THE HANDBOOK

OF DIRECT MARKETING
✒
By Billy Sharma
In 1994 Canada Post
reported that: CHAPTER 1
• Canadian households
received an average of
27 pieces of direct mail per
DIRECT MARKETING:
week. This includes IT’S NOT AN EVENT
unaddressed and
addressed mail. IT’S A PROCESS
• 17.8 billion pieces of direct
mail were sent out in
Canada that year.
Direct marketing is not an event, it’s a process, it’s a highly
effective process of marketing that encompasses pre-campaign
• Expenditure on direct mail
increased by 51% over the
activities such as forecast analytics, list compilation, creation and

last 10 years reaching

implementation of the campaign relevant to the target audience,

$1,499 million in 2004.

and post-campaign endeavors such as fulfillment and marketing
analytics. This helps us learn and fine tune future initiatives to
make them more strategic.
Today most of the world’s leading companies use direct
marketing and most advertising agencies have a direct marketing
arm. Direct marketing is about return on investment, relevance,
responsibility and results.
It is a way of reaching out and building solid, mutually
rewarding relationships with lots of customers, without ever
meeting them face-to-face.
The best description of direct marketing is Salesmanship in
Print. It has been in existence since the Middle Ages, yet when you
mention direct marketing many think of it as just selling via the
mail. Some confuse it with a channel of distribution, like mail order.
And now that the Internet is an integral part of direct
marketing, it has also been referred to as contact in real time.
Despite its existence for centuries, it is only in the past
thirty years that direct marketing has really matured, expanded and
become one of the leading methods of marketing.

PAST, PRESENT...
Today direct response sales in Canada are in the billions.
The direct response industry provides thousands of jobs in Canada.
What is most significant today is that direct marketing along
with interactive methods of marketing, an arm of direct marketing,
now represent 26.2% of total marketing expenditures. And they are
both growing rapidly.

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 Allocation of all marketing dollars in 2006 Agencies racked up $28.21
billion in U.S. revenue in
2006. Most of them are part
of just six conglomerates
as below:

Omnicom
• BBDO Worldwide
• DDB Worldwide
• TBWA Worldwide
• OMD

Interpublic
• McCann-Erickson
• FCB
• Initiative Media
• Lowe & Partners
• Universal McCann

WPP Group
• J.Walter Thompson
• Ogilvy & Mather
• Y&R Advertising
• Mindshare
• Mediaedge: cia

...FUTURE Publicis
• Publicis Worldwide
• Leo Burnett
Growth will continue to rise in all media segments of the
• Saatchi & Saatchi
industry as the direct marketing industry continues to grow and
• D’Arcy Masius Benton
mature. Today we see evidence of this with many direct marketing
agencies recording over one billion dollars in sales each year and & Bowles
expanding internationally from their head offices to many parts of • Starcom Mediavest
the world. Worldwide
• Zenith Optimedia Group

SO WHAT’S IN IT FOR YOU? Dentsu

• Dentsu
(owns 15% of Publicis)
Direct marketing is becoming increasingly relevant to
marketers. As a result, agencies and clients are placing a premium
on people who have a broad range of skills in advertising, direct Havas
• Euro RSCG Worldwide
• Arnold Worldwide
marketing, promotions and brand imaging. Demand is high for
those who understand the implications of all the media channels.
Budgets are also shifting from mass marketing to direct and
micro marketing because marketers want to see a return on
investment now. As a result, retaining talented marketers will
become increasingly essential as agencies and clients shift their
focus to integrated methods of marketing.
10
Leger Marketing, a leading
Canadian market research
In a recent column, ‘Direct & Personal’, in Direct Marketing
firm, conducted a series of
News, talent recruiter Barbara Morris said: “I can tell you right now
surveys on the issue of what
that we’re heading for a talent crisis, because of three reasons. First,
it takes to keep the best
there will be pent-up demand for talent in the future from companies
employees. that have held off on hiring decisions.

• 76% of respondents
“Secondly, baby boomers have been retiring in big numbers

believe that the quickest

leaving a void that will have real significance in years to come. So the
way to advance their
best talent will have even more power and employment options.
career is to change “Most people think about retention as the third part of the
companies. hiring-developing-retention equation. They look at it as step three

• When employees were

in the workplace continuum, the thing you bother with only after

asked the question:

the employee has reached a certain level in the organization. My

“Why did you choose a

experience has led me to invent a new paradigm. It looks like this:

particular company over

Retention = hiring + development.
another?” 42% said that “Another key indicator is how the leading direct marketing
career development and agencies have fared recently. This is a good indicator of growth
continued training were
the key reasons for
potential for those who are contemplating direct marketing as a

choosing one employer

serious career.”

over another.
THE EVOLUTION OF DIRECT MARKETING
• Good on-the-job training
and development is more • In the 1700s direct marketing was called Mail Order;
of a lure to employees • During the ‘60s and ‘70s it was changed to Direct Mail or
(31%) than lots of
vacation time (24%) or
Direct Mail Marketing, Direct Response or Direct Marketing;

even good health

• In the ‘80s it began to be called Junk Mail by consumers;

benefits (11%).
• By the mid ‘80s, three more names evolved - Database
Marketing, Relationship Marketing and Loyalty Marketing;
• And finally when asked:
• By the 1990s One-to-One Marketing, Customer Relationship or
“Were you given the
Customer Bonding became popular names;
tools and resources
• Today new names are being added and books written on
you needed to succeed
Participation Marketing and Permission Marketing largely due
when you first joined to the popularity of the web and viral marketing and new
your last company?” privacy laws.
44% said “No”. TODAY
1990s PARTICIPATION MARKETING
ONE-ON-ONE MARKETING PERMISSION MARKETING
1980s
CUSTOMER RELATIONSHIP
JUNK MAIL
CUSTOMER BRANDING
DATABASE MARKETING
1960s - 1970s
RELATIONSHIP MARKETING
DIRECT MAIL
LOYALTY MARKETING
DIRECT MAIL MARKETING
DIRECT RESPONSE
1700s DIRECT MARKETING
MAIL ORDER

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 HISTORICAL REASONS FOR
THE GROWTH OF DIRECT MARKETING
Although direct marketing can be traced back to the ancient
times of the Babylonians and Persians who are credited with the
first known envelope – a clay wrapper from 2000 BC – the biggest
strides were made after the invention of moveable type. Since then
many other factors have made important contributions to the
growth of direct marketing. Some of the important ones are:
GUTENBERG’S PRINTING REVOLUTION
Printing with moveable type was one of the most important
advances in history. Invented in the 1450s by Johann Gutenberg, a
German from Mainz, his printing press made it possible to print
many copies of the Bible. This soon led to printing of other books,
newspapers and periodicals and finally catalogues. Credit
for the oldest existing catalogue (1498), which gives prices for the
books offered, goes to Aldus Manutius of Venice.
BIRTH OF THE CATALOGUE Franklin’s Satisfaction
Guarantee
“Those persons who live remote, by
During the mid 1600s seed and nursery catalogues came on
the scene in Europe. A popular slogan at that time was “Eliminate sending their orders and money to
the Middleman” because farmers were upset by the high profits that said B. Franklin, may depend on the
others made on the goods they produced. same justice as if present.”
One of the most famous direct marketers who published his
own catalogue in the early 1700s was Benjamin Franklin. He has
also been credited with incorporating the first “satisfaction
guarantee” in his catalogue.
THE INTRODUCTION OF
THE FIRST POSTAGE STAMP
It was not until May 6, 1840 that Great Britain introduced
the first adhesive postage stamp called the ‘Penny Black’ and thus
began a chain of events that was to change how the world
communicated. Two days later they also introduced the ‘Tuppence
Blue’ and soon the world copied Britain’s example and began
issuing their own stamps to pay for mail delivery.
A NEW WAY TO GET
THE MAIL THROUGH
In the 1860s the Pony Express and the stagecoach became
vehicles for mail delivery.
Ranked among the most remarkable feats to come out of the
American West, the Pony Express was a service whose primary
mission was to deliver mail and news between St. Joseph, Missouri
and San Francisco, California. 12
2006 WORLD RANKING OF
DIRECT MARKETING
IN THE 1900s THE TYPEWRITER

AGENCIES
STARTED A NEW TREND

DM AGENCIES REVENUE
• 1926 Start of The Book of the Month Club

1. Rapp Collins
• 1930 Specialty catalogues (Spencer Gifts, Hanover House)

Worldwide $306.0
• 1950 Reader’s Digest started its direct mail operation
• 1950 Publisher’s Clearing House offered many magazines
2. Epsilon $300.0 • 1950 Columbia House started Columbia Record Club
3. Wunderman $300.0 1950-1960 THE BIRTH OF DRTV
4. Draft FCB (DIRECT MARKETING TV ADS)
[Interpublic] $285.3
5. Aspen Marketing
In the 1950s and 1960s, broadcast emerged as a direct

Services $188.0
response medium. The first DRTV ads were heavy–handed
“pitchmen” style presentations that sounded like traveling salesmen
6. Harte-Hanks
Direct $180.8
trying to sell snake oil. They soon improved in quality and were
used to sell everything from books to merchandise, to generate
7. OgilvyOne leads, and as a support medium for a direct mail campaign.
Worldwide $170.5
8. Merkle $149.5
Other forms of DRTV include infomercial and fundraising
appeals. The success of “The Jerry Lewis Telethon” for so many
9. Protocol years proves the power of selling to a captive and receptive
Integrated Direct audience.
Marketing $128.0
10. MRM
Today there is a channel devoted only to selling products on

Worldwide $120.0
the air – The Shopping Channel.
1970 -1980 BIGGER AND FASTER
Source: Advertising Age/ Data Centre
COMPUTING POWER
But it wasn’t until the 1970s and 1980s that direct marketing
really exploded due to several factors:
• Huge increase in computing power
• Drop in computing costs
• Information technology’s ability to enable companies to more
accurately select suitable targets for direct marketing and
telemarketing
By the late 1980s two other factors had a huge impact on the
growth of direct marketing: the fragmentation of television with an
explosion of channels and the ease of shopping using credit cards,
toll-free numbers and new methods of delivery – FedEx and UPS.
Today the Internet, a twentieth century revolution, is
propelling the direct market industry. This new response-marketing
weapon continues to lead direct marketing in sales, ad spending
and employment growth.

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 REASONS WHY DIRECT MARKETING WILL
CONTINUE TO GROW IN THE FUTURE

“The key to selling a product

Today no business or company can survive without

via direct mail is to offer a

computers. Technology has always been a great catalyst that has
better price, better service
helped boost the direct marketing industry.
DIRECT MARKETING HAS THE ABILITY (powerful guarantee, easy-
as-pie, no-hassle return
policy) or an exclusive deal
TO TARGET MORE PRECISELY

or product (the only game in

Unlike other forms of communication, direct mail targets
town). If you have one of
only those who are prospects or customers. For example, a
University’s best source for fundraising is its students, so there is more of these elements in
no circulation waste. This is an advantage that lets the advertiser place, you have a better
have total control over the quality of the message and quantity of chance to be successful
circulation. It not only allows marketers to reach and understand selling by mail.”
who their best customers are, but also allows them to use rewards to – Dennison Hatch,
ensure repeat purchases. Who’s Mailing What!

GEOGRAPHIC FLEXIBILITY
The marketer or advertiser can select their customers or
prospects by specific geographic locations by their postal codes.
This offers them a demographic advantage because they can focus
on those regions where they believe their best prospects or clients
reside.
DIRECT MARKETING IS TOTALLY PRIVATE
This one-on-one exchange not only allows closer contact
between the customer and the marketer but also provides the
capacity to build ongoing loyalty. This is invaluable to direct
marketing’s success and will help contribute to its unprecedented
growth in the future.
DIRECT MARKETING IS MEASURABLE
Since obtaining a response is the key element in direct
marketing, the number of sales or leads generated by any direct
mail campaign can be easily measured. This knowledge enables
direct marketers to fine-tune future plans to ensure greater success.
DIRECT MARKETING’S ABILITY AND FLEXIBILITY
TO MICRO MARKET
This flexibility allows a marketer to provide different groups
different offers based on their past response behaviour. It can also
target specific audiences and learn who responds to what, when and
how – an enormous factor in future growth potential.

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 LIST AVAILABILITY AND BETTER
SEGMENTATION TECHNIQUES
More strategic ways have been developed to target, measure,
model and analyze data and behaviour. These analytical tools and
methods have led companies to lift response rates and to improve
profitability.
THE INTRODUCTION OF NEW PLAYERS
CONTINUES TO PROPEL GROWTH
From the extreme of smarter technocrats to better creative
types, both have bolstered the science side and the art side of the
business.
REFINED TRACKING METHODS
Direct marketing is constantly monitored to track
demographic and lifestyle changes. These changes allow users
to reliably predict future sales and extend opportunities.
IT IS THE ONLY TACTILE
MARKETING METHOD
Since branding is important, direct marketing is the best way
of getting your customers to smell, touch or experience your
product first hand. It allows the marketer to send samples easily
by mail or by shipping them overnight via a courier service.
There are also many external factors that will help direct
marketing flourish in the future.
DIRECT MARKETING IS FUELED
BY TECHNOLOGICAL ADVANCEMENTS
As technology continues to grow, direct marketers find new
methods to develop in many areas. The cost and time of computing
has rapidly decreased as the technology has accelerated. New
technologies, especially the Internet, are solid reasons for direct
marketing’s growth today.
NEW SHIFTS IN WORK PATTERNS
More single, one-parent and dual income families have
drastically changed the work model. Women in the workplace have
more money but less time, so their time has shifted from hours
in the mall to time on the Internet and use of TV for home
shopping.
THE EVER-EXPANDING
‘BABY BOOMER’ GENERATION
This new generation of 50+ has enormous buying power and
15 they are quite familiar with computers. They are becoming
 We are bombarded by over
$5 million worth of
the most important source for commerce in general and for

commercial and media

fundraising organizations in particular.
THE SKYROCKETING COST OF SALES CALLS messages every week.
It is estimated that it now costs an average of $200+ to make a
sales call. This does not mean that each call is successful. It is
merely the cost of maintaining a sales person on staff to make
regular sales calls. This is another reason why there is a lack of staff
in a department store. The profit margins make it prohibitive to
maintain large sales or service staff especially when competing with
companies that offer the same goods on the Internet.
EASE OF SHOPPING
Not only is shopping by catalogue or on the Internet a great
convenience but also other innovations like credit cards, toll-free
numbers and overnight delivery have helped make such shopping
easier and very popular.
THE CONSTANT FRAGMENTATION
OF CONSUMER MARKETS
Multiple channels and media options have made it harder to
capture audiences by traditional advertising means such as mass
media. This in turn has forced companies to divert funds from mass
media marketing to more targeted marketing.
GROWTH AND THE IMPORTANCE OF
OTHER INTEGRATED MARKETING METHODS
From call centers to the Internet, many of these new methods
help marketers to grow and become channels for collecting
valuable data and information.
However, the most important reason why direct marketing
will continue to grow is that marketers want to see a return on
investment, not in some distant future but now. Direct marketing
has the capacity to deliver that promise.
Today direct marketing is booming because it is accountable.
Tomorrow as consumers turn increasingly to new media for
information and demand relevance and value, marketers must
keep pace and provide quantifiable results.
The popularity of direct marketing is evident in the fact that
it boasts three Canadian associations devoted to it.
• The Canadian Marketing Association (CMA)
• The Direct Marketing Association of Toronto (DMAT)
• Association of Internet Marketing and Sales (AIMS)

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 THE POWER OF DIRECT
United States direct
THE CANADIAN MARKETING ASSOCIATION (CMA)

marketing figures:
Formerly known as the (CDMA) Canadian Direct Marketing
• Sales of more than $1.93 Association, it now represents:
trillion. • 3,000 members
• Each dollar spent on • 750 organizations
direct marketing yields on
average an ROI of $11.65.
DIRECT MARKETING ASSOCIATION OF TORONTO
By comparison each dollar
(THE DMAT)
spent on non-DM
advertising yields an ROI
Represents:

of $5.29.
• 500 members

• Direct marketing employs

• 275 organizations

1.7 million people. ASSOCIATION OF INTERNET MARKETING AND

* Collective sales efforts SALES (AIMS)
support 8.8 million other
jobs, and 10.5 million US
Represents:
jobs in total.
• 2,000 members
• Direct marketing
• 600 organizations
generates 10.3% of the
US Gross Domestic
Product. A CANADA POST SURVEY
* Source: ROI, Sales, Expenditures and
In spite of the negative connotation of direct marketing as
Employment in the US, 2006 – 2007 Edition junk mail, people like receiving mail. Here are the findings from
Canada Post:
1. Seven out of ten people like receiving mail.
2. Many people feel that getting mail is like receiving a
‘Birthday present’.
3. People tend to spend an average of 3 1/2 minutes sorting
their mail – often over the wastebasket.
4. Retail store catalogues, free samples, coupon books are most
popular while sweepstakes are the least popular.

17
 PERSONAL EXPERIENCE
In the late ‘80s when I worked as an art director for Ogilvy &
Mather (Canada), the advertising agency employed scores of people
in every department from account services to media. In those days
the agency was one of the largest with over $170 million in revenue
and occupied three floors. Most of the marketing dollars were spent
on reaching new customers through advertising.
The agency’s direct marketing division, Ogilvy & Mather
Direct, had a small office on another floor with no more than
fifteen to twenty people. Today, not only Ogilvy & Mather Direct,
now called OgilvyOne, but practically every other advertising
agency including MacLaren McCann, Wunderman and Cossette
in Toronto, have a huge direct marketing department, comparable
in size and importance to their advertising departments. Direct
marketing no longer plays second fiddle to advertising.
In 1999 I was hired as marketing manager and creative
director of Interactive Marketing Group (IMG) when they opened
their Canadian head office here in Toronto. IMG was a division
of Response Marketing Group from Richmond, Virginia. Our first
account was CIBC. We were responsible for the direct marketing of
the bank’s four credit cards worth two million dollars back then.
The growth of direct marketing has been so dramatic that
many small and large direct marketing organizations have cropped
up all over the world. Marketers not only demand a return on their
investment but they have also realized that it makes more sense to
talk to their target market or present customers directly through
direct marketing methods.
The Web and the Internet, both an integral part of direct
marketing, are adding to the impetus and growth of this industry.
In 2001 I became the creative director of HJC new media and
have watched it become an Internet agency focused purely on the
non-profit segment via viral marketing. Many businesses have
shifted their marketing dollars from advertising to direct marketing.
Now, some of the biggest spenders are:
• Financial services - banks, credit cards, etc
• Pharmaceutical companies
• Charities and non-profit organizations
• Business to business
By the early 2000s, direct response sales in Canada were
recorded at $51 billion, providing 482,000 jobs and spending
$9.3 billion on direct response advertising. The number of jobs has
more than doubled in the past five years.
18