Cover Story: International DM - The world is DM's oyster

Regions thought to lag behind the UK in terms of DM, such as Russia, Poland and Sweden, are upping their ante. And along with more established overseas DM markets such as Germany and Japan, they're scooping international awards.

This year's Cannes Lions Direct awards were a clear indication that there's a big DM world out there and it's full of talent. It's easy to overlook the fact that direct marketing is not a US or UK-centric activity.

Yet the campaigns entering, and winning, on the international awards circuit are testament that other countries have upped the ante with their direct marketing.

The awards saw many international winners, with some countries standing out from the crowd. Germany won five awards including the Grand Prix, which went to Nordpol Hamburg Agentur Fur Kommunikation for its Renault Modus campaign. Sweden and Switzerland won three Lions each, while Australia, Austria, New Zealand and Singapore all won two apiece.

The UK managed a gold, three silvers and two bronzes, but the results are a clear indication that the skills of other countries cannot be overlooked.

While global groups such as Leo Burnett, OgilvyOne and Tequila are producing award-winning work in many territories, the winners in the Cannes Lions, the Caples and DMA Echo awards show that there are many strong independents worldwide.

Asia-Pacific and Scandinavia are two regions producing top campaigns.

This year, Singapore agency 10am Communications won a Cannes Lion gold in the Flat Mailing category for the Singapore Environmental Council, while Ad Planet Group took home a silver in Alternative Media for the Nature Society of Singapore.

Sweden won three Cannes Lions awards, including a Gold for agency The Fan Club for its B2B campaign for Sydsvenskan Daily News, and also did well in the DMA Echoes.

Countries to watch out for

Norway and Denmark did well too, with the latter bringing home six Echo awards, including two for agency Gekko's 'Trivial Pursuit' campaign for Citrix Systems. Jens Vanborg, client services director, at Gekko says Scandinavia is "strong on strategy and creative concepts and implementing these in integrated campaigns. We also embrace new medias".

There are a number of countries to watch, where direct marketing is not quite as developed or mature as others, but are growing fast, such as Russia, Poland and Italy (see box, page 43).

Of course, every country is different. While SMS may be big in some countries, particularly in the Asia-Pacific region, more traditional channels such as mail are preferable in others. While the UK may be considered superior in its use of data - the wealth available and how marketers use it - not every country has a list industry and some have no commercially available universal lists, such as the Electoral Roll.

Entering new territories

This is an issue for direct marketers in developing DM markets. While global agency networks may have spread their tentacles far and wide a long time ago, companies such as Acxiom and Experian, on the supplier side, are now stepping up their expansion into other countries.

Experian's marketing services division was solely UK-based until a few years ago, says Stefan Elliot, business development director of its international marketing services division. It now has six offices in Europe and is looking further afield. "We're looking at other territories as well. There's a lot of focus on the Asian market," he says.

Acxiom has been an international player for some time, with headquarters in the US and offices throughout the world, including China, Australia and Europe.

The data supply situation in each country, however, can vary widely.

Australia's direct marketers have had no access to that country's Electoral Roll (ER) for the past year. As a result, Acxiom has noticed an increased demand for its data services from marketers trying to cope with this loss.

"We certainly do a lot more now - data sales are increasing and more direct marketing is being done," says Barbara Sullivan, marketing and privacy leader, at Acxiom, Australia. "There's more effort and focus on data quality."

She says that while the Australian list industry is doing well, the loss of the ER is being felt. "It really does have an impact on the ability to keep data up to date. It's okay at the moment because the (current) ER is relatively fresh, but going forwards, it will be more difficult."

Other countries are even further behind in data service provision, directly correlating with the sophistication of direct marketing that can be achieved.

This is something Experian has found during its expansion into other European territories. "Where we have the most success is where we've dumbed down our offer," says Elliot. "For example, we've worked in Italy and some of the profiling was very rudimentary. But it's the first stage of segmentation.

We're hoping it's an incremental journey - they'll do some work, find it's not sophisticated enough and ask if we can take it to the next stage."

Globally, though, there is a catch-up game going on in the data arena, as consumers become more vocal about their rights and direct marketers strive to become more targeted and relevant.

Russia has a long way to go before it has the same data and legislative landscape as the UK, but it is a country trying hard to catch up. Alexei Kruzhkov, managing partner of Moscow-based agency Connexions, which works for brands such as Unicef and Philip Morris, says this is the biggest problem for the Russian DM industry. "We don't have good lists or databases, so almost every DM project starts with building a list from scratch. Here there are no list brokers or experts, such as Experian."

Increasingly, consumers are bemoaning a lack of privacy legislation in Russia. "There is no legislation, so consumers complain," says Kruzhkov. "In a test mailing for Unicef, we targeted a lot of wealthy people. Some consumers complained and threatened to sue. We really want to compile a Robertson (opt-out) List and are trying to move towards it."

Poland is in a similar situation to Russia when it comes to data availability, but this is starting to change. "It's a growing economy," says Auke Vandenhout, northern European group leader, at Acxiom. "More advertisers are coming to Poland and a lot of direct marketing is being used for retail planning. We do a lot of analytics using our data on who's living where, so we can advise on where to open a bank or a retail operation - that's how it starts."

As Kruzhkov's experience in Moscow shows, when direct marketing takes off, privacy and opt-in start to become an issue too. In fact, consumer awareness of data protection is now being taken seriously by marketers.

For instance, it seems consumer dissatisfaction at the intrusiveness of telemarketing is not only rife in the UK. The movement of call centres offshore is problematic for many DM markets, including Australia.

"Consumer pushback from telemarketing is an issue here," says Sullivan. "In the last two months, consumer dissatisfaction levels have grown." Last month, in response to consumer sentiment and industry demand, the minister for communications released a discussion paper on a potential 'Do Not Call' list.

Data issues are not the only big difference between countries. The DM channels used also varies. For example, in Germany, telemarketing is highly regulated and is not permitted without prior consent from the consumer.

In South Korea and Japan, the mobile phone is the mainstay of activity, with digital technology years ahead of that in the UK.

"In Asia, many clients are taking part in direct marketing without knowing it. One reason for this is that digital is such an important part of life," says Kent Wertime, president of OgilvyOne Asia Pacific.

"The real discussion about direct marketing going forward in Asia is centred around the cellphone and internet. There is still a fair amount of traditional offline DM being used, but we don't have the quality of data sources you have in the West."

Kent cites Korea and Japan as the leading edge markets, but says China, Hong Kong and Singapore can't be discounted (see box, page 40).

Demand for digital marketing

There are many multinationals operating across the Asia-Pacific region offering the traditional mix of direct marketing services, but Wertime says there are fewer local shops providing the same service as a result of the demand for digital over more traditional channels.

South Africa is another growing DM market, where multinationals are fairly dominant when it comes to winning prizes. In the country's 2005 Loerie Awards, big winners were Kite (see picture, right), Ogilvy SA, Network BBDO and TBWA\Hunt\Lascaris, with campaigns for brands including Italcatto, Virgin Atlantic and BMW.

There's strong competition from local outfits too. Nici Stathacopoulos, chief executive of agency The Tipping Point, names Action Ambrose and Lesoba Difference as two of the top local agencies to watch, but says new media firms such as Trigger, eMessageX and launchPad are also doing well, as more brands turn to digital marketing.

However, one of the major issues for direct marketers in South Africa is a lack of internet access. "We do not have a large mass of the population with access to the internet, or particularly high levels of income, therefore traditional advertising channels still work well here," says Stathacopoulos.

Including a direct response element in campaigns is becoming more common as SA firms become aware of the need to garner a response from marketing activity.

Yet, while many countries have a long way to go before their DM industries are as developed as the UK and US, being a late developer can be a good thing. Many of those involved in DM overseas say they are learning from the mistakes of other markets.

Rob Edwards, chief executive of ADMA says this is the case in Australia when it comes to mobile marketing. "Mobile marketing is growing because we've learned from the mistakes made overseas, especially in the UK and Europe when they tried to regulate it too late," he says. "They tried to shut the gate after the horse bolted."

So, despite the differences, it looks like the UK needs to watch its back when it comes to the international DM arena. With multinationals and local shops producing award-winning work and countries such as Russia, Poland and China all striving to develop their DM, it looks like the competition is hotting up.

POWER POINTS

- Globally, there is a catch-up game going on in the data arena

- Countries to watch are: Russia, Poland, Italy and Asia, among others

- DM channels can vary greatly in different countries as can data issues

- Being a late developer can be a good thing as many countries learn from mistakes in other DM markets

POLAND

Industry spend (2005 estimate): £600m (source: Polish Direct Marketing Association; www.smb.pl).

The top line: A developing DM industry

Challenges: Little data available; high mailing costs and low-internet penetration.

RUSSIA

Industry spend (2004): $313m (source: Russian Association of Communication Agencies; www.akarussia.ru).

The top line: A country that is still dealing with the fallout from the end of the Soviet Union, but is developing fast.

Challenges: Little available data, meaning databases have to be built from scratch for most campaigns; reliable, but slow postal system and no privacy legislation.

GERMANY

Industry spend (2003): £20.5bn (source: Deutscher Directmarketing Verband DDV; www.ddv.de).

The top line: Well-developed DM industry, with a number of agencies winning international prizes. Large mail-order market and increasing use of email and SMS.

Challenges: Telemarketing is strictly regulated and no commercially available Electoral Roll.

JAPAN

Industry spend (2004): £15.2bn (Source: Japan Direct Marketing Association).

The top line: Highly developed digital landscape with high-speed broadband and advanced mobile technology involving FeliCa chips, which turn phones into digital wallets.

Challenges: Less developed data protection laws.

AUSTRALIA

Industry spend (2004): £4.1bn (source: Australian Direct Marketing Association; www.adma.com.au).

The top line: Strong DM industry. Mobile marketing is growing, although direct mail remains the preferred channel for most. Australians are also one of the highest users of online shopping.

Challenges: Small, widely dispersed population. Loss of commercially-available ER. Consumer complaints against telemarketing rising.

SOUTH AFRICA

Industry spend: No figure available.

The top line: Growing DM industry. Mobile marketing is yet to take off.

Challenges: Much of population is on a low income and without internet access.

REGIONAL FOCUS - JAPAN AND SOUTH KOREA

The Far East has embraced digital marketing with gusto. For instance, while iMode has only just arrived in the UK, it's been in Japan for some time. Many mobile phones are imbedded with FeliCa chips, which turn phones into digital wallets and this is influencing digital marketing.

Kent Wertime, president of OgilvyOne Asia Pacific, explains: "You can buy a domestic flight ticket by phone, get your boarding pass on it, and get on the plane.

"The FeliCa chip is becoming standard - companies are working to get billboards that are FeliCa-enabled. You can point a phone at it, download information and buy a ticket there and then," he says.

QR codes are also popular. These are similar to barcodes that can be read and translated by your mobile phone.

"We've done a campaign for Northwest Airlines with billboards that are 20ft-high barcodes giving airline information," says Wertime. "Every physical space is becoming a DR mechanism."

In South Korea, SK Telecom has launched mobile multimedia ads. Consumers can already watch TV on their phones and this is driving digital marketing.

"It means video clips of advertising on phones. We did a campaign for Nike - a teaser clip of a 30-second TV commercial showing football stars, where people clicked on it to see the full ad," says Wertime.

REGIONAL FOCUS - ITALY

Seventy per cent of marketing budgets in Italy are spent above the line, on TV, radio and press, says Pier Paolo Borgia, director of Experian's Italian marketing services division, based in Milan. He adds that there is little data available for DM due to strict opt-in laws.

"The amount of mail every household receives in Italy on a monthly basis is seven; the European average is 80. This is mainly due to the lack of contacts available," he says. "Use of the Electoral Roll is completely banned - except for government bodies. In 1997, it was also ruled that any paper survey had to have two different express consents - one for the company sending it, and one for third parties.

Then, in 2003, another new law came into effect to preserve the phone file. Any company, until last year, could use it, and it stood at 19 million, but now there are only 200,000 records with consent. It's been a big hit for the DM industry."

As a result, Borgia says Experian has decided not to invest in data collection, but to specialise in data integrity and quality, so helping clients get more out their existing data.

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