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The Problem with Direct Response Marketing

2010 July 14

There are many today who advocate direct response marketing to the exclusion of other marketing channels.  These are very silly people.

The problem isn’t that direct response marketing (which I define as advertising with a concrete offer and a measurable response mechanism) isn’t important and necessary.  It’s just not sufficient.  As a matter of fact, it isn’t even close.

The real issue isn’t what direct response measures, but what it doesn’t.  Those that ignore other marketing channels either aren’t aware of the facts or are just not thinking clearly.

The Allure of Direct Response Marketing

The case for direct response marketing is logical: Why waste money on lots of fuzzy concepts when you can directly spur sales and get clear, measurable results?  Unfortunately, the results aren’t as clear as they might seem and branding isn’t as nebulous as direct response advocates often claim.

Firstly, direct response campaigns vary widely in their results.  Some of this is due to how well the campaign itself is executed, but a lot has to do with how strong the brand being promoted is and what other promotion is going on at the same time.  Marketing channels work better in combination than they do as isolated entities.

Secondly, branding metrics are as measurable as anything else.  Many corporations regularly track their brands and can access brand data as easily as they do sales data.  You can be sure that successful, profit oriented enterprises wouldn’t continue to do so unless they had clearly established a link between the two.

In truth, there is a lot more to a purchase than simply seeing an offer and responding to it.

The Path to Purchase

It has long been known that the purchase decision is much more than an event, it’s a process.  The evidence for this is overwhelming and there are a wealth of frameworks to describe it (the agency that I work for describes 7 stages in the purchase process).

The following is my own summary, which is probably no better nor worse than any other.

Awareness: Awareness is probably the most overused term in marketing, so much so that it is often meaningless in common usage.  In actuality, it is a blanket term that describes a variety of metrics, including aided and unaided awareness, awareness of brand attributes, etc.

Nevertheless, awareness is quite important and has been linked to brand usage.  Although some skeptics point out that brand usage itself promotes awareness and the relationship is somewhat reflexive, awareness is something we can directly control and raising it increases sales.

Another issue is that many brands have nearly total brand awareness, so there is little utility in increasing it.  However, even for the biggest brands, awareness of brand attributes (i.e. quality, value, taste, safety, etc.) remains an important factor for sales and again, raising awareness of an attribute that is something that is highly actionable.

Many direct response advocates point out that direct response produces awareness as well as sales and this is undoubtedly true.  However, it does so much less efficiently than mass media and doesn’t communicate brand attributes as effectively.

Consideration: For most categories, consumers develop mental consideration lists (usually 3-5 brands) from which they will make their final purchase decision.  While the consideration phase is less important low involvement categories like potato chips, it is essential for durables.

Take a car purchase, for instance.  Let’s assume that consumers buy a car every 3 years, surely they will not respond to an offer for the majority of that time.  They will only do so when they are actively in the market (usually the last 6 months or so).  During the rest of the time, they are building their list.

Ask someone who is starting to think about buying a car.  Inevitably, they will be able to rattle of a handful of brands that they are going to research further.  Buying a car is a big deal that requires a lot of research and involves a lot of money, so consumers will use their lists to filter out other brands.

Consideration is a synaptic, emotional process, so direct response is not well suited to this phase.

Trial: Okay, this is where direct response marketing really shines.  You can get people to try your product even if they weren’t aware of it or considering it before.  If it’s really a standout product, you might be able to turn them into loyal customers.

However, it should be obvious by now that this won’t be very effective in isolation.  People tend to respond to offers from brands they know better than ones they don’t.  This is a big reason why some brands direct response campaigns perform so much better than others.

Loyalty: Many categories are essentially portfolios. People tend to frequent several restaraunts, drink several brands of soft drinks etc.  Most families even have more than one car.

One way of increasing revenue is to market to current customers in order to increase your share of the consumer’s mix.  Direct response marketing can be effective here, but so can a lot of other things, including events and TV.

Another aspect of loyaty is switching, which is often price driven.   Many of the same channels that are effective for promoting loyalty work to promote switching too, but the messaging of course needs to be vastly different.

Advocacy: The ideal customer is one who not only buys your product, but goes out and recommends it to others.  Non-traditional promotion such as events and social media thrive in this area and it’s tough to see how direct response can play much of a role.

Just like the previous stages, advocacy has specific metrics that can be monitored.  The most popular is the Net Promoter Score, however it is fairly new and there are some detractors.  This article gives a good overview of why some are skeptical.

Nevertheless, advocacy is increasingly recognized as an important marketing objective, however you want to measure it.

Recency Planning

The framework described above is fairly basic and I don’t think many professional marketers would have much of a problem with the basic logic.  There are, however, other approaches which have proved effective.  One is recency planning, championed Erwin Ephron.

The basic idea is that the most effective ad is the one seen closest to purchase and we have no idea when that purchase will happen.  Therefore, we should minimize campaign weights and seek to be on air for as many weeks as possible.

Many people believe that recency is an argument for certain types of direct response marketing (some consider point-of-sale a type of direct response channel).  However, it isn’t.  In fact it is an argument for efficiency and therefore favors mass media.

Again, we run into the same problem: response mechanisms cost money and there are other ways of monitoring marketing effectiveness.  One of the reasons that cost-per-action pricing never took off on the web is that most marketers feel they can optimize conversions better themselves.

Who’s asleep at the wheel?

Before I sign off, I want to re-emphasize that I have no problem with direct response marketing.  I do, however, have a big problem with the notion that there is no other way to monitor marketing effectiveness.

For each stage of the path to purchase described above there are well established methods of monitoring and a variety of solutions for different marketing problems.  Direct response is a perfectly viable one for some marketing tasks, but absolutely deficient for others.

In my many travels there are two things that I’ve found no shortage of:  Different ideas about how to do great marketing and incompetent jerks who think they’ve found the one, true path.

- Greg

10 Responses leave one →
  1. July 14, 2010

    Thanks for the post. Needed discussion. I do think that traditional “direct marketers” undervalue branding — which is the whole positioning of my agency and the reason I often describe my services as “well-branded direct response creative” … because so much DM had traditionally ignored even basic branding guidelines. And most people in DM do know that a multi-channel approach works better than single-channel most of the time (although they define multi-channel as multi-DM-channel). The biggest area of disagreement is regarding the nature of the creative. Ad people go for emotion and tend to feel that offer/response-mechanism dilute effectiveness of awareness creative. Direct marketers want to make any ad campaign at least drive to a landing page where data can be captured.

    Personally I think you first have to put aside certain categories of products. Hard-core infomercial-like products (basically product invented from scratch to be sold via DM) is most likely not going to benefit from an awareness approach. The calculation is always ordervalue-mediacost needs to be positive. Those operations would go bankrupt if they tired to market based on traditional brand-awareness model. And your comment that “In truth, there is a lot more to a purchase than simply seeing an offer and responding to it” is simply not true for many DM-sold product. The consumer may see multiple mail pieces or infomercials but “Girls Gone Wild” video franchise for example did just find with “see and offer and respond” as do many infomercial products. I just had to order a Pillow Pet for my daughter because of an infomercial.

    But DMer forget that there are also plenty of products that DO require an emotion-based path do purchase as you outline. There are products like Apple’s where they do pretty well without much DM. I actually don’t recall ever getting mail from Apple. Beer, soda and retail are all areas where part of the “product” IS the TV branding — the emotional association of certain beer is derived in part by the branding the buyer wants to be associated with (and knows others know about). So the TV spend is actually part of the product itself.

    I wish “we could all just get along” and DMers could listen and learn from brand guys and visa versa. You learn a lot when you start by acknowledging that both are important. The key is understanding when to use each and how.

    [Reply]

    Greg Reply:

    Peter,

    Yeah, I think that’s about right. It all comes down to objectives. It is very rare that DM isn’t at least part of the picture and very rare that it is the whole picture.

    I think the key, for DM or for anything else, is to know as much about your client’s business as possible so that you can act as a true partner and not just a one dimensional advocate for whatever it is you’re selling.

    - Greg

    [Reply]

  2. July 14, 2010

    I think you’re spot on here, but I also think this is a structural problem that is only getting worse

    Digital media lends itself to easy direct response measurement, and the bean counters – whether on Wall Street or in your internal accounting and budgeting groups – love measurement

    So as budgets have tightened up and marketers have been (rightly) asked to demonstrate ROI on their ad investments, digital/DR has become the path of least resistance

    I think the failure here is one shared by agencies, media companies and marketers alike

    Having spent years railing against ROI models, media companies now find themselves fighting a rear-guard action against websites that actively track response levels and dynamically price inventory.

    Marketers have fallen prey to the myth of complexity – convinced the costs of tracking response outweigh the value to be gained from optimization.

    Agencies and consultants have made countless millions in fees alternatively offering solutions and obscuring results.

    Instead of resisting actionable ROI measures, the ad community should be leading the charge to develop sustainable, dynamic and robust models to guide future investments.

    [Reply]

    Greg Reply:

    Bill,

    Thanks for your input (although I think the consultants racked up considerably more millions than the agencies).

    In truth, most of the major marketers do have a fairly sophisticated understanding about ROI. They track and monitor performance on a number of axes, invest in econometrics to optimize them, etc.

    The bigger problem is with smaller advertisers who do not have a research budget. For them, DR offers the only real measurement that is meaningful to them and they mistake that for meaning that it is the only marketing channel that produces measurable results.

    - Greg

    [Reply]

  3. July 15, 2010

    Hi Greg, Love this post… love it. Ironically, I just wrote about Direct Marketing/Direct Mail and how it should be just one part of the overall “recipe” for a successful campaign. Here’s the link… http://tinyurl.com/2vk49ez

    BTW, I’m a big TAC fan, too! http://tinyurl.com/3x9o8h5

    All the best,
    Steve O

    [Reply]

    Greg Reply:

    Steve,

    Nice post (No surprise there, everybody from Philadelphia writes great posts:-)

    The Ad Contrarian ( http://adcontrarian.blogspot.com/ ) is a a truly great read. Although, I must admit, I do find some of his ideas a bit goofy and recently got into a small comment battle on the TAC site. Nevertheless, he’s usually right and, more importantly, always funny

    - Greg

    [Reply]

  4. August 31, 2010

    Interesting article about things to consider with direct response marketing. It seems like there can be a lot of factors when making a sale.

    [Reply]

    Greg Reply:

    Thanks, Kymaro. I’m glad you liked it.

    - Greg

    [Reply]

  5. October 16, 2010

    Hi there…interesting post. As someone who has been part of both – mass media and Direct Marketing teams, I could’nt agree more with what you are saying. I work for the financial services industry (Life Insurance) in India. The biggest issue I have with DM is that it’s sole measurement is oftentimes the responses or ‘leads’ that it generates. Apart from Web and Mail, we’ve worked on many experiential marketing modules (the types one does in schools, workplaces, malls etc) and while it does generate ‘leads’ – it also offers a brand experience to a consumer that can and should be measured. How does one go about measuring this ‘experience’, especially when the mass media campaign is in full swing? So, then we get into the whirl of ‘these many leads – these many appointments (we do it through a call centre) – and these many sales’. The same metric however is often missed through mass media. There, it is more about awareness scores. I feel marketers should evolve mechanics that can track most inputs individually.

    [Reply]

    Greg Reply:

    Shekhar,

    Thanks. Brand experience is elusive, but we’re getting much better at measuring it. The agency I currently work for, ZenithOptimedia, has a great Touchpoints program that does a good job of evaluating brand experience (alas, not in real time). It’s extremely useful and correlates 80% or better with market share.

    Thanks for your comment.

    - Greg

    [Reply]

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