In the good old days, we used to test everything that moved, measure responses and purchases, analyse the results, produce lifetime value calculations for customers, rank media and  lists according to actual results and just got on with developing the business. We largely ignored post campaign research, as we had hard facts, and we had those more quickly than any research could deliver results. So we may have used pre-campaign research in focus groups, but we believed in long copy, benefits, calls to action, testing and experience – because they worked. We had a control, and tested to beat it.

I remember mailings for a large credit card company 30 years ago where we’d mail 2.5 million people and have over 250 test cells for lists, copy, design. And of course life was a lot simpler, as online didn’t exist, things moved more slowly, customers were more loyal for longer (if you got it right), and we understood what we were doing both technically and in a marketing sense.

Now, we have big data and data overload, and companies simply don’t know what to do with a lot of the data they are generating. Analytics are clearly more difficult the more channels there are and the more they interact, but I think that a lot of the problem is because a lot of the new channels have developed in silos and the people working in them don’t understand either integration or marketing, nor do they test or even know how to test.

I appreciate that testing integrating TV and door to door by omitting door to door from TV fringe areas, so creating control groups, is a much simpler concept from over 30 years ago when we had TV fringe areas (I’ll happily explain to anybody who is interested). And that for example when I went on a cutting edge database marketing course for 5 days in 1985, it covered far fewer channels, but in much more depth, and was still cutting edge 15 years later with minor updates.

Now, we have a much more complicated landscape, and far more data, some of it real time, and perversely, far less testing. We also have much less experience and knowledge in the business, and most people live in silos, without clear goals at times. I cringe when I hear some digital marketing specialists talk about testing as if they’d just invented it. They’d have been laughed off a stage 30 years ago for being too simplistic – but we will get there as marketing is introduced to new techniques, along with true data understanding and analytics.

But that will take a while and we’ll still have a huge volume of data to analyse, and it all takes time. And we live in a fast moving world where we want to understand today and not in 3 month’s time. So we need immediate results analysis and the understanding and insight that goes with that. Which brings me back to research, and specifically to on-line research. This isn’t a research treatise, so I’m not going to discuss the relative strength of panels, enquirer and buyer questionnaires, except to say there are some very large on-line panels, you can build your own, and it is simple to research amongst on-line buyers and responders, and to look at the impact of off-line activity too.

So whilst we are waiting to find out what people have done, why they have done it and what they are likely to do next, and then discovering our analysis is out of date, I’m coming round to believing that timely online research is a better option if done properly.

One of the figures drummed into my brain 30 years ago was 95% significance, and that was simply saying that with the right sample size and predicted response, you could be 95% sure of the outcome. I suspect that some online panels aren’t measuring up to this, but that’s a separate issue.

I’ve been aware of the online research done by Fastmap for some time now, and I’m impressed with what they do in our area of business, but here we are talking about researching individual marketing campaigns. What also grabbed my interest recently was an article in the Winter 2011/12 issue of data IQ magazine (free at www.dqmgroup.com/dataiq ) written by Joanna Reynolds of Reynolds Busby Lee. It just so happens that another attendee on the database marketing course I mentioned was Joanna, who was client side at the time and we invited some select clients onto a course we funded. So she worked for Consumers Association, Time, Readers Digest and others along the way to founding her own agency. What Joanna said in her article was

 “We need to go beyond data, beyond the customer contact cycle, beyond post-purchase research and beyond monitoring social media if we are to fully understand our customers’ experience.”

And of course, Joanna’s company has a solution based on a real-time diary of customer experience. Diaries are not a new tool, although the ability to deliver online in real time is very powerful. But I’m not advocating this as the solution to all our needs, just one of them in the general area of panels, diaries, real time and immediate post research – but there are enough tools out there to validly analyse behaviour across multiple channels, tested offerings and the ‘why didn’t they’ as much as the ‘why did they’, much more quickly than waiting for a big data solution.

I suppose it’s inbred, but what I really believe is that constant testing is the right thing to do, adapted to a more integrated and fast moving marketing world – but it needs a lot more effort, budget, understanding and skill sets than it used to do, and the direct and digital communities have less not more right now.

If I’d written that headline 20 years ago, it would have conjured up images of the top shelf in video rental shops – but not now! This is about premium, short-form, embeddable videos.

We are working with a French/Belgian company, VideoStep SA, who have developed a new model for video distribution, based on the existing model not meeting the needs of both producers and publishers.

We all know that video is one of the stickiest parts of a website, and helps tremendously with SEO, and that the amount of video going onto the internet is huge – but it is mainly amateur and time consuming to find, so publishers with deadlines don’t use anything like as much as they could. By the same token, many video producers don’t have the reach they could, and if they use a syndication model, there are issues of control and revenue share to an extent that monetisation models return very little.

VideoStep is firstly a search engine for premium, short form, embeddable video, providing a professional marketplace for producers and users. It enables producers to increase their inventory whilst retaining a larger share of revenues, and critically to leave their video in their own player, so they get all the clicks, social media likes and so on.

And for publishers, they can semi automate a video page that will give them a lot more sticky content, more ad space to sell and a share of revenues on sponsored videos, as well as more advertising revenue on their own videos (from pre-roll or similar).

VideoStep launched in France in January 2012 after nearly 2 years of technical development, and is funded by VC’s and internet entrepreneurs including France’s richest internet billionaire. And to launch in the UK, they were looking for a partner rather than an agency.

We of course work as an agency in both B2B and B2C, and have spent many years building sales funnels for B2B clients in a traditional marketing/agency role, even though the tolls and channels have changed. So for us, it was simply a matter of doing what we do with a particular product in a particular market. So far so good. But we have also taken on sales responsibility for the UK, so as well as making appointments, we are keeping them, following up and signing contracts.

We launched in the UK in February, and although it is early days, the initial reactions have been very positive.

This is an additional workload as 100 Percent Direct Marketing is still very busy and growing, so with some regret, I have stepped down from the various trade association and industry roles I held – with the DMA on both the mailing house side and integration committee, as editor of the Why Mail newsletter, and as chair of the B2B Alliance. I first sat on a trade association committee 30 years ago, so I think I’ve done my bit, but 100 Percent remains a committed member of the Direct Marketing Association and individually as a Fellow of the Institute Of Direct and Digital Marketing too.

As I write, VideoStep has just over 300,000 videos indexed in its search engine, and this should hit 2 million by the end of the year.

Michael Howe

Just about everything if you read the headlines, or not much if you read the detractors. But headlines can be misleading, and often take the nugget that is right and generalise from it.

So what do you think of “Twitter followers of brands more likely to buy” as a rationale to invest the time in Twitter as a marketing tool?

Apart from being a statement of the blindingly obvious to me, akin to saying my children are the children most likely to buy me a birthday present (I wish), the whole of social media is now discovering marketing and data and analytics as opposed to statistics. Which is a good thing, long overdue and a cynic (like me) might think they are on Chapter 1, when they think they’ve invented marketing – but at least it’s going in the right direction.

Or email marketers saying that emails are being welcomed and opened as never before, contrasted with a headline that over half of email messages are deleted within 2 seconds without ever being opened. The analysis on the first one attributes improved results to better segmentation and targeting, and also relevance. This to me implies lower volumes and better results. Another survey I’ve seen says people are being much more selective about emails they receive, subscribing just to companies they trust, but then welcome them. This goes with better response rates on lower volumes within a committed customer base!

And in the more traditional area of off line, direct mail is achieving open rates of 91%, not that we ever used to measure on open rate, and I heard somebody from Royal Mail lamenting that financial services direct mail had ruined the channel by turning it from a direct marketing channel into a mass communication one. Well yes, but they lapped up the volume when it was there, and some of us have been saying for about 20 years that using the post with pseudo targeting and minimal cost per pack is direct communication and not direct mail, and has made it far more difficult for real direct mail to get the right price for proper targeting and creative, and also the right consumer perceptions.

Mobile runs the risk of following the same route as email as an outbound marketing route, which has nothing to do with how much Mcommerce there will be in 10 years time (£19 billion according to separate surveys from eBay and Barclays).

So what works?

Some answers come from another survey (Marketing Gap from fastmap) recently published, which says that social media largely is not working for new business acquisition. We’ve all seen some great case studies that say the opposite, but most of us don’t have iconic brands and huge marketing budgets to fund the resources and expertise to stand out. And in very public channels, how many copycats are there very quickly if something is seen to work?

But everything works in the right context with the right execution, which is about as vague as I can get.

Maybe better to ask what doesn’t work? Whatever the communication, it has to have relevance to the audience, it has to engage, it has to have some brand personality, it has to have benefits to the recipient including some sort of offer, it has to grab and keep attention, it has to be properly targeted – and many more similar points. Any half way decent direct mail copywriter would have told you this 25 years ago or more, and what doesn’t work are communications which don’t follow these principles. Which is quite a high percentage.

It seems to me that there is a shift for the better happening. The newer channels are coming out of their silos and discovering marketing, and it is marketing rather than technology that will drive integration forward and reintroduce best practices that we took for granted many years ago – engaging copy that tells a story that is credible for a brand, proper database marketing, and testing to name but three.

And here, finally, is a quick run through of some channels and what we think their strengths and weaknesses are – based partly on ability to achieve stand out in a crowded world. Of course, a brilliant campaign can achieve stand out in most channels, but we can’t all be brilliant all of the time. There are always exceptions too, which is why good marketing agencies like to understand their clients, their products and services and their target markets, to make sure they aren’t proposing standardised solutions when there could be something better.

But talking of standardised solutions:

Email – If you can get somebody to engage with you, then it is a great way to keep that engagement in a low cost way. But that is essentially retention not acquisition. We don’t use email for acquisition any more.

Mobile – You could say exactly the same as for email, so we shall.

Social – According to an IBM study, 82% of marketers plan to use more social media, but most are struggling with the volume of data generated and don’t know how to measure ROI. So why increase spend? There are some negative reasons – you simply have to monitor and respond positively and quickly, and you need to be out there. The strength though is in a customer controlled engagement environment, which can be very positive on loyalty but is hardly an acquisition channel. And the time costs need to be controlled.

Search, PPC, Adwords, Banners and similar – This is obviously moving into the acquisition arena. The question is not if but which ones and how much. But we can’t all be number one on natural search, and getting on page 1 and staying there is the challenge. To us, for most businesses, this is a matter of getting it right initially and then keeping it right at a low cost, and that is mainly a time cost.

Broadcast Media – If you can define the target market and find the right channel, particularly with localised channels such as radio, this can work well for acquisition or promotions. Just thought we’d throw that in out of the blue.

Direct Mail – We worked in direct mail before most of the other channels listed existed, so we do have a bias. But it also allows us to say that done badly, direct mail is a very expensive way of failing – you can fail at a much lower cost in email. Ask yourself though which channel has the most flexibility within channel imposed formats, most creative freedom, and the best option for long copy if you can tell a real story? And also has the highest unit cost? Our view is that if you can tightly define your target market, and get the messaging right, and then the pack format, you can achieve real stand out with direct mail more readily than the other channels. So direct mail is good for acquisition, but not for engagement or retention. It is still worth using for a new catalogue or new product or service where you need stand out within the existing customer base.

Michael Howe

The DMA has launched a new quarterly newsletter – Why Mail? – promoting direct mail as a medium. As an agency, we wouldn’t necessarily feature this, but if you can read a copy, you will see that the editor and yours truly are one and the same. In fact, I wrote most of it, with the design and final editing being done by the DMA.

If anybody would like a printed copy, or to ensure you receive the next issue (probably early February 2012), just let me know through the contact form on the site, or by email.

You can read a copy of this first edition of Why mail by following the link.

Whilst this is about direct mail and integration, it is part of a wider view we have on maximising profit from the right mix of integrated channels, which is the subject of a separate post.

Michael Howe

The Direct Marketing Association (DMA) is about to sign a new agreement with the Government in a bid to reduce the industry’s impact on the environment. The Voluntary Producer Responsibility Deal is the result of months of discussions between the DMA and Defra.

The proposed agreement reflects the current Government’s current targets to move towards a zero-waste economy and reduced carbon emissions. It will build on the success of a similar agreement with Defra in 2003, which set recycling targets for the direct marketing industry.

The detail on the DMA website is restricted to members, but here is some background and some statistics.

Sometimes, perception and reality can be some distance apart – direct mail currently accounts for just 0.4% of unrecycled waste, compared to say 9.2% for newspapers.

In 2003, the Direct Marketing Association and Defra agreed a target of 70% of direct mail to be recycled by 2013. The industry reached and passed this target in 2009, with 76% of direct mail being recycled. This in turn led to a new set of targets prior to 2013.

The DMA launched a new environmental standard, PAS 2020, specifically for direct marketing. It isn’t as rigorous as ISO 14001, but it is industry specific and so more focussed. And one of the new targets is that 40% of all direct mail is PAS 2020 compliant by 2014. The actual target for recycling is only slightly higher at 80%, and in fact the focus has switched to wastage reduction.

By wastage reduction, we mean better targeting and better use of suppression files such as the Mailing Preference Service (which now has 5 million people registered), but also better data cleaning to remove gone aways and undeliverables. The target is a 25% increase in the use of suppression files by 2014. PAS 2020 is part of a carbon reduction initiative, and the industry will develop carbon calculators by the end of 2014 to form the basis of the next agreement after that.

Of course, direct mail is a successful business, accounting for £16 billion in sales, employing 280,000 people and providing 25% of Royal Mail’s volume – and effectively subsidising the universal postal service.

This doesn’t make direct mail a good thing environmentally, but it is nothing like as harmful as common perceptions, and has done a great deal to get its house in order – and a lot of the source material is pulp left over from tree felling for other uses such as building, and nearly all is from sustainable or recycled resources. More trees are planted every year than felled in the UK, and a lot of this is down to the wider paper industry.

And for perspective, some comparisons:

• Disposing of a year’s worth of direct mail for one person generates as much greenhouse gas as growing two and a half apples.
• According to a Gartner study, the global IT industry, including email, generates as much greenhouse gas as the world’s airlines.
• The total annual carbon footprint of direct mail per adult is 2.8 kg, which is the equivalent of driving 7.7 miles in a car or 34 seconds on a long haul flight.
• Email has a carbon footprint of 21.2kg per annum for each UK web user.
• On line search has a carbon footprint per annum of 10.6kg per search user.

Of course, email has much higher volumes, but it also has much lower opening rates.

Sources: Direct Marketing Association & Mail Media Centre

Should we be dropping email from acquisition and going back to direct mail? Look at the stats:

• Email open rates for acquisition halved between 2008 and 2010
• 91% of prospect direct mail was opened in 2010
• Direct mail response rates have increased by 25% in the last few years

While we believe there’s a role for email, in the chase to incorporate digital and social media in marketing plans, many people have ignored or overlooked traditional channels or indeed missed key changes in the ROI of the media they use or should be using.

In 2006, the ROI on digital marketing, including email, search, banners and pay per click, was three times that of direct mail. By 2009, they were roughly equal, and the probability is that today the ratio favours direct mail.

Moreover, according to a recent Gartner study, people are now turning away from social media usage, particularly the early adopters – which means that its proposed value and reach as a marketing medium will be less than hoped, even though it is still in the formative stages. So it has taken about two years for social media to start to lose impetus. It took email maybe eight years, and direct mail about 100 years.

What’s Leading to These Changes?

Typically, a chase for cost minimisation leads to not maximising effectiveness, leading to a lack of standout in a cluttered market. This is certainly what has happened to direct mail over the last 10 to 15 years. While email’s very success is also its biggest problem.

A USA survey says that over half of all emails are deleted within 2 seconds without ever being opened, and that ignores the problem of actually reaching the inbox. The focus of most email experts is now on proper targetting, creative and reaching the inbox – quite right, but it’s frankly about as sophisticated as direct mail was about 25 years ago!

What does all this mean for marketing people who want to maximize their reach to prospects and conversions from customers? Giving up email marketing and online and putting all your marketing budget into direct mail is not the answer. Email is still the favoured medium for existing customer communications because open rates are so good…but you still need to have a strategy to deal with non-openers if you have an open rate of 40%.

An Integrated Solution

This should lead you to properly integrated marketing plans – with proper targetting, messaging and relevance – but how do you stand out from the crowd in an increasingly crowded world? The simple answer is you can’t if you don’t control the channel or the format of the channel. I don’t really know how you can stand out in an email inbox even if you get everything right, or without falling into a spam filter.

How many people can actually be on page one of Google if you get your SEO right, and you can make similar arguments about paid search, PPC, banner ads and so on, as well as all the coming social media advertising opportunities.

And direct mail? Spend a little more and it’s a lot easier to get stand out. Years ago, most direct mail was B2B, and highly creative. Then B2C came along with much larger volumes and cost per pack was the main consideration, and direct mail lost a lot of its impact and creativity. Now, and for the last three years, a lot of the volume has gone so the market is less cluttered, and some creativity is starting to creep back in.

I’ve just spent a few hours looking at case studies around the world on behalf of the DMA, and thanks to the Mail Media Centre and Patrick Collister for access to his publication “Directory” – there are some amazing examples of creativity from a simple idea well executed, to complicated packs. But the best ones show direct mail being used in conjunction with other channels, driving traffic to the web, working in conjunction with email, reaching where other channels don’t – and on and on.

So it’s about integration, about ROI, about targetting, messaging and relevance, and about getting noticed in the first place. And then it’s about the right strategy and channels for maintaining and improving relationships.

We don’t have all the answers, and it is different for each sector and for businesses within sectors, but we do have some of them, based around achieving stand out in a marketplace and maximising ROI.

New marketing VAT advice service warns ‘supplier beware’.

The Direct Marketing Association (DMA) is warning suppliers of print-based marketing products and services that
they run the risk of being slapped with a hefty VAT bill if they fail to get to grips with VAT legislation.

The warning comes as the DMA announced the launch of its VAT Helpdesk, a free service that provides advice to marketers to clarify the complex rules and regulations specifically concerning printed marketing goods and services.

Many organisations that use print-based direct marketing media are unable to reclaim VAT and look to their suppliers to minimise their VAT liability. This is achieved through the design of the printed material and managing the contents of mail packs so that they are classified as ‘zero rated’. VAT liability can also be
reduced by applying special exemptions for charities and using techniques such as ‘single supply’.

The DMA’s VAT Helpdesk was set up at the urging of the industry because the guidelines published by HMRC aren’t clear and often need interpretation to understand how they apply. Most accountants and financial managers don’t have the specialist knowledge – especially regarding what precedents and case law exists – to be certain that they are applying the correct interpretations.

With pressure piling on suppliers to reduce cost for their customers, companies are waking up to the fact that they need to assess VAT correctly since they – not their customers – are liable for any penalties. HMRC can routinely backdate assessments four years and apply a fine of up to 100 per cent of the VAT shortfall in addition.

Commenting on the launch of the DMA VAT Helpdesk Richard Evans, head of compliance and legal services for the DMA, said:

“We’re aware of a number of companies that have been caught out by misinterpreting the VAT rules. Unfortunately it is a case of ‘supplier beware’. In the past year we’ve seen some companies being hit by HMRC with bills totalling millions of pounds. There’s a huge grey area, for instance, around the point at which you are no longer supplying zero rated goods to a full VAT rated service. That’s why our free helpline will help companies navigate the complexities of the VAT rules in this area.”

Run in conjunction with Zero VAT, the VAT Helpdesk is staffed by experts with many years experience who can provide guidance on what can be zero rated and identify where there is an element of risk. The helpline is not designed to give general advice on VAT issues but is specifically for DMA members wanting guidance on the supply of zero rated goods. As a DMA member, 100 Percent Direct Marketing has full access to this service, and will be able to advise clients accordingly.

How many times do you get invited to a free event at Wembley Stadium, to look and learn, courtesy of the FA and the Direct Marketing Association?

So I was there yesterday morning for the launch of the digital marketing research survey conducted amongst Premier League clubs. Quite a few DMA members there but just one Club – the FA didn’t invite any, but Chelsea are a DMA member anyway – so well done Chelsea FC! It just struck me that’s the first time I’ve written that, but probably shouted something similar a few thousand times over the years.

What did I learn? The problem with aggregated research is that it lumps the good, bad and indifferent together, and large (over 2 million email addresses in one case, presumably Manchester United) and much less than one tenth of that at the other end of the scale. It is obviously a highly loyal audience, and the average number of emails a month is twice an email industry norm. Maybe as a function of that, the open and click rates are no higher than industry norms, which did surprise me – but given the frequency maybe that’s quite a good average. The view was that there was a lot to be done on segmentation, targetting and personalisation to keep the communications relevant.

And a common view that mobile communications are the biggest challenge ahead – so maybe I’ll see emails and web content optimised for my Blackberry in future.

As a reaction to the Panorama programme last week on direct mail, the Direct Marketing Association has issued a fact sheet to differentiate advertising mail and to give the true figures on environmental impact.The fact sheet can be downloaded from here: http://www.dma.org.uk/news/dma-produces-fact-sheet-advertising-mail

Panorama Programme

I thought the programme was superficial, more like a travel programme than a serious investigation, muddled facts and completely and deliberately confused the issue by lumping scam mail and so called junk mail in together – and as the journalist requested a lot of the mail he had, as somebody else has pointed out, it could not by definition be called junk mail.

Think Jessica

Still, it did highlight a serious problem of scan mail, and I urge anybody to look at the Think Jessica campaign. I saw a DVD after a Metropolitan Police presentation at the DMA, and was shocked by the scale of the fraud – and also by the fact that it has reached such volumes without us as an industry being aware, never mind helping with positive action. Nearly all of it comes from outside the UK but using UK postal accounts, so whilst there may be difficulties in admin and contractural relationships, I’m convinced far more should have been done and still could be.

Met Police Resource

I went to see the Met Police at New Scotland Yard to see what could be done to help – essentially to look at ways of identifying the crooks at a much earlier stage. The main problem here is police resource, but I still think the industry could do far more, and should have been doing since the police brought the issue to the attention of the industry.

Maybe a sign of the times, as direct mail regains some of the ground it has lost, but we’re delighted to welcome back two clients where we didn’t lose their business as much as they stopped the activity – but are now looking at lists and direct mail after quite a gap – The Telegraph Media Group, who we last worked for in 2005, and Taj Hotels, Palaces and Resorts, who we last worked for in 2008.

We are now busy going through our lapsed client files, 2000 – 2005!