Offline and Online Direct Advertising

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Offline and Online Direct Advertising
Chapter Fourteen
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Chapter Fourteen Objectives

• Explain direct advertising and reasons underlying
  its growth
• Describe the characteristics of direct-response
  advertising
• Discuss the distinctive features of p-mail
  advertising
• Explain the role of databases and data mining

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Chapter Fourteen Objectives

• Perform lifetime value analysis of database
  entries
• Discuss the distinctive features and advantages
  of opt-in e-mail advertising
• Evaluate the role and future prospects of
  wireless advertising

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Direct Advertising

• Use of any of several media to transmit messages
  that encourage purchases of advertisers brands
• Postal mail and e-mail are the most important.
• Facilitated by practice of Database Marketing

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Database Marketing

• Involves collecting and electronically storing
  info about past, present, and prospective
  customer
• Info is used to profile customers

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Niche Marketing

• B2b marketers have expanded usage of direct
  advertising

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Database Marketing and Data Mining

• Successful direct mailing requires availability
  of computer databases and addressability
• Direct Advertising does not deal with customers
  as a mass
• Creates individual relationships with customer

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Database Marketing and Data Mining
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Database Assets

• Direct advertising efforts to those who represent
  the best prospects for the companys products or
  services
• Offer varied messages to different groups of
  customers
• Create long-term relationships with customers

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Database Assets

• Enhance advertising productivity
• Calculate the lifetime value of a customer or
  prospect

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Lifetime Value Analysis

• Customer lifetime value
• Net Present Value (NPV) of profit that a company
  stands to realize on average new customer during
  a given number of years.

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Lifetime Value Analysis

• 5 ways to augment lifetime values
• Increase the retention rate
• Increase the referral rate
• Enhance the average purchase volume per customer
• Cut direct costs
• Reduce marketing communication costs

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Mailing Lists

• windows to our pocketbooks
• Internal (house lists) and external (public
  lists)

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The Practice of Data Mining

• information extraction activity whose goal is to
  discover hidden facts contained in databases
• RFM System
• Recency of a customers purchase
• Frequency of purchases
• Monetary Value of each purchase

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The Practice of Data Mining

• R-F-M Categories application
• Company can divide customers into quartiles or
  quintiles for each category
• To test effectiveness
• Take a representative random sample of customers
  from each cell.
• Distribute a catalogue, brochure or other
  p-mailing

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The Practice of Data Mining

• Provide sufficient time for sampled customers to
  respond
• After sufficient time has elapsed, determine
  response rate and average expenditure per cell
• Project these statistics to full membership

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The Practice of Data Mining

• Based on response-rate and average-expenditure
  and with knowledge of the cost of distributing
  the mailing, it is easy to calculate whether this
  is a profitable proposition
• The decision rule is simple Direct mailing only
  to those cells whose revenue potential outstrips
  mailing expense

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P-Mail Advertising

• P-mail advertising
• Advertising matter sent via the postal service to
  the person whom the marketer wishes to influence
• Ex. Letters, postcards, programs, calendars,
  catalogs, videocassettes, blotters, order blanks,
  price lists, menus, etc.

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P-Mail Advertising

• Saab 9-5 direct mail campaign
• 200,000 consumers were targeted
• The Martin Agency developed IMC Strategy

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P-Mail Advertising

• The Martin Agency designed four mailings
• Countdown mailing
• Subsequent qualification mailing
• Special issue of Road Track magazine
• Test-drive kit mailing

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P-Mail Advertising
Qualification mailing
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P-Mail Advertising
Response to qualification mailing
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P-Mail Advertising
Test-drive kit mailing
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P-Mail Advertising

• Targetability
• Measurability
• Accountability
• Flexibility
• Efficiency

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What Tasks can P-Mail Accomplish

• Increase sales and usage from current customers
• Sell products and services to new customers
• Build traffic at a specific retailer or Web site

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What Tasks can P-Mail Accomplish

• Simulate product trial without promotional offers
  and incentives
• Generate leads for a sales force

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What Tasks can P-Mail Accomplish

• Deliver product-relevant information and news
• Gather customer information that can be used in
  building a database
• Communicate with individuals in a relatively
  private manner

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Who Uses P-Mail Advertising

• 77 of U.S. companies reported using p-mail in a
  survey
• are turning from the t.v. box to the mailbox
• Both B2B and marketers of consumer

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Why The Trend toward P-Mailing?

• Rising expense of television advertising
• Unparalleled targeting
• Measurable advertising results
• Consumers are responsive

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The Special Case of Catalog Marketing

• Marketers perspective
• Catalog selling provides efficient and effective
  way to reach prime prospects

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The Special Case of Catalog Marketing

• Consumers perspective
• Saves time
• Appeals to consumers fearful of shopping
• Convenience of making purchase decisions at
  leisure
• Modern conveniences make it easy to order from
  catalogs

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The Special Case of Catalog Marketing

• Consumers perspective
• 5. Merchandise quality and prices are often
  comparable if not better than those of stores
• 6. Guarantees are attractive

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E-Mail Advertising

• The use of the Internet for sending commercial
  e-mail messages
• Alternative to banner ads, pop-ups, or other
  forms of rich-media presentations

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E-Mail Advertising

• Over 20 of emails users receive is marketing
  related
• Expenditure is expected to exceed 2 billion by
  2003

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Opt-in E-Mail versus Spam

• Opt-in E-mailing
• The practice of marketers asking for and
  receiving consumers permission to send them
  messages on a particular topic (s)

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Opt-in E-Mail versus Spam

• SPAM
• Unsolicited and unwanted commercial e-mail
  messages
• Brand-awareness is offset by negative reaction

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The Virtues of E-Mail Advertising

• E-mail no different from p-mail
• an actionable mess in front of a pre-disposed
  buyer

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The Virtues of E-Mail Advertising

• Personalization
• E-mails can be personalized to individuals unique
  informational needs

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The Virtues of E-Mail Advertising

• Targeting
• Can target specific messages to well-defined
  groups of present customers or prospectives

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The Virtues of E-Mail Advertising

• Cost Efficiency
• E-mail is a relative bargain compared to p-mail

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The Virtues of E-Mail Advertising

• Effectiveness
• Response rates to e-mails sometimes exceed 20

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The Virtues of E-Mail Advertising

• Measurability/Accountability
• Calls for specific action from recipients

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The Virtues of E-Mail Advertising

• Speed
• Can be transmitted and received

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The Virtues of E-Mail Advertising

• Safety
• E-mail avoids the hazards of p-mail

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Acquiring Opt-in Lists

• House lists generally generate higher response
  rates

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The Special Case of Wireless E-Mail Advertising

• By 2005 over 60 million North Americans will be
  using WAP, PDAs and messaging devices
• Advertising wireless e-mail users could create
  negative sentiments and be antithetical to the
  reason why people use wireless in the first place

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The Special Case of Wireless E-Mail Advertising