Here’s the first post on The Hacker Group website located here. I think it sets a good foundation for making the argument as to why direct response agencies should be more successful than pure digital agencies in using digital marketing.
We view marketing in two distinct modes – Brand or Direct Response. While both communicate the value of a product, service or company, the key performance indicators and core drivers of success are different. Brand marketing focuses on improving the awareness, perception and likeability of a product, while direct response marketing is about generating a measurable sale or consumer action. Both are important.
Digital marketing can be either brand or direct response. But digital has much more in common with data-centric direct response than brand marketing.
Why? Direct response marketing is built on the following four core capabilities:
Data Management for Response and Attribution
It takes massive amounts of data to build response models, understand user preferences, deliver media, attribute sales and optimize performance in direct marketing. The ability to process, store, analyze, report and execute campaigns based on data is core to successful direct marketing. Data provides transparency, results discussions, progress metrics and accountability.
Data as a Digital Imperative – Digital marketing is at its most powerful and effective when data is captured, analyzed and used for optimization. Understanding how data is created, how it is transferred from one organization to another, how to store the data, how to report data and, most important, how to use data to improve performance, is core to digital marketing.
Segmentation and Targeting
Selecting the right prospect profile to target is critical in direct marketing due to the cost of producing mail packages, print ads, and TV and radio commercials. The overlay of analysis and predictive modeling to determine the right group of people to mail, email or show direct TV spots to with the right message is critical for achieving a positive return on investment.
Segmentation and Targeting in the digital world is also critical to improving ROI on marketing spend. In the online world targeting can mean anything from serving ads against specific keywords to real-time optimization of display ads to a specific action on a website. The advantage of segmentation and targeting online is how fast you can collect data and optimize campaigns – many times automatically – vs. waiting for weeks or months for the sales results of direct mail. The discipline of targeting campaigns up front in the direct marketing world when applied to digital marketing gives us a better starting point for optimization.
Testing and Optimization
In direct marketing, testing and optimization requires setting a control group that gets consistent treatment against test groups that get new treatments, in order to quantify lift. You optimize by repeatedly incorporating winning elements into the control and striving for new champions. It is iterative.
The digital version of testing and optimization can happen with much smaller data sets at greater speed and a lower cost since you don’t need to print and mail anything. Many digital-only companies fail to incorporate this discipline into their DNA.
Creative that Sells
Direct marketing creative is built to elicit a response – including special offers targeted to specific segments. Combining successful targeting with a compelling offer is 80% of the success or failure of direct marketing, as a rule of thumb.
In the digital world, specific offers are also a critical piece of a test matrix. Determining which offer performs best both in immediate response and on-going lifetime value requires the data, targeting and optimization to all work together.
The high cost of planning and executing a direct mail, DRTV or other campaign creates accountability and precision in direct marketers. That ethos drives a higher level of execution excellence in digital campaigns as well. The cost of failure is much higher with direct marketing campaigns given the cost of production and extended lead time needed. Companies raised purely on digital don’t have this type of discipline because of the inexpensive flexibility to test, pause and optimize in-line.
Wrap it up!
Digital marketing benefits more from the core capabilities of direct response marketing than brand marketing. Data-centric digital channels easily lend themselves to the response and optimization nature of direct marketing. Digital excels when data, targeting, testing and specific offers come together to meet a specific audience.