3 Factors facing DM community

Dec 7

3 Factors facing DM community

Great post by Rob and BMF. I responded below as this article felt pretty pertinent to what we are doing now at StreetHawk.

Three key factors facing Direct Marketing community in next three years

By Rob Chandler, Head of Marketing Sciences, BMF.

Rob ChandlerHistorically Direct Marketing has been perceived as being at the grubbier end of marketing. We have often misconstrued as direct selling. Many have defined us as a “channel” within the marketing team with its KPIs confined to “response” numbers on a marketing plan. We have been accepted only as the necessary evil, the only clearly quantifiable figures to the bottom line.

The world has changed. Dan McFadden’s Nobel Prize winning paper (Nobel laureate for economics in 2000) proved the case that connected people’s behaviour (at an individual level) with macro-economic theory. His studies fueled a tsunami of amazing thinking from behavioural economists and psychologists around the world, and as it entered the mainstream in books such as “The Tipping Point” and “Predictably Irrational”, the broader marketing community slowly came to the realisation that many of the traditional advertising and marketing mechanics are fundamentally flawed, and that the most effective way to engage people is to get them to act and interact. To do something differently. To change their behaviour.

While I believe the challenges presented by the proliferation of data and technology should not be underestimated, we have been talking about them for years and they are now well charted. I believe that the most significant challenges we as an industry face are more fundamental. Below I have outlined two global and one local challenge our industry will face over the next 3 years.

Challenge 1: No one likes “I told you so”

Behavioural change is the underlying philosophy of Direct Marketing. It always has been; relationship marketing, loyalty programs, a good old fashioned DR ad or a beautifully crafted letter, are all the tools of our trade designed to drive response, interaction and change behaviour. However, as the mechanics of our trade have become mainstream, far from staying true to our convictions, we started to question ourselves. Almost everything has an aspect of direct response to it, and yet direct marketing has an air of losing relevance.

DM Challenge 1 is for big thinking and leadership over executional small mindedness; we need people to stand on stage and be at the forefront of emerging technologies and trends. We need to change people’s attitudes through our behaviour; we need to be proud to be sitting on the bleeding edge of mainstream marketing. Our behaviour will determine our future relevance and the attraction of the brightest talent to our industry.

Challenge 2:  “I want it and I want it NOW”

Real-time presents many technological challenges, but fundamentally with a savvy business case and confidence in partners, we now have the tools to collect, manage and communicate cross-platform in real-time. For me, the big challenge that real-time presents is organisational. We can already see the creaking tensions in the relationship between CIO and CMO, a challenge that is set to increase across the boardroom.

For most organisations, historically marketing is a “bolt on” to the side of the business focused on “promotion” rather than the whole marketing mix. Promotion is controllable; it works on the organisation’s rules often to a structured yearly calendar.  Real-time demands instant response on a customer’s terms, not the organisations.  In order for that response to be managed at the frontline, the marketing team, corporate affairs, PR, IT and product have to be cohesive. Many have spoken about customer centric marketing, but now is the time when rhetoric need to be actioned and in order for it to do so the entire organisation needs to be aligned.

DM Challenge 2 is about people and organisational change management; customer centricity has long been the domain of the direct marketer, now is the time for CRM to lose the association it has developed to software programs and return to its roots as an organisational management philosophy, it is only then that real-time can be truly delivered.

Challenge 3:  “the terrible teens”

Love it or loathe it, the Australian market is maturing; 10 years ago we were a third tier market on the global stage, a low budget market that slipped under the Global CMO’s radar; our contribution to global business performance was limited. Even locally based companies often faced a small number of rivals; commercial pressure to innovate was significantly less than in the US and the UK. We have gotten away with taking interesting approaches from around the world and giving them a uniquely Australian wrapping; which historically has served us well as we batted above our weight at global award shows. But, things are changing.

As the world economic crisis has caused global organisations to diversify revenue streams, the pressure on Australia has grown exponentially. Far from being a lowly third tier, market we have been identified as a market ripe for the picking and with it come budgets. With budgets comes greater attention on marketing teams with greater attention comes increasing pressure, with pressure comes fear and with fear comes conservatism.

Over the last 3 years I have seen Australia’s performance on the global stage dropping. It appears that the exciting somewhat maverick creative work we have been known for is now in the place of markets such as Brazil, Argentina, even Norway and Denmark. At the same time, I observed a recovery from markets such as the US and the UK; these markets have already invested in the systems and technology to serve their customers and now they are beginning to rewrap automated marketing platforms in a layer of creativity that is paying off.

So where does this leave Australia? We are in danger of falling between the big boys with their big budgets and automated systems and the beautiful simplicity verging on naivety of the smaller markets. During our teen years, we need to ensure that we stop following the big markets and start to push our strengths as a young, innovative and exciting market.

DM challenge 3:  Using innovation and creativity to leverage market momentum on the world stage: Momentum is fragile; we need to battle conservatism, exerting the nation’s power as a market of innovators and creative thinkers in every aspect of Direct Marketing.

Posted by Rob Chandler, Head of Marketing Sciences, BMF

Natasha Rawlings on December 7, 2011 at 10:25 AM said: Your comment is awaiting moderation.

Hi Rob, great post. Having worked in the ‘grubbier’ end of marketing my whole career I do understand that ‘direct response’ is losing its relevance even though most companies are doubling down in their use of it. Perhaps we just need a new phrase that captures all the methods and means of affecting a customers purchase behaviour using direct means.

I have been busy this last year (well nearly, it bloody feels like it!) applying my direct skills to building a shopping platform which affects shoppers behaviour in the real world, while they are out on the streets, to drive them to store via smartphones. The psychology and use of data is all direct, but the application would not be seen as such.

Retailers it seems are calling direct ‘Shopper Marketing’ (have a look at POPAI.com.au for more info), and really this is just an application of what we know to the real world.

The use of smartphones is blurring the lines between online and offline, direct and brand. I believe smartphones hold a key to the future of direct, and like you say, we have to push ahead to be an innovative market or get left behind in the world scene. I can say from personal experience that there is a general lack of support for new and exciting ventures here (but also in Europe). To get funding here or industry support is tough. A vast majority of Aussie startups end up going to Silicon Valley where new ideas are fostered (and it is quite easy for Aussies to do that – the US has it figured out!). The recent sale of Grabble to Walmart recently is a great example. They were at a party in Silicon Valley where Walmart were sending scouts and presto, they’re sold. (http://www.grabbleapp.com/)

If that wasn’t enough the US are sending talent scouts here so startups don’t even haven’t to go overseas to get acquired by foreigners: http://www.smh.com.au/it-pro/business-it/search-for-next-facebook-comes-to-australia-20111206-1og94.html

I am not sure why we are suddenly so conservative here, 10 years ago I think we were an innovative market in the direct sense. What happened? We are really going to be left behind the likes of Asia and other emerging markets in terms of making use of technology and best direct practices. Why?

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