Direct, digital data driven marketing 5th edition lisa spiller

Direct marketing legend Martin Baier died on June 30, 2016. He was 93 years old. Martin was truly one of the founding fathers of the direct marketing field, and a staunch supporter and active contributor to direct marketing education nearly his entire professional life. His keen intellect and business vision, combined with his many significant intellectual contributions, will live on forever in our marketing discipline.

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Direct Digital & Data-Driven Marketing

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Direct Digital & Data-Driven Marketing

5th Edition

Lisa Spiller

Los Angeles London New Delhi Singapore Washington DC Melbourne

Thousand Oaks, California 91320

SAGE Publications India Pvt Ltd

B 1/I 1 Mohan Cooperative Industrial Area

Marold 2020

First published as Contemporary Direct Marketing by Prentice Hall

in 2004 Second edition published in 2010 Third edition published

as Contemporary Direct and Interactive Marketing by Racom

Communications in 2012 Fourth edition published in 2018

Apart from any fair dealing for the purposes of research or privatestudy, or criticism or review, as permitted under the Copyright,Designs and Patents Act, 1988, this publication may be

reproduced, stored or transmitted in any form, or by any means,only with the prior permission in writing of the publishers, or in thecase of reprographic reproduction, in accordance with the terms oflicences issued by the Copyright Licensing Agency Enquiries

concerning reproduction outside those terms should be sent to thepublishers

Library of Congress Control Number: 2019955360

British Library Cataloguing in Publication data

A catalogue record for this book is available from the British Library

ISBN 978-1-5297-0818-9

ISBN 978-1-5297-0817-2 (pbk)

Editor: Matthew Waters

Assistant editor: Jasleen Kaur

Assistant editor, digital: Sunita Patel

Production editor: Nicola Carrier

Copyeditor: Sharon Cawood

Proofreader: Leigh C Smithson

Indexer: Silvia Benvenuto

Marketing manager: Lucia Sweet

Cover design: Francis Kenney

Typeset by: C&M Digitals (P) Ltd, Chennai, India

professional life His keen intellect and business vision, combinedwith his many significant intellectual contributions, will live on

forever in our marketing discipline

Martin helped define direct marketing and was a key figure in

developing and expanding the direct marketing industry He wasknown as the ‘Father of Zip Code Marketing’ after writing an

article in 1967 for the Harvard Business Review entitled ‘Zip

Code: New Tool for Market Segmentation.’

Martin Baier authored or coauthored many seminal books on

direct marketing during his lifetime His Elements of Direct

Marketing, published in 1983 by McGraw-Hill, was the first

academic textbook on direct marketing A Japanese edition of thistext was published by Nikkei in Tokyo in 1985, and an

international student edition was published in Singapore in 1986

Martin’s How to Find and Cultivate Customers through Direct

Marketing was published by NTC Business Books in 1996.

Contemporary Database Marketing: Concepts and Applications,

an interactive college textbook and CD, coauthored with KurtisRuf and Goutam Chakraborty, was published by Racom Books in

2001 Martin coauthored with Lisa Spiller the first edition of

Contemporary Direct Marketing, released in 2004, and the second

edition, Contemporary Direct and Interactive Marketing, released

in 2009, both published by Prentice-Hall Their third edition waspublished in 2012 by Racom Books

Martin was recognized by his peers and received many awards forhis achievements and contributions to the field The Direct

Marketing Educational Foundation, now known as Marketing

EDGE, presented him its Ed Mayer Award, and the Direct

Marketing Insurance Council named him Direct Marketing

Insurance Executive of the Year, both in 1983 Martin was

inducted into the Direct Marketing Association (DMA) Hall of

Fame in 1989 The Mail Advertising Service Association honoredhim with its Miles Kimball Award in 1990 The Ed Sisk Award forDirect Marketing Vision was presented to him by the Direct

Marketing Association of Washington Educational Foundation in

1994 The 1995 Andi Emerson Award for contribution of

outstanding service to the direct marketing creative communitywas awarded to him by the Direct Marketing Creative Guild andthe John Caples Awards Board In 1995, he was elected

International Fellow of the Institute of Direct Marketing (U.K.) inrecognition of exceptional services to the profession The NewEngland Direct Marketing Association honored him with a LifetimeAchievement Award in 1996

Martin was with Old American Insurance Company as Senior

Executive and Vice President of Marketing for more than 25 years.After retiring in 1987 as executive vice president of the marketinggroup, he was a direct marketing consultant and educator Hefounded the Center for Direct Marketing Education and Research

in the Henry Bloch School of Business and Public Administration

of the University of Missouri—Kansas City (UMKC), where heserved for 25 years as adjunct professor He created and taught aProfessional Direct Marketer certification program at UMKC andtraveled the world speaking at direct marketing conferences

Martin consulted with a variety of organizations involved in

adopting the discipline of direct marketing He was affiliated with

many professional organizations and is listed in Who’s Who in Finance and Industry and Who’s Who in Advertising He taught

direct marketing at many universities and conducted numerous

seminars throughout the United States as well as in Europe,

Australia, New Zealand, and Asia

Martin’s education included an MA in economics (1970), a BA inbusiness administration (1943), and a BS in economics (1943)—all from UMKC

Martin was an active and passionate member of both the DirectMarketing Association (now known as the Data & Marketing

Association) and the Kansas City Direct Marketing Association.His passion for direct marketing was second only to his love forhis family—his devoted wife Dorothy Baier; his daughter, DonnaBaier Stein; his grandson, Jonathan Baier Stein; and

granddaughter, Sarah Rachel Stein

This book, Direct, Digital & Data-Driven Marketing, in both its

fourth edition and the present edition, has been written with MartinBaier in my heart and on my mind I hereby dedicate this text tohim

1 Processes and Applications of Direct Marketing

2 Database Marketing and Customer Relationship

Management

3 Lists and Market Segments

4 Marketing Analytics: Testing and Measurement

PART 2 Create and Place Direct Marketing Campaigns

5 The Offer

6 Creative Message Strategies

7 Print Media

8 Television, Radio, and Digital Video

9 Mobile, Text, and Telephone for Marketing

10 Digital and Social Media

PART 3 Serve and Adapt to Customers and Markets

11 Business-to-Business (B2B)

12 Fulfillment and Customer Service

13 Environmental, Ethical, and Legal Issues

14 International Direct Marketing

PART 4 Applications, Examples, and Careers in Direct, Digital, and Data-Driven Marketing

Appendix B: Careers in Direct and Interactive Marketing

Appendix C: Branded Digital Marketing Certification

Programs

Appendix D: Direct and Digital Marketing Campaign ProposalGuide

Index

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1 Processes and Applications of Direct Marketing

The Scope of Direct MarketingCharacteristics and Growth of Direct MarketingDefinition and Description

The Convergence of Direct and BrandMarketing

Factors Affecting the Growth of Direct MarketingThe Processes of Direct Marketing

Direct Communication 1:1Multiple Media

Measurable ResponseDatabase

Customer RelationshipsMultichannel FulfillmentOmni-Channel MarketingApplications of Direct MarketingUsers of Direct MarketingNonprofit OrganizationsPolitical OrganizationsGovernmental OrganizationsSports Organizations

SummaryKey TermsReview QuestionsExercise

Critical Thinking ExerciseReadings and ResourcesCase: Fear 2 FreedomNotes

Customer Loyalty Programs

Examples of Loyalty Programs

Source Data

Recency/Frequency/Monetary AssessmentDatabase Maintenance

Match Codes and Merge-Purge

Database Uses and Applications

Using a Customer Database

Performing Database Analytics

Database Enhancement

Internal Data Enhancement

External Data Enhancement

Customer Relationship Management

Customer Value

Customer Lifetime Value (CLTV)

One-on-One Personalized Marketing

Partner Relationship Management (PRM)Summary

Key Terms

Review Questions

Exercise

Critical Thinking Exercise

Readings and Resources

Case: Nevada Tourism

Notes

3 Lists and Market Segments

Lists as Market Segments

A Perishable Commodity

Types of Lists

The List Industry

List Measurement and Analysis

The Nature of Market Segmentation

Clustering Areas to Segments

Availability of Statistical Data

Summary

Key Terms

Review Questions

Exercise

Critical Thinking Exercise

Readings and Resources

Case: Virginia Beach Tourism

Tracking Responses and Measuring TestResults

Hypothesis TestingStatistical Evaluation of DifferencesStructuring and Evaluating a TestUsing Math and Metrics to Determine the ‘Right’Target Market

Determining Customer ValueCalculating Customer Lifetime Value (CLTV)Predicting Buyer Behaviors

Determining the ‘Right’ Customer to TargetAnalyzing Market Penetration

Measurement is the Key

Calculating Response Rates and ConductingBreak-Even Analysis

Calculating the Impact of a LiftDetermining Conversion RatesPlanning the Direct Marketing Budget

How to Begin: Estimating CostsThe First Calculations: Margins, Fixed andVariable Costs

Net Profit and Breaking EvenCost per Inquiry/Cost per OrderReturn on Investment/Return on AdvertisingInvestment

Budgeting for TestsAnalytic Application: Super Bowl Advertising

Summary

Key Terms

Review Questions

Exercise

Critical Thinking Exercise

Readings and Resources

Case: Hi-Ho Silver

Notes

PART 2 Create and Place Direct Marketing Campaigns

5 The Offer

What Is the Offer?

Making an Offer EffectiveComponents of the Offer

Step 1: Perform Market Research

Step 2: Determine the Objectives of the OfferStep 3: Target the Offer

Step 4: Test the Offer

Step 5: Execute the Offer

Critical Thinking Exercise

Readings and Resources

Case: Mike’s Bike Tours

Critical Thinking Exercise

Readings and Resources

Case: Barely There

Advantages and Disadvantages

Position and Timing

Critical Thinking Exercise

Readings and Resources

Case: Busch Gardens

Characteristics of Television Time

Direct Marketing Uses of Television

Television Home Shopping

Advantages and Disadvantages

Internet Radio Competitors

Critical Thinking Exercise

Readings and Resources

Inbound versus Outbound Calls

Advantages and Disadvantages

Planning a Telephone Marketing ProgramSummary

Key Terms

Review Questions

Exercise

Critical Thinking Exercise

Readings and Resources

Driving Site Traffic

Search Engine Optimization

Deal-of-the-Day Online Offers/CouponsClick-to-Chat

Measuring Site Traffic and Analytics

Google AnalyticsClicktale

Summary

Key Terms

Review Questions

Exercise

Critical Thinking Exercise

Readings and Resources

Case: Mud Pie

Segmenting Business Markets

Standard Industrial Classification (SIC)North American Industry Classification System(NAICS)

Other Industrial Market Segmentation CriteriaMarketing Funnel

B2B Customer Acquisition

Content MarketingIn-Person ContactTelephone CallsReferrals

WebinarsSocial MediaB2B Customer Retention

Up-sellingCross-sellingCustomer Loyalty

Critical Thinking Exercise

Readings and Resources

Traditional Fulfillment Standards

The Fulfillment Process

U.S Postal Service

Alternative Delivery Systems

Fulfillment Problems

Sources of Fulfillment Problems

Ways to Avoid Fulfillment Problems

Call Centers

In-House Call Center

Outside/ Outsourced Call Centers

The Importance of Customer Service

Zappos: An Online Customer Service ExperienceEvaluating Customer Satisfaction Level

Keeping Customers Happy

Summary

Key Terms

Review Questions

Critical Thinking Exercise

Readings and Resources

Ethics of Direct Marketing

The DMA’s Guidelines for Ethical BusinessPractice

The DMA Corporate Responsibility DepartmentBasic Consumer Rights

The Right to Safety

The Right to Information

The Right to Selection

The Right to Confidentiality

The Right to Privacy

Privacy Protection Study Commission

Privacy Today: Antispam Laws

Annoyance and Violation

Type of Information

Consumer Privacy Segments

Corporate Response to Privacy

The DMA Commitment to Consumer ChoiceThe DMA Interest-Based Advertising (IBA)Guidelines

Third-Party Privacy Intervention: InfomediariesRegulatory Authorities of Direct Marketing

Federal Communications Commission

Federal Trade Commission

Consumer Financial Protection Bureau

Food and Drug Administration

Legislation and Permission Marketing

Online Legal Issues

Emerging Privacy Concerns

Summary

Key Terms

Review Questions

Exercise

Critical Thinking Exercise

Readings and Resources

Case: Snow Companies

Notes

14 International Direct Marketing

Direct Marketing around the World

Differences between Domestic and InternationalDirect Marketing

Making the Decision to Go International

Step 1: Assess Your International PotentialStep 2: Conduct Market Research

Step 3: Select Your Trading Partners

Step 4: Develop an International DirectMarketing Plan

Step 5: Begin International Direct MarketingActivities

Modes of Market Entry

CanadaEuropeLatin AmericaAsia/PacificMiddle EastAfrica

Summary

Key Terms

Review Questions

Exercise

Critical Thinking Exercise

Readings and Resources

Case: Coca-Cola in Peru

Appendix B: Careers in Direct and Interactive Marketing

Appendix C: Branded Digital Marketing Certification

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Welcome to Direct, Digital & Data-Driven Marketing, the fifth

edition of the book formerly titled Contemporary Direct and

Interactive Marketing Called ‘3D Marketing’ for short, this new title

is well suited to its contents as the book overviews the historical

foundations of direct marketing, explores the present and future transformation of marketing relative to the explosion of digital

marketing formats, and details the constant and consistent use of

data to drive marketing strategies and activities In essence, this

book presents modern marketing concepts, strategies, tactics,formats, and activities, which have blossomed from the

implementation of direct marketing methods

The updated title is also consistent with other recent name

changes in the direct marketing industry In October 2016, theDMA rebranded itself by replacing ‘direct’ with ‘data’ in its name.DMA now stands for the Data & Marketing Association This

rebranding strategy showcases the fact that relevant customerdata has always been the driver behind targeted marketing andcustomer relationship enhancement Another name change

occurred a few years earlier when the Direct Marketing

Educational Foundation (DMEF) changed its name in 2013 toMarketing EDGE EDGE is an acronym that represents the

nonprofit organization’s mission: to Educate, Develop, Grow, andEmploy college students in the field of marketing Thus, the new

title of this book, Direct, Digital & Data-Driven Marketing (‘3D

Marketing’), appropriately reflects the multi-dimensional aspects ofthis dynamic field as it continues to transform and becomes

increasingly relevant in today’s modern business world Directmarketing is truly multi-faceted and three-dimensional, given themany mediums and channels used to engage with consumerstoday

Just as with previous editions, this book was written to help youunderstand the theories behind modern ‘3D marketing’ and tolearn how to apply these theories in your classes and in your

career In other courses, you may have studied psychology and

human behavior, the basics of advertising, communications

theory, and practice, and even accounting In this book, you willsee how these, and many more disciplines, converge in the field

of direct marketing to form a discipline that changes with time but

is always creative, useful, and even fun! When reading the

following chapters, I hope you will be able to apply many conceptsyou have already studied and learn how they are essential to

successful marketing I also hope that, as you consider your

career, whether in marketing or a related field, you will have found

it helpful to understand how so many activities we all undertakedaily are affected by direct, digital, and data-driven marketing Insome sense, we are all marketers and consumers, and we allbecome involved in the techniques of modern marketing Decadesago, direct marketers gathered customer names and addresses,created mailing lists, established relationships with customers,and sold goods and services on a one-on-one basis to customersvia mail and telephone Today, modern marketers are still

concerned with gathering information and creating relationshipswith each customer in order to maximize customer value and

personalize the customer experience, but customer databasesand digital, social, mobile, and text message media have

dramatically changed the speed and effectiveness of these

activities More and more companies and organizations are usingthe concepts of direct, digital, and data-driven marketing as theirprimary methods for business transactions

This fifth edition recognizes the growth of various digital marketingformats as the newest interactive channels for conducting modernmarketing today Although digital, mobile, and social media

marketing channels are similar to direct mail in that they targetmessages on a personal one-on-one basis with great precisionand effectiveness, they do so with much greater speed of

transmission and enable both immediate customer response andexcellent measurability and analysis Today’s consumers desireboth the speed and the control that the digital, social, and mobilemedia formats provide Marketers must include these importantmediums in their marketing campaigns Direct marketing has

always been accountable and measurable Now, with the variousdigital media formats and computer technology, it is more

interactive and precise than ever before The fifth edition builds on

the traditional foundations of direct marketing that are still

applicable today, and it extends into the future where constantdigital innovations continue to transform the marketing landscape.The new media of yesterday have become mainstream mediatoday We cannot begin to envision what changes are ahead Butone thing is certain: traditional direct and data-driven marketingprinciples will still apply This latest edition builds on these

traditional foundations, captures the new media and methods, andexplores the future innovations of modern marketing

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Using This Book

This fifth edition of Direct, Digital & Data-Driven Marketing

contains the following four major sections:

1 Build, Develop, and Measure Direct Marketing Strategies

2 Create and Place Direct Marketing Campaigns

3 Serve and Adapt to Customers and Markets

4 Applications, Examples, and Careers in Direct Marketing

Individual chapters within these major sections deal with suchsubjects as database marketing and customer relationship

management; developing lists and profiling customers; testing,measuring, and analyzing campaigns; planning value

propositions; creating compelling message and media strategies;fulfilling the offer; serving the customer; understanding

environmental, ethical, and legal issues; exploring internationalstrategies; and applying direct marketing Each chapter includes achapter outline, key terms, end-of-chapter summaries, reviewquestions, exercises, readings and resources and cases Thematerial does not progress from easy to difficult, but it does

progress logically from introduction to application To be

successful in any course, you must read each chapter carefullyand outline key concepts along the way The chapter spotlight foreach chapter will give you a real-world example that provides asense of what that chapter will address Read the chapter

spotlight prior to the chapter Each chapter also contains the-art modern marketing content, many photos and images, andnumerous applications and examples to drive home importantconcepts The discussion questions at the end of each chapter willassist you in reviewing the important concepts and the mini

state-of-exercises will enable you to critically think about and apply thechapter’s content Be sure to explore the four appendices that aredesigned to contribute to your marketing education and help youduring your college years and beyond Keep your eyes and earsopen to the marketing world around you and you will be able toeasily understand and apply the concepts, strategies, tools, and

35techniques of direct marketing that have become mainstreammarketing in today’s world.

Huge thanks to Dr Matt Sauber and David Marold, both of

Eastern Michigan University, for coauthoring the business chapter with me and for updating their ‘Domino’s Pizza:Growing Sales with Technology’ comprehensive case Extra

business-to-thanks to Dave Marold for coauthoring the new Direct and DigitalMarketing Campaign Proposal Guide featured in Appendix D

Sincere gratitude goes to Dr Carol Scovotti, University of

Wisconsin–Whitewater, for coauthoring the international chapterwith me In addition, much appreciation to Freddy Rosales,

Universidad de CEMA, Argentina, for contributing the ‘Coca-Cola

in Peru’ case for the International chapter

A great deal of thanks to Dr Dae-Hee Kim, Christopher NewportUniversity, for his many valuable contributions to the MarketingAnalytics chapter, and for his insight and advice on other chapters

as well Also, special thanks to Susan Jones, Ferris State

University, for contributing the new and expanded catalog section

in the Print Media chapter

Genuine appreciation to Dr Tracy Tuten, University of Michigan,for her inspiration and support, very valuable insight and

assistance regarding much of the revision content for this currentedition, coauthoring the new Appendix C on Branded Digital

Marketing Certification Programs, and her contribution of many of

the new Readings and Resources provided at the end of eachchapter.

I am sincerely indebted to the many business professionals whokindly assisted in providing valuable input, case and spotlight

information and textbook examples for this fifth edition Theseinclude:

Tyler Baesman, Jeff Sopko, Evan Magliocca, and Brian

Garner, Baesman Group, Inc

Breeze Holmgren, Bloomin

Nadine Drath, Doctors Without Borders/Médecins Sans

Frontières (MSF)

Debbie McNeil and Wendy Werner, DuPont

Yumi Lawlor, Instacart

Rick Pallen, Johnson Controls Security Solutions

Mike Lasher, Siegmund Brundl, Roberto Gallegos, Mike

Luksatich and Bente Hughes, Mike’s Bike Tours

Joe Psych, NextMark

Russ and Rebekah Tinsley, Oozlefinch Craft Brewery

Liz Lacey and Bella Nguyen, Pandora

Lori Barnett and Kristina Pontillo, PepsiCo

Carrie Schweikart, Quad

TJ Blease, Uber

Many of the valuable contributions of business professionals toprevious editions of the text have continued to enhance the fifthedition Those contributors included: Dan Caro and Faith Albers,both of Whereoware, for their excellent work on each of their clientfeatures (Evergreen, Interlude, Sullivans, and Mud Pie), and fortheir valuable contributions to the Careers Appendix To Dan

Dipiazzo and Andrew Scogna, formerly of Busch Gardens/WaterCountry USA, for their many outstanding real-world examples thatappear in several chapters throughout the textbook

Special appreciation to Elizabeth Baumann, Lids; Will Blanton,Snow Companies; Senny Boone, Data & Marketing Association(DMA); LaRhonda Burley, The Washington Redskins; CorrinaFerguson, Greater Williamsburg Chamber & Tourism Alliance;Amy Hart, Hauser’s Jewelers; Nicole Hoadley, Snow Companies;

Michael Kimball, Williamsburg Winery; Bill Leber, Swisslog

Logistics; Muriel Millar, Fear 2 Freedom; Herbie Morewitz,

ChirpXM; Leslie Sink, Hi-Ho Silver; Rosemary Trible, Fear 2

Freedom; Judy Triska, Virginia Living Museum; and Sylvia

Weinstein, Oyster Pointer.

I remain grateful to Dr Elizabeth Young, who coauthored the

‘Testing, Measuring, and Analyzing Customers and Campaigns’chapter; Dave Marold of Eastern Michigan University for his

networking assistance and his contributions in coauthoring several

of the end-of-chapter cases; Dr Matt Sauber of Eastern MichiganUniversity for his contributions to several end-of-chapter casesand select chapter material; Charles George for his contributions

to the ‘Mobile, Text, and Telephone’ and ‘Digital and Social Media’chapters; and the talented and dedicated people at The MartinAgency for the agency feature in Appendix A, for their

contributions to and assistance with Appendix B and several

opening vignettes and cases featuring their clients

I continue to appreciate the contributions of Chuck Applebach,formerly of the Virginia Beach Convention & Visitors Bureau; GregWard and Justine Thompson of BCF Boom Your Brand; Kurt Ruf,Ruf Strategic Solutions; Joe Pych, NextMark; Ruthie Keefe,

BlueSky Creative, Inc.; Florence Camenzind and Mark Honeyball,Chevrolet Europe; Mary Eckenrode and Denise Meine-Graham,Cheryl’s; Michael Sparling, 1-800-FLOWERS.com; Mike Simmonsand Ken Gammage, Directed Electronics; Vicki Rowland, formerly

of the Peninsula SPCA; Janel Mootrey and Lisa Mihalcik,

Zappos.com, Inc.; Amber Nettles, The Daily Press; Elizabeth

Baran, DICK’s Sporting Goods, Inc.; Jenelle Allemon, Domino’sPizza; Ted Ward, GEICO; Jody Wagner and Anne Walsh, Jody’sPopcorn; Deanna Williams, Macy’s Inc.; Karen Rice Gardiner,formerly of the National Geographic Society; Carrie Schweikart,QuadDirect; David Noonan, Mountain Gear; Jessica Wharton,Newport News/ Williamsburg International Airport (PHF); PeterSamuel, PING; Sandra Jarvis, Peace Frogs, Inc.; Chris Mainz,Southwest Airlines; Roger Phelps and Cama Poffenberger,

STIHL, Inc.; Matt White, White & Partners; and Wendy Weber,Crandall Associates