What is 'Direct Marketing'
Direct marketing is a form of advertising in which companies provide physical marketing materials to consumers to communicate information about a product or service. Direct marketing does not involve advertisements placed on the internet, on television or over the radio. Types of direct marketing materials include catalogs, mailers and fliers.
BREAKING DOWN 'Direct Marketing'Direct marketing removes the "middle man" from the promotion process, as a company provides a message directly to a potential customer. Companies with smaller advertising budgets typically use this type of marketing since they cannot afford to pay for advertisements on television and often do not have the brand recognition of larger firms.
How Direct Marketing Works
Direct-marketing messages generally include a call to action, encouraging the recipient to respond via a toll-free phone number or a reply card or by clicking on a link in an email promotion. Companies are able to measure the effectiveness of their direct-marketing campaigns by tracking responses. Direct marketing is more effective when companies use targeted lists of prospects developed using available marketing data that can segment them into identifiable groups that are likely to have an interest in a product or service.
Over the years direct marketing has developed a bad reputation for cluttering up people’s mail boxes with junk mail or generating spam in email inboxes. Many companies engage in opt-in or permission marketing, which limits their mailing or emailing to only those willing to receive it. Companies select communication channels they consider most effective for a particular market. For instance, a new gym may find more success distributing flyers, while a new grocery store prefers to mail promotional coupons to the residents of nearby neighborhoods.
Pros and Cons of Direct Marketing
Companies that use direct marketing benefit from being able to focus limited resources on a targeted promotion, which also allows them to personalize the marketing message. Because it is easy to measure responses, companies can test different marketing messages for improving the response rate. Direct marketing can be cost-effective if the customer database is well-managed.
The downside of direct marketing is that response rates can vary widely making the flow of prospects unpredictable. Ineffective campaigns can be costly, especially if they occur frequently. Companies that send blanket direct mail or email promotions have to overcome the negative image of junk mail and email spam. The key to effective direct marketing is an accurate database, which can be expensive to maintain.