Internet Marketing Goes Direct

Internet marketers are re-writing direct marketing rules to fit the medium.

By Richard Cross

There is truth in the business mantra of the day, "the Internet changes everything. Long-standing icons are dropping fast. Everything from valuing stocks to booking travel is shifting into uncharted waters.

Direct marketing is no exception. Venerable direct mailers are joining Net-only newcomers to change forever the way goods and services are sold the world over. For example, Omaha Steaks, the venerable purveyor of high-quality meats through the mail reports it is revising its marketing targets to include the young, upscale Internet audience it recently discovered. The mailing list marketing upstart, ListsNow.com is successfully challenging long-established bricks-and-mortar based competitors from a remote server in the rural Southwest US. And, the Internet-only cataloger, Weekend-in-Florence is proving Americans will buy expensive glass, silk, and leather goods sight unseen from an unknown "brand" of retailer located in far-away Italy.

Such companies are finding the Net a good place to do business, but are also re-writing direct marketing rules and lore to suit the new medium. This article examines three distinct and mostly favorable changes the Internet is bringing to direct marketing. They include, 1) a shift to a world of marketspaces, 2) a new focus on converting fence-sitting maybes to buyers, and 3) globalization of the markets. Plus, I propose a new mantra to suit the era, Data Rules, Technology Delivers, Relationships Pay."

Marketplaces and Marketspaces

The Internet gives businesses a space to build customer relationships and to conduct transactions. Marketspaces do not require buyers to drive or walk somewhere to visit with sellers face-to-face. Nor do they require paper catalogs, direct mail solicitations, or any of the sales paraphernalia we associate with direct marketing. The number of sellers a buyer can visit is free of limits imposed by opening hours, distance, and the physical effort required to get around. Competing sellers are just a simple mouse click away. Buyers can even sit back while using intelligent agents to shop for them.

Catalog shopping shares some of the dynamics of Web shopping, including the promise of convenience, free access through 800 telephone numbers, next day delivery, and round-the-clock service. But, even though most catalog operations offer the same 24-hour-a-day, 7-day-per-week service offered by Internet sites, catalog shopping cannot match Internet shopping. Internet shoppers can easily compare offerings and obtain in-depth product information while sellers can change catalog pages instantly, customizing offers based on individual customer characteristics.

Old-fashioned direct marketing exists somewhere on a spectrum between the marketplace and marketspace concepts. At the distant end of the spectrum, far from marketspace dynamics, lies direct mail. Of course, direct mail can be involving. But it does not permit instant dialog, and has more in common with one-way communications than with interactive media. At the other end of the marketing spectrum and much closer to Internet dynamics is the telephone, the only interactive medium available to traditional direct marketers. In fact, the telephone and the Internet are so complementary that e-commerce sites are beginning to offer access to telephone-based customer information centers directly from a Web page.

Maybe Baby

Except for those occasional direct mail packages that ask for a yes, no, or maybe response, direct marketers are not accustomed to dealing with people who do not respond with anything but a yes to their offers. Maybes, prospects who need a little more persuasion or a personalized offer, are lumped with non-responders. This makes it impossible to offer further persuasive communications, or to adjust the way a product is offered. Consequently, maybe's are discarded along with outright rejections.

The Internet changes this traditional binary, yes/no approach in a positive way for direct marketers. The Internet allows the marketer to observe a customer's every move, even if they don't buy. And, because the Internet marketer lives in a world of zero communication cost, follow-up e-mail messages open the door to persuasion and conversion to yes. Assisting in this effort is the fact that creative and offers can change in real time, allowing the marketer to fine-tune communications.

In fact, it might be said that the primary contact strategy of the Internet marketer is to maximize the number of maybes in order to provide an ever-growing pool of new business prospects.

It will take a big adjustment for direct marketers to satisfy themselves with maximizing response instead of maximizing orders. Nonetheless, the same hunting and gathering principles that apply to acquiring new business also apply to maximizing leads.

The World Is Flat

The Internet makes the world look flat to every marketer. The usual barriers to communication and trade -- distance, culture, language, logistics, politics are quickly falling, creating a flat playing field where almost anyone can compete in almost any business from anywhere in the world.

This fact is most apparent in those industries where internet-only businesses have quickly grown to challenge their bricks and mortar competitors. The prime example is Amazon.com. Indeed, a new verb form of Amazon, being Amazoned, has arisen to describe the impact Amazon has had on competing booksellers. If you are a bricks-and-mortar company, you need a strategy to avoid getting Amazoned.

Companies that deal in products that normally move through electronic pipelines are especially vulnerable to virtual competitors. In fact, within the direct marketing world itself, the mailing list industry is faced with exactly this sort of competitor anyone can easily set up shop as a list seller. All that's needed is an Internet connection and a server.

My colleagues and I recently looked into this development and found that some of the best interactive list sources were not traditional list brokers and managers, but one person operations, or mom and pop businesses operating from outside the list brokerage community (Direct Marketing, June, 1999, Page 28). One of these, ListsNow.com. is growing at a rate of more than 30% a month at a time when many list companies with established clienteles are not growing at all. Another home office list seller told us he had customers in Europe and Australia, thanks to the fact that his company shows up when people use search engines to find mailing list sources. Some buyers are new to direct marketing, while more seasoned customers like the Web-enabled ability to experiment with selections and to determine counts without involving a broker.

Looking at the US from across the Atlantic, Webpreneur Alessandro Naldi, founder of the popular Web site, Weekend In Florence, sells unique Tuscan products mostly to American and Japanese consumers wanting authentic Florentian merchandise without the trouble of traveling to Italy. Naldi has expanded his offerings over the years to include travel arrangements and even tickets to the Uffizi a very handy service as anyone who has suffered interminable waits to enter Italy's most famous art museum on a hot August day will tell you.

Naldi had a world vision from the start. ListsNow was US-focused. Still, both entrepreneurs demonstrate that the Web is a global medium. Both cases clearly demonstrate that the Internet marketer's universe is not limited by the availability of mailing lists or phone numbers. Rather, it expands almost without limits to the four corners of the earth.

Data Rules, Technology Delivers, and Relationships Sell

More than any other communications medium available to marketers, the Internet facilitates economical collection and use of customer data. It produces too much data, however, for any human to process. So, instead of marketing based on the usual data sets generated by direct marketing campaigns, Internet marketers entrust moment-to-moment decision-making to computer-generated models and neural networks. Marketers develop the models that apply the rules, of course. But, the driving force behind communications is data. That's why I believe it is more accurate to say that data itself now rules the relationship between buyer and seller. And, technology delivers the message.

One thing that hasn't changed in the marketing equation is people. People still have a fundamental need to be recognized as individuals, and to exercise basic social instincts. The Internet excels in satisfying these needs. For example, e-mail and Web sites easily deliver personalized messages and rewards. In fact, reward programs offering frequent flyer miles, merchandise, cash and rebates have been syndicated so that any Internet marketer can get on the recognition bandwagon.

The Internet also accommodates human social instincts, and has been a social watering hole from the beginning. AOL, arguably one of the most successful online ventures, started out as a gathering place for special interest groups from farmers to small aircraft owners. Today, no web site is complete without a chat room, bulletin board, or some other opportunity to communicate with others using a company's product or service.

Direct marketers have always understood the value of nurturing relationships. Most can cite the value of a customer to the penny. And, while data and technology combine to enhance that value, it is the relationship, and not high-tech tools, that pays the bills.

In Conclusion The Ultimate Tool

That things are going their way on the Internet doesn't mean that professional direct marketers can be smug or complacent. Indeed, while Internet marketers are finding direct marketing practices to their liking, they are also adjusting traditional direct marketing rules to fit the new medium. The Web has its own dynamics the Internet clock runs faster, and Internet marketers necessarily focus more on managing prospects than on new business acquisition. On the Web, everything is testable, flexible, and modular. And, because the Web is moving so fast, experience is also building quickly; the result is that every day the basics of Internet marketing are becoming more advanced.

The Internet may be changing everything, but direct marketing is making the Internet a viable tool for change. Direct marketers' abilities to manage data, to use database technologies and to develop relationships are helping the Internet develop as a commercially valuable medium.

Indeed, the Internet itself is proving to be the ultimate direct marketing tool, and a great place to buy and sell things. Anyone with a Web site can offer goods for sale, a fact that is giving birth to a whole new generation of direct marketers. But, the world of the Internet is as flat for them as it is for even the old-time players, giving all an equal shot at success.

Richard Cross is president of Cross World Network www.crossworldnetwork.com, a strategic marketing consulting firm located in Tarrytown, NY. Cross and his associates work with companies and organizations wishing to adapt new marketing technologies and database marketing strategies to strengthen customer relationships. He is co-author with Janet Smith of Customer Bonding: Pathways to Lasting Customer Loyalty, 1995, NTC Business Books. He can be reached at (914) 591-6700 or via e-mail at rcross@crossworldnetwork.com.

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