The term direct marketing covers all advertising activities in which the target group is contacted directly. The aim of this form of marketing is to establish a relationship and interaction with a target person, and thus get them to perform a desired action.
The heart of direct marketing: the response
A reaction or response from the target person constitutes a response. For example, if the company requests a response by postcard, a response exists as soon as a prospect sends back a completed postcard and thus responds to the direct marketing measure. The response options depend on the type of advertising. In the case of postal mailings, response cards are just as conceivable as coupons. Other possible responses in direct marketing are a call to a website, a call to a specified telephone number, a reply fax and many others.
Measuring success in direct marketing
The great advantage of direct marketing is that the success of such an advertising measure can be measured directly. Two key figures are used for this purpose. In direct marketing, the response rate indicates the ratio of responses in relation to the total number of persons addressed. Its level depends on several factors. One factor is the time and effort spent on designing the advertising material, the advertising objective, the average order volume and the need to explain the product. The cost per order (CPO) provides information on whether the advertising measure is profitable. The total cost of the direct marketing measure is divided by the total number of orders or contracts received. The average sales must cover the total cost per order for the direct marketing measure to be profitable.
Forms of advertising in direct marketing
Direct marketing encompasses a large number of possible individual activities. A typical example of direct marketing is direct mail. This can be unaddressed direct mail (e.g., supermarket brochures) or addressed direct mail. In the case of addressed direct mail, companies either use their own address databases from customer or prospect databases or rent, lease or buy address databases from address publishers or list brokers. However, telemarketing, advertising, radio commercials, TV commercials and billboard advertising are also part of classic direct marketing. More specialized forms of direct marketing are also formed on the Internet. Here, for example, there is email marketing or the targeted dispatch of newsletters with response elements.
Advantages and disadvantages of direct marketing
Direct marketing has the great advantage that all measures can be measured via the response. Mailings & Co. also have the positive property, however, that they minimize the wastage of advertising, since the target group can be selected very specifically on the basis of address databases. As a result, the budget available for direct marketing is utilized more efficiently and advertising costs can be reduced overall. Another advantage of direct marketing is that it binds customers to the company. Customer loyalty can be increased through targeted measures. However, direct marketing is limited by German laws from the area of competition law and consumer protection. Due to regular promotional mailings from several companies, consumers are often inundated with advertising, which is why direct marketing does not always enjoy a positive reputation.
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