Direct Response Marketing Test #2

Advantages of Direct Marketing
Measurable, Trackable, and Expandable
Measurable:
“Since you know which ads are being responded to and how many sales you’ve received from each one, you can measure exactly how effective each ad is. You then drop or change ads that are not giving you a return on investment.”
Trackable:
“when someone responds, you know which ad and which media was responsible for generating the response.”
Expandable:
– When a product is expandable, it can be marketed through different channels and different ways to the consumer…this way the marketer can find exactly which marketing techniques are most effective and tailor their tactics to maximize ROI. A good example of this is cross selling: which is selling an additional product/service to an existing customer: it is easier for a marketer to invest in an EXISTING/loyal customer and expand their purchases rather than seek out a new customer.
– “provides access to expandable and marketable customer base” and “able to market using many different media”
8 Elements of Successful Direct Marketing
1. The Offer
2. The List
3. The Creative
4. Involvement
5. Format-Concept
6. Seasonality
7. Ease of Ordering
8. Analysis
Components of an offer
– The Product – Not all Products fit Direct Purchasing ( Not all People fit Direct Purchasing).
•The Price
•The Add On (Premium)
•The Terms
-(COD), 3 Easy Payments of 19.95 each
Split test-
a test where at least two samples are taken from the same list, each considered to be representative of the entire list, and used for package tests or to test the homogeneity of the list.
Multivariate test
testing a hypothesis where many variables are modified
-In contrast to single element tests in which one variable is changed at a time, Multivariate testing allows for complete changes to a marketing creative design. One example is changing web landing pages, which can change many elements and be tested in real time.
Source Code
the media, media vehicle, or means by which the person has responded to become a customer
ROI (Return on Investment)-
a popular tool of measurement in business, this is the net profit divided by the average amount invested in the company in one year.
LTV (Lifetime Value of a Customer)-
the discounted stream of revenue a customer will generate over the lifetime of his or her relationship or patronage with a company.
CRM (Customer Relationship Management)-
a business strategy to select and manage customers to optimize value
Cohort-
– specific experiences, events or other factors shared by a group of consumers
– It is a device used in direct response advertising to spur action by involving the reader; examples would be tokens, stamps, punch-outs, puzzles, and so on
Examples: Wunderman’s gold box– people who saw commercial were the only ones who understood what the gold box meant
Break Even-
the point at which the gross profit on a unit sale equates to the cost of making that unit sale.
CPR (Cost Per Response)-
the total promotion budget divided by the total number of orders and/or inquiries received.
CPI (Cost Per Inquiry)-
promotion costs divided by the number of inquires (people who responded, but did not order yet)
Suppression-
do-not-email list. Every account has one and subscribers are typically added to the list because they have been unsubscribed, or emails sent to the email address have bounced.
– Records that are removed from a promotion for a variety of reasons, including previous request to opt out of promotions.
Merge Purge-
a computerized process used to identify and delete duplicate names/addresses within various lists.
Append-
Matching items from list to a database
-Adding additional data to a file. This can include adding outside data to a customer file such as a wealth score, or demographic information such as age
Control package-
Direct mail package that is used as the baseline for measuring performance of test packages with different offers, content, or formats.
Matchback-
the procedure by which an order response is tracked back to the starting place (catalog or offer) from which it was generated.
Dedupe-
removing duplicates from a list
Space ads
Space Ads refer to magazine ads, they are good for new business ventures. They quickly make the offer and benefit clear to the consumer.

– Space ads refer to magazine and newspaper ads only. Online ads are referred to as digital ads. The costs vary widely. In general online ads are less expensive because they generate lower responses. However “click fraud” is a serious issue for the validity of online ads.

ROP
is a form of newspaper advertising that gives the editor or publisher the discretion to place the ad anywhere within the publication.
Costs for creating a Space Ad
-Creative: Art work, Photography, Copywriting
-Space Costs – S.R.D.S
Rates for Color, Black, Placement
-Fulfillment Costs – per inquiry, cost per order
-S & H fees
insert media
a popular form of print advertisement commonly used in a magazine or newspaper
-Magazine Inserts
-Package Inserts
-Co-op Insert Media
Positioning
It’s a marketing strategy that enables marketers to understand how each consumer perceives a company’s product or service based on important attributes (also known as “product positioning”)
house file-
list of an organization’s own customers (active as well as inactive) and responders
response list-
lists of those who have responded to another direct marketer’s offer
compiled list-
prospect lists that have been generated by a third party or market research firms via directories, newspapers,public records, and so on. These individuals do not have a purchase response history
hot names list-
generally made up of people who already have immediate contact, or have made some type of commitment to your group.
4 elements of a direct offer
reciprocity, greed, transference, motivations
motivations
Motivations are the needs that compel a person to take action or behave in a certain way. A direct response offer uses tactics such as reciprocity, greed, and transference to motivate a consumer to buy the product/take action.
Reciprocity
The natural want to give back something when we receive something. Marketers often use this to draw in consumers: perhaps they include a free product or service, in hopes that the consumer will become a returning customer and want to do business with them next time
Greed
A good way to remember how a consumers greed can influence their decision making is “freemium” offers. For offers with premiums, the desire for the added item, such as a tote bag or umbrella, adds an element of greed into the decision to buy or donate.
Transference
Marketing tactics that influence the way customers think/feel about a product: shaping consumer attitudes/opinions/and ultimately consumer buying habits
Brand Advertising
marketing that boosts knowledge of a company or product’s name, logo, or slogan.
Direct Marketing
a database-driven interactive process of directly communicating with targeted customers or prospects using any medium to obtain a measurable response or transaction via one or multiple channels
:A direct connection with the customers.
:The customer buys from you, and you get all of the information.
Affinity Marketing
Partnering with another company that has the same customer base in order for both to gain new customers. Collaborative effort to grow customer bases.
Loyalty Marketing-
growing and retaining current customer base by providing them with incentives
Creative Technique:
Creative research- developing compelling messages for any direct response promotion, in any format or in any medium, begins with research and leads to idea generation and finally copy-writing
Direct marketers must understand their target audience and what motivates their buyer
Motivators:
People want to gain- self confidence, improved appearance, convenience
People want to save- time, money, memories
People want to avoid- criticism, physical pain, trouble, discomfort
People want to become- good citizens, creative, efficient, knowledgeable, good parents
Involvement Devices-
engage the reader in some way include tokens, stamps, punch outs, puzzles, premiums, and gadgets that the reader returns to the seller
Links and click buttons are natural involvement devices of websites
The “Gold Box”- Wunderman
Advantages of Direct Mail
Measurable
Trackable
Targeted
Adv. Cont:
-Personalization
-flexible (different formats)
-extremely suitable for testing
Disadvantages of Direct Mail
Not too cost effective
Minimal Response Feedback
Involvement Devices
It is a device used in direct response advertising to spur action by involving the reader; examples would be tokens, stamps, punch-outs, puzzles, and so on
Examples: Wunderman’s gold box– people who saw commercial were the only ones who understood what the gold box meant
Queries
Questions asked of a database. For example a database is searched to create a report of customers with a number of purchase of a specified time period.
Control Package (or simply the Control)
The best performing ad, which all other promotions are tested against
Database driven promotions-
specific, can target individuals
-Database marketing is a form of direct marketing that uses databases of customers to generate targeted lists for direct marketing communications
Demographically driven media-
broad, can only target groups