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Multichannel marketing’s greatest challenge
By David Scrim
Integrating online and offline
So, in fact, direct mail and online marketing are growing
It’s no secret that since 1995 the Internet has
completely upended consumer-shopping patterns. In
fact, the Web now claims the record as the most rapidly
adopted new communication media in history —
unseating television. And according to a 2006 Forrester
Research study, during 2005 the Internet became the
most frequently used in-home shopping channel —
outpacing newspapers, catalogs, direct mail and the
telephone, including 800 numbers. The report
forecasted that in 2006 consumers would “go online”
to either browse, research or purchase goods in more
than 70 percent of their individual shopping episodes.
together at a combined ad spend totaling $64.5 billion
However, while the Internet has become a very powerful,
pervasive and cost-efficient medium, it has hardly put old-
in 2005, topping total television ad spend for the first
time ever.
There’s a great reason that online and offline direct
marketing are growing together. At their core, they rely
on the same basic marketing principles: They are targeted,
addressable media, and they provide measurable results.
This applies not only to e-mail, but also to banner ads,
search marketing and affiliate marketing networks. These
online disciplines employ the same data-driven tactics that
are the foundation of old-school direct marketing, such as
testing, segmentation, targeted messaging, measurement,
accountability, transactional database and analytics. Online
and direct mail are like database marketing sisters.
school direct marketing out to pasture, as many young
While these sisters share many common values and practices
netizens once predicted.
in theory, in the real world they basically have remained
In fact, media spending numbers show that the opposite
has occurred. Spending on addressable, data-driven direct
marketing has been on the rise for decades, at the expense
of mass media, and Web-based marketing clearly has served
strangers. They have grown up isolated by technologies that
are worlds apart, by separate databases, by generational
gaps and by unique market pressures. As a result, today
they are very disconnected.
to extend, if not further advance, that trend.
Trends in advertising spending share
Source — (DMA) 2006 Statistical Fact Book
Beginning in the mid-1980s, marketers, faced with
26.6%
25
fragmenting mass-media audiences and a lack of adequate
accountability, began shifting money away from traditional
22.3%
advertising media and into direct marketing and marketing
20
20.2%
20.5%
databases. According to the Direct Marketing Association’s
18.8%
17.4%
(DMA) 2006 Statistical Fact Book, total U.S. spending on
16.4%
15.7%
16.2%
15
direct mail grew by more than 24 percent between 1985
13.9%
13.1%
and 1995.
10.4%
10
During the next 10 years, online was born and grew up as
8.5%
the ultracool new marketing channel. The same DMA report
7.2%
shows us that total U.S. spending on Internet ads reached
7.0%
7.2%
6.1% 6.3%
5.2%
5.5% 5.3%
4.7%
2.9%
2.1%
advertising had no negative effect on direct-mail spending,
advertising expenditures.
6.8%
5
$7.9 billion in 2005. However, this rapid growth in Internet
which also grew — actually increasing its share of total U.S.
6.8%
6.1%
.8%
0
Media
Direct mail
0% 0%
Newspapers
Spot TV
Network TV
1985
Cable TV
Radio
1995
Yellow pages
2005
Magazines
Internet
All others
In the final analysis, however, any business has just one
majority of Web analytics systems do not use any historical
set of customers. Today’s marketing challenge is to bring
customer database information, such as customer profiles,
all messaging and response options together by looking at
segmentations and promotional histories, in their reporting.
the world from the customer’s view. This requires online
Most data warehouses do not collect actionable Web
and offline to join forces in a marketing family with a single
information about what existing customers might “want
focus on customers.
to do” based on their searches, click-throughs, shopping
Most marketers have now learned that their multichannel
customers are their best, most valuable customers. They
know that Web sites drive retail traffic and that catalogs and
e-mail drive sales in all channels. Certainly these are reasons
enough to break down the silos. And now there’s one more.
Earlier this March, L.L.Bean, the famous Maine outdoor gear
cataloger, reported that in 2006 more than 50 percent of
its $1.5 billion in annual sales came through its Web site.
But these orders aren’t from new customers responding
to online ads. Up to 70 percent are renewal orders driven
to the Web site from the company’s catalog mailings to
existing customers. This means that most of L.L.Bean’s
past customers are now offline-to-online customers. The
company’s core business is fully multichannel whether
L.L.Bean likes it or not.
Many merchants are already in this same situation.
Remember that 70 percent of shopping episodes engage
the Internet in some fashion. To execute effectively,
businesses simply have to make their Web site, catalog,
direct mail and corporate marketing databases all work
together. Most cannot, and the evidence of online and
offline direct-marketing disconnects is not hard to find.
carts and online surveys. Since customer touch-points do
not share operational information horizontally that could
greatly improve overall customer service, the result is
misunderstanding and infighting.
Where is that 360-degree view? Where
is the consistent customer experience?
Now is the time to act and to get connected. The offline
camp must fully embrace the new technologies, which
are the future. They need education, and they must make
room at the marketing strategy table for the e-marketing
professionals. The online group must become team players
and realize that proven concepts, systems and techniques
for effectively managing customer relationships have been
around for more than 20 years. They need to adopt these
concepts and take them to a higher level.
The digital marketing revolution isn’t going to end here. It
will soon impact television, radio, newspapers, magazines,
outdoor advertising, cell phones and other forms of
marketing communication. Multichannel will become
megachannel, with many additional marketing database
opportunities. Customers will continue to seek messages
that are more targeted, more relevant, more consistent,
Most marketing organizations are divided into channel-
more immediate and more attractive. And they want a
specific silos governed by their channel-specific measures
variety of easy links to the Internet or whatever other
and channel-specific biases. Many retailers collect only
response channel that best suits their own immediate needs.
a small amount of customer data at the point of sale,
where 90 percent of their sales occur, but they crunch
terabytes of Web session data trying to improve conversions
on Web sites that deliver just 10 percent of sales. The
We can’t deliver a seamless customer experience without
integrating online and offline. It’s time “all” the database
marketers got together. After all, it’s what the customers want.
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