Could it soon be last post for direct mail?
06-Mar-08
Direct mail is in full retreat and direct marketing agency pitches have all but dried up. Is this a dreadful portent for a once-thriving sector, or simply a blip while it reorganises itself?
It has to be said the outlook does not look good. Most DM agencies would stoutly rebut the suggestion that they are all, or indeed anything, to do with what the public calls 'junk mail'. But while what's stuffed through the letter box scarcely represents the strategic high-ground of precision marketing, no one can deny that historically it has been the sector's bread and butter. Nor that the 7.4% volume decline recorded by Royal Mail for last year represents a serious setback.
The problem, in a word, has been the internet. If people can get more directly what they want through search, they are likely to be even less tolerant of the 'junk mail'. And so events seem to be proving.
But so what? In theory the advent of digital media is a huge opportunity for direct marketing agencies to reinvent themselves and build some added value in the process.
After all, in the kingdom of the blind, the one-eyed is king. Though clients are crying out for rapid mastery of the new digital communications medium, no one has an expertise that entirely fits the required template. But at least direct marketing agencies do, inherently, possess some important elements of that template. They understand the targeted response mechanism, they are at home with data extraction and management on a massive scale; and at their core is CRM. Seen from this perspective, 'digital' is simply a change of channel rather than a new medium.
Sadly, matters are not that simple. At a time when old-style creative advertising agencies are facing increasing difficulty in maintaining their role as the first port of call for communications-challenged senior clients, DM agencies have not been nearly as successful as they should be at making 'digital integration' the core of their offering and seeking out the strategic high-ground.
Why this should be so is puzzling. Possibly, DM agencies have an inferiority complex about their position in the agency pecking order that makes it difficult for them to rise to the occasion.
Certainly commentators have noted a creeping demoralisation and lack of entrepreneurial fibre within the sector of late. The talent, some say, is moving elsewhere.
That shouldn't be so as, managed correctly, direct and digital make good bedfellows. That aside, a major problem remains. The image of direct marketing (among some practitioners, let alone the client and consumer) has been befuddled by direct mail. Direct mail won't disappear, but it has to get smarter.
As EHS Brann chief Matt Atkinson puts it: "The key point now is it's quality over quantity…Consumers are not saying they don't want direct mail, they're saying they don't want junk mail. As an industry, we have to be more considered about what we do, and so do our clients."
Amen to that.
Expedia embraces the new generation of digital DM techniques
by Kim Benjamin Marketing Direct
05-Feb-08
Kim Benjamin talks to Matthew Walls, head of marketing at Expedia.co.uk and Hotels.com, about why behavioural targeting will be key to future success.
With hundreds of brands offering services such as flights, hotel bookings, insurance and car hire, the UK online travel industry is booming. But it's an area that is becoming increasingly crowded and fragmented and jostling for prime position is no easy task
Responsibility for the marketing communications across two online travel brands is an even tougher proposition, but it's a role that Matthew Walls appears to be more than qualified for. As head of marketing for online travel hub Expedia.co.uk and its worldwide accommodation sister site, Hotels.com, Walls is building on a background firmly established in travel marketing.
"I started my career as a creative marketer - now I'm more a data analyst than anything else," says Walls. "My role is about uncovering hard data on our customers and products and producing believable numbers to get the brand to where it is today and will be in the future, rather than conducting a straw poll. The online environment has given us the ability to harness data and to tailor products specifically to individual customers. Instead of saying: 'Here's the brochure, take it or leave it,' we can be much more targeted."
Maxed out
The data he refers to is considerable. As online brands, Expedia.co.uk and Hotels.com have invested heavily in search marketing. "Many of our potential and existing customers end up on search engines. Google is the filter for our business, but we are now almost maxed out on search marketing." He is now exploring other digital marketing channels such as behavioural targeting, mobile search and social media - all of which provide a wealth of user behaviour information.
Expedia has wasted little time in beefing up its agency credentials to this end. In July, it appointed Meteorite to handle its direct marketing activity, alongside retained agency Freud Communications.
"There are shortcomings with the amount of tracking that can be done online," says Walls. "It's easy to get hung up on what can and should be tracked and this changes all the time as digital is such a fast-moving area. But the ability to track affords us a great deal of certainty - we know what is and is not working. In the travel sector, for example, keywords can change every three hours, so we have to manage the data we collect effectively. We analyse what people are searching for, how many clicks there are, how much volume is being generated, the conversion rates and ultimately how much money this makes for us."
With the competitive nature of online travel, it's not difficult to see why it's a sector that can engender very low levels of customer loyalty. "Typical segmentation issues don't really apply as our customers tell us what they want. Yet regardless of the fact that someone has bought products from us three times, for example, they will invariably end up using search engines. This is why content, website functionality and usability are now vital. Travel is an emotive product - it's not about us saying, 'This is a good hotel', it's about peer reviews - both good and bad. We have to be clear about the product, because otherwise it achieves a short-term sale."
With hundreds of thousands of email addresses on its databases, the vast majority of which have been generated from the sites rather than through third-party activity, it's somewhat surprising that email marketing is an area that Walls admits is still in development. The database of Hotels.com, for example, is used more to generate electronic vouchers offering discounts to individuals after certain purchases. "Our definition of CRM is to solve customers' problems and generate loyalty this way. Email does play a role in this, but newsletters, for example, are not a major part of our marketing activity - the functionality of our sites is ultimately more important."
To this end, behavioural targeting is set to play an important role in terms of enriching the customer experience and it's an area Walls is considering for future investment. Expedia currently works with behavioural targeting provider Omniture and Walls says the brand has achieved "reasonable success" from trials so far.
"Rather than just serving banners out to people, we can do so based on their past behaviour," he says. "It's a trade-off between cheap distribution of banners, and low cost-per-thousand rates, to no degree of targeting. We've found some interesting middle ground and the medium is working for us as we are delivering content to the right person at the right time more often than most. The previous approach was wallpapering, blasting everyone and hoping for the best, and for those who don't want to receive the content, it can be a pretty bad experience."
In mid-January, statistics from online research service Hitwise revealed that Expedia.co.uk lost top spot to Thomson Holidays in terms of the number of weekly website hits achieved. With the online travel industry expected to be worth more than £33bn by 2011, according to figures from Euromonitor International, the stakes, and the rewards on offer, can only get higher.
POWER POINTS
- Expedia.co.uk and Hotels.com have invested heavily in search marketing
- Expedia is testing how offline DM can increase online activity
- Content and website usability are vital in an industry that often engenders low levels of customer loyalty
WALLS ON...
Behavioural targeting: "We'll develop our use of behavioural targeting. Rather than serving general banners, we can be more targeted and serve them based on past behaviour, whether in relationship to our site or another one."
Mobile search marketing: "There remains some doubt about the way the technology platforms will develop and deliver. The more there are, the more complicated it gets. It's at an acceptable stage, though, and offers another route to consumers."
Social media: "It's certainly an opportunity, but people use social media for reasons other than receiving our marketing messages. There's still an element of the unknown involved and it's an area we are treating with caution."
Digital direct: "I don't subscribe to the idea that digital and direct are separate. If DM means an engagement between a brand and its customers, then in our view that's what digital's about - we can respond to a customer's specific requirement."
Friday, 7 March 2008
Competitors
Cash in on luxury home cover
Simon Lambert, This is Money - Tuesday, April 24, 2007
A new home insurance provider has introduced a no-claims bonus with a twist – investing 20% of premiums and returning the proceeds after three years.
The buildings and contents insurance policy is claimed to be the first of its kind. It is aimed at high rollers and those with multiple homes and is available to people who spend at least £3,000 a year on their household insurance.
Launched by specialist insurance brokerage Private Insurance Portfolio and Sterling Insurance Group, the new policy will invest 20% of the premiums in the UK money markets.
A bonus payment consisting of that 20% of the premium invested, plus proceeds, will be returned to policyholders who don't make a claim over three years.
The need to have an annual premium of £3,000 or more to qualify pitches the policy squarely at millionaire and billionaire homeowners.
Using This is Money's home insurance comparison service, the owner of a £500,000 home counties property with £50,000 contents cover and £350,000 rebuild costs would pay around £500 per year in premiums.
But as policyholders with Private Insurance Portfolio can incorporate multiple homes, including buy-to-let, it could benefit amateur landlords who hold a handful of properties, or families that own a main residence, buy-to-let investments and holiday home.
After three years homeowners who have signed up to the policy and made no claim can either cash in their investment or roll it over and accrue more for another three years.
The home and contents insurance can cover works of art, wine collection, jewellery, fine furniture and antiques and comes with cover for identity fraud, stalking and kidnapping.
Amelia Robertson-Young, managing director of Private Insurance Portfolio, claimed the company was turning the insurance market on its head. She said: 'For too long, people haven't received enough reward for not claiming on their household insurance. Our clients will receive both a competitive premium and a return on that premium.'
The investments for the policy will be made against the Sterling yield curve – which reflects the rate at which pounds sterling is borrowed on the money markets, currently around 5.75% - and managed by boutique bank and financial services group Kaupthing, Singer & Friedlander.
Simon Lambert, This is Money - Tuesday, April 24, 2007
A new home insurance provider has introduced a no-claims bonus with a twist – investing 20% of premiums and returning the proceeds after three years.
The buildings and contents insurance policy is claimed to be the first of its kind. It is aimed at high rollers and those with multiple homes and is available to people who spend at least £3,000 a year on their household insurance.
Launched by specialist insurance brokerage Private Insurance Portfolio and Sterling Insurance Group, the new policy will invest 20% of the premiums in the UK money markets.
A bonus payment consisting of that 20% of the premium invested, plus proceeds, will be returned to policyholders who don't make a claim over three years.
The need to have an annual premium of £3,000 or more to qualify pitches the policy squarely at millionaire and billionaire homeowners.
Using This is Money's home insurance comparison service, the owner of a £500,000 home counties property with £50,000 contents cover and £350,000 rebuild costs would pay around £500 per year in premiums.
But as policyholders with Private Insurance Portfolio can incorporate multiple homes, including buy-to-let, it could benefit amateur landlords who hold a handful of properties, or families that own a main residence, buy-to-let investments and holiday home.
After three years homeowners who have signed up to the policy and made no claim can either cash in their investment or roll it over and accrue more for another three years.
The home and contents insurance can cover works of art, wine collection, jewellery, fine furniture and antiques and comes with cover for identity fraud, stalking and kidnapping.
Amelia Robertson-Young, managing director of Private Insurance Portfolio, claimed the company was turning the insurance market on its head. She said: 'For too long, people haven't received enough reward for not claiming on their household insurance. Our clients will receive both a competitive premium and a return on that premium.'
The investments for the policy will be made against the Sterling yield curve – which reflects the rate at which pounds sterling is borrowed on the money markets, currently around 5.75% - and managed by boutique bank and financial services group Kaupthing, Singer & Friedlander.
Behavioural Targeting
ISPs eye bigger slice of ad pie
28-Feb-08
Targeting online ads based on people's surfing habits is not a new thing. Behavioural targeting has been a welcome development in online advertising, validated by the rapid uptake of technologies developed by the likes of Bluelithium and Revenue Science. Publishers collect information about what their users are up to online to be able to offer more refined targeting: the theory is that advertisers access more valuable audiences, and media owners are better able to monetise their inventory.
In the old days, online planners would mainly target audiences by environment. And while we would make our jobs sound sophisticated, much of what we did wasn't rocket science. Trying to sell holidays? The obvious place to buy ads would be contextually relevant environments, such as a portal's travel section. Hardly surprising that this often worked. Indeed, it still does and has done in all types of communications throughout history.
But there are some issues with this approach. As with any market, limited supply and high demand lead to inflation. This has been experienced in paid search where mature sectors such as finance have started feeling the pinch.
Behavioural targeting represents a different way of doing things. It isn't about reaching people where they are, it's about targeting them by who they appear to be. For example, Yahoo! can identify mortgage seekers as those who visit their mortgage content and then serve timely ads elsewhere on the Yahoo! network of properties, perhaps while they're checking their e-mails.
Until now most "behavioural targeting" has been done at a site or network level but Phorm - which launched this month - is moving the game on. By teaming up with internet service providers it will collect behavioural data at the gateway.
Working initially in the UK with BT, Talk Talk and Virgin Media, Phorm will monitor customers' behaviour in its entirety. This is where things differ from other approaches which observe only segments of people's online actions, such as intra-site or across a cluster of properties. Phorm will have a clear view from the top of the mountain rather than one of its valleys.
There will obviously be questions about privacy but Phorm has this covered. Users are anonymous and once an audience match has been made no data is retained. While some people will opt out, just like there are some who delete cookies, most will not. Ultimately, as Google's vast coffers verify, people are not necessarily averse to advertising if it is relevant to them and not too intrusive.
A travel operator, for example, could target ads to an audience only if they have been to search engines and keyed in phrases such as "Caribbean holidays", looked at Lonely Planet's Jamaica website and read pages of a competitor site heavy in conterelating to package holidays. It may seem like something out of 1984, but it's got a lot of people excited.
Publishers and advertisers connect via Phorm's marketplace - the Open Internet Exchange. Within the OIE advertisers define how much they are willing to pay for their uniquely defined audiences. Publishers set the minimum they want to receive. Phorm's technology does the rest, by using the insights garnered from the internet service provider (ISP) to add a layer of value-adding targeting. Space goes to the highest bidder.
On the surface it seems a winner for most parties. Advertisers get a new way to reach aggregated and highly defined consumers. Most publishers haven't got much to lose, as generally they have more inventory than they can sell, hence the reason many are almost giving it away. The opportunity to get a greater return will be compelling.
And I am sure the ISPs could do with the cash as there is little margin left in the commoditised subscription business. We already have an ad-funded mobile phone service, who knows an ad-funded ISP might not be that far off?The level of accountability in digital means there's nowhere to hide. If this proves a more cost-effective way to reach and influence consumers it will go a long way. Given the current climate, it may not be long before one of the big boys gets their cheque book out again…
28-Feb-08
Targeting online ads based on people's surfing habits is not a new thing. Behavioural targeting has been a welcome development in online advertising, validated by the rapid uptake of technologies developed by the likes of Bluelithium and Revenue Science. Publishers collect information about what their users are up to online to be able to offer more refined targeting: the theory is that advertisers access more valuable audiences, and media owners are better able to monetise their inventory.
In the old days, online planners would mainly target audiences by environment. And while we would make our jobs sound sophisticated, much of what we did wasn't rocket science. Trying to sell holidays? The obvious place to buy ads would be contextually relevant environments, such as a portal's travel section. Hardly surprising that this often worked. Indeed, it still does and has done in all types of communications throughout history.
But there are some issues with this approach. As with any market, limited supply and high demand lead to inflation. This has been experienced in paid search where mature sectors such as finance have started feeling the pinch.
Behavioural targeting represents a different way of doing things. It isn't about reaching people where they are, it's about targeting them by who they appear to be. For example, Yahoo! can identify mortgage seekers as those who visit their mortgage content and then serve timely ads elsewhere on the Yahoo! network of properties, perhaps while they're checking their e-mails.
Until now most "behavioural targeting" has been done at a site or network level but Phorm - which launched this month - is moving the game on. By teaming up with internet service providers it will collect behavioural data at the gateway.
Working initially in the UK with BT, Talk Talk and Virgin Media, Phorm will monitor customers' behaviour in its entirety. This is where things differ from other approaches which observe only segments of people's online actions, such as intra-site or across a cluster of properties. Phorm will have a clear view from the top of the mountain rather than one of its valleys.
There will obviously be questions about privacy but Phorm has this covered. Users are anonymous and once an audience match has been made no data is retained. While some people will opt out, just like there are some who delete cookies, most will not. Ultimately, as Google's vast coffers verify, people are not necessarily averse to advertising if it is relevant to them and not too intrusive.
A travel operator, for example, could target ads to an audience only if they have been to search engines and keyed in phrases such as "Caribbean holidays", looked at Lonely Planet's Jamaica website and read pages of a competitor site heavy in conterelating to package holidays. It may seem like something out of 1984, but it's got a lot of people excited.
Publishers and advertisers connect via Phorm's marketplace - the Open Internet Exchange. Within the OIE advertisers define how much they are willing to pay for their uniquely defined audiences. Publishers set the minimum they want to receive. Phorm's technology does the rest, by using the insights garnered from the internet service provider (ISP) to add a layer of value-adding targeting. Space goes to the highest bidder.
On the surface it seems a winner for most parties. Advertisers get a new way to reach aggregated and highly defined consumers. Most publishers haven't got much to lose, as generally they have more inventory than they can sell, hence the reason many are almost giving it away. The opportunity to get a greater return will be compelling.
And I am sure the ISPs could do with the cash as there is little margin left in the commoditised subscription business. We already have an ad-funded mobile phone service, who knows an ad-funded ISP might not be that far off?The level of accountability in digital means there's nowhere to hide. If this proves a more cost-effective way to reach and influence consumers it will go a long way. Given the current climate, it may not be long before one of the big boys gets their cheque book out again…
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