Direct Marketing is Dead. Long Live Direct Marketing!

July 30th, 2008  

(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) *

Old Direct Marketing (Taylor Davidson)

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)

Direct Marketing, New World (Taylor Davidson)

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!

—

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

Category: Bridging Online and Offline Interactions, Creating Strategy using Design Methodology  

SIMILAR THOUGHTS

Viewing 17 Comments

    • ^
    • v
    Conversation with a friend:

    Friend: "I agree that the product is the core, and marketing should reinforce the product. That being said, product reinforcement tends to be about clear functional benefits, whereas consumers are more often seeking experiences. I suppose one can build a positive experience into their product."

    Me: Agreed. Consumer's aren't looking for features or benefits, just solutions. And that solution (which is part of the experience) has to be built into the product.


    Friend: "... marketing in this era works best when authentic. Brands that are authentic, where less of the message has to be managed because it can stand on its own, will continue to win in this information-rich era. If you have an authentic brand, then you should worry far less about what the blogosphere and the like might say about you."

    Me: "If you're authentic people (blogosphere) notice. Being authentic is part of giving up trying to control the message, and just control what you do."
    • ^
    • v
    Taylor: "Being authentic is part of giving up trying to control the message, and just control what you do."

    I'd like to go a step further from the marketing jargon and make it more visceral, something like "Being authentic is part of giving up trying to *change people's valid opinions of you*, and just control what you do."

    It's more like "Not being a sociopath is part up giving up..."

    Etc.

    Take a stab at this?
    • ^
    • v
    I'm still trying to complete the sentence "not being a sociopath is part of..." :)
    • ^
    • v
    (think, paulson, recommendations to buy bear stearns the day before it collapsed, hedge fund guys with 6 trill of shuffled debt, an insane invasion of iraq on pretense, for your sociapath examples, and what they have might have to give up... not so hard) ... these people with these minds simply have to die off, they are so vested into an identity that to change would be the same as suicide
    • ^
    • v
    social media will kill marketing, direct or otherwise, because the transparency of hyper-connectivity exposes intention. energy follows intention. marketing campaigns are made of intention, not words or clever concepts.

    marketers cannot hide their intentions anymore, and that will be the end of them. because you cannot fake it or manipulate for authenticity.
    • ^
    • v
    right, there's some quasi-famous line regarding holding onto a lie: that it accumulates such a huge cognitive load to remember all the different parts of it that it will eventually come down HARD.

    pretty much the same thing here. being "good" (or "transparent" in this case) is not just the ethical choice, but also the efficient choice.

    thanks for having these discussions guys, i feel like it's helping me articulate these important things to other people outside our mini echo chamber (and i use that lovingly ;-) that need to understand.
    • ^
    • v
    and i think umair is trying to make people see that it is the strategic choice ... he is at the border of idealism on this, which is fine...

    this point of articulating outside the echo-chamber is a good one .. an entire skill-set ... sitting upon one-tenuous assumption, that people prefer change over having their pre-existing view validated. a tough call.

    i'll trade you my blog post on change and transformation for yours....
    • ^
    • v
    yep: maybe it's ethical, but strategy is why companies are starting to analyze decisions using the ethical / authentic lens in their profit / NPV calcs. and these decisions are being made on the margin: how does being a little bit more ethical impact marginal profit? how does it compare to other ways companies could spend capital / resources / time / corporate reputation?

    I would hazard a guess that most companies see being ethical as an all-or-none choice, and that being "partly ethical" or "partly transparent" is perceived as a confusing, sub-optimal choice, and thus company decides not to pursue at all. thoughts?

    the counter-examples (Patagonia?) are few and far between.

    perhaps people don't need to understand... just let the old die and the new / transformed steal their market share? will people change? (maybe) do they want to? (doubtful) collapse and rebirth is part of the business cycle, right?
    • ^
    • v
    personally I believe social media just ends up being part of marketing, or at least what we used to call marketing.

    the sad thing is that companies being to adopt social media en mass, doesn't that take away a lot of the benefits people have had in using these communication methods free of interruptive corporate spam?

    an alternate thought path: people have always and will always try to be manipulative and hide intentions: why will companies be any different?
    • ^
    • v
    that is an honest thing to say .. so many woohoo social media "evangelists" would not allow themselves such directness... discussions today online re, is social media just for selling things? probably.

    appreciate your emphasis on margin, above. reality is a great, and relentless, echo chamber..

    vo nyugen giap was a vietnamese general with a phd and said an amazing thing about america .. ah, your computers, they merely serve to render your ignorance more efficient .. and while i can see a bright light of possiblity coming over the horizon, i agree with your observation of the human element, look at the comments on youtube

    i think you nailed the central point, for enterprises, if it helps with strategy, we will do it. soon. probably. but most of my interest and excitement comes from my time (and philosophical/spiritual/consciousness interests) out on the edge, where friendfeed and twitter are revealing something of the next phase of life on earth, and it is totally exciting to see it come into being.

    companies, like scientists with their need for proof, need to see it on the bottom line. yogis have been smiling with hyper-connectivity for eons.

    enjoy, thanks for your time

    do you know anything about spiral dynamics?
    • ^
    • v
    actually, being a marketer inside a company, it's good to trade one echo-chamber for another sometimes...
    • ^
    • v
    and for every goon at guantanamo prosecution strategy meetings, we have a guy like this, inventing the next solar breakthrough http://web.mit.edu/newsoffice/2008/oxygen-0731....

    human life seems a series of planes, all good and all evil, right here. pick your level, if you have a choice, and do your work

    enjoy
    • ^
    • v
    If you go past the exclusively marketer side of this, perhaps a more efficient equation would be:
    person + product + marketing message + consumer context = consumer decision to buy or not

    The consumer context could then be broken down into criteria like I was toying with here http://bryanlanders.tumblr.com/post/42962678/br.... This is where social media completely changes the way the equation works vs pre-social media. I suggest this addition because I think even with a crappy person + crappy product + crappy message, consumers might still decide to buy based on their context! Think about peer pressure (did you ever make your parents buy a bad product for you only because you wanted to fit in?), viral/P2P media (created by the marketer or not), or even just a positive review of the product by a trusted source.

    Even though new media/content/etc has insanely blown up the context part of the equation, it was there before. Wasn't that a huge way marketers exploited niches pre-internet?
    • ^
    • v
    That's a pretty insightful addition and spot on...

    Content AND context... and given that most of social media is creating context (I heard "curating content" at BarCampRDU this weekend), it's a pretty important frame to add.

    my take is that marketers exploited niches because context couldn't escape the niche. what's different about context now? to go back to your post, more creators, more recipients, and different relationships (e.g. looser, stronger, wider)...

    Is there a "marketplace context" and "personal context"? Marketplace context = "what people think of the product" or "a marketplace's valid opinion"?

    person + product + marketing message + context (marketplace + personal) = consumer decision

    and how does "control", "$$$" and other frames vary within that equation from before to now?
    • ^
    • v
    Re: marketplace and personal contexts, sure, those both exist. But in a way, it all has to come down to the personal context where the consumer pulls out their wallet and slaps down those hard-earned bills, right? Marketplace context (person A's context + person B's context...) certainly can impact the personal context, but that crucial moment of sales conversion (well, ok, unless you are forced to buy at gunpoint or something!) is an individual decision (even if you're involved in a group investment...each individual has to decide to put down their share).

    Re: control and moolah, are you meaning from the marketer's perspective and impact? If so, man, it's changed a ton! One framework for looking at these elements is marketing as communication. Ethan will roll his eyes, but, every new channel of communication opened up on "the internet" enables more information to be shared and consumed by, errr, consumers. While there are still some channels (meaning printed materials, blogs, micro-blogs, forums, web apps, etc) under the sole direction of the marketer, they might as well kiss goodbye the concept of "control" in terms of having exclusive access to the consumer's brain!

    I don't think that means giving up on efforts to put the intended message out there, but there is an obvious need for new strategies to have a positive effect on the communications out of the marketer's control. How about instead of "control" the focus shifts to "impact" or "intention and energy" (where energy is communication around products/services and intention is the decision to direct/amplify/mute/guide that energy towards a desired outcome)?
    • ^
    • v
    i don't see anything to roll eyes about here
    • ^
    • v
    Oh, cool...I was generally referring to "the internet', which, "isn't one thing...it's a million different things." Just a little lazy shorthand...I assure you in my mind I was carefully factoring in those million different things :)
 

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