Money Talks: It’s Past Time That Marketers Reconsider Reward-Based Promotions

Recently, Bill Warshauer provided Target Marketing readers with a timely reminder of the efficacy of reward-based promotions and their utility in replacing discounts in the promotional mix. Now let’s take it a step further with some modeling.

Recently, Bill Warshauer provided Target Marketing readers with a timely reminder of the efficacy of reward-based promotions and their utility in replacing discounts in the promotional mix.

Extremely interested, I commented and a somewhat updated summary follows:

It is past time that marketers reconsider reward-based promotions.

Let me give you one simple case history.

Some years ago, a client, a leading bank, found that they were sending pre-approved but unrequested credit cards to customers and were getting unacceptably few people “deblocking” or “activating” their cards despite a regular monthly conversion series urging them with various incentives like no annual charges for one year, to accept and use the new cards. The low conversion rate, plus the costs of up to six efforts per prospect with no revenue, were at least discouraging.

When we were asked for help, we proposed turning this system on its head. Our objective was simple: incentivize card recipients to use their new cards immediately instead of allowing the costly slow drip from promotions over months: make them, as mafia lore says, an offer they couldn’t afford to refuse but we could afford to make.

To do this we designed an elaborate mailing to be sent without fail, the day after the card, rehearsing all the card holder benefits but telling the prospect there was another “secret” benefit which could only be had by calling a special toll-free number.

Having determined in advance, the allowable cost per active card, we knew that we could afford to offer $50 per active card user. The caller was not to be asked to “deblock” or “activate” their card (unnecessarily bureaucratic words in our view) but rather, “May we credit your card account with a $50 gift you can spend right away when you use your card within the next five days?” (We also tested $20, $30, and $40 as alternatives to determine the most profitable offer.)

Want to know which was best? Ask me.

While the cost of the mailing package nearly got us fired, the results turned client fury into joy. We achieved the client’s objective of conversion, even after consideration of the cost of the reward, at a cost-per-conversion of less than half of what the client had been spending. And it was right away, a significant cash advantage.

Not exactly the proverbial rocket science, is it?

I had drilled into me over the years by the iconic Dick Benson and by others that Rule No. 1 of what was then called direct marketing was:

It doesn’t matter a damn how much you spend in marketing money so long as in the end, the unit cost of achieving your order gives you the pre-determined profit you desire, or more!

Why many marketers have the least trouble getting their minds around this is a total mystery to me. It should be hardwired into them.

However, taking advantage of the isolation of the pandemic, it seemed worthwhile to have another go at trying to explain it and providing those readers who are interested, with the tools to build a simple model to help them calculate it for themselves.

Using the activation of distributed credit cards as an example, let’s assume that the bank has determined it can afford to spend a maximum of $87.50 to generate each active credit card. In arriving at that assessment of the “allowable,” the bank has determined that it wishes to achieve a profit of a similar $87.50. And to make certain that their marketing geniuses won’t forget the need for that profit, the bank’s managers have made believe the profit is a “cost” and reserved it so the marketing guys cannot get their mitts on it.

Now, if the actual cost of generating the activation is exactly the $87.50 allowable, the profit will still be there. And if, due to the marketing team’s genius (or luck, or a combination of the two), the activation costs less than the allowable, the difference will go right to the bottom line and the applause will be deafening.

Let’s look at this starting with the knowns:

Determining the allowable figure 1For this hypothetical example, let’s accept that the historic active card revenue is $350 and that operating the card system and covering general and administrative costs is 50% of this revenue. Now let’s reserve an additional 25% ($87.50) for profit before determining how much we can spend for marketing.

As you can see, that leaves us with $87.50 which we can afford to obtain an activated card user and make a 25% profit. Put another way, if we spend exactly $87.50 for marketing including the cost of any incentive, then we will make the mandated 25% profit. Spend more and we will make less profit or even have a loss; spend less and the saving against the $87.50 allowable will add to the profit.

Now the fun starts.

What we wish to project is how much our response needs to increase from a non-incentivized baseline to justify the incremental cost of each level of incentive. Let’s assume that including the variable cost of converting the incoming telephone calls, the per-thousand marketing cost is $1,500. Before adding the cost of any incentive, the baseline at different response levels looks like this.

Non-incentivized cost per activated card, figure 2
Note that the white outlined cells are inputs and the shaded cells are driven by formulae. In working with the model, this allows you to play “what ifs?” and input your own assumptions, for example, different percentage responses or cost per thousand.

As you can plainly see, only the cost of a 1% response exceeds the $87.50 allowable and eats into the reserved profit. At 2%, the cost is $75 which means that the bottom line is the $87.50 allowable plus the $87.50 reserved profit objective, less the $75 cost per response, for a total contribution of $100 or 35% of revenue, a comfortable ROMI of 1.33.

But as aggressive marketers, we want more responses and profit. And we are prepared to offer an incentive of $20 to achieve that. Our question must be: How much does the addition of this incentive have to increase the percentage return to justify the additional $20 (or some other number you choose)?

To find the answer to this and provide a tool for answering other questions with different inputs, we built this model. It references the ACPO model above and matrixes the calculated cost of a given response percentage with the addition of the incentive.

Actual Cost, Figure 3To this has been added a table which permits us to input any combination of response rate and incentive and generate how much additional percentage response would be required to justify using the specified incentive, in the case of this example a $30 cash promise.

Incentive Justification, Figure 4
To help you should you care to build your own model, the equations which drive it are explained below the numbers.

As you’ll see, to justify the $30 incentive, response must rise by 0.86% from 2.0% to 2.86%. Any increase greater than 0.86% would make the use of the $30 incentive a winner.

There is no question that money talks. We just need to understand the language.

Any interested reader who wishes to have a copy of this Excel model, email pjrosenwald@gmail.com with “Model Please” in the subject line.

Navigating Minimalism and Maximalism in Marketing

No doubt you’ve all heard of the poor guy who starved to death, equidistant between two three star restaurants with perfectly valid credit cards in his pocket. He just couldn’t deal with having to make the momentous decision to choose one or the other. Sound familiar?

No doubt you’ve all heard of the poor guy who starved to death, equidistant between two three star restaurants with perfectly valid credit cards in his pocket. He just couldn’t deal with having to make the momentous decision to choose one or the other.

Sound familiar?

Given the number of data and AI marketing options at our fingertips, the bewildering range of media to choose from, the unlimited possibilities for product and service pricing and delivery systems, are we sure that we aren’t facing the same fate — death by maximalism.

I thought I’d made up the word but as usual, Google put me right.

“The term maximalism can refer to anything which is excessive, overtly complex and “showy”, or providing redundant overkill in features and attachments, grossness in quantity and quality and maximalism the tendency to add and accumulate to excess.”

Discussing this maximalism with a sophisticated and highly successful marketing colleague, he just shook his head and admitted that while he certainly was guided by the wealth of data available, “in the last analysis” he said, “I just follow my gut.”

Regular readers of Target Marketing will have seen a number of thoughtful pieces on determining the optimum number of marketing messages to send and when enough is enough. Not surprisingly, despite their general recommendations, none that I can remember have come down solidly and told us whether to maximize or minimize the frequency of communications.

The essence of the maximum/minimum question would appear to be driven by priorities and these are likely to be different — not only for each marketer but for each product or service. Determining what’s most important to you is a very good place to start, and surprisingly not the metric that many marketers use.

Most of us start (or should start) by looking at the bottom line. That would be easy if there was only a single bottom line. But we all know that the priority of determining whether we are looking for a single profit point, a lifetime value, an increase in brand value, the optimum return on our marketing investment (ROMI) or some other metric, must impact our answer. Haven’t we all seen instances where, for example, late in the fiscal year marketing management discovers that approved promotion monies have not yet been spent and fearing that as a result, budget allocations for the following year might be reduced, rationalizes an immediate, urgent campaign to use this money?

Various studies of consumer attitudes to commercial email communications support research published by Campaign Monitor that clearly indicated that the largest reason subscribers flag email as spam (almost 46%) is “they emailed too often.” As we all know, too often can be a big turnoff. I stopped watching CNN because the multitude of “short breaks” were longer than the news content.

This doesn’t mean that we should abandon the maximalism of our marketing efforts for minimalism despite the current and trending rage among brands for “less is more.”

From Copypress:

“Minimalism as branding is a bit of a divergence from the historic take on minimalism. It takes its core principles from the movement and presents a unified, cohesive framework that emphasizes clean, simple designs with exacting focus.”

Think not only of graphic design but of total strategic marketing focus, as well.

On the basis of long experience with what works and what doesn’t, the Denny Hatch school of direct marketing applauds with good reason, maximized “ugly” presentation and beating the bushes for orders as long as it is profitable.

That said, there is an increasingly strong argument for stepping back a little and meditating on the possibility that instead of maximizing our promotional efforts, we test minimizing them. We could then determine whether the consumer trend is away from “the more the better” consumerism and we can develop more and better customer relationships with less communications.

With so many choices available to marketers, we are like the poor fellow who starved to death, in danger of starvation in the midst of an abundance of plenty. Perhaps it’s time to start listen more to our guts than to our data.

2020: A Big Year for Media Spend Will Underscore Data’s Role in Marketing Strategy

With the longest U.S. economic growth span on record, one might think the wheels may be about to come off of the economy — and marketing spend along with it. Not so, says Bruce Biegel, senior marketing partner at The Winterberry Group, during his annual forecast about marketing strategy.

It is the best of times.

With the longest U.S. economic growth span on record, one might think the wheels may be about to come off of the economy — and marketing spend along with it. Not so, says Bruce Biegel, senior marketing partner at The Winterberry Group, during his Direct Marketing Club of New York annual presentation, “The Outlook for Data Driven Advertising & Marketing 2020.”

marketing strategy
Source: Winterberry Group (2020), with Permission | Credit: Winterberry Group

Sure, there is caution. The Great Recession displaced many — and served to accelerate digital disruption from retail to finance to certainly marketing, forever. Perhaps businesses have never felt safe, sound, and secure ever since. One might call it “wise agitation.” And it really has been consumer spending that has served as the primary driver of growth, particularly in 2019.

Not the R Word …

Outside of business caution and flat earnings, where are the signs of another recession? They are hard to find.

Inflation and wage growth are hardly sputtering — even as the nation’s unemployment rates are at record lows. Trade rows and impeachment proceedings only appear to buoy the stock market. Even inside the world of marketing, privacy restrictions have not diminished the luster of data deployed for marketing and insight. And with the Olympics and a General Election this year, it should be times aplenty for many media channels, agencies, data providers, and tech companies — as these events are traditional hallmarks of spending.

So who are some of the winners in the current marketing and media environment?

… But plenty of D, Even Still

D, as in Direct: Biegel noted that “Buy Direct” is creating continuous rise and sale in DTC [direct to consumer] brands. The subscription economy is booming and traditional distribution channels — read, retail — continue with a “D” of their own, “disintermediation.”

“The five-year growth (through 2019) of DTC retail is four times that of the retail market revenues — 7.64% growth vs. 1.78%,” he reports.

That doesn’t translate to digital-first success, however, as such approaches are not scaling as rising costs in paid social, for example, are inhibiting customer acquisition.

marketing strategy
Source: Winterberry Group Spend Estimates (2020)

D, as in Digital: Online media spending overall grew by 19.1% in 2019 — compared with a 5.9% decline in offline media spending for the same year. Among all digital media categories in 2019, paid search grabbed the largest share — followed by display and paid social. Yet search spending “only” grew by 13.2%, compared to 21% growth for display, and 23% growth for paid social. For 2020, online media spending will continue to climb — reaching $166.4 billion in spending, while offline media will reverse its decline and post a 2.3% climb this year (remember, Olympics and Elections) to $223.1 billion.

D, as in Data: Data spending also posted healthful growth in 2019 — up by 5% — with another 6.2% growth expected in 2020. Is data working harder for marketers — as in, increasing marketing efficiency? Possibly. Spending on offline data dropped 5.5% in 2019 — while spending on email data and analytics posted 22.4% growth, and spending on digital media data and analytics (other than email) grew by 14.4%. Yet businesses are wholly satisfied with their own level of “data-centricity.” Biegel says, “Organizations are slightly more ‘data-centric’ this year than when asked in 2017 — on the whole, industry data-centricity is not progressing as envisioned.”

marketing strategy
Source: IAB-Winterberry Group Data-Centric Org (2020)

What’s Driving Data Strategy at Businesses?

Beigel reports three primary facilitators:

  • A desire to deliver better customer experiences;
  • Heightened regulatory compliance requirements and need to honor consumer preferences; and,
  • Increased demand to better leverage both first- and third-party data assets.

With a data-for-marketing marketplace in the United States now valued — both offline and online —- at $23 billion, those are three very important drivers that marketing professionals needs to get right. Or else our C-suite credibility may be diminished.

Artificial intelligence also has benefited from this reverence for data. Beigel reports that $11 billion has been invested globally in AI in the past five years — with 80% of marketers seeing AI “revolutionize” marketing in the next five years. Much of this investment is set on drawing insights from both structured and unstructured data sources.

And Where Are There Lingering Concerns?

Besides enterprise command of data assets, which could go either superbly or not, there are other concerns — both macro and micro, Biegel reports.

U.S. economic growth will likely slow to 1.9%, with global growth at pronounced risk. Corporate earnings may disappoint — leading to tightened purse strings. Tariffs may be reduced – nation by nation, region by region — but to what immediate impact? In short, Biegel says, “Limited tailwinds indicate that growth must be earned or bought.”

Among offline media there will be pockets of growth — outdoor, shopper marketing, linear and addressable TV — though direct mail will only squeak growth, with radio, newspaper, and magazines continuing their declines (even as their digital counterparts grow).

Search, display, and social will continue to dominate online media spend — but less mature channels, such as influencer marketing, digital video, and OTT [over-the-top] streaming, and digital audio will post rapid growth from much smaller bases. That portends good times for online data — but is it all rosy?

marketing strategy
Source: Winterberry Group Spend Estimates (2020)

For example, are customer acquisition and retention costs, though, declining in these channels? It may be that media inflation will eat into marketing efficiency, particularly if “targeting” data gets less precise and, as a result, relevance gets more elusive. Privacy restrictions, while well-meaning, are not always implemented in such a way that serve best consumers. Still, only 16% of businesses have reduced their spending and reliance on certain kinds of data as a result of new and potential data privacy regulations, Biegel reports.

So, come December 2020, will all of these predictions and concerns bear out? That’s one of the reasons I attend Bruce Biegel’s Annual Outlook at DMCNY each year. As great a prognosticator as he is and as on-target as his business, data, and economic models are — he’s always close enough to the market to say where struggles remain, where the work of data-driven marketing is hard, where hiccups happen, and the like. These are all of the many micro and macro reasons that any best of times can go awry.

His January 2020 predictions are now in the books — and we will all be back again in January 2021 — barring any hiccups.

Marketers Know Time Is Money, So Why Do They Care About the Other 271 Things?

Benjamin Franklin, one of America’s founding fathers and a tireless worker, is credited with the expression “Time is Money.” And we all know how true that is. Especially when we are wasting it reading 271 things we didn’t really need to know.

Readers will no doubt share my sense of deja vu at the overuse of numbers to catch our attention — 5 Essential Steps: 16 Mandatory Rules; 4 Impossible Challenges; Etc. signposting articles, inviting our interest so we’ll read on. It’s not all that surprising that the reason we find these so engaging is that most of us are conditioned to God’s 10 Commandments. You can’t get a better reference than that and the copywriter who penned them must be a paradise celebrity.

In and around our industry, there are lots more than 271 things you don’t need to know at all.

If you have Denny Hatch’s “Ultimate 85-Point Marketeers Checklist” on your desk, you hardly need any more commandments. And if you do, you can just Google your query and you’ll have the answer in seconds. What’s surprising is how many of these “musts” appear over and over in our daily feast of business media coverage. How many times do we ask ourselves: Haven’t I heard that a million times before, and does that stuff really matter, anyway? Keeping our attention on what does matter is important.

Last week, writing here, Bob Bly gave us a numbered list, “Why the 10 Principles of the Direct Response Mindset Still Matter” and made the important point that the primary objective of direct marketing “is not to enhance image, build a brand, increase awareness, or entertain. It is to get more inquiries, leads, orders, and sales.”  But what struck me as most important was his reference to a “Direct Response Mindset.” If you have that mindset hard-wired, you don’t have to worry about all those other 270 mandates. If it is not about inquiries, leads, orders, and sales, it’s not about direct and data-driven marketing.  If I had a numbered list, mine would incorporate getting sales at less cost than the amount you could afford, getting them below the allowable cost per order (ACPO) into No. 1.

The fact is that what really matters cannot usually be framed in a numbered sequence, but needs more open space to articulate and define ideas. (Although, the 10 Commandments is a great exception.)

Ask yourself this question: Which came first? Twitter or the fact that today’s C-level executives (sadly, including our president) seem to be too busy or too lacking in concentrated brain power to read anything longer than a tweet?

Perhaps that’s why one of the world’s largest and most successful corporations has done away with fancy PowerPoint presentations and requires the convener of a meeting to prepare a written (no illustrations) meeting brief covering the intent and objective of the meeting and providing the necessary business and financial background and action desired. At the start of each meeting, the participants are handed a printout and given the necessary quiet time for them to read the brief. What a great way to get everyone aligned to the issues and at the same starting point. Any company that would follow this procedure would be sure to make meetings much more productive and get over the fact that more often than not, executives have not read the carefully prepared presentations or memoranda distributed electronically.

Having had a lot of interactions with consultants who were tasked with and compensated for reducing costs in client companies, one thing I have never found them focusing on was wasted time, like knowing all 271 things that fill space and waste time. If, especially in service companies, compensation and related benefits are one of the largest expense categories, the productive use of the time of the staff must be one of the most fertile areas for savings. Because it’s hard to measure and, therefore, outside the remuneration parameters of most cost-cutting consultancies, the value of time doesn’t make the cut for priority issues to be addressed.

It is difficult to forget that at an Executive Committee meeting at a Brazilian company, while waiting for the CEO to turn up, the executives gossiped about football (a Brazilian religion), sex (another Brazilian religion), and other topics. A back-of-the-envelope calculation of the cost of the wasted half hour until the CEO apologetically appeared came to something in the region of $15,000. When subsequently informed of this calculation, the CEO shamefully agreed that it was outrageous that he should have been so late. “But” he said shyly on reflection, “It’s my $15,000.” One can only imagine how many other meetings have similar unproductive costs.

Benjamin Franklin, one of America’s founding fathers and a tireless worker, is credited with the expression “Time is Money.” And we all know how true that is. Especially when we are wasting it reading 271 things we didn’t really need to know. Franklin certainly would have endorsed “the importance of substituting zero-sum mindsets (fasting, complaining, and suffering) with additive-sum ones (plentiful-gratitude)”

That’s why he was a big fan of Thanksgiving, something for which we can all give thanks.

May you have a hearty one.

A 4-year-old Girl Shows the Power of a Strong Brand

Recently, I was reminded about the power of a strong brand by my 4-year-old granddaughter who told me, “You know how I can tell when there’s a McDonald’s close by? There’s a sign with yellow M on a red background. That means there’s a McDonald’s near here.”

Recently, I was reminded about the power of a strong brand by my 4-year-old granddaughter who told me, “You know how I can tell when there’s a McDonald’s close by? There’s a sign with yellow M on a red background. That means there’s a McDonald’s near here.”

McDonald’s has certainly built the golden arches “M” brand over the course of many years; my earliest remembrance is from the early 1960s. But the fact that a 4-year-old girl learned the symbolism in a much shorter timeframe illustrates how powerful great branding can be.

When I recently Googled “direct marketing and branding,” I was surprised to see that there are a lot of search results positioning the two as separate marketing strategies. I thought that debate was put to rest years ago — you need both.

The Internet has turned everyone into a direct marketer, and those who have built strong brands are the big winners — think Amazon, 1-800-Flowers, Omaha Steaks, Zappos, etc. When I was with Roska Direct, our results showed over and again that when we did direct response marketing using the umbrella of a strong brand, we achieved better response and conversion rates than when we downplayed the brand in an attempt to juice response.

According to Statista, Google enjoyed a 90%-plus share of searches from 2010 through 2013, before it dipped into the high 80s, sneaking over 90 only in October of 2016 and 2018. So what’s Google doing about it? Running a national brand campaign on television, Here to Help, using The Beatles 1965 hit, “Help.”

Interestingly, if you try to find those branding ads by Googling “Google ad campaign,” you won’t. What you’ll find is Google in direct response mode, helping you construct your own online advertising campaign through Google.

Like I said, you need both.

Where Do You Start? Teaching Direct Marketing to College Students

What’s the best approach to engage college kids in understanding direct marketing? Principles first; metrics second? Or Metrics first; principles second?

What’s the best approach to engage college kids in understanding direct marketing? Principles first; metrics second? Or Metrics first; principles second?

I remember sitting in the parlor of a Catholic parish rectory in North Jersey while my wife was participating in a wedding rehearsal. The Mets game was on TV. The brother of a parish priest who was visiting from Ireland asked me to explain baseball. Explain baseball?!?! Where do you start?

Despite all of the professional speaking and training I’ve done in direct response marketing, the first time I taught a college course devoted entirely to it was last spring. I started with the fundamental concepts of media, offer, and creative. I had them write about each of these concepts from their own experience. We went over the various targeting opportunities marketers have online and offline. And at the end, we covered measurement and metrics.

At the end of the course, I asked the students to tell me what worked, what didn’t, and what should be changed. The most insightful comment was from a student who said:

“I wish you had covered all that measurement content at the beginning of the course. It made me realize why all that other stuff was important, and how it fit into the big picture.”

HELP!

Now, as I embark on teaching a course dedicated to Direct Response Marketing at Rutgers School of Business Camden, I’m looking for advice about how to sequence things.

Last year, when I bemoaned the lack of an appropriate up-to-date textbook for this discipline in this column, Dave Marold and Harvey  Markowitz stepped up and recommended the Fourth Edition of “Direct, Digital, and Data-Driven Marketing,” by Lisa Spiller. (Thanks for that Dave and Harvey; I’m using that book in the Fall).

What Do You Think?

Now I see the benefit of stressing measurement early. Even though I told the students every class that the coolest thing about direct marketing is that you can measure it, apparently the mechanical reality of measuring something like search engine keywords was not real for them. So:

  • Do I incorporate some form of measurement into every lesson?
  • Do I introduce a comprehensive measurement unit early in the course? (Spiller’s book does that early on, in Chapter 4).
  • Or, do I go full-on “math course” at the beginning, and thin a 40-student class down to 20 students after two weeks? (Just kidding).

Opinions welcome. (Actually, encouraged.)

Marketing Training in the Language of Customer Persuasion

In my keynote sessions, marketing training classes and even in past posts for Target Marketing, I’ve asked a critical question of marketers representing all levels of expertise over the past several years: “The 4 Most Powerful Words for Closing Sales?”

In my keynote sessions, marketing training classes and even in past posts for Target Marketing, I’ve asked a critical question of marketers representing all levels of expertise over the past several years: “The 4 Most Powerful Words for Closing Sales?”

To-date, no one has gotten this question right. Yet it is the most important concept to understand if you want to write direct marketing, advertising, social media copy and compelling content that sparks downloads from your website, Live Chats, sales inquiries and repeat sales.

If you read one of my posts from a couple years back, you know those four words to which I’m referring: If not, you could guess all day and likely not get it right. It’s because these four words are not associated with creating a sense of urgency, promising instant gratification, promising elevation in social status, beauty contests, coolness scores and many other things we promise in marketing copy. They are simply words that communicate trust, respect, dignity and personal power.

They are simply:

But You Are Free.

In a market where media and marketing experts suggest we are exposed to more than 4,000 advertisements a day, ads and all the strategies to inspire impulsive behavior continue to lose effectiveness.

Consumers are wise. Many know when they are being played, and they know what to believe and what not to believe, and when to walk away. They don’t fall for those empty promises of smarter, better, faster, prettier, richer, if you buy a given product.

What we do fall for are words that make us feel powerful, independent, respected, individual and a little closer to living a purposeful, actualized life than we were before. “But You Are Free (BYAF)” does just this. When a salesperson provides us information to help us make a decision, or provides us with a choice, and then tells us we will still be respected and valued, and offered help in the future, no matter what we chose, we feel many of the things mentioned earlier. And when we feel powerful, respected, wise, we tend to align with those who make us feel that way. This is where persuasion occurs. Not with intimidating, anxiety-enducing statements like, “One seat left at this price,” “Limited Time” and “This offer won’t last long.”

The BYAF concept was discovered through studies first conducted in 2000 by social psychology researchers, Nicolas Gueguen and Alexandre Pascual, who sought to understand what resulted in the greatest compliance for doing a simple task. They asked subjects on a city street to give money to a cause and were only able to get 10 percent of those asked to comply. When they added the phrase, “but you are free to accept or refuse,” nearly 48 percent complied, and in many cases, the amount of the gift donated was greater than before. Subsequently, they found that by using these same words to get people to take a survey, the compliance rate was also substantially higher.

The key here is the simple old adage of, “people like to be told, not sold.”

When we are being told something and then told we are respected for the choice we make, we respond differently than when we are simply being sold. This is where content marketing has taken off so successfully. It is the act of informing and establishing mutually respectful relationships vs. pushing for a sale.

In short, successful marketing, and the language of persuasion, is not the choice of words we make, it is the information shared and choices we provide without consequence to those with whom we are building brand relationships. Words that inform, enlighten, engage, followed by words that support and respect personal choice and empowerment create the greatest language of persuasion.

For more insights on BYAF, refer to my post dated April 2016. You are free to read it or not, and regardless, I’ll still post on this same topic next month!

Media Outlook 2019: Spell Marketing with a ‘D’

The January marketing calendar in New York has included for the past decade or so a certain can’t-miss event of the Direct Marketing Club of New York. In 60 fly-by minutes, 100-plus advertising and marketing professionals hear a review of the previous year in marketing spend, a media outlook for the current year and macro-economic trends driving both.

The January marketing calendar in New York has included for the past decade or so a certain can’t-miss event of the Direct Marketing Club of New York. In 60 fly-by minutes, 100-plus advertising and marketing professionals hear a review of the previous year in marketing spend, a media outlook for the current year and macro-economic trends driving both.

Bruce Biegel, senior managing director at Winterberry Group, keeps everyone engaged, taking notes and thinking about their own experiences in the mix of statistics regarding digital, mobile, direct mail, TV and programmatic advertising.

“We will be OK if we can manage the Shutdown, Trump, China, Mueller, Congress and Brexit,” he noted, all of which weigh on business confidence.

Suffice it to say, marketing organizations and business, in general must navigate an interesting journey. Biegel reports estimated U.S. Gross Domestic Product (GDP) growth of 2.3 percent in 2019 down from 3 percent in 2018, while total marketing spending growth in 2018 had dipped below its historic level of exceeding two times GDP growth.

In 2019, we are poised for 5.3 percent growth in advertising and marketing spending a slight gain from the 5.2 percent growth of 2018 over 2017.

Watch the Super Bowl, By All Means But Offline Dominance Is Diminishing

Look under the hood, and you see what the big drivers are. Offline spending including sponsorships, linear TV, print, radio, outdoor and direct mail will spot anemic growth, combined, of 0.1 percent in 2019. (Of these, direct mail and sponsorships will each post growth of more than 3 percent, Winterberry Group predicts.)

But online spending growth display, digital video, social, email, digital radio, digital out-of-home, and search will grow by 15.5 percent. Has offline media across all categories finally reached its zenith? Perhaps. (See Figure 1.)

Figure 1.

Credit: Winterberry Group, 2019

Digital media spend achieved 50 percent of offline media spend for the first time in 2018. In 2019, it may reach 60 percent! So who should care?

We do! We are the livers and breathers of data, and data is in the driver’s seat. Biegel sees data spending growing by nearly 6 percent this year totaling $21.27 billion. Of this, $9.66 billion will be offline data spending, primarily direct mail. TV data spending (addressable, OTT) will reach $1.8 billion, digital data $7.85 billion, and email data spend $1.96 billion (see Figure 2.)

Figure 2.

Credit: Winterberry Group, 2019

Tortured CMOs: Unless She’s a Data Believer

Marketing today and tomorrow is not marketing yesterday. If marketing leadership does not recognize and understand data’s contribution to ad measurement, attribution and business objective ROI, then it’s time for a new generation to lead and succeed. Marketing today is spelled with a D: Data-Driven.

Unfortunately we don’t have all the data we need to manage Shutdown, Trump, China, Mueller, Congress and Brexit. That’s where sheer luck and gut instincts may still have a valid role. Sigh.

Remembering Lester Wunderman, Direct Marketing Pioneer

Lester Wunderman, who passed away at 98 last week, was a quiet giant among visionary innovators. And if the marketing universe looks almost totally different today than it did in the “Mad Men” age of the 1960s, Lester deserves the lion’s share of the credit.

Lester Wunderman, who passed away at 98 last week, was a quiet giant among visionary innovators. And if the marketing universe looks almost totally different today than it did in the “Mad Men” age of the 1960s, Lester deserves the lion’s share of the credit. That he recently saw the legendary J. Walter Thompson merged into Wunderman must have given him no small pleasure.

When in 1958 with his brother and two other partners, he opened the mail order and direct mail agency Wunderman, Ricotta & Kline, in modest Union Square premises, relatively few companies were using the mail order channel and those who were, such as “The Book of The Month Club,” were doing their own marketing. Columbia House, the club division of Columbia Records, was one of the first and for many years, the leading client.

Eras are measured and defined by the magnitude of change that takes place within them and the visionary drivers of that change, whose innovations give the landscape a whole new look. Now, after years as secondary citizens in the marketing community, direct and data-driven marketing have taken “pride of place.” Lester always said it was just a matter of time.

Quoting Publicis Groupe Chief Growth Officer, Rishad Tobaccowala on the reason, MediaPost wrote:

“… conventional brand-building media models aren’t working as well as they used to. It’s because big brands are realizing that the only way to have a relationship with and understand their consumers, is to cut out the middlemen and have a relationship with them directly.”

The essence of marketing has now come full circle from the door-to-door peddler and personal selling to mass marketing and back again to the personal selling Wunderman always championed; albeit, with technologies never dreamed about in the 1950s. In a 1967 speech at MIT, Lester insisted on giving the industry a proper name, and “direct marketing” replaced direct mail, mail order and a host of others. Invited to give a keynote speech to the then U.S. Direct Mail Marketing Association, Lester accepted — but on the condition that the association change its name to the Direct Marketing Association. It was noisy fight but Wunderman won. That he would then become the “Father of Direct Marketing” was obvious.

For over the last half century, Lester was my closest friend and my guru. His humanity went hand-in-hand with his vision. “There is nothing that will not change,” he would say to anyone lucky enough to hear him. “Nudge that change in the right direction, take chances and measure, always measure your success or failure.” Having spent considerable time with his beloved Dogon tribe in Mali, even earning the honor of becoming a tribal Chief, Lester never lost touch with what he saw as real, a primitive understanding of human behavior and a profound respect for human values.

He knew instinctively (and proved over and over again) that a one-to-one relationship between people, be they partners, friends, acquaintances, customers or prospects, had to be more enriching than any distant relationship. His endless curiosity demanded that he know as much as possible about them and as the computer gradually replaced the mechanical card systems, the possibilities to capture data and use it to better serve customers and clients exploded. As increased streams of data became accessible, clients might scream about the cost of keeping and managing it, but that didn‘t deter Lester, who coined one of his best and most lasting perceptions: “Data is an expense” he said. “Knowledge is a bargain.”

Increased knowledge became an endless quest for Lester, and it was a gospel he shared domestically and internationally. Born one summer evening over a bottle of very good wine in my London garden, Wunderman Worldwide was designed to make this knowledge and its marketing uses available to young, ambitious, like-minded marketers — first in the U.K., France and Germany and, if successful, in any countries where it might be wanted. There are now 175 Wunderman offices in 60 countries.

The road to this success was hardly a smooth one. The acquisition by Young & Rubicam in 1973 was more a marriage of convenience than of love: Y&R needed to be seen to have the direct marketing skills it lacked, even if it had a very limited passion for the discipline. WRK wanted access to blue chip clients who were beginning to seriously examine direct marketing.

For reasons never made clear to Wunderman or the industry and breaking every classic rule of branding, Y&R management created a new brand, Impiric, and folded all its non-traditional businesses under this rubric. Overnight, the Wunderman brand was erased from the door. Lester was both personally heartbroken and professionally angry seeing years of brand-building disappear on what seemed little more than a whim.

Fortunately, just a few years later when Sir Martin Sorrel’s WPP acquired Y&R, he searched for the Wunderman company and found it buried under Impiric. As confused by Impiric as everyone else, he telephoned Lester, invited him to meet and, over lunch, both proudly restored the Wunderman brand and appointed Lester Chairman Emeritus of the company for life.

In an Ad Age interview in 2010, newly anointed by WPP, Lester said:

“For me, who started one little office with my brother and myself down on Union Square, to be the chairman of a company that is global, and practicing a high state of art all over the world, I can’t tell you what a revelation, in my lifetime, [it is] to see us go from kind of the horse-and-buggy form of advertising to the Internet. It’s just miraculous. The things we know about people, our ability to make messages more relevant and timely — advertising is just more efficient than it used to be.”

Lester’s creativity and his inventions are legendary. Eager never to leave a client or prospect without something new and unexpected, many of Wunderman’s greatest breakthroughs were brilliant adrenalin-driven responses to momentary problems. With a furious Columbia House client in the WRK conference room throwing on the table “take ones” millions of which had been printed and few “taken,” Lester, coolly walked over to the conference room magazine rack, picked up a copy of TV Guide, put one of the take ones in the center (where it almost fit) and announced that at that very moment the media department was booking this position exclusively for Columbia and all the take ones would be used. That position became one of the most productive DM media buys of its generation.

The Wunderman credo never changed, whether the means of accomplishing it was consumer loyalty programs, subscription club models, newspaper inserts supported by TV spots and toll-free 1-800 customer service numbers. Get as close to the customer as possible, listen to his voice and establish a one-to-one relationship. At an industry conference when others were droning on about postal regulations, out of nowhere, Lester proposed the idea of an intelligent mailbox for each consumer, a mailbox that knew what was wanted and only permitted those special messages access. Today we call it our “inbox.”

An avid tennis player, Lester never let work get totally in the way of play and, until recently, he found time weekly to play singles with the pro from his tennis club. On winter business trips abroad, he could almost certainly be found on weekends skiing in St. Moritz or Davos and in the summer at his beautiful house in Mogins, France. About 43 years ago, when he was courting his wife Suzanne who became both his companion and muse, he interrupted an otherwise important business meeting to carefully write down the recipe for a special dressing he wanted to prepare for the dinner’s arugula salad. The important things for Lester always took priority.

Lester Wunderman was a unique gentleman in an industry not over-populated with them. Read his books, “Being Direct” and “Frontiers of Direct Marketing,” or look deeply at his photographs of the Dogon tribe — his brothers, (in the permanent collection of the Metropolitan) and talk to those direct marketing practitioners who have worked for or with him. You cannot miss his special magical quality.

We have lost a great guru and friend, and he will be sadly missed. We are lucky that his wisdom and teachings are indelibly woven into the fabric of two generations of U.S. and overseas marketers.

Lester Wunderman Rosenwald
Credit: Peter J. Rosenwald. The two of us in 1997 at the DMA Mad Hatter’s Tea Party. Lester (Right) and Me (Left).

Nostalgic for the Future: Data That is ‘Close to You’

Last week, I had a dream — and in it, Karen Carpenter and I were friends. The following night, I had a similar dream — and this time it was Carly Simon. I literally went to bed the next night hoping for a Roberta Flack visitation.

Last week, I had a dream and in it, Karen Carpenter and I were friends. The following night, I had a similar dream and this time it was Carly Simon. I literally went to bed the next night hoping for a Roberta Flack visitation. As a result of these slumbering vocalists and songwriters, I’ve spent a good part of my leisure time over the New Year holiday listening to all their songs on my iPod. It’s yesterday, once more.

Who knows why we dream what we dream?

Sometimes, it just happens that when we’ve experienced enough in life, in play, in work some situations are bound to come around again, next week or decades later. I mean, I owned all that vinyl way back then and now I can stream it all again.

Greatest Hits: Lifecycles of Data-Inspired Marketing

So when Marc Pritchard of Procter & Gamble last week at the Consumer Electronics Show talked about “a world without ads,” I said to myself “oh, I’ve heard this song before.” And he’s right to say it.

In the world of data and direct marketing, a quest for wholly efficient advertising and a mythical 100-percent response rate actually is a 100-year science. Thank you, visionaries, such as Claude Hopkins.

• The 19th Century shopkeeper knew each customer, and conversed regularly. Ideally, each customer’s wants and desires were noted and needs anticipated to the extent that the customer was fulfilled accordingly. (Aaron Montgomery Ward and Richard Warren Sears.)
• Direct marketing originally through print, catalogs and mail, and then broadcast sought to replicate this model remotely. Measurement, attribution and response were put to science. Creativity served the science, or science served the creativity in either direction. Segmentation, analytics and differentiated communication flowed. (David Ogilvy, Stan Rapp and Alvin Eicoff, among others).
• In digital, social and mobile, direct marketing is rejuvenated this time “data-driven marketing.” Some have described this as data-inspired storytelling, or direct marketing on steroids. How responsible data collection can be used to identify prospect needs and wants, and funnel tailored communication through to sale, service and repeat purchase. (Jeff Bezos, among others.)
• And now the product itself can be designed to communicate to the customer smart appliances, smart cars, and the parts and products inside, with sensors and Internet connections and mobile app interfaces all being able to let the user know, it’s time for consideration or some other product lifecycle action.

Post-Advertising: A Reverence for Data

In all these examples, the constant is “I want to know you, so I can serve you the customer” and the facilitator is data. We exist to create and serve a customer. Period. Anything less is not sustainable. Data, in these models, is sought, analyzed and revered. It is also transparent, and its use and application has consumer buy-in. That premise is as true now in the Internet age, as it was in the direct response era before it. We all need to excel in data reverence, first, and then data analysis and application.

Advertising does have a role here, of course. Not every product sells itself and not every product meets customer satisfaction fully. The best advertising, and even the best data behind it, cannot save a bad product. There is always a need for advertising and marketing to inform the consumer, and a brand promise that serves to attract and retain beyond the product.

Every generation has its pop heroes. Tonight, I may just dream of Adele.