When they come to write the history of technology in direct marketing, a logical starting point will be the 1980s, with the arrival of the first generation of marketing databases. As computers and software developed to be more powerful and economical, it became possible to store a huge amount of customer information and use it to build direct relationships.
Hard on these heels came computer-driven mass telemarketing, and later that quantum leap in DM technology - the internet. True, it took some time for marketers to realise the power of the web as a direct channel, but once they did it was evident that the internet was perhaps the greatest database marketing vehicle ever invented.
It's hard not to get starry-eyed when reading this tale of technology's role in the development of direct marketing. After all, the use of such tools to connect with consumers has meant the evolution of the direct marketing industry into the multi-billion pound business it is today.
But all is not rosy in this particular garden. Misuse of predictive diallers (see feature, page 31) is now being blamed for the current consumer backlash against telemarketing. The power of marketing databases has allowed seemingly indiscriminate mass mailing by certain industries, notably the credit card sector. And in a recent survey commissioned by Cable & Wireless, newer techniques, such as text messaging, are said to be damaging consumer trust in brands.
So could technology be killing the golden goose that is direct marketing? This is the thorny question we put to this month's Think Tank panel, drawn from client companies, suppliers and agencies. It's a hard proposition, since technology plays a huge part in the direct marketing lives of all of those present.
Martin Runnacles is a director of the Presky Maves agency, but his career includes stints as marketing director at Jaguar and before that as communications director for Volvo. His perspective includes a time when databases were slow and the internet was a select tool used just by the military.
"The basic principle of DM then was having a one-to-one relationship with customers, and that's still sound," Runnacles says. "But what the increasing sophistication of the database and the internet has allowed is that delicate proposition to be disturbed." For Runnacles, the sheer volume of contact that technology enables also leaves it open to misuse.
David Eldridge, chief executive of database software manufacturer Alterian, paints a worse-case-scenario of DM having to operate in an environment where "the consumer backlash makes it impossible to use DM channels effectively, with those consumers refusing to give the discriminating data we need to create effective models".
The Telephone Preference Service grows by the day, while spam has led to the development of ISP 'white lists'. "It's very difficult for a proper internet marketer to negotiate their way through all the ISP white listings and have the occasional recipient, who didn't find the communication relevant, block every email you send to AOL," Eldridge continues. "To negotiate your way back on to ISP white lists takes months, and it's stopping this kind of DM being effective."
Eldridge tempers this gloomy view by pointing out that technology has presented "huge opportunities" for contacting customers and prospects, with call centres now fully web-enabled and shorter-run digital print enabling communication with more and different communities of customers and prospects.
The other panelists don't deny the awesome power of direct marketing technologies. At Macmillan Cancer Relief, the supporter database sits at the heart of the charity's marketing activities, allowing the capture of transactional and other data. Targeting is then refined using Mosaic and database modelling tools such as SPSS. "These are tools we simply couldn't do without," says Judith Dutton, deputy director, marketing at Macmillan. She attributes 15 per cent of the charity's income to activity off the database.
That technology is a cost-saving device is not at issue either. Dutton highlights the benefits for Macmillan in this regard. Instead of mailing an appeal, the charity can put it up on the Macmillan website. "We save on print and postage, and through being able to transfer data electronically rather than by disk," she says. "We also test creative through online surveys and get a much faster response."
Benefits of technology
Eric Lunt, national account manager at telephony technology maker Amcat, argues that predictive dialler technology has similar benefits. "Billions of man-hours have been saved since the predictive dialler arrived," he says.
For NatWest, a huge bank with many financial services products, the call centre is now its main point of contact with customers. Despite having 100 centres dotted around the UK, NatWest also uses outsourced centres for both in- and outbound calling.
"The fact is that we can offer a lot of our products at a more competitive price, because we have call centre technology in place as opposed to branches," says Sharon Davidson, senior direct marketing manager at NatWest. "Improving technology means we've been able to reduce the cost of our outbound campaigns, and so we're able to provide a low-cost service. For example, if you're a customer of our premium banking service, you'll have a relationship manager calling you personally, as opposed to an outbound call from a call centre. We wouldn't be able to offer that level of service to our student customers, for instance."
The live, real-time aspect of databases has been a real boon for targeting. Clients of Amcat want results from outbound campaigns immediately, so that they can tailor the next one. "It does allow organisations to target the right people rather than just getting a list of contacts and phoning them, as people did in the past," Lunt says.
The latest milestone in direct marketing technology has been the advent of multi-channel marketing. "Technology has given Macmillan a lot of new channels, through which we can broaden our reach to new supporters who would not be reached through traditional channels," Dutton says. "Younger donors are more used to SMS and email, whereas older supporters prefer direct mail." Davidson agrees, adding that technology has created expectations both internally at NatWest and with customers that all the various media will be used.
And there's the rub. Advances in direct marketing technology and new channels have created expectations that they are there to be used, to whatever extent is deemed necessary. "The problem with the newer DM channels is that they may be more powerful, but they are more intrusive," Eldridge says. "If you get direct mail, you can put it in the bin if you don't want it. You're more likely to get a negative reaction to an email or an SMS message because consumers deem them more personal."
However, the panel agrees that technology per se is not guilty of damaging the DM brand. As Lunt succinctly puts it: "Technology itself isn't inherently the problem, just as cars on their own don't cause accidents." He believes that all the various tools have the ability to "get rid of the communications elements that consumers don't like. It's just that marketers don't use them".
Davidson challenges this by pointing out that responsible brands such as NatWest have put self-policing of direct marketing technology in place. "We have various flags on our database: 'do not mail', 'do not call', 'do not email' and 'do not text'," she says. "People who have registered on TPS do form part of our pool, and legally we could contact them with outbound calls because they're existing customers, but we have chosen not to because we feel it is intrusive."
For their part, the two suppliers present, Alterian and Amcat, say they have put measures in place to help marketers get the best use out of their technology. Alterian sells its database engines both directly to clients and indirectly to managed service providers (MSPs). "We tend not to go to customers, sell the software and say, off you go," Eldridge says. "If the data quality isn't there, we say, please don't use it. If you haven't got access to consultants who can build you models on a regular basis, then you're not going to get best use out of the technology."
Last year, Amcat hosted some client seminars about best practice in predictive dialling, including lessons in how to configure the dialler so that it does not leave a silent call. "One of our messages was that there's no real advantage to winding up these machines to go at full pelt - it doesn't produce anything extra in terms of results. And that if you do nothing else, publish your phone number. Otherwise it's like driving around with no number plates on."
Lunt is also currently recruiting people whose sole remit is to visit customer sites to make sure they know how to use the kit properly. Not out of altruism, he admits, but because using diallers in the right way is "our bread and butter".
Whether marketers listen to such best practice advice is up to them. Would industry-applied penalties help? Dutton says technology has grown exponentially, but that the industry hasn't kept pace by issuing guidelines or restrictions. "We need to play catch-up," she says. For Runnacles, the recent Kitchens Direct/Ofcom stand-off over silent calls raises the question of how seriously punitive action can be directed against high-profile businesses.
It seems the ultimate duty of getting best use of the technology rests with clients and their technology suppliers. Runnacles says it is encouraging that the two suppliers present have put in place best practice techniques to help clients use technology properly. "Eric's motor car analogy is perfect - it's not the vehicle, but how we use those vehicles," Runnacles says. "Responsible clients must be able to say that they take a dim view of poor use of the technology, because it's damaging the image of direct marketing."
THE PANELIST LINE-UP
DAVID ELDRIDGE, CEO, Alterian: Eldridge set up his first company in 1984, at the age of 14, to market his own software. Following four years in several roles with Royal Dutch Shell Group, Eldridge joined GB Information Management, where he spent four years leading corporate development before founding Alterian.
SHARON DAVIDSON, senior direct marketing manager, NatWest: Davidson started her career in South Africa as a marketing manager at Nedbank. She relocated to the UK and worked for the card division of Halifax as a portfolio manager, before moving last year to NatWest.
MARTIN RUNNACLES, director, Presky Maves: Runnacles started his career in advertising as a graduate trainee with J. Walter Thompson. Marketing roles followed at Courage Brewing, Volvo UK and BMW (GB), after which he became group marketing director of Rover Group. He then joined Jaguar where he was global marketing director until the end of 2004. At Presky Maves his role involves guiding strategy.
JUDITH DUTTON, deputy director, marketing at Macmillan Cancer Relief: Dutton joined Macmillan more than two years ago to head up the donor marketing function. Having spent a number of years as a DM practitioner in the commercial sector, she moved into data consultancy, before switching to the not-for-profit sector six years ago.
ERIC LUNT, national account manager, Amcat: Lunt began his career with voice and data communications provider Azzurri, where he specified and supported telephony products and services. Lunt has spent the last five years working at call centre technology specialist Amcat, where he manages key customers, including LBM and Excell Contact Centres.