Direct results clearer than agency spend

By Dita de Boni

Keith Norris is, by his own description, really annoyed.

Sitting in his Freemans Bay office, the Direct Marketing Association's chief executive says he is cheesed off with the media's "incessant love affair with measuring the effectiveness of [an advertising medium] by adspend."

In other words, he says, an agency can pump money and time into "flash-looking ads," but can they put a price on how effective that ad actually is in spurring people to buy?

The Direct Marketing Association (DMA) will be spending more than $100,000 on an economic impact study this year in the hope of proving to the industry and commentators that the image of direct marketing as the "blue-collar cousin of advertising agencies" should be put to rest once and for all.

"Whilst mainstream agencies assess their strength and viability by the size of the media billings, a [direct marketing] agency is involved with strategy and concept and media selection, just like a mainstream agency, plus database segmentation, customer relationship programmes, testing and measurability, back-end analysis, and narrow-cast media like mail, telephone and e-media," Mr Norris says.

He says direct-to-consumer stands apart from other forms of marketing in its ability to give measurable results for every dollar spent. His economic impact study this year will provide the actual figures, but for now the association refers to United States statistics which seem to back up local evidence of a distinct rise in the use of a plethora of direct marketing strategies.

In 1999, according to the US Direct & Interactive Marketing Today economic impact report, each dollar spent on direct marketing resulted in an $8.69 return on investment. Direct marketing advertising expenditures now represent 57.1 per cent of total US adspend.

Interactive/online direct marketing weighed in at $US1.3 billion ($2.55 billion), a relatively new category for the industry and one expected to grow to $8.6 billion by 2004.

Although Mr Norris admits New Zealand "is not up to that level [of direct marketing] yet, anecdotal evidence supplied to him puts methods such as call centres, catalogues, targeted e-mails, infomercials and customised mail-outs at around 35 per cent of adspend in this country.

He admits that people are not always fond of direct marketing efforts: junk mail, database renting, annoying infomercials that hound insomniacs and too-good-to-be true-offers from anonymous shop fronts have "inextricably linked" valuable direct marketing efforts with pesky promotions.

The number of complaints the association receives yearly - relating to both the activities of the DMA's 500 corporate members as well as non-members - exceeds 1000.

But the bulk of the problems, says Mr Norris, relate to "poor communications, unrealistic [consumer] expectations, and goods out of stock."

Cold calling is no longer popular, he says, as direct marketing works on creating a relationship between buyer and seller and "consumers don't respond well [to buying] without some sort of relationship established."

Nothing has signalled a change in mentality to direct marketing more than the fact major ad agencies including Gestro Horne, Foote Cone & Belding and Saatchi have followed their international parents and established direct marketing departments, divisions or businesses alongside traditional branding and marketing activities.

As direct marketing continues to live out its growth curve and agency gurus descend from the rarefied air of pure creative to embrace a more cosy relationship with target audiences, the DMA is hammering home the industry's legitimacy.

Mr Norris says far from being offended by corporates holding information on clients, for example, "[people] expect companies like Air NZ to know I like an aisle seat, that I play golf, that I like to be upgraded to business class.

"It's all about focusing on the customer."

Perhaps the most important sign that direct marketing is becoming a mainstream discipline was the announcement in late November that the Advertising Agencies Association - long a stronghold of the Saatchis and DDBs of the world - was restructuring to throw open its membership to include design, direct marketing and web companies.

Executive director David Innes says the 3As has followed its member agencies into the area of direct marketing and admits there is a possibility of duplication between 3A and DMA memberships.

Several agency reps hold fast to the old perceptions of direct marketing and have opposed the move, with one quoted in industry rag Admedia as comparing the move to "sleeping with the enemy."

But Mr Innes says there will still be points of distinction.

"We will be more tightly focused, and concentrating on things we do well, like media relations.

"We are different animals and [the 3As] will still be aimed more at agencies where direct marketing and traditional functions are integrated."

Invitation to acceptability? Mr Norris cannot hide his glee at the thought of the 3As moving into the space below the DMA's Beaumont Street office (Mr Innes prefers to think of it as "moving into the same building," but concurs that the two bodies, while differently focused, will still be able to help each other.

"There are real synergies [the 3As and the DMA] can explore. Sharing facilities will make us more cost effective. We already do joint seminars and the like," Mr Innes says.

"But basically, everything about direct marketing is logical and measurable, whereas creativity isn't."

"We can't be one [body] because we are totally different organisations."