Media: Junk mail cans its image
It's still not sexy, but the one-time joke of adland - direct marketing - has moved into TV, radio and print. And the likes of Tesco, First Direct and Direct Line are reaping the benefits. By Richard Cook
Monday 28 April 1997
The direct marketing business was worth pounds 5.5bn in 1995, according to the Direct Marketing Association. The DMA is currently preparing figures for 1996 but expects the final figure to top the pounds 6bn mark. Not bad for an industry that is full of people who wanted to get into advertising, were delighted at breezing through the interview and were then several weeks into their new career before it dawned on them they were never going to write the new Levi's ad.
"That's exactly how I got into the business," laughs Sarah Owens, the managing director of direct marketing recruitment specialists Direct Recruitment, "but the image of direct marketing has certainly improved out of all recognition since then, as companies like Tesco have got involved."
When Tesco embarked on its direct marketing programme, by launching a loyalty Clubcard to build up a database, it was roundly mocked for so doing, not least by its supermarket rivals. But since launching the card, Tesco has moved from strength to strength and become Britain's biggest grocer. And the supermarket has paid generous tribute to the efficacy of direct marketing along the way.
"One reason why direct marketing is doing so well at the moment is that we can quantify the effect we have in a way that other marketing disciplines just can't," says DMA chief executive Colin Lloyd. "We reckon, for example, that last year people spent around pounds 24bn directly as a result of the pounds 6bn of direct marketing expenditure."
Ironically it was the recession that helped propel direct marketing into the premier league. Previously the resource chiefly of charity and financial service companies, direct marketing started to attract big names looking for a more cost-effective advertising approach.
"There's two real reasons why direct marketing has really started to take off," agrees Simon Hall, chief executive of direct marketing agency Barraclough Hall Woolston Gray. "The first is that clients started to think really hard about their advertising budgets and about accountability during the recession, which sent them towards us. The second is the improvement in computer systems, which have enabled everyone to target customers ever more effectively."
This reliance on technology is certainly changing the face of the business, not least by providing a host of opportunities for young talent. Barraclough Hall, for example, employs 170 people, but with an average age of just 25. And right now the direct marketing industry is crying out for all the young talent it can get. Fortunately, it can now also offer that talent more than the opportunity to pen a little junk mail.
"The rewards are starting to match the new status of the industry, and the improved calibre of the people choosing to join it," confirms Owens, "Someone with just 18 months experience can expect to earn around pounds 18,000- pounds 20,000, and there are very good prospects. I've just placed a 29-year- old in a job paying pounds 50,000, and that's by no means unusual."
It helps that the industry has one of the best-developed industry training schemes around. The diploma administered by the Institute of Direct Marketing is recognised around the world. The Institute takes around 450 students a year - both from direct marketing agencies and from advertisers. Typically around 360 of those proceed after two years to the diploma. Everyone is sponsored by their employer and the course is structured so that it can be completed by a mixture of evening classes and intensive one- or two- week training sessions.
"We're also trying to get direct marketing on to the syllabus at colleges and universities," says the Institute's membership director Neil Morris. "When we first went to them and said direct marketing should be taught on its own and not included in some general marketing course, we didn't get very far. But people have seen how companies like First Direct, Direct Line and even Tesco have built their businesses using DM, and they are increasingly starting to take notice."
Certainly the sheer volume of information that marketers have now started to collect about the public is impressive. They know where you live, what you earn and how you prefer to spend it. They know this because they are prepared to spend pounds 600m a year just on compiling databases of information.
But where the industry is now starting to develop is in the creative ways that it uses that information. You are no longer impressed just because it is your name on the envelope or because the letter is addressed specifically to you. But if you are expecting a baby in nine months time and get sent free a magazine packed full of tips for mum's-to-be along with a little discreet baby-related advertising, then that's a different story. If you then get sent another magazine to guide you through the first months of your baby's life, and another when it reaches six months, the chances are the words junk mail will never pass from your lips. Yet that's one of the ways Tesco is currently exploiting the database it has developed.
"There's been a revolution in direct marketing over the last couple of years," says Barraclough Hall chief executive Simon Hall. "It's always been more intellectually demanding than other advertising disciplines, but now it's starting to get more creative as well. The profile of our industry is soaring, and if that profile still lags behind the rest of advertising I don't care. They are the dinosaurs and we already have greater importance with the client companies. We shouldn't mind too much if our profile is still lagging behind the reality"n
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