Marketing tips for attracting post-recession consumers

By Paula Andruss

Two years ago, consumers bought McMansions with no money down, racked up historic levels of credit card debt and indulged their coffee habit daily. Today, they’re more likely to opt for a downsized home, paid-down debt and a cup of joe they brewed themselves.

Whether you think the recession is over or not, there’s no doubt it has taken a toll on consumers’ purchasing habits. Most aren’t spending as freely as before, and many are learning to be happy with less.

But the news is not all bad for marketers. New research from Communispace and Ogilvy & Mather Chicago suggests that while post-recession consumers may continue to keep a tight hold on their wallets, there are new consumer characteristics emerging that marketers can tap into to drive sales.

How consumers have changed
The Communispace and Ogilvy report, which gathered consumer insights in the fourth quarter of 2009, found that consumers who embraced frugality plan to continue in that vein. Seventy-eight percent believe the recession has changed their spending habits for the better, with only 21 percent saying they personally will go back to spending like before the recession hit.

“Historically the pattern has been that Americans spend their way out of a recession,” says Manila Austin, Ph.D., Communispace’s director of research and co-author of the study. “But we heard people saying they weren’t going to do that this time. Consumers are more aware and also more cautious.”

Chris Fedorczak, brand planner at The Richards Group branding agency in Dallas, agrees that consumers have become cautious, and says that trend is unlikely to change soon.

“People are more conscientious and deliberate when it comes to financial matters than they have been in years,” he says. “This behavior will not quickly evaporate.”

To entice frugal consumers to buy, marketers would do well to focus on value in their messages. The study found that while 92 percent of respondents are using coupons, 91 percent are shopping at discount stores and 90 percent are buying more store brand or generic products, those shoppers are typically not willing to sacrifice quality for price. Buying fewer but higher-quality products was preferred by 73 percent of respondents vs. 27 percent who said they’d go for a larger number of lower-quality items.

“It’s not enough to simply shout about constant sales or gimmicky promotions,” Fedorczak says. “Marketers need to understand their customer’s nuanced sliding scale of value, and they need to position their brand within that range to be most relevant. Price is always a component, but it’s rarely the only consideration.”

That idea rings true for Danny Wong, marketing manager of Blank Label, a Boston-based provider of men’s dress shirts that consumers “co-create” with the manufacturer by choosing their own colors and design elements.

Wong says many of the company’s customers say that they previously shopped mass brands or visited their local tailor and paid upwards of $150 for a custom shirt, and they appreciate the fact that Blank Label allows them to co-create a shirt that’s made to fit them in both size and style, all at a more economical price.

“They’re impressed by the value as well as the innovation,” he says.

As a result, Blank Label is pushing the concept of co-creation as a marketing and branding strategy, a tactic Wong says has been good for business.

“People are looking for value, and when they hear about co-creation at a cost similar to what they’re already paying, they think it’s special and different,” he says.

Redefining the American dream
Making purchases that are special to them also reflects another consumer trend emerging from the Communispace and Ogilvy study, referred to as the “reincarnation of the American dream.”

More than 90 percent of respondents say they would rather have respect from family than status, as well as have a smaller house without a big mortgage than a big house with a mortgage to match. That means personal relevance may become even more important as marketers reach out to their customers.

“The last few years have been challenging, but they have helped people clarify what is truly worth it, and what they will — and will not — do for money,” Austin says. “People still want things, services, experience; but they are seeking to align spending with their personal values.”

Fedorczak adds that the American dream never died — it’s simply being redefined. “People will no longer lust after the lifestyle of the Joneses,” he says. “Instead, they will carefully examine what makes them truly happy before they buy.”

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Demography Is Key to Survival

Do consumers see value in loyalty programs? Absolutely. A recent study from the CMO Council finds:

• 52% are influenced to buy because of loyalty programs
• 58% want more relevant offers and individualized deals
• 70% want more discounts and savings incentives

This research shows that consumers expect marketers to understand them better and deliver more relevant and valued offers. How can you do this? Stick with deeper engagement and personalized contact — not mass blast communications and gimmicks — to drive loyalty.

You might also be interested in:

3 Ways to Enhance Your Loyalty Marketing Program

How Using Mail with Mobile Benefits Marketing Loyalty Programs

Business author Kenneth W. Gronbach explains how capitalizing on generational shifts is the key to brand survival.

By Bruce Britt

An author and internationally respected demography expert, Kenneth W. Gronbach has spent years crunching numbers to determine how marketers can reach across generational divides to appeal to the broadest audience possible. But statistical calculations aside, Gronbach says, he finds the clearest proof of what works in a much more familiar place: his family’s mailbox.

“[A local retail store] sends coupons to my teenage girls,” says Gronbach, founder and CEO of Connecticut-based KGC Direct. “And they always direct [the girls] to their Web site for more information and additional deals. That’s the way it should be done.” In mixing its marketing media, he says, that local store has found that even Web-savvy young consumers like his daughters enjoy the idea of getting something in the mail addressed to them and are more than happy to respond, especially digitally. It also has discovered the power of what Gronbach insists will be a key to marketing success in coming years: demographics.

The recent author of The Age Curve: How to Profit from the Coming Demographic Storm, Gronbach reminds us that, with Baby Boomers moving into retirement and their parents well into old age, direct marketers are going to need a deeper demographic understanding of younger customers if they hope to remain relevant.

With 100 million young American consumers in its ranks, Generation Y — aka the “Millennials” — has replaced the nation’s 78 million Baby Boomers as the largest consumer group. As a result, Gronbach says, many marketing tactics and strategies designed to appeal to the once dominant Boomer generation must now evolve for the younger crowd. (Likewise, marketers who still covet older generations like the Boomers will also have to keep pace with demographic shifts to adjust their messages and media mixes as their targets’ life cycles spin toward the winter years.)

Demographics allow marketers to better segment all of these groups, says Gronbach, and to avoid erroneous assumptions about how to reach them. He cites many brands’ ham-handed efforts at digital marketing to Millennials as a prime example of why demographics are key. “We know absolutely that the Internet is going to play a part in the future of marketing, but we also know there are some built-in land mines,” Gronbach says. “There’s a resistance to advertising on the part of the users of social media sites. If you start jamming things down their throats with pop-ups, or introductions that can’t be shut off, that’s a slippery slope. You’re almost in danger of making enemies.”

On the flip side, Gronbach says, his research shows that traditional forms of direct marketing, most notably direct mail and outdoor advertising, continue to appeal to younger buyers. “With direct marketing and billboards, the habits of the viewer haven’t changed,” insists Gronbach. “No one has taken their mailboxes down, and the outdoor is still right there on the road facing you. Yet for some reason [advertisers and marketers] are missing two of the biggest opportunities.” Everyone checks the mailbox, Gronbach notes in his book, “even the most devoted Internet followers.” His book adds, “Direct marketers and their client companies will be the clear winners in the decades to come, no matter what happens to costs, labor and the generational shifts that lay ahead.”

Youth movement

In anticipation of these changes, Gronbach has spent considerable time sketching profiles of six distinct generations of consumers: the GI Generation (born 1905 to 1924), which includes those who fought in WWII; the Silent Generation (born 1925 to 1944), the children of the Great Depression, including those too young to serve in WWII; the Baby Boomers (born 1945 to 1964); Gen X (born between 1965 and 1984); and Gen Y (born between 1985 and 2004). And finally Generation Z, born 2005 to present.

Gronbach says that the older generations are waning considerably in influence, and the Boomers, though still an economic force, are rapidly retiring. Meanwhile, Gen X, with about 70 million American consumers, is still smaller than the Baby Boomers and lacks the same punch at the cash register.

But Millennials, he says, more than make up for shortcomings in the preceding generations. “Generation Y is going to make themselves felt like no other generation in the history of our nation,” forecasts Gronbach. “They are bright, educated, and they can multitask. They have a social conscience. They don’t see [race].” Barring unexpected economic disaster, Gronbach says, these Millennials will fuel explosions in a wide range of industries, from apparel to car sales.

Problem is, even though Millennials represent the most massive marketing opportunity since the Boomers, members of Gen Y can be tough for brands to reach, Gronbach says. While Gen X is thought to respond to both traditional and new media, members of tech-savvy Gen Y are more fickle. “With the exception of the Internet, Generation Y is not being reached with any kind of media,” Gronbach complains.

Gronbach refers back to his daughters to drive home his point. “Neither of them has ever read a newspaper in their life,” he says. “Neither of my daughters listens to radio. Magazines? They will go online and pick their stuff.”

He adds that television doesn’t fare much better with younger consumers. The classic TV business model, where networks offer “free” entertainment in exchange for viewers watching heaps of 30-second ads, is sputtering.

“It was a good deal, but we’ve gone from five to 10 commercials an hour to as many as they can wedge in,” Gronbach says. “They’ve breached the deal. When people are on Facebook and they can’t get rid of a pop-up, they resist. Internet users don’t transfer the same attitude over from their TV viewing.”

Find what works

Gronbach believes some traditional marketing outlets do have greater potential than others to reach younger consumers. He contends that mail, with its tactile power and potential for personalization and precise targeting, is among those channels that offer cross-generational appeal: “If you mail something to somebody, they get it.”

He adds that direct mail can sometimes act as the Trojan horse that allows marketers to pique Millennials’ interest before making good on the vaunted potential of digital media. “If you have a really good digital presence, a lot of times it’s like an amusement park on a desert island,” Gronbach says. “Either people don’t know you’re there, or they don’t know how to get there. If you want to have some kind of co-promotion between online and direct mail, there’s absolutely nothing better.”

Outdoor media possess the same inescapability as direct mail, he says, and he sees plenty of room for improvement. “Billboards where the images change are a real step in the right direction,” Gronbach says. “I think billboards can speak to the cars. You could actually put a radio signal in the boards, where if someone was interested in the board they could hear a message. There are lots of things you can do.”

He says that marketers must be careful to consider the environmental impact of their vehicles, too, as Millennials tend to be more eco-conscious than older generations of consumers. “Print everything you have on recycled paper, and make sure the recipient knows it,” he says. “Come up with some angle that makes you the friend, not the enemy. It’s not that hard.”

Respect elders

Of course, he urges marketers to do the same when reaching out to older generations, who, despite their diminishing influence and comparatively small numbers, shouldn’t be forgotten. He points out that Boomers, for instance, still wield about $2 trillion in annual buying power and that Gen X still includes nearly 70 million American customers.

In reaching Boomers, he says, marketers should know that they are receptive to multimedia messaging, but respond best to many traditional forms of direct marketing because they are more familiar with them. Retiring at a clip of one every eight seconds, Boomers are more age-conscious and respond well to marketing messages that recognize this. “If you want to sell something to the Boomers, offer up something that will keep them young, because they are going to be playing air guitar in rest homes,” he says.

In some ways, Generation X — composed of those born between 1965 and 1984 — mirrors the Boomers. Gen X was already around by the time the technology revolution of the 1980s and 1990s kicked off, so while its members certainly aren’t tech-averse, they continue to make good targets for multimedia marketing campaigns that blend new media with old.

“Gen X is bilingual,” explains Gronbach. “They speak cyber as a second language — but do not respond to Internet marketing efforts. They are as at home in the cyber world as they are with television and, in some cases, radio. They do not read newspapers at all.”

However, they do read what shows up in their mailboxes, provided they consider the offers genuine and compelling, says Gronbach. “They are very savvy and see through marketing gimmicks,” he warns. “This is an esoteric group with eclectic tastes and an entitled attitude.
They have vexed Madison Avenue for 20 years,” he says, although Gen X “can’t consume at the level of the Boomers who preceded them because they don’t have the critical mass.”

At this point, the same can be said of the GI Generation (86- plus years old) and the tiny Silent Generation (now 66 to 85 years old), says Gronbach. “Their consumption levels have dropped like a stone,” he notes. He says the Silent Generation will pose particular challenges to certain industries because of its small size compared to the GI Generation. “They’re going to disappoint the assisted living facilities, the funeral parlors and the cremation companies,”
Gronbach predicts.

Still, these older consumers shouldn’t be completely forgotten, says Gronbach. And marketers who do seek them out will generally find that they respond best to time-tested marketing methods. “They are devoted newspaper readers, especially the obits,” he points out. “They inhale talk radio and overnight television. They are also direct mail junkies and religiously use coupons and anything else that saves them money, like senior discounts.”

He says they also offer a viable audience for products aimed at kids. “The one real bright spot in their consumption,” says Gronbach, “is called the ‘Bubby Factor:’ They will spend money on their grandkids with a vengeance.”

By the numbers

Of course, Gronbach cautions against making too many assumptions even about older consumers. The hard data, he says, allow for much more educated guesses. And in an age where marketers are more pressed than ever to guess right about consumers’ desires and to demonstrate verifiable results from their campaigns, hard data should be embraced as a CMO’s best friend.

”The behavior of the consumer is very predictable,” says Gronbach. “The Bureau of Labor Statistics has been writing about [demographics] for maybe longer than 30 or 40 years. We know at what ages people buy automobiles, their first houses or the most clothes. We know when consumption peaks. Demographics don’t lie.

Dissecting a Millennial

These kids today They’re confident (at times to the point of arrogance) about their ability to contribute and make a difference in the world.

Attitude Adjustments Huge in both number and potential impact, they’re a sharp departure from Gen X trends and the opposite of Boomer youth behavior.

A bunch of know-it-alls Technology-enabled in every aspect of their lives from where they shop to what they buy, read, cook, eat and watch.

Six Generations of Consumers

GI GENERATION— (born before 1925) Made up of those who lived through and fought in WWII. Also known as “The Greatest Generation” because of its contributions to the second World War. Buying power considered negligible.

SILENT GENERATION — (born 1925 to 1944) Those generally thought to be too young to fight in WWII and those born during the war. The smallest generation of the 20th century as a consequence of low Depression-era birth rates. Buying power considered negligible.

BOOMERS — (born 1945 to 1964) Children of the GI and Silent Generations. The second largest generation (78.2 million Americans) and one of the most coveted, with about $2 trillion in annual buying power.

GEN X — (born 1965 to 1984) Largely children of the Silent Generation, numbering around 69.5 million Americans. Regarded as technologically “bilingual,” but do not respond to Internet marketing efforts.

GEN Y — (born 1985 to 2004) Also known as “Millennials,” “Echo Boomers” and “The Net Generation.” They are the children of the Baby Boomers and the largest generation at 100 million Americans. The most coveted buying group, consuming at a rate of more than five times the Baby Boomers (in adjusted dollars).

GEN Z — (born 2005 to present) With 4,317,000 babies born, 2007 was the largest birth year in U.S. history. Latinos make up about 14 percent of our total population but accounted for more than 25 percent of total babies born in 2007. This new generation is already more than 20 million strong and is sure to be an exciting and challenging market.

Up: Direct mail – 6%
Down: E-mail – 5%

The percent change in the last two years in how consumers prefer to be contacted by marketing companies with which they have an existing relationship.

Source: CCB fast.MAP 2009 Marketing-GAP Research

Wondering what really motivates consumers to read their direct mail? Here’s what a recent study from market research agency fast.MAP found.

1. It’s from a brand or company they know (55%)

2. It’s personally addressed to them (51%)

3. They’re interested in the product or service (50%)

4. They can clearly see it contains a free sample/voucher (39%)

5. It about a local service or event (27%)

6. The packaging is interesting (15%)

7. It looks fun/humorous (10%)

Source: CCB fast.MAP 2008 Marketing-GAP Research

Despite our increasingly virtual world, people still appreciate tangible items, as evidenced by Matter — a Royal Mail service that places brands directly in consumers’ homes via a box of free product samples.

30,000+ boxes mailed. 85% of recipients recall receiving the items. 41% used the items. 21% gave an item to a friend or family member. 20% spoke with a friend or family member about one of the brands.

New study shows Americans have a print preference

Digital media is no substitute for traditional printed pieces, according to a recent survey conducted by Harris Interactive® on behalf of Earthtone, a firm specializing in comparison pricing for printers. The majority of employed U.S. adults (64 percent) say print media is easier to read than the digital equivalent. Further, more than two-thirds (68 percent) say they feel more comfortable reading something on paper than on screen, suggesting that we associate things we can touch and feel as being more “real.”

DMA report predicts $1B jump in direct mail spending

Spending

In defiance of predictions about its decline, spending on direct mail marketing is expected to increase by more than $1 billion in 2010, according to an annual study from the Direct Marketing Association.

The “Power of Direct” economic impact study released earlier this year reports that spending on direct mail will rise from the $44.4 billion doled out in 2009 to $45.5 billion next year.

The study also reports that noncatalog direct mail continues to boast impressive ROI. According to the report, non-catalog direct mail returned $15.22 for every dollar spent in 2009.

The report further points out that e-mail, once thought to be next big thing as a prospecting medium, drives fewer sales than most other channels. Commercial e-mail drove $26 billion in sales in 2009. Non-catalog direct mail, by comparison, drove $445.8 billion in sales in 2009. — Darrell Dawsey

Ah, tweens. That hard-to-pin-down market segment that comprises children somewhere between the ages of 8 and 14 is, without question, a buying powerhouse. Not only do tweens have bucks of their own to spend, but they’re also big on “pester power” – the ability to influence families’ buying decisions. And even though they are coming of age in a digital world, tweens (or tweeners, as they also are called) love to receive traditional mail, experts say.

By: Gwen Moran

Marketing expert Maria Bailey of BSM Media created a network of tweener girls for the Precious Girls Club™ and has mailed more than 10,000 samples, postcards and other direct mail packages. She says each mailing lifts traffic to the club’s Web site (preciousgirlsclub.com) by 5 percent. Bailey built this network by contacting a database of mothers of tween daughters.

$8,500,000,000 – total amount that current teens and tweens will spend on grooming products by 2012

Tween “purchasing power” – Total annual tween “purchasing power”: $43 billion

Number of times, over the course of six months, that tweens shop for…
Apparel: 8.2
Electronics: 4.5
Home furnishings (including room décor): 4.4

$2,047 – average yearly amount of their own money to spend

Number of children ages 8 to 14 in the U.S., as of 2008: more than 21 million

Percentage of tweens who spend at least an hour per day…
Online: 83%
Watching TV: 68%
Listening to the radio: 29%
Reading magazines: 10%
Reading newspapers: 5%

Percentage of tween spending devoted to food purchases: 17%

Percentage of U.S. tweens who are Latino: 20%

Percentage who are African-American: 17%

Tweens like to pass things along to their friends. Tina Wells of Buzz Marketing Group recently launched a direct mail program, sending 25 brightly colored, branded postcards to each of a network of 100 tween girls. Because the cards were playful and interesting, Wells says, they had a pronounced pass-along rate: some 2,400 of those postcards were delivered with a tacit endorsement from the recipient girl to her friends.

Reporting by: Paula Andruss

Marketers are really good at understanding what makes a mail piece stand out, but it’s not always clear what that piece needs to stand out against. What does the rest of the consumer mailstream look like? As your target customers rifle through their daily mail, what other pieces are they likely to encounter as they consider, open and discard their way through their mail piles? To find out, we waded into the two biggest tributaries to the U.S. mailstream — First-Class Mail® and Standard Mail™ & Periodicals — to get a better idea of what American households were getting in their box. Here’s what we learned. (NOTE: All data is from 2007, the year for which the most recent figures for mail to U.S. households are available.)

95.9 Bilion First-Class Mail®

Bills, invoices or premiums – 12.5%
Advertising – 8.1%
Financial statements – 4.7%
Invitations or announcements – 2.1%
Notices of order – 2.1%
Insurance policies – 0.9%
Greeting cards – 2.7%
Letters – 0.7%
Invitations – 0.4%

Business or nonfederal government agency – 31.4%
Personal mail – 3.8%

103.5 Billion Standard Mal™ & Periodicals

Flyers & circulars – 17.3%
Magazines & newsletters – 4.3%
Catalogs – 14.5%
Mail-order company – 54.2%
Specialty store – 22.1%
Department store – 11.3%
Letter-size direct mail – 23.1%
Postcards – 7.1%
Donation requests – 3.8%
Nonprofit – 2.3%

Source: USPS® Household Diary Study: Mail Use and Attitudes, FY 2007

The Asian-American Market

By: Vicki Powers

Despite the tremendous upside to ethnic marketing, marketers have been rather slow to embrace it, perhaps viewing it as fraught with perils and pitfalls. But that’s starting to change. Even as they are making careful inroads into the Hispanic market, marketers are also turning their attention to Asian Americans.

And no wonder: although Asians only represent 5 percent of the U.S. population, they are among the most educated and affluent U.S. consumers. But the Asian-American market, with its multiple sub-groups and diverse languages, remains a challenge to most marketers.

Because so many companies don’t address the Asian-American market directly, the opportunities to build relationships and cultivate loyalty abound. Indeed, according to Saul Gitlin, EVP of strategic services at Kang & Lee Advertising, Asian Americans may represent one of the true “last frontiers” of first-mover advantage for brands in the United States. “(This market) offers a fairly uncluttered environment,” says Gitlin.

Youth Must Be Served

Looking to court younger targets? As a group, Asian Americans are one of the youngest slices of the U.S. market. Census figures show that the median age among Asian Americans is 34.8 years. Meanwhile, the rest of the U.S. population has a median age of 36.2 years.

Spreading the Wealth

Though they are largely concentrated in three states — California, Texas and New York— Asian American consumers nonetheless wield significant spending power. According to a University of Georgia study, Asian Americans spent $459 billion on products and services in 2007.

Open to Suggestion

Marketers should seriously consider direct mail when reaching out to Asian Americans. Even though Asian Americans are more likely to buy luxury electronic items and keep up with advances in electronic communications, they’re also affected by direct mail. Direct mail influences 22 percent of product purchases for Asian- American respondents.

Brain Power Meets Buying Power

Educated consumers are almost always a coveted group, and Asian Americans tend to be among the most schooled customers in the United States. About 48 percent of Asian Americans have earned a bachelor’s degree. Meanwhile, they are also the most affluent group of Americans, with a median household income of $63,900.

Hot Wired

Asian American consumers are among the most active in the digital world. For instance, e-mail use on mobile phones is higher among Asian Americans than among any other group. Nearly 52 percent of Asian American adults who use the Internet bank online — as compared to 47 percent of the rest of the U.S. adult population.

True, more marketers are looking for the green working hard to make their product or their message more environmentally sensitive. In recent years, “green marketing” has exploded in popularity among companies big and small. More and more, direct marketers are upping the recycled content of their paper, cleansing their databases faster than ever before and encouraging more consumers to toss unwanted fliers, envelopes and catalogs into recycling bins. “It’s very clear that all of our members and board members see how important this issue is,” says Pat Kachura, senior vice president of social responsibility for the Direct Marketing Association. Last year, Deliver® began addressing the environmental impact of direct marketing in our first “green” issue. Now, as we return to the subject in our second eco-themed issue, we are finding still more examples of marketers making full-on commitments to green marketing. And they are having an effect. How? Well, consider the impact of a few of the recent achievements cited below:

3 percent savings on paper quantity, the result of reductions in mailer sizes, spared nonprofit group Consumers Union more than $250,000 over three years.

375 million paper pages were saved in 2007 when MetLife began mailing directories and periodicals on CDs instead of paper.

930 million pieces of unwanted mail were eliminated last year by the 1,500 marketers using the DMA’s Mail Preference Service.

The Latino population is expected to increase by 126.4 percent between 1990 and 2011, compared to a 15.4 percent gain for the non-Hispanic population over that same time.

According to a 2006 report, the majority of Latinos in the United States 66.8 percent are of Mexican ancestry. Latinos of Central American ancestry are the next largest group, making up about 9 percent of the foreign-born U.S. Latino population.

The U.S. Latino population’s purchasing power was estimated at $212 billion in 1990 and $700 billion in 2005, and is now predicted to grow to more than $1 trillion by 2010, according to studies.

U.S. Latino buying power was greatest in California, where it stood at more than $214 billion as of 2006. Latino buying power in the state is expected to grow to $307.98 billion by 2011.

The Latino ad industry is outpacing all other sectors of advertising and is now a $4 billion-plus industry.

Corporate spending in Latino market advertising is now more than 5 percent of marketing budgets, up from 3.6 percent in 2000.

Sources: The Association of Hispanic Advertising Agencies; 2006 Selig Center report The Multicultural Economy; Synovate’s 2006 U.S. Diversity Markets Report

The marketing world is dominated by news and opinion about the Internet and its impact on marketing - and rightfully so. Heck, you’re reading this on our brand new Web site, after all. The new reality of consumer control is clearly having a major impact on the way marketers engage with their customers.

So, amid the kind of seismic change we’re experiencing, how can traditional advertising continue to succeed? Against the juggernaut of digital technology, does a TV spot carry the same weight it once did? Is a print ad going to deliver the same ROI? And what about direct mail? Surely that’s under threat - it’s not called snail mail for nothing.

Well, not so fast.

Looking at the latest 2007 forecast for U.S. advertising spending, those old-line mediums are holding up pretty well against the online onslaught.

True, Internet marketing will likely see the biggest increase this year - up 15 percent to $10.7 billion - but even at that figure, it represents only 5.5 percent of all the money spent. The major television networks can expect $17.4 billion (8.9 percent of the total spend), the cable networks another $20.3 billion (10.4 percent) and magazines will rake in $14 billion (7.2 percent).

And what about poor direct mail? Well, believe it or not, direct will grow 7.5 percent to $64.4 billion - or roughly a third of all the money spent.

Does that mean Internet marketing is over-hyped? Of course not. But it does mean that in a world that’s increasingly dominated by digital technology, direct mail remains an amazingly relevant and efficient form of marketing. It’s increasing its value in the mix and demonstrating that it has a crucial place in a marketing world that’s gone mad for online social networks, blogs, wikis and all things digital.

Junk mail? Hardly! Research shows people look forward to receiving mail

BY: SANDRA BECKWITH

It’s getting harder and harder to entice people to open marketing e-mails. Spam filters are getting more sophisticated, and prospective customers are, too.

But research shows that consumers and business types are far less resistant to direct mail. Not only are they more likely to open it, they also spend more time with it once they do, says direct mail consultant Lois Geller, author of Response: The Complete Guide to Profitable Direct Marketing.

“People interact more with direct mail than with e-mail,” she says. “They open it, they manipulate it, they get involved with it.” When the message is appropriate for the recipient, Geller says, mail actually makes people smile.

MetLife Auto & Home knows well the value of mail, and uses it to stay in touch with its 4 million customers. “Our research shows us that not all of our policyholders have e-mail, and those who do use it all day at work don’t want to sit in front of the computer reading messages from companies like ours at home,” says Robert Lundgren, vice president of marketing.

Julie Casimiro, the company’s director of corporate marketing, says that mailing product information and educational material increases retention and boosts the number of additional policies purchased. “Mail has a long shelf life. People hang on to it for future reference,” she says.

But it’s important for MetLife to find the right contact frequency. “Our optimal number of touch points is seven,” Casimiro says. And that’s one of the reasons mail is such an important part of MetLife’s marketing mix. “If I’m limited to seven touch points before I overcommunicate, I’d better make sure every single one is as effective as it can be.”

Recent research by the U.S. Postal Service® reveals that recipients look forward to receiving and interacting with their mail, which makes the mail a memorable and valuable high-touch opportunity for businesses. The USPS® survey explored attitudes about mail in the workplace and the home. Key workplace findings include:

• Mail reaches business professionals. Business mail doesn’t get screened as aggressively as e-mail is filtered.
• Businesspeople keep useful mail in a mail “library” - a file or drawer, or on a bulletin board.
• Mail helps people make decisions. When it’s time to make a purchase, find a supplier or attend a professional event or training, professionals may turn to their mail libraries.
• Mail communicates and generates response. It can drive Web traffic or allow recipients to respond offline with a Business Reply Mail® card.

On the consumer front, a survey revealed the following:

• Consumers are eager to see what’s in their mail. More than half the respondents said that receiving mail is a “real pleasure” and that they “look forward” to discovering what’s in their mail: 98 percent bring their mail in on the day it’s delivered and 77 percent sort it immediately.
• Home mail is handled and sorted by the household decision maker. The person who handles the mail is typically the principal grocery shopper (84 percent), the person who pays the household bills (81 percent) and the one who determines what mail to keep and what to toss (90 percent).
• People appreciate commercial messages that arrive in the mail. About 55 percent look forward to discovering what’s in their mail, and 67 percent say mail is more personal than the Internet. They use it to learn about new products or services, to manage the household and to oversee their finances.

Direct helps retailers pull in the customers

BY: SCOTT S. SMITH

Location, location, location. Every retailer knows that’s the key to success. But direct mail, direct mail, direct mail turns out to be key as well when it comes to bringing customers into the stores.

In its annual Customer Focus 2005: Direct Marketing Survey of 2,000 consumers, Vertis Communications, a Baltimore-based provider of media and marketing services, uncovered that 73 percent of direct mail readers read direct mail from retailers, which is up from 70 percent in 2003. That’s music to a direct marketer’s ears. But even more interesting was that 24 percent of adults who had read direct mail from a store where they typically didn’t shop visited the store within the next 90 days.

Those are compelling figures when you consider how difficult it is to get consumers’ attention to begin with. “Despite all the competition from other types of advertising messages, retailers are getting customers not only to read their direct mail but also to actually come into their stores, even though these consumers have never or rarely been there,” says Jim Litwin, vice president of marketing insights at Vertis Communications. “It’s a testimony to how powerful direct mail can be when the right message is targeted to the right audience.”

TARGETING GENDER AND AGE

Perhaps not surprisingly, women led the pack in the Vertis study. About 30 percent of baby boomer women reported that they had visited a store in the most recent 90 days in response to a mailer from a retailer that they normally didn’t patronize. That compares to about 26 percent of Gen Y women and 22 percent of Gen X women.

But while the women reported to be more responsive to direct mail as the age group increased, men trended in the opposite direction. Baby boomer men apparently leave the shopping to their wives: only 19 percent said they had responded to a mailer. Younger men were more responsive, with Gen X at 28 percent and Gen Y at 24 percent.

The big surprise is that income level made almost no difference. For those with incomes below $100,000, about 25 percent of all age groups, male and female, went to the new store in response to a mailer. For those with incomes of more than $100,000, just 18 percent made the visit. (Apparently, they had already bought everything they needed.)

“With the huge number of products competing in the marketplace, consumers are always seeking information on the prices and selections available to ensure they are getting the best value,” explains Litwin. “Adults have become more receptive to using direct mail to obtain this information, and it has proven to be an effective medium for retailers to connect with new customers.”

Don’t write off the Boomers just yet

BY: AARON DALTON

The first of the Baby Boomers will turn 60 this year. Yet this generation remains one of the most vital for marketers, with substantial wealth and influence. Here’s more on what makes the Boomers tick.

BY THE NUMBERS

Boomers are the largest segment of the U.S. population at 75 million strong. The generation born during the years 1946-64 comprises 26 percent of the populace, 45.8 million households, with an annual purchase power of $2.1 trillion. Boomers’ median household income of $60,000 is significantly higher than the national median of $44,500, according to the U.S. Census Bureau, National Center for Health Statistics. Meanwhile, 40 percent of boomers reported a household income above $75,000, significantly more than younger (29 percent) or older (17 percent) adults, according to a study by the Pew Research Center.

ONE GROUP, DIFFERENT ATTITUDES

Boomers are not a homogenous group. In fact, a 2005 Yankelovich MONITOR® report titled “Leading Edge Baby Boomers” showed that Leading Boomers born in the 1940s differ from Core Boomers born in the 1950s on everything from politics to buying habits and marketing opinions. For example, only 38 percent of Leading Boomers thought it would be risky to try an unfamiliar brand, but 45 percent of their younger counterpart Core Boomers were nervous about making such a decision.

HOW TO REACH THEM

Twenty-eight percent of Boomers reported purchasing products from a catalog over the previous two months in a 2005 Yankelovich MONITOR survey. And Boomers are not too set in their ways to develop new consumption patterns in response to direct mail. In fact, the same survey indicated that 7 percent of Boomers made a purchase in the same two-month period after receiving mail from a company with which they had not previously done business.

… OR NOT

Both Leading and Core Boomers expressed negative sentiments about marketing in the 2005 Yankelovich survey. For example, both groups were extremely concerned about practices and motives of marketers, but Leading Boomers were more concerned (75 percent to 69 percent).

BIG ON VALUE

One secret to successfully communicating with Boomers is to make sure you have a very strong value proposition to your offer, says Laurel Kennedy, president of Age Lessons, a consulting firm and think tank that focuses on issues affecting Boomers. “We see Boomers as meticulous consumers, not conspicuous consumers,” notes Kennedy. “Whatever you offer had better deliver what Boomers perceive to be valuable.”
Sales of one brand of cereal took off among Boomers once the brand changed its approach from medicinal (vitamins) to healthy living, says Kennedy. “The brand encourages consumers to act as amateur nutritionists, focusing on positive attributes like anti-oxidants and soy,” she says. “It has more of a heart-healthy focus than a creaky-bones focus.”

FOCUS ON THE POSITIVE

“The defining characteristic of Baby Boomers is their enduring sense of youthfulness,” says Walker Smith, president of marketing consultancy Yankelovich, Inc. “Boomers always want to approach every life stage with an active sense of engagement. They want to be vigorous and energetic and involved. It’s important to strike a youthful chord in your messages to Boomers. Try to bring a new sense of originality to the situation.”

Direct helps drive car buyers into action

BY: CHUCK YEAGER

Here’s some good news for auto industry execs and their marketing partners: Consumers respond aggressively to direct mail when they’re in a car-buying mood.

52% of direct mail readers planning to buy a new car read automotive direct mail. But more important, 73 percent of those readers surveyed respond to those mailings by turning to other media and/or heading to dealership showrooms, according to research by Vertis, a Baltimore-based marketing services firm.

SHOPPERS VISIT WEB, DEALERSHIPS

35% of adults who have responded to automotive direct mail by visiting a company’s Web site are planning to purchase a new vehicle within the next 12 months;

26% of those who plan to make a purchase visited a dealership in person.

“Automotive marketers who use direct mail notice results when targeting the right audience at opportune times,” says Jim Litwin, vice president of market insights for Vertis.

Vertis’ Customer Focus® 2005 Automotive Direct Marketing study revealed the following findings for those who had read automotive direct mail:

37% of men and

39% of women visited a dealership;

23% of men and

13% of women were driven to a sender’s Web site.

AGE MATTERS

A consumer’s age is also a factor in how they respond to the automotive marketing they receive in the mail:

Of the younger baby boomers (born between 1956 and 1964) surveyed who read automotive direct mail,

46% said they visited a dealership; 38% of Generation Y (born between 1977 and 1994) took the trip.

32% of Generation Y readers of automotive mail and 24% of Gen X (born between 1965 and 1976) respondents visited a sender’s Web site.

14% of Generation Y and 7% of younger baby boomers who read the direct mail replied to the offerings from an auto company via mail.

“The numbers show that a targeted medium like direct mail is an effective way to talk to car buyers,” says Scott Marden, Vertis director of marketing research. “Direct mail plays a key part in closing purchases by driving consumers to dealerships.”

BY: NANCY ADAMS

If you really want to cultivate a big market, think small.

There are 23 million small businesses in the United States with 500 or fewer employees, constituting 99.7 percent of all businesses, according to the Small Business Administration.

And the best way to reach this $8.6 trillion market, according to a recent study, is through direct mail.

Experian, a global information solutions company, recently conducted a wide-ranging study of 1 million companies with fewer than 25 employees and found that small business owners are 20 percent more likely than the general public to buy from direct mail for both business and personal needs.

That’s encouraging news for marketers - particularly those offering financial services and upscale catalog items, because small business owners are 50 percent more likely to make their purchases via mail in these areas.

Small business owners are uniquely positioned to make the purchasing decisions. They operate in a very different environment than the corporate customer because they often blur the lines between personal and business endeavors when making business decisions. They frequently use personal funds to make business purchases and are often motivated by personal reasons to make those purchases.

In addition, the study found that small business owners may not be the people many marketers have assumed them to be.

“We all know that profiling the business owner is one of the most effective ways to hit the right market, but

“Our study results may just change widely held beliefs that might have companies marketing their products to the wrong market or even in the wrong way.”

Experian’s study leveraged demographics such as age, income and household makeup to develop a profile of the small business owner.

BY: Barbara Schmitt

Here’s a news flash for marketers: Direct mail readership is rising year after year - from 72% of adults surveyed in 2002 to 76% today, according to research by Baltimore-based Vertis. That’s good news for marketers, who can package relevant and useful information in high impact formats that will make targets want to open their mail.

HOW DO YOU GET THEM TO OPEN DIRECT MAIL?

More than 2000 consumers revealed what it takes to get them to open a company’s direct mail piece in Vertis’ 2005 customerfocus® Direct Mail Survey:

• Timing (piece arrives when service is needed): 69%
• Package looks interesting: 63%
• Special offer or discount: 51%
• Package looks important (for instance, it looks like it contains pertinent financial or insurance information): 49%
• Feel something in the package: 48%
• Free gift or token inside: 37%
• Dated material enclosed: 33%

“When you already have a relationship with a customer, especially one with a high lifetime value, it’s very effective to send a toy or gift that calls attention to your offer,” says Janice Mayo, Vertis senior vice president of marketing. “People do pick up those ‘lumpy’ packages and, in the business-to-business area, response rates tend to be higher.”

MAKE IT PERSONAL

To increase the value of your mail pieces, take what they’re already reading and make it more pertinent. Here’s how:

• Personalize the content: Zero in on people’s lifestyles, interests, or a specific moment in time: where they are in their career or family. Time delivery of your mail piece to arrive when they have a need for the service. “For example, you have a unique opportunity to deliver the right messages to automotive customers,” says Mayo. “Target effectively by sending different messages to people who are at different points in the purchase cycle. Give information on trading and upgrading to someone who purchased a vehicle four years ago rather than to a person who just bought a car and doesn’t need that kind of information.”
• Include special offers and personalized messages: financial planning advice, a customer service message, an upgrade or a better way for customers to utilize services.