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Point of view 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. 955 American Lane • Schaumburg, IL 60173 • 800 850 4389 • www.experianmarketingservices.com 07/07 • © Experian Information Solutions, Inc. 2007. All rights reserved. Experian and the marks used herein are service marks or registered trademarks of Experian Information Solutions, Inc. Other product and company names mentioned herein may be the trademarks of their respective owners. 4496-0707CS