The Changing Face of Direct Marketing

Economic crisis accelerates changes in the basic underlying business models of multichannel marketers, who have had to adapt in order to survive as consumers shut their wallets. Here are some of the ways business models have been radically and permanently altered.

• Consumers learned to wait for promotional offers in emails, on websites and in catalogs. Consumers simply refused to buy without a promotion. It used to be that marketers could discipline their own customers, teaching them that promotions would appear occasionally rather than constantly. Today's consumers have been trained to expect a constant stream of promotions from their favorite merchants, simply waiting for the next promotion before placing their orders. The rules of the game have changed from “if” merchants should offer promotions to “how much” and “how often” they need to be putting promotions in front of their customers.
• Email emerged as a primary method for communicating with customers. Some marketers are finding that email is the channel of communication when it comes to making sales. The amount of time, effort and thought that goes into planning and budgeting email campaigns is increasing exponentially. Marketers have learned to coordinate email campaigns with their catalog mailings, segment their email databases and impose discipline on their email campaigns.
• Catalogers’ matchback results have become increasingly complicated as order flows have shifted away from catalog circulation to a wide variety of online sources, ranging from email campaigns, website promotions, behavioral targeted ads, etc. Smart marketers are spending time finding the most profitable mix of catalog circulation and web marketing as they try to make sense of their matchback results.
• Catalogers cut back circulation to survive. Catalogers found ways to squeeze wasted circulation as they were struggling to react to shrinking response rates. The need to cut circulation made many businesses healthier, as they found ways to cut circulation without cutting into top-line sales and bottom-line profits.
• Manufacturing costs (printing costs as opposed to paper costs) have fallen 10 percent to 15 percent as printers have struggled to fill press time resulting from downsized catalog circulations and the evaporation of magazine ad pages. Catalogers are capturing these savings by bidding out their printing jobs and making sure their existing printers' costs are in line with the new reality of printing costs.
• Catalogers have learned to optimize their housefiles and prospect circulations at the co-op databases, cutting out the bottom 10 percent to 15 percent that just won’t respond. Co-op databases are powerful tools to identify households that just aren’t buying. Identifying those households that have stopped buying is an efficient way to cut printing, paper and postage costs for wasted circulation.
• Online behavioral targeted ads have exploded onto the scene with Dotomi, acerno and Affinity leading the way in serving up online ads that are proving to be incremental, measurable and cost effective.
• Virtual catalogs have become an affordable and effective technology for catalogers to broaden the reach of their print circulations. Printers are leading the push for virtual catalogs, led by Worldcolor, Quad/Graphics and Brown Printing, as well as stand-alone virtual catalog vendors. Virtual catalogs included as links within emails are proving effective at driving quality web traffic.

The economic crisis has meant that every business has suffered. In a time when “20 percent down is the new flat,” marketers have had to find new ways to reach their customers cost effectively. Catalogers have morphed into savvy multichannel marketers. Both Catalog Success and the ACCM show changed names within the past year to reflect the new reality that direct marketers must evolve into true multichannel marketers. Expect the hard lessons of the past year to translate into stronger companies and healthier bottom lines.