Transcript Ch 14

Chapter Fourteen
Offline and Online
Direct Advertising
Chapter Fourteen Objectives
• Explain direct advertising and reasons
underlying its growth
• Describe the characteristics of directresponse advertising
• Discuss the distinctive features of p-mail
advertising
• Explain the role of databases and data
mining
Chapter 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
Direct 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
Database Marketing
• Involves collecting and electronically
storing info about past, present, and
prospective customer
• Info is used to profile customers
Niche Marketing
• B2b marketers have expanded usage of
direct advertising
Database Marketing and Data
Mining
• 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
Database Marketing and Data Mining
Database 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
Database Assets
4. Enhance advertising productivity
5. Calculate the lifetime value of a customer
or prospect
Lifetime 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.
Lifetime 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
Mailing Lists
“windows to our pocketbooks”
Internal (house lists) and external (public
lists)
The 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
The 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
The 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
The Practice of Data Mining
6.
Based on response-rate and averageexpenditure 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
P-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.
P-Mail Advertising
Saab 9-5 direct mail campaign:
200,000 consumers were targeted
The Martin Agency developed IMC Strategy
P-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
P-Mail Advertising
Qualification mailing
P-Mail Advertising
Response to
qualification mailing
P-Mail Advertising
Test-drive kit
mailing
P-Mail Advertising
• Targetability
• Measurability
• Accountability
• Flexibility
• Efficiency
What 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
What Tasks can P-Mail Accomplish
4. Simulate product trial without
promotional offers and incentives
5. Generate leads for a sales force
What 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
Who Uses P-Mail Advertising
•
77% of U.S. companies reported using pmail in a survey
•
“are turning from the t.v. box to the
mailbox”
•
Both B2B and marketers of consumer
Why The Trend toward P-Mailing?
•
Rising expense of television advertising
•
Unparalleled targeting
•
Measurable advertising results
•
Consumers are responsive
The Special Case of Catalog Marketing
Marketer’s perspective:
Catalog selling provides efficient and
effective way to reach prime prospects
The 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
The 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
E-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
E-Mail Advertising
•
Over 20% of emails users receive is
marketing related
•
Expenditure is expected to exceed $2
billion by 2003
Opt-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)
Opt-in E-Mail versus Spam
SPAM
•
Unsolicited and unwanted commercial email messages
•
Brand-awareness is offset by negative
reaction
The Virtues of E-Mail Advertising
•
E-mail no different from p-mail:
•
“an actionable mess in front of a predisposed buyer”
The Virtues of E-Mail Advertising
Personalization
E-mails can be personalized to individuals
unique informational needs
The Virtues of E-Mail Advertising
Targeting:
Can target specific messages to welldefined groups of present customers or
prospectives
The Virtues of E-Mail Advertising
Cost Efficiency
E-mail is a relative bargain compared to pmail
The Virtues of E-Mail Advertising
Effectiveness
Response rates
exceed 20%
to
e-mails
sometimes
The Virtues of E-Mail Advertising
Measurability/Accountability
Calls for specific action from recipients
The Virtues of E-Mail Advertising
Speed
Can be transmitted and received
The Virtues of E-Mail Advertising
Safety
E-mail avoids the hazards of p-mail
Acquiring Opt-in Lists
House lists generally generate higher
response rates
The Special Case of Wireless E-Mail
Advertising
•
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
The Special Case of Wireless E-Mail
Advertising