1. June 2010
Entering the
Digital Direct Marketing Space
An Introduction
Joep Hutschemakers

2. Market definition
Direct Marketing Definition
Traditional DM Channels Direct Marketing Definition Digital DM Channels
 Direct Mail (Catalog)  Email
 Direct Mail (Non-catalog)  Internet Display
 An interactive non face-to-face process of
 Telephone Marketing addressable communication …  Internet Search
 DR* Television  …that uses one or more advertising media…  Internet Other
 DR* Radio  …to effect, at any location, a measurable sale, lead,  Mobile
retail purchase, or charitable donation…
 DR* Magazine  Social Networking
 … with this activity analyzed on a database for the
 DR* Newspaper development of ongoing mutually beneficial relationships
 Insert Media between marketers and customers, prospects, or donors.
*DR=Direct Response
Purpose
 Solicit an order (Direct Order)
 Generate a lead (Lead Generation)
 Drive purchases at retail outlets (Retail Purchase)
 Raise funds for nonprofit organizations (Fundraising)
Source: The power of direct marketing - 2009-2010 edition by DMA; Principles of Marketing Engineering by Gary Lilien
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3. Market
Fundamentals
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4. The World Is Moving Digital
Relevance, Interactivity and Measurability!
From: To:
Mass Targeted
Offline Online
Single Multi Channel
One way push Two-way dialogue
Art Science (by the numbers)
Today it is all about Relevancy, Interactivity and Measurability
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Source: US Dep of Commerce/NTIA, InfotTrends, TREKK Cross Media, The Media Audit 2009

5. The need for personalized 1:1 communication after the digital revolution is
the reason Direct Marketing outgrows traditional expenditures fast as
marketers continue to shift away from traditional mass media
Direct Marketing Spend outgrows mass marketing spend
Mass 52%
48%
46%
50%
54%
52%
DM 48%
Source: Outsell Annual Advertising Study 2010, The Power of Direct marketing 2009-2010 edition by DMA: 4

6. Digital Direct Marketing is expected to surpass Direct Mail in 2014…
Total US DM Expenditures in $b
CAGR ‘04-’09 CAGR 09-’14
2.2%
(3.3)%
Traditional
Other
.5%
(1.1)%
Direct Mail 16%
20%
Digital
Source: Outsell Annual Advertising Study 2010, The Power of Direct marketing 2009-2010 edition by DMA:, expert interviews 5

7. … as Digital will continue to capture share from traditional media
But Direct Mail is not going to disappear overnight
CAGR ‘09-’14 DM Expenditures per Channel
DR Newspaper
DR radio Traditional
Media
DM (catalog)
Losing
Share
DR Magazine
Telephone
7%-14% DR TV
DM (non-catalog)
9%-18%
11%-22%
Digital
13%-24%
Media
13%-26% Capturing
Share
15%-30%
29%-60%
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Source: Outsell Annual Advertising Study 2010, The Power of Direct marketing 2009-2010 edition by DMA:, Winterberry Group Survey

8. It is all about ROI – Digital channels give highest ROI
ROI: DM driven sales per dollar of DM advertising
ROI by Medium
Average ROI across all verticals
$1 invested in DM results in $11.7 of sales
Avg across all
11.7
verticals
Source The Power of Direct marketing 2009-2010 edition by DMA, eMarketer cited by ExactTarget, „08 Channel Preference Survey 7

9. Customer
Needs
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10. Marketers felt relatively comfortable with the traditional direct marketing and
mass marketing channels
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11. In the last decade there has been a rise in new interactive media channels
marketers need to keep up with
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12. And with these new interactive channels the dynamics of the marketing
communications landscape has become quite complex
Lack of knowledge, time and optimization
Impacts all aspects of the Direct Marketing Value Chain… 11

13. Biggest challenge for marketers is obtaining quality data to identify prospects
and bring relevancy
Analyze Data & Set Campaign Build &
Design Creative Track Results
Identify Prospects Strategy Execute campaign
Unfulfilled Important Needs Comments Opportunity for SR
Up-to-date lists • Physical addresses go out of date 1%/mo • SR will plow back the immense
• E-mail addresses go out of date 3%/mo amount of response data that SR
gather s via registration
Sufficient data and analytic • Databases are still too transactional and tools/through deploying digital
tools to come up with more not suitable for truly 1-1 marketing media
relevant offerings
“Being relevant is key” , “people give so
much data away these days, we should use
that to be relevant to them in our
communication” (CMO quote)
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Source: : 1)The power of direct marketing - 2009-2010 edition by DMA 2) QBR – Current Economic trends in Direct and Interactive Marketing by DMA/WinterberryGroup Q4 „09

14. Lack of cross media optimization as well as lack of knowledge
But appetite to experiment
Analyze Data & Set Campaign
Design Creative
Build & Track Results
Identify Prospects Strategy Execute campaign
Unfulfilled Important Needs Comments Opportunity for SR
Enough time to keep up with
the meteoric rise of new
• As technologies quickly mature, • Print providers are seen as
channels and media types technical companies, marketers
marketers look to consolidate purchase
decisions with single supplier and agencies expect us to educate
Technical savvy - marketing them on the use of latest
teams technologies!
Innovate • Appetite to experiment. Fear factor: “if I • Offer end-to-end solutions instead
don‟t do it someone else is going to eat of point solutions
my lunch”
Cross media optimization as • they are site- and channel- centric • Provide education and insights in
marketers organized in silos instead of a customer- centric‟ performance of all building blocks in
relationship marketing‟ view a cross media campaign (channel,
response type, lists, etc)
• Each online marketer trying to
understand ROI from efforts in their
channel
Source: A.T. Kearney CMO Summit, OD Conference 2010: CMO Spotlight panel, 1) QBR– Current Economic trends in Direct and Interactive Marketing by DMA/WinterberryGroup Q4 ‟09; 13

15. Turning data into action is hard so is the integration of traditional and emerging data
ROI, ROI, ROI
Analyze Data & Set Campaign Build & Track Results
Design Creative
Identify Prospects Strategy Execute campaign
Unfulfilled Important Needs Comments Opportunity for SR
ROI, ROI, ROI • Marketers are being held accountable • Help them to keep their job, by
like never before showing how their money is spend
and what the return is
Turning data into action • Multitude of online channels leaves • Provide insightful dashboards
marketer adrift in sea of data
Integration of Traditional and • pURLs remove the lid of the black
Emerging data box in direct marketing, it helps you
to optimize moving forward
“Channels will always change, the
need for data doesn‟t nobody wants
less data.”
Source: 1) Key Online Marketing Trends for 2010 Unica survey 155 marketers, interviews
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16. Product
Solution
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17. Print providers can take the driving seat steering the DM value chain
Expand from a strong print position to capture more value upstream and/or downstream
Analyze data & Set Campaign Build & Execute
Design Creative Track Results
identify prospects Strategy Campaign
Choose Channel Choose Media Type Choose Response Channel
Web
Social Postcard Flyer Call center registration
DirectMail
network
Contest/
Banner Letter Trade Show
pURLS
Newspaper/ Email
magazine
Newspa Fax Data
HTML QR Codes
Internet Mobile per Ad Import
Webinar Insert Survey Business
TV/Radio Telephone
Reply Card
Response Measure:
Fulfillment: Marketing Report Lead Distribution
Kitting, Email,
All responses collected in Dashboards
Electronic, VDP, one database. Real Time, automatically
Sales Reports
POD, Mail, etc. Centralized, Online, generated
Qualified 16

18. Integrated cross media solution for commercial print companies
Build on key elements of supply chain mgt, incl reducing printed inventory
Ambition:
with POD capabilities, warehouse mgt and fulfillment Communication Service
Provider
By building, executing
and measuring
integrated cross channel
Data modeling and data direct marketing
mining campaigns. (“I still do
Core competencies
your printing and
Comprehensive marketing program
fulfillment too”)
measurement metrics and analytics
1to1 ROI-driven multi-channel marketing solutions
Web To Print
Digital asset mgt systems/inventory mgt
Mailing & Fulfillment
Best-in-class prepress and print production
Today:
Mail/fulfillment/print service
provider. By providing
customized document mgt and
workflow solutions. Printing on Time
digital press, offset, packing
and shipping orders. (“We can
do Direct Mail too) 17

19. Marketing
& Sales
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20. Multi-Channel Communications – A Different Kind of Sale
Different kind of culture
Sales: Different DMU
 Need to get past the print buyer and get to the marketing
leadership
Sales: Different pitch
 Commodity based sales  marketing solutions
 Transactional  consultative solution discussion
 Machinery  marketing
 Marketing:
– Up-to-date knowledge need
- Educate, educate, educate production, sales and
customers on a religious bases
- not a one push at the start
 Executive staff:
– needs to be the major fanatic to drive this
Source: Multi-Channel Communications Measurement & Benchmarking. InfoTrends, 2008., client and expert interviews 19

21. Sales: Different Decision Making Unit
Roles involved in buying DDM solutions
Role Responsibility Look for in DM solutions Sales pitch focus
Marketing  Overall marketing  Integrating processes across  Strategy,
leadership strategy and budget channels and departments, measurement,
(CMO, VP) enhance collaboration and marketing
productivity, measure overall optimization
performance
Relationship  Develop targeted marketing  Functionality that supports  Emphasize
marketer programs aimed at sustaining and segmentation, campaign mgt, and customer insight
(direct and growing customers‟ or prospects‟ customer analysis and value mgt
database interest in a firm‟s products or
marketers) services  Personalization, dialog marketing,  Appetite for
event triggers, and contact technology
optimization
Interactive  Monitor and apply new and emerging  Alignment of internal and external • Integrating
marketer channels and technology solutions mostly activities, centralize measurement, interactive
delivered by smaller vendors focused on and optimize spend channels
specific niche /area of expertise
Marketing  Manage marketing budgets, establish standards, close  Simple, intuitive user interfaces that  Budgets,
operations the measurement loop support many users with varying processes,
levels of analytical and marketing fulfillment
 Manage and maintain marketing content demands
 Manage/ coordinate relationships with broader
marketing ecosystem of vendors, suppliers,
distributors, and service providers
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Source: The Forrester Wave :Enterprise Marketing Platfroms Q1 2008, Marketing Automation Indsytry Spotlight by TM Capital, Client interviews

22. Strategic
Aspects
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23. Personalized digital 1:1 communication is an extension of the traditional
commercial print direct marketing
Commercial printers are in the communication business
The Customized Communications Continuum Value
Integrated
Competencies/Skills
Marketing
Campaign Mgt
Multi channel
Communications
TransPromo
Communications
Advanced VDP –
1:1 Personalized
Communications
Web-to-print
Entry Level –
Simple Business
Communications Time
 Simple name  Browser based  Beyond mail  White space in  Personalized  Completely integrated
and address info application merge and billing docs, docs delivered management and
simple business statements, other via multiple tracking of message,
 Some targeted  Incl. page design,
correspondence transaction docs media, incl. print, time, person and
images and text order entry, job
to deliver email, web, media
tracking, template  Completely targeted
libraries, soft mobile, etc  Ongoing live
unique content messages with
proofing online based on specific,  Point solutions interaction with 22
full color images
payment detailed profile enterprise marketing
and text
info systems

24. Offering integrated cross media solutions will secure VDP sales and accelerate
profits
Direct Mail (VDP) is and will be the largest spend bucket in DM in the short term
160 50%
150
45%
140 135 25 Integrated
• Sellable chartable items
Campaign
40% • drive the sales of all
115 20 Roadmap, mgt &
120 media, incl VDP
Gross margin in % of sales
dashboard
35%
Sales value in $1,000
100 100 15 20 45 • Every Direct Mail
100
30% Digital solutions campaign must have an
(email, pURL, online response option
80 25% mobile, etc) • Marketers do not want
point solutions
20% • VDP is the standard
60
• Monochrome & 4/C
100 100 100 Variable Data
95 15% devices that run VDP
Print need to be fed as they are
40 80
underutilized
10%
20
5% • Traditional Direct Mail
Traditional print
is/will disappear
0 0%
2005 2007 2009 2011 2013
Response .5-1.5% 3-5% 7-9% 10%+
Rate
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Source: DMA,, Romano & Broudy, expert interviews

25. Competitive landscape is characterized by commercial printers, agencies and direct
mail companies trying to enter the marketing/communications solutions market
Most print companies are still waiting at the side line
• A handful of players that
started 2-3 yrs ago are now
harvesting their efforts.
• Success stories are mainly
coming from medium
Credibility in market
sized/small companies
as a Marketing
Solutions Provider
High
• knowledgeable
marketing &
sales
organization
• effective cross
media platform
• Infrastructure in Commercial Print
Companies
place
Low
• processes Media Agencies
(Incumbent / Start-ups
streamlined
Size of bubble illustrates
relative TOTAL revenues
of the company
Print Print & Digital
• Although the train has
Media Offering
already departed still
many commercial print
companies are waiting
on the platform
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26. Many players are testing the waters and/or planning to enter the market for cross
media direct marketing solutions
Need to differentiate and to enter aggressively to capture market share
Commercial Printers Direct Mail providers
+ DDM is a “natural” extension from DM
+ Mailing and fulfillment, Print production
Direct Mail is and will be largest bucket of
+ Perceived as technology company + DM spend in the coming years
- Lack of (Direct) marketing knowledge Large asset base makes them less flexible
- Large asset base - and biased towards the print channel
Traditional Agencies
Integrated New breed
+ Already at table with marketing DMU
Cross Media
Focus too long on mass media + Very flexiblelow overhead lack of
due small size,
- Clients moving away from purchasing Direct legacy and
- Lack of scale
- media via agencies and hire them for Marketing
- Lack of in-house print capabilities
their creative strenghts Campaign Mgt
Marketing Automation Vendors Companies doing it in-house
+ Strong technology base
+ Direct control, leveraging marketing
automation investments
Vendors of campaign mgt platforms also have
+ strong market expertise - Lack of resources
- Lack of sales force - Lack of knowledge
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27. Questions?
Email: Hutschemakers@gmail.com
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