offline and online direct advertising
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Chapter Fourteen. Offline and Online Direct Advertising. Chapter 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 - PowerPoint PPT PresentationTRANSCRIPT
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Chapter Fourteen
Offline and Online Offline and Online Direct AdvertisingDirect Advertising
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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
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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
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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
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Database MarketingDatabase Marketing
• Involves collecting and electronically storing info about past, present, and prospective customer
• Info is used to profile customers
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Niche MarketingNiche Marketing
• B2b marketers have expanded usage of direct advertising
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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
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Database Marketing and Data MiningDatabase Marketing and Data Mining
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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
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Database AssetsDatabase Assets
4. Enhance advertising productivity
5. Calculate the lifetime value of a customer or prospect
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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.
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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
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Mailing ListsMailing Lists
“windows to our pocketbooks”
Internal (house lists) and external (public lists)
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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
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The Practice of Data MiningThe Practice of Data Mining
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
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The Practice of Data MiningThe Practice of Data Mining
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
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The Practice of Data MiningThe Practice of Data Mining
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
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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.
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P-Mail AdvertisingP-Mail Advertising
Saab 9-5 direct mail campaign:
200,000 consumers were targeted
The Martin Agency developed IMC Strategy
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P-Mail AdvertisingP-Mail Advertising
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
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P-Mail AdvertisingP-Mail Advertising
Qualification mailing
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P-Mail AdvertisingP-Mail Advertising
Response to qualification mailing
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P-Mail AdvertisingP-Mail Advertising
Test-drive kit mailing
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P-Mail AdvertisingP-Mail Advertising
• Targetability
• Measurability
• Accountability
• Flexibility
• Efficiency
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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
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What Tasks can P-Mail AccomplishWhat Tasks can P-Mail Accomplish
4. Simulate product trial without promotional offers and incentives
5. Generate leads for a sales force
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What Tasks can P-Mail AccomplishWhat Tasks can P-Mail Accomplish
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
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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
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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
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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
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The Special Case of Catalog MarketingThe Special Case of Catalog Marketing
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
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The Special Case of Catalog MarketingThe Special Case of Catalog Marketing
Consumer’s perspective:
5. Merchandise quality and prices are often comparable if not better than those of stores
6. Guarantees are attractive
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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
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E-Mail AdvertisingE-Mail Advertising
• Over 20% of emails users receive is marketing related
• Expenditure is expected to exceed $2 billion by 2003
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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)
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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
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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”
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The Virtues of E-Mail AdvertisingThe Virtues of E-Mail Advertising
Personalization
E-mails can be personalized to individuals unique informational needs
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The Virtues of E-Mail AdvertisingThe Virtues of E-Mail Advertising
Targeting:
Can target specific messages to well-defined groups of present customers or prospectives
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The Virtues of E-Mail AdvertisingThe Virtues of E-Mail Advertising
Cost Efficiency
E-mail is a relative bargain compared to p-mail
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The Virtues of E-Mail AdvertisingThe Virtues of E-Mail Advertising
Effectiveness
Response rates to e-mails sometimes exceed 20%
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The Virtues of E-Mail AdvertisingThe Virtues of E-Mail Advertising
Measurability/Accountability
Calls for specific action from recipients
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The Virtues of E-Mail AdvertisingThe Virtues of E-Mail Advertising
Speed
Can be transmitted and received
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The Virtues of E-Mail AdvertisingThe Virtues of E-Mail Advertising
Safety
E-mail avoids the hazards of p-mail
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Acquiring Opt-in ListsAcquiring Opt-in Lists
House lists generally generate higher response rates
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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
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The Special Case of Wireless E-Mail The Special Case of Wireless E-Mail AdvertisingAdvertising