Advantages and Disadvantages of Direct Marketing

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Many of the advantages of direct marketing have already been presented. A review of these and some additions follow:

1. Selective reach. Direct marketing lets the advertiser reach a large number of people and reduces or eliminates waste coverage. Intensive coverage may be obtained through broadcast advertising or through the mail. While not everyone drives on highways where there are billboards or pays attention to TV commercials, virtually everyone receives mail. A good list allows for minimal waste, as only those consumers with the highest potential are targeted. For example, a political candidate can direct a message at a very select group of people (those living in a certain Zip code or members of the Sierra Club, say); a music club can target recent purchasers of CD players.

2. Segmentation capabilities. Marketers can purchase lists of recent product purchasers, car buyers, bank-card holders, and so on. These lists may allow segmentation on the basis of geographic area, occupation, demographics, and job title, to mention a few. Combining this information with the geocoding capabilities of Prizm or VALS (discussed in Chapter 2), marketers can develop effective segmentation strategies.

3. Frequency. Depending on the medium used, it may be possible to build frequency levels. The program vehicles used for direct-response TV advertising are usually the most inexpensive available, so the marketer can afford to purchase repeat times. Frequency may not be so easily accomplished through the mail, since consumers may be annoyed to receive the same mail repeatedly.

4. Flexibility. Direct marketing can take on a variety of creative forms. For example, the Discovery Network sent 17-inch TV sets to media buyers through the mail. The only message accompanying the TV sets was one on the cord that said "Plug me in" and another on a videotape that read "Play me." Upon doing so, the recipient was greeted with a seven-minute promotional video. Direct-mail pieces also allow for detailed copy that provides a great deal of information. The targeted mailing of videotapes containing product information has increased dramatically, as companies have found this a very effective way to provide potential buyers with product information.

5. Timing. While many media require long-range planning and have long closing dates, direct-response advertising can be much more timely. Direct mail, for example, can be put together very quickly and distributed to the target population. TV programs typically used for direct-response advertising are older, less sought programs that are likely to appear on the station's list of available spots. Another common strategy is to purchase available time at the last possible moment to get the best price.

6. Personalization. No other advertising medium can personalize the message as well as direct media. Parents with children at different age levels can be approached, with their child's name included in the appeal. Car owners are mailed letters congratulating them on their new purchase and offering accessories. Computer purchasers are sent software solicitations. Graduating college students receive very personalized information that recognizes their specific needs and offers solutions (such as credit cards).

7. Costs. While the CPM for direct mail may be very high on an absolute and a relative basis, its ability to specifically target the audience and eliminate waste coverage reduces the actual CPM. The ads used on TV are often among the lowest-priced available, and a video can be delivered for less than $1 (including postage).

A second factor contributing to the cost effectiveness of direct-response advertising is the cost per customer purchasing. Because of the low cost of media, each sale generated is very inexpensive.

8. Measures of effectiveness. No other medium can measure the effectiveness of its advertising efforts as well as direct response. Feedback is often immediate and always accurate.

Disadvantages of direct marketing include the following:

1. Image factors. As we noted earlier, the mail segment of this industry is often referred to as junk mail. Many people believe unsolicited mail promotes junk products, and others dislike being solicited. Even some senders of direct mail, including Motorola, GM, and Air Products & Chemicals, say they throw out most of the junk mail they receive. This problem is particularly relevant given the increased volume of mail being sent. (One study estimates the typical American receives 14 pieces of junk mail per week.)39 Another predicts that by 2007 consumers will receive over 3,900 junk e-mails per year.40 In 2002 over 205.7 billion pieces of mail were sent in the United States alone.41

Likewise, direct-response ads on TV are often low-budget ads for lower-priced products, which contributes to the image that something less than the best products are marketed in this way. (Some of this image is being overcome by the home shopping channels, which promote some very expensive products.) Telemarketing is found to be irritating to many consumers, as is "spam" or Internet junk mail. As you can see in Ethical Perspective 14-2, other factors have also created image problems for the direct-marketing industry.

2. Accuracy. One of the advantages cited for direct mail and telemarketing was targeting potential customers specifically. But the effectiveness of these methods depends on the accuracy of the lists used. People move, change occupations, and so on, and if the lists are not kept current, selectivity will decrease. Computerization has greatly improved the currency of lists and reduced the incidence of bad names; however, the ability to generate lists is becoming a problem.42

3. Content support. In our discussion of media strategy objectives in Chapter 10, we said the ability of magazines to create mood contributes to the overall effectiveness of the ads they carry. In direct-response advertising, mood creation is limited to the surrounding program and/or editorial content. Direct mail and online services are unlikely to create a desirable mood.

4. Rising costs. As postal rates increase, direct-mail profits are immediately and directly impacted.

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