The Marketing Manager's Yearbook 2007
Making the Budget Work Harder
Direct mail and integration
Alex Batchelor is involved in direct mail not only as a client but also as Marketing Director for Royal Mail. He explains how integrating direct mail into an above-the-line campaign can do wonders for return on investment.
As a marketer who has experience working for both commercial and public sector brands I know the outlook for this profession is extremely challenging. In most organisations marketing budgets are decreasing in line with a more competitive business environment yet we’re continually being asked to improve return on investment and accountability. This is being made even more difficult by discerning customers who are switching off to customer communications. The question we’re all asking ourselves these days is ‘how do I minimise spend but optimise the reach and effectiveness of the message?’
New marketing channels
Companies continue to spend millions of pounds every year marketing their products and services in order to drive sales, engender loyalty and improve brand awareness. In today’s media environment there is a plethora of ways to reach target audiences, ranging from the more traditional channels such as TV, radio, press ads and direct mail to more new age techniques including blue casting, podcasting and now even ‘odour ads’ – outdoor advertisements that emit smells, such as perfume fragrances in bus stops.
These whizzy new marketing channels show that marketers are getting increasingly inventive in the way they interact with their customers and prospects, leveraging advancements in technology to create new communication strands. Whilst such innovation is revolutionising marketing, this media proliferation has become a double-edged sword. Fragmentation of audience through the number of channels available is now the single biggest challenge facing marketers. Added to this is the increasing issue of opt-in and knowing exactly through which channels customers are most happy being contacted. Whilst opt-in legislation hasn’t yet been homogenised across all media, marketers must recognise the importance of consumer choice or face more stringent regulations. Moves such as OFCOM’s proposed ban on junk food advertising before the watershed illustrates just how vulnerable the marketing environment has become and could be indicative of future developments. This growing trend of consumers taking control of their media consumption also raises questions about media planning. Are agencies geared up for planning truly integrated schedules which optimise reach but also take into account channel preference and opt-in? This is an important question as media planning is no longer the privilege of wealthy brands. Fragmentation of media means more choice, which has led to commoditisation. Consequently media choices will become less of a cost issue and more of a value decision, so media planning will become a significant tool for SMEs too.
"Media proliferation has become a double-edged sword. Fragmentation of audience through the number of channels available is now the single biggest challenge facing marketers."
Integration
All that said, integrating a campaign across different media is the most cost-effective way to ensure reach of message by harnessing the strengths of different media. Direct mail for example enables much greater personalisation than other channels, which can be extremely useful if your brand strategy has multiple objectives. You might want to encourage loyalty in one group of prospects, poach another group away from a rival brand or introduce the product to a third group. Direct mail allows you to target each group separately with tailored messages, while channels, like TV and press advertising, build brands more widely by appealing to an aggregated average. It is this level of personalisation and engagement that attracts new brands to the medium, but also challenges organisations that already use direct mail to use it in new ways, to meet different marketing objectives. For example, Nivea’s use of the medium to take brand marketing into the home, Waitrose using direct mail for its regional marketing and eBay integrating direct mail into its e-marcomms strategy.
‘Don’t do politics’ campaign
The Electoral Commission’s 2004 ‘Don’t do politics’ campaign is a great example of an integrated campaign. The campaign involved TV, radio and press advertising, direct mail and billboards – the multi-channel approach ensuring that as many people as possible would be touched by the campaign, and with the direct mail reinforcing the message and providing more in-depth information. The objective of the campaign was to promote awareness of and participation in the European Parliament, local and London elections. Research had shown that while people continued to switch off from the political process, which they saw as dull and irrelevant, they were still passionate about political issues. From this insight emerged the campaign’s main objective – to make politics personal – and what better way of making politics personal than using a medium that can be personalised for every recipient? The campaign was extremely successful, with one in three respondents saying they had voted as a result of seeing the campaign, and one in four claiming to have discussed politics with family and friends. 64% of UK adults had seen at least one element of the campaign and awareness of the election date rose by 53%.
"Unlike other communication channels, where people can feel bombarded,...the daily delivery of the post is approached with hope and longing because of the 'personal touch' implied by it."
‘Pricing in proportion’ campaign
Royal Mail embarked on a similar campaign to launch Pricing in Proportion. On 21 August 2006 postal charges changed. Instead of being priced according to the weight of an item, Pricing in Proportion meant that the cost of postage would be decided on size and shape as well as the weight of an item. To ensure all of its customers – businesses of all sizes across all sectors as well as the general public – knew about the these changes, Royal Mail embarked on a £10 million integrated awareness campaign combining TV, press and radio advertising with direct marketing.
The above-the-line components of the campaign were planned specifically to reach as many people as possible with the top line message that pricing is changing, whilst the direct marketing activity, which was delivered to every residential and business address in the UK (the largest ever DM campaign), gave more detailed information about the price changes. Direct mail was an integral component of the campaign because it gave people something physical that they could read when it was most convenient for them and also keep for future reference. The tangibility and usefulness of the direct mail component – a ‘Size Guide’ enabling customers to measure their post against the new guidelines – meant that it was more likely to be kept in the home or office, adding value to the campaign. According to research from Postwatch, Royal Mail’s integrated approach was very successful, resulting in 84% awareness.
The personal touch
The fact that Royal Mail delivers to every household in the UK ensures the ‘nation’ is easily accessible. Single media campaigns these days just aren’t delivering the mass audiences they once used to and advertisers are realising the effectiveness of personalisation and ‘speaking’ to specific individuals. What’s more, research from the CRAM Institute has highlighted the emotional response people have with the post, and the role it plays in everyone’s lives. There is a myriad of items that are delivered to a typical letterbox from birthday cards and invitations to important bills and statements. But unlike other communication channels, where people can feel bombarded, the research demonstrated the daily delivery of the post is approached with hope and longing because of the ‘personal touch’ implied by it.
Clearly, as brands continue to get more personal with their customers, post is becoming an increasingly important element of an integrated campaign and if anything makes above-the-line pounds work harder. Even FMCG brands that have usually relied on TV advertising are now testing the effectiveness of above-the-line combined with direct mail (and liking what they find).
Royal Mail research in conjunction with dunnhumby revealed the short-term uplift for FMCG campaigns using direct mail was an average of 21.2%, with a 5% increase in penetration and 2% increase in brand share. Furthermore, the long-term effects saw an average uplift of 12% on in-store sales – these results speak for themselves.
So in answer to the question posed at the beginning of this article: how to minimise spend, but optimise reach and effectiveness; integration is key and direct mail has a valuable and most importantly accountable role in the marketing mix.
Alex Batchelor started as a graduate trainee with Unilever and worked in marketing in the UK, Austria and the USA. He then worked in advertising as a strategic planner at Saatchi & Saatchi. He also spent six years at Interbrand, a marketing consultancy, initially running their brand valuation business and then as Managing Director. He joined Orange in 2001 as Vice President Global Brand. Alex joined Royal Mail as Marketing Director in June 2005.