Future challenges for direct marketers

According to Muthui, South African direct marketers are in for challenging months ahead on three key fronts:

• Pending South African legislation regarding direct marketing (DM) practices and how consumer information is used and;
• The entry of new foreign brand players into the market, who will be demanding a greater spend on marketing activities that embrace direct in the same manner as developed countries, such as Europe and US, which place greater emphasis on the power of DM.
• Raising the bar on what true, professional direct marketing encompasses.

Muthui elaborates, "Pending legislation will have a big impact on direct marketers in terms of consumer protection and privacy. Consumers will have greater control over their information and direct marketers will need to abide by what information can or can't be used, with the ultimate decision lying with the consumer.

Opt-in, opt-out

"On the legislative side, there are currently two schools of thought - opt-in and opt-out marketing. By opt-in marketing, the consumer decides whether or not they want to receive marketing communication and then elects to provide or decline his or her information. Opt-out marketing means a consumer is sent initial marketing information at contact level and then the consumer is given the choice of whether he or she wishes to receive future marketing communication, with the option to either remain on the database or to 'opt-out'," continues Muthui.

The opt-out model is a far better option for South Africa for one key reason. "South Africa is still considered a developing market with a very strong emerging middle class that has not yet had the opportunity to be exposed to new products and services via traditional DM methods. Ideally, they should be approached from the perspective of receiving an introductory communication and then deciding whether or not this is relevant to them. At the end of the day, if a consumer is not aware of an existing product or service, how can they opt in to receive the marketing information in the first place?

Muthui adds, "From a DMA perspective we need to rally industry together to address the challenges and assist the Government in writing and publishing this legislation to ensure that both the industry and consumers are protected."

More diverse audience

The DMA has also reviewed its representation and where it was in the past skewed towards the trade, it will now focus on a more diverse audience that includes the consumer. "Consumers can also approach the DMA for assistance and guidance and we'll also be focusing on developing consumer education programs about what effective DM constitutes and what the benefits are for consumers," comments Muthui.

New technology channels have also opened up a whole new avenue of what DM entails. In the past, DM was seen only as a carrier for mail, but with the advent of telemarketing and electronic channels, such as mobile telephones and email messaging, entirely new methods of reaching consumers have opened up.

However, the advent of these new technologies has not spared direct marketing from the vagaries of spamming, employed by many fly-by-nights who cause immeasurable damage to the perceived efficacy of the medium.

"Spamming is a global issue and is certainly not unique to South Africa. It is also more prevalent in electronic media such as email and SMS as these are personal, in-your-face mediums. Unsolicited and irrelevant messaging serves nothing more than to create an irate consumer. The industry has done a lot to prevent spam from proliferating such as employment of fire walls and so on at big corporates; however the home or small office user is often more susceptible to spamming," explains Muthui.

Underused

DM as a tool is very much underused in South Africa, compared to Europe and the US, where up to 50% of advertising budgets is allocated to DM. The DMA and industry have a lot of work to do in terms of raising the credibility of direct marketing locally and demonstrating its potential for delivering real results and measurable responses, rather than the junk mail perception it currently has with many marketers and brand owners.

"There are countless examples of poorly planned and executed campaigns by unqualified agencies who believe they can be specialists across all marketing disciplines and, secondly, the poor quality of databases remains a burning issue," says Muthui.

"Put the two together and you create immeasurable damage to the medium. One of the biggest arguments put forward as a case for DM is that it is measurable. Significant amounts are invested in advertising spend, yet it still remains a challenge to measure actual growth based on generic brand advertising.

Measurement process

Adds Muthui, "In DM there is a scientific measurement process. The marketing message is targeted to a specific individual and should address their specific needs. Essentially, you are approaching people who have the propensity to be marketed to and hence are more perceptive to your message. With direct marketing you can measure campaign by campaign specifically, analyse your return on company investment and also review where there is room for improvement."

Achieving all this, however, revolves around effective and analytical database management. Muthui says, "I firmly believe that the will exists in all client-facing organisations to get to know their customers better. The difficulty comes in with finding and constantly refining a system that dynamically, effectively and analytically captures the information you need. There is no technology that can do this entirely on its own. Rather, it is a hybrid of technology, people and processes to capture data and more importantly, the skills of the front-end person to capture, gather and then analyse information effectively.

"Infrastructure and software at the end of the day are just enablers. The key is how knowledge and customer information is applied and gathered by the staff and their understanding of the customer decision process. From a human resource point of view, it is vital to build a team with analytical capability to sort what is relevant and what is not. You need good customer analysts who understand that there is a distinct difference between product-type marketing and marketing to thinking consumers," he cautions.

In closing, Muthui is firm about the role of the DMA in meeting the industry challenges ahead. "Privacy laws are going to seriously affect how direct marketing is assembled. While this has seen global brands become more innovative and focused in their approach, South Africa has a great opportunity to achieve a high level of Industry 'hygiene' that is acceptable to all parties.

"With the right governance and transparency in place as well as the support and buy-in from the industry at large, the DMA will be working hard to raise the profile of direct marketing to where it should be - niched, focused and effective," he concludes.