After visiting the US DMA’s conference, Karen Fletcher asks the crucial
question: does bigger always mean better?
With almost 1000 stands in the exhibition hall and more visitors than
ever before, last month’s 79th annual conference of the US Direct
Marketing Association in New Orleans certainly proved that the Americans
do it bigger than anyone else. But are they better?
If financial indicators are anything to go by, direct marketers in the
US are leading the direct marketing world.
In the US, DM advertising expenditure has grown to 58.3% of total US ad
spend, according to the most recent study by the US DMA. Overall media
spend for direct marketing initiatives will reach dollars 144.5bn
(pounds 96.3bn) by the end of 1996 - a 6.3% increase on 1995.
In the US, more than 20 million workers are employed as a result of
direct marketing activities - 11.3 million in consumer direct marketing
and 8.8 million in the business-to-business sector.
Business-to-business direct marketing is a particularly high growth area
in the US. Between 1991 and 1996, sales in this sector generated by
direct marketing grew by 9.2% to dollars 543bn (pounds 362bn). And
growth is forecast at 10% a year until 2001.
The scale of this growth is highlighted by comparison with total US
business-to-business sales, which increased by just over 5% between 1991
Consumer direct marketing sales in the US are forecast at dollars
634.6bn (pounds 423bn) - an increase of 6.6% over 1995. Indeed,
telemarketing is now the leading method of communication with potential
and existing customers. Direct mail ad spend will reach dollars 34.6bn
(pounds 23bn) in 1996 - almost 24% of total advertising spend - while
telemarketing will represent a remarkable 40% of all DM expenditures, at
dollars 57.8bn (pounds 38.5bn).
The level of maturity of the US direct marketing industry gives it the
confidence to embrace new media with enthusiasm. The Internet was the
hot topic at this year’s conference.
A study conducted for the US DMA by Vos, Gruppo & Capell, a US
investment banking firm which specialises in direct marketing, shows
that sales of consumer products and services through interactive media
in 1995 amounted to dollars 2.7bn (pounds 1.8bn). The report estimates
that this will reach around dollars 28.1bn (pounds 18.7bn) by 2004.
While UK marketers are still asking whether the Net is a viable direct
medium, American direct marketers are looking for ways to use it even
Simon Dalby, business development director at WWAV Rapp Collins says:
‘The Americans are miles ahead on things like new media. I saw a lot of
examples of that, such as the company offering coupons over the
Internet. Wherever they are in the US, consumers can access special
offers in their area by printing off coupons from the Net.’
Another company offering specialist Internet services to client
marketers was Connect, one of America’s leading suppliers of
applications for companies which use the Internet as a direct sales
Connect offers advanced services to marketers, allowing them not only to
display their products on the Net, but also to take orders in a secure
environment. The company works with business-to-business and business-
Clients who use Connect’s OneServer system can track and record
information about their customers’ names, purchasing history and
browsing preferences. Marketers can use this data to present individuals
with suggested products, or highlight special offers targeted at their
interests. Direct marketing is literally on a one-to-one basis.
But it is rare for marketers to use one medium alone to communicate with
customers or prospects. The multimedia campaign is far more commonplace.
In the US, companies are developing new methods for dealing with orders
flowing in from a variety of sources.
AT&T, which began life as a telecommunications company, offers a
multimedia ordering service for clients who rely on the telephone, mail,
fax, the Internet, or a combination of these for communication with
The multimedia system enables orders to be processed as quickly as
possible - essential in the US, where consumers are used to and demand
high-quality, speedy service. Orders sent in by mail or fax are read by
optical character recognition technology. Callers with telephone orders
are prompted with a question-and-answer session using a touch-tone
keypad, or using voice-capture technology.
Whatever response medium is used, all data captured is integrated into a
single transaction report. Information stored can be summarised as
Direct marketers in the US have harnessed technology to drive the
industry forward. This has created a virtuous circle which encourages
marketers to continue to invest their profits in more technology and
better use of new media.
However, part of this growth has to be attributed to US consumers who
are much more at home shopping direct. In the UK and the rest of Europe,
consumers are still cautious about ordering by mail or telephone. They
require more persuasive direct mail, for example, rather than the brash
‘buy now’ approach.
But direct marketers in the US do not have it all their own way and
acknowledge the quality of the creative work which comes out of the UK.
Indeed, they prefer to work with UK agencies for European campaigns.
Colin Lloyd, chairman of the UK Direct Marketing Association, says: ‘I
think the basics of direct-response television and direct mail are no
different from the UK. If anything, we are slightly ahead in terms of
creative presentation. Britain has always been at the leading edge of
creativity, but the US has the volume.’
And the Brits are not exactly dragging their feet when it comes to
technology. Dawn Orr, sales director at NDL Direct Marketing, says: ‘I
wouldn’t have said that the Americans seem further ahead of us. If you
want the latest technology, it might be more difficult to find in the
UK, but it is definitely there.’
Neil Shotton, marketing manager for Mailcom, says: ‘We have always said
that the market is three years more mature in the US than the UK, but in
terms of technology, I didn’t see anything that wasn’t being done in the
UK. They are faster at fulfilment because the US consumers demand faster
There is a lot that direct marketers in the UK can learn from the US,
not least that technology is something to be used to the full. But the
fact that the UK consumer demands higher creative standards and better
targeting means that we are less prone to ‘junk mail’ than our
Orr adds: ‘American direct marketers seem to have a poorer quality of
data than us - they have more trouble with gone-aways and deceaseds than
we do, for example. A lot of them have huge databases, but the quality
doesn’t come across as being much better and response rates weren’t
greater than the UK.’
The message from New Orleans is that direct marketers in the US are
riding a wave of success with more and more companies using direct
marketing to build or boost their brands. But one thing is certain, it
won’t be long before that transatlantic wave will break on these shores
and UK direct marketers will reap the rewards of creative excellence,
data integrity and sharp targeting.