Marketing communication is often equated with mass advertising using media such as television, radio, and print. This is often referred to as above-the-line advertising. Besides these media, organizations can also use more directly targeted media, which include direct mail, telephone, email, etc. This is referred to as below-the-line advertising or direct-to-consumer advertising. Remarkably, spending on below-the-line advertising more than doubles spending on above-the-line advertising in the US (V12 Group & Winterberry Group 2006). Moreover, below-the-line advertising spending has increased by 7.5 percent per year, while spending on above-the-line advertising increases at a lower rate of 5.5 percent per year. These figures emphasize the importance of below-the-line advertising.
Traditionally, direct marketing has been the field that mainly focused on the use of direct-to-consumer advertising. In the early days, direct marketing was mainly associated with firms almost solely relying on direct media, such as Reader’s Digest. The US-based Direct Marketing Association (DMA) defines direct marketing as an interactive system of marketing that uses one or more advertising media to effect a measurable response and/ or transaction at any location. According to McDonald (1998), there are three key issues in this definition: (1) direct marketing is interactive, (2) all direct marketing actions are significantly more measurable than traditional mass advertising, and (3) activities connected with direct marketing communication can take place at any location.
European scholars have advocated a broader definition of direct marketing. Both Tapp (1998) and Hoekstra (2003) have emphasized the relationship dimension of direct marketing. Tapp (1998) defines direct marketing as a way of acquiring and keeping customers by providing a framework of three activities: (1) analysis of individual customer information, (2) strategy formation, and (3) implementation such that customers respond directly. It has also been acknowledged that direct marketing can be viewed at three levels (Hoekstra 2003): (1) direct marketing at the firm level: direct marketing drives the business (e.g., ING Direct, Capital One); (2) direct marketing at the marketing strategy level: direct marketing drives part or all of the marketing strategy (e.g., British Airways, Tesco); and (3) direct marketing at the tactical level: direct marketing is used within the communication mix (e.g., Albert Heijn).
Within direct marketing, multiple media are used. These include: telephone, direct mail, catalog, television (direct response commercials, home shopping), print media (coupons in magazines, newspapers, specialty print media advertisements), direct response radio. The upcoming of the Internet has increased the potential of direct marketing dramatically. Consumers now use it is as one of their primary information channels, while in certain product categories, such as travel and leisure, the Internet is the dominant channel. The field of e-commerce focuses on the Internet channel. E-commerce is defined as the process of buying, selling, or exchanging products, services, and information via computer networks (Turban et al. 2004).
Direct marketing is closely related to other terms often used, the most important being database marketing. Verhoef and Hoekstra (1999) defined database marketing as that which uses individual customer and/or prospect data from a customer database and transforms these into information that supports marketing decision-making by applying statistical analysis and/or modeling techniques. Thus, database marketing focuses on the analysis of individual customer data.
The scientific marketing community has mainly studied direct marketing from a customer selection perspective. Research mainly focuses on predicting which customer or prospect is most likely to respond (i.e., response to a mailing). Direct marketing practice often uses the so-called RFM-methodology (recency of last purchase, frequency of purchase, and monetary value of purchase) to select customers. Marketing scientists have proposed sophisticated statistical models, such as logit models and decision trees. Another relevant topic is the prediction of customer lifetime value, which is defined as the expected net present value of all customers’ future earnings. This concept is being used to value, segment, and rank customers. High-value customers might be treated differently from low-value customers. Research in direct marketing practice is mainly concerned with testing the content and presentation of the media. For direct mailings, simple rules for the presentation of the envelope, the characteristics of the letter, brochure, and reply device have been developed based on expertise. For example, it has been recommended that they use short words, short sentences, and short paragraphs, and that they look easy to read (Roberts & Berger 1999).
Since the end of the 1990s, there has been much attention give to customer relationship management (CRM). This concept is clearly related to both direct marketing and database marketing. CRM is defined as a strategic approach that is concerned with creating shareholder value through the development of appropriate relationships with key customers and customer segments. CRM unites the potential of relationship marketing strategies and IT to create profitable, long-term relationships with customers and other key stakeholders (Payne & Frow 2005). Due to the focus on CRM in many firms, the proposed relational aspect of direct marketing is often nowadays ignored. Direct marketing is now usually again equated with its instruments, such as direct mail. The economic impact of direct marketing is, however, very large (DMA 2006).
Overall, direct marketing is an interesting and relevant discipline within marketing, which requires sufficient attention both in marketing practice and in marketing science.
- DMA (2006). Statistical fact book. New York: Direct Marketing Association.
- Hoekstra, J. C. (2003). Direct marketing. Groningen: Wolters Noordhof.
- McDonald, W. J. (1998). Direct marketing: An integrated approach. Boston: Irwin McGraw-Hill.
- Payne, A., & Frow, P. (2005). A strategic framework for customer relationship management. Journal of Marketing, 69(4), 167–176.
- Roberts, M. L., & Berger, P. B. (1999). Direct marketing management. Upper Saddle River, NJ: Prentice Hall.
- Tapp, A. (1998). Principles of direct and database marketing. London: Financial Times.
- Turban, E., King, D., Lee, J., & Viehland, D. (2004). Electronic commerce: A managerial perspective. Upper Saddle River, NJ: Prentice Hall.
- Verhoef, P. C., & Hoekstra, J. C. (1999). Status of database marketing in the Dutch fast moving consumer goods industry. Journal of Market Focused Management, 3, 313 –331.
- V12 Group, & Winterberry Group LLC (2006). Tracking the Trends: A Comparison of Above-theLine and Below-the-Line Expenditure Trends. At http://printambassador.com/resources/ TrackingTheTrends.pdf, accessed August 30, 2007.