(A temporary respite from venture capital and micro-entrepreneurship. We’ll return to the topic soon.)

How does traditional targeted direct marketing work?

(click on the drawing for a large, legible version) *

Traditional targeted direct marketing is based on the premise that marketers can control differentiated information and messaging presented to segmented groups of individuals.

• The traditional method works well in a business and social environment where information is obscured, where companies can control messaging to groups of people and where people cannot easily share information between groups.
• If the marketer is wrong in one part of the “person + product + marketing message” equation, the pitch fails. Companies optimize to the system to develop the best answers to this equation.
• Marketing creates the brand by “talking” and controlling the information flow between the company and people.

How is direct marketing changing?

(click on the drawing for a large, legible version)

In an environment where marketers’ ability to dictate the person + marketing message + product equation decreases, the marketing and product approach needs to shift to leverage shifting flows of information.

• In a business and social environment where information flows outside of the normal direct marketing firewalls and companies cannot control the messaging to segmented customer bases, the traditional approach begins to break down.
• The equation becomes a little more fluid and variable as the range of inputs and answers increase drastically.
• Traditional targeted direct marketing still exists; but to a lesser extent, focusing on specific segments or products as dictated by best practices, lessons from the marketplace and corporate initiatives.
• But since companies can no longer control the flow of information as consumers can talk between groups on the same scale as companies, controlling the message becomes an unrealistic goal.
• Therefore the desire to control the message leads to high customer acquisition costs as the traditional channels used to control the message become increasingly ineffective.
• What can still be controlled? Product becomes more important than marketing. Product builds the brand.
• Marketing shifts from positioning to reinforcing.

How can marketers adapt to this new environment?

• The opportunity of “alternative media”, social media, “alternative channels” et. al. is to integrate with traditional media, not replace.
• To understand how to adapt to the new environment, focus on the fundamental shifts in the flow of information; the shifts have rebalanced the efficiency and effectiveness between the various traditional and newer marketing strategies and tactics.
• Marketers still have to understand the intended customer base and the product value proposition to create great marketing strategies. Expose oneself to the new tactics and possibilities of alternative media, but remain focused on creating strategies that achieve the primary marketing goals and objectives. Choosing a particular tactic without first understanding the fit in the strategy and its goals neglects fundamental marketing best practices.
• It’s not an “either/or” decision between traditional and alternative media: the answer is “both”.
• But at the same time, get comfortable with spending less money, not more.**

Direct marketing is dead!

Long live direct marketing!

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* I know my handwriting is chicken-scratch at best. I hope it’s legible…
** Insight by Ethan Bauley.