September 28, 2012
By Craig Dempster ,

Applying Traditional Direct Marketing Principles to the Digital Age

As a long-timer in the direct and database marketing industry, I have seen quite the evolution over the years. And if I step back and try to look objectively at our field today, there seems to be a persistent, unspoken dispute between the traditional direct/database marketer and the digital marketers of today. The digital guys seem to think they invented the idea of using customer information to create insights that drive engagement, build customer relationships, and maximize ROI. It's as if audience targeting, campaign testing, data management, and data analysis didn't exist before now. Of course they did—these disciplines are the very foundation of direct and database marketing.

I can hear you traditionalists now: "You tell 'em, Craig!" But not so fast. Just because direct and database marketing principles have built many a customer relationship, we can't just rest on our laurels and watch the dollars roll in, using only the tried and true tactics. Consumers have changed—they've gone digital, ready or not. And we're all going to have to face that reality. Too many direct and database marketers are paralyzed by the digital jargon—many don't know a pixel tag from a Pixy Stix. I see fear in your faces when the subject turns to PPC, SMS, SEO, DMP, or DSP. (Whatever happened to good old CPM, BRC, and ZIP+4?) The truth is, the parallels between traditional direct and database marketing and digital are countless. It's time we recognize the strengths that each camp brings to the table and work together to capitalize on direct and database marketing principles in the age of digital.

While I still consider myself a youngster, I have to admit my career began in the heyday of direct mail and telemarketing, when lists were printed on Cheshire labels or green-bar manuscripts, and electronic media meant mag tapes or 3.5 floppies. As the Internet became more mainstream, I was eager to understand the value that real-time anonymous data could bring to the direct marketing cause. Throughout the ensuing years, as I've worked on the development and execution of digital strategy for Merkle, I've had the privilege of spending time with an array of progressive companies and start-ups that are focused on using information technology and analytics to drive and accelerate digital marketing. It is through these interactions that I've become aware of the staggering amount of investment and innovation taking place in the industry.

We need only to glance at the now-popular LUMAscapes digital ecosystem charts by Luma Partners to get an idea of the flurry of activity in this space. The pure digitalists look at these charts as a badge of honor, intimidating the less adventurous direct and database marketers, who shudder at their complexity. Assuming the role of the unbiased opportunity-seeker, I look at them curiously, as a representation of possibilities for rapid innovation that will create better solutions. And while the digital folks believe they are creating brand-new marketing techniques, a close look reveals that most of the ecosystem is just an updated version of the way the direct and database marketing industry grew—with a series of data compilers and aggregators, analytic services providers, service bureaus, database managers, and lettershops. In reality, the same ecosystem could be diagrammed for good old-fashioned direct and database marketing. It's driven by the same principles that have existed for decades; it's just being powered by new technologies and executed in new media.

But lest you think I disregard the value of the bright-eyed technologist, my frustration has a flip side. Why do so many traditionalists want to stick their head in the sand and ignore the many extraordinary opportunities afforded by the development of new digital customer interaction capabilities? They dig their heels in, refusing to make any headway on the path toward understanding the new technologies available to them for their own progression and the advancement of their marketing strategies.

The parallels continue to grow between these two disciplines that may seem oceans apart. Indeed, the data management platforms and demand-side platforms (the aforementioned DMPs and DSPs) of today—built to manage advertiser audiences, manage the execution of exchange-based buys, and give access to third-party data—are the equivalent of the count systems I used to sit in front of as a list broker working for Metromail in 1996. I had the ability to go in and see how many people fit a specific set of demographic or transactional criteria; select a list based on my client's desired specifications; and create a campaign file, or "list," that would get processed through merge/purge at a service bureau, then shipped to a lettershop for execution through the U.S. Postal Service (USPS). Today, the DMP and DSP perform audience management and exchange-based display media execution for online advertisers. But instead of the list going to a service bureau and lettershop, campaign execution is happening in real time through the DSP in an exchange environment. Frequency capping, which is analogous with merge/purge, happens through the DSP. And the exchange environment essentially operates as the delivery mechanism, similar to the USPS.

Even the evolution of targeting between the two eras is comparable. Direct and database marketing evolved from geographic targeting; to renting vertical response files by the context and audience reach of their titles, like J. Crew or Williams Sonoma; to intuitive selection of demographics, life styles, or segmentation personas; to ultimately being able to perform pinpoint targeting using model scores to select the exact individuals to mail for maximum response rates. How is that different from the evolution of digital? We've moved from contextual placement of display ads (selecting a particular site, say, ESPN.com, because of the context and reach of the audience) to today's exchange-based buying method of targeting by persona (selecting placement based on known behaviors of consumers) to the emerging method of utilizing analytics on anonymous (and sometimes, identified) consumers to reach desired individuals, wherever they are on the Web.

I could go on. But in the spirit of every marketer's ultimate goal, let's just agree to embrace each other's strengths now. For it will be the combination of the great experience of the seasoned direct and database marketer and the great mind of the digital marketing technologist that will ultimately drive the future of customer acquisition and relationship management. Will you thrive, or will you go down fighting?

Craig Dempster is the executive vice president and chief marketing officer at Merkle, charged with developing the enterprise marketing strategy and directing an expanded marketing function.