introduced catalogs. With changing demographics?especially the decline in the rural population?and increased postal costs, many general-merchandise catalogs geared to lower- and middle-class families disappeared. Montgomery Ward, for example, withdrew its catalog in 1985.
Direct marketing has benefited greatly from advances in technology. At the beginning of the 21st century, the field was entirely dependent on computers that facilitated the development of enormous databases as well as the collection of ZIP code and census tract data. Armed with those data, advertisers were able to target audiences more effectively and track responses to direct mail with precision. Niches became even more narrowly defined, and relationship marketing (also known as one-to-one marketing-in which the marketer modifies its behavior toward an individual customer based on that customer's needs) was established.
However, as direct mail and direct-marketing appeals proliferated, the expression "junk mail" came into use to characterize unwelcome direct advertising in the public mind. Direct-mail agencies began to employ ingenious methods to disguise the nature of their mailings. Affixed stamps replaced machine stamping on envelopes, and technology enabled machines to simulate handwritten addresses. Direct-mail pieces were designed to look like telegrams, checks and even government documents, in the hope of persuading recipients to open the envelopes rather than disposing of the material, unopened and unread.
During the 1980s, the entry into the field of many low-budget advertisers further impugned direct marketing's overall reputation. In the U.S., hundreds of local TV stations had fringe time periods (after midnight and before 6 a.m.) that were used for direct advertising. Payment for airtime was based on recorded sales rather than contracted time, which freed advertisers from costly media commitments. Though several high-end advertisers, such as AT&T Corp., used direct marketing during this period, the general public's negative opinion of the discipline continued.
This trend to expansion, facilitated by AT&T's introduction of a toll-free 800-number service in 1967, paved the way for telemarketing and facsimile marketing in the late 1970s. The growth of cable TV further enabled the targeting of audiences with specialized interests.
The online revolution
The Internet, originally considered peripheral to direct marketing, revolutionized the industry. Mailing lists, traditionally taken from sources such as driver's license rolls, subscription lists and product purchase lists, had a new source of potential consumers, so-called "e-lists" generated by Internet users. The rapid expansion of online catalogs, promotions and e-lists was responsible for U.S. e-commerce sales reaching $11 billion in 1999. During the year 2000, 35% of all U.S. Internet users made online purchases.
Changing technology transformed not only techniques of direct marketing but also the nature of the industry. In 1973, the DMAA modified its mission and changed its name to the Direct Mail/Direct Marketing Association. In 1983, with computers becoming more commonplace, the group changed its name again, this time to the Direct Marketing Association.
The year 2000 saw a majority of global and local companies phasing into computer-based direct campaigns with great success, whether delivered via diskette, CD-ROM, DVD-ROM or the Internet. Revenues from direct-response advertising continued to increase, generating $1.5 trillion in U.S. sales during 1999, according to the DMA. In 2001, marketers spent nearly $197 billion dollars on direct response advertising in the U.S., a 3.6% increase over spending in 2000, according to the DMA.