offline and online direct advertising

Chapter Fourteen

Offline and Online Offline and Online Direct AdvertisingDirect Advertising

Chapter Fourteen ObjectivesChapter 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

Chapter Fourteen ObjectivesChapter 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

Direct AdvertisingDirect Advertising

• Use of any of several media to transmit messages that encourage purchases of advertiser’s brands

• Postal mail and e-mail are the most important.

• Facilitated by practice of Database Marketing

Database MarketingDatabase Marketing

• Involves collecting and electronically storing info about past, present, and prospective customer

• Info is used to profile customers

Niche MarketingNiche Marketing

• B2b marketers have expanded usage of direct advertising

Database Marketing and Data Database Marketing and Data MiningMining

• 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

Database Marketing and Data MiningDatabase Marketing and Data Mining

Database AssetsDatabase Assets

1. Direct advertising efforts to those who represent the best prospects for the company’s products or services

2. Offer varied messages to different groups of customers

3. Create long-term relationships with customers

Database AssetsDatabase Assets

4. Enhance advertising productivity

5. Calculate the lifetime value of a customer or prospect

Lifetime Value AnalysisLifetime 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.

Lifetime Value AnalysisLifetime Value Analysis

5 ways to augment lifetime values:

1. Increase the retention rate

2. Increase the referral rate

3. Enhance the average purchase volume per customer

4. Cut direct costs

5. Reduce marketing communication costs

Mailing ListsMailing Lists

“windows to our pocketbooks”

Internal (house lists) and external (public lists)

The Practice of Data MiningThe Practice of Data Mining

“information extraction activity whose goal is to discover hidden facts contained in databases”

RFM System:

• Recency of a customer’s purchase

• Frequency of purchases

• Monetary Value of each purchase


R-F-M Categories application:

Company can divide customers into quartiles or quintiles for each category

To test effectiveness:

1. Take a representative random sample of customers from each cell.

2. Distribute a catalogue, brochure or other p-mailing


3. Provide sufficient time for sampled customers to respond

4. After sufficient time has elapsed, determine response rate and average expenditure per cell

5. Project these statistics to full membership


6. 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

7. The decision rule is simple: Direct mailing only to those cells whose revenue potential outstrips mailing expense

P-Mail AdvertisingP-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.


Saab 9-5 direct mail campaign:

200,000 consumers were targeted

The Martin Agency developed IMC Strategy


The Martin Agency designed four mailings:

1. Countdown mailing

2. Subsequent qualification mailing

3. Special issue of Road & Track magazine

4. Test-drive kit mailing


Qualification mailing


Response to qualification mailing


Test-drive kit mailing


• Targetability

• Measurability

• Accountability

• Flexibility

• Efficiency

What Tasks can P-Mail AccomplishWhat Tasks can P-Mail Accomplish

1. Increase sales and usage from current customers

2. Sell products and services to new customers

3. Build traffic at a specific retailer or Web site


4. Simulate product trial without promotional offers and incentives

5. Generate leads for a sales force


6. Deliver product-relevant information and news

7. Gather customer information that can be used in building a database

8. Communicate with individuals in a relatively private manner

Who Uses P-Mail AdvertisingWho 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

Why The Trend toward P-Mailing?Why The Trend toward P-Mailing?

• Rising expense of television advertising

• Unparalleled targeting

• Measurable advertising results

• Consumers are responsive

The Special Case of Catalog MarketingThe Special Case of Catalog Marketing

Marketer’s perspective:

Catalog selling provides efficient and effective way to reach prime prospects


Consumer’s perspective:

1. Saves time

2. Appeals to consumers fearful of shopping

3. Convenience of making purchase decisions at leisure

4. Modern conveniences make it easy to order from catalogs


Consumer’s perspective:

5. Merchandise quality and prices are often comparable if not better than those of stores

6. Guarantees are attractive

E-Mail AdvertisingE-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

E-Mail AdvertisingE-Mail Advertising

• Over 20% of emails users receive is marketing related

• Expenditure is expected to exceed $2 billion by 2003

Opt-in E-Mail versus SpamOpt-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)

Opt-in E-Mail versus SpamOpt-in E-Mail versus Spam

SPAM

• Unsolicited and unwanted commercial e-mail messages

• Brand-awareness is offset by negative reaction

The Virtues of E-Mail AdvertisingThe Virtues of E-Mail Advertising

• E-mail no different from p-mail:

• “an actionable mess in front of a pre-disposed buyer”


Personalization

E-mails can be personalized to individuals unique informational needs


Targeting:

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


Cost Efficiency

E-mail is a relative bargain compared to p-mail


Effectiveness

Response rates to e-mails sometimes exceed 20%


Measurability/Accountability

Calls for specific action from recipients


Speed

Can be transmitted and received


Safety

E-mail avoids the hazards of p-mail

Acquiring Opt-in ListsAcquiring Opt-in Lists

House lists generally generate higher response rates

The Special Case of Wireless E-Mail The Special Case of Wireless E-Mail AdvertisingAdvertising

• 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

The Special Case of Wireless E-Mail The Special Case of Wireless E-Mail AdvertisingAdvertising

offline and online direct advertising

Documents

data miningchapter

characteristics of direct

lifetime value analysis5

advertising matter

sampled customers

lifetime values

average expenditure

mail advertisingexplain