Features major direct marketing and advertising trend with long term impact, details the 7 profit drivers for insurance direct marketing and explores Web 2.0 opportunities for direct marketers.

1. “Count Down to Profits”
The 7 Profit Drivers of Direct Marketing
Presenters:
Bill Tyson Teressa Sund
Executive Vice President Vice President
AMPAC Insurance Marketing U.S. Bancorp Insurance
Services, LLC

2. Agenda
• 2008 Direct Marketing Review & Outlook
• Change Drivers that will Affect Direct
Marketing - Long Term
• The 7 Profit Drivers of Direct Marketing
• Web 2.0 as a Direct Marketing Tool
• Open Discussion

3. “Internet advertising over the
past 2 years has outpaced
forecasts by 25% and 40%”
Source: IBM Institute for Business Value analysis

4. Advertising Spend to Media Consumption
Media Consumption vs. Advertising Dollars Spent
Time Spent Ad Spend
Area of
Areas of Inefficiency Opportunity
34%
35%
30%
26%
25% 23% 23%
22%
20% 18%
18%
15% 13%
10% 8%
4% 4%
5% 3% 3%
2%
0%
Network Cable Radio Magazine Newspaper Internet Other
4
Sources: Time Spent: SRI Knowledge Networks, Spring 2007;
Ad Spend: TNS Media Intelligence, Strategy 2007 YTD (1/1/07-9/30/07) Total Spend by Media

5. 2008 Direct Marketing Production Trends
• Decline of Middle market service
providers
• Digital print technologies
• Smart statements
• Variable, data driven fulfillment
• Customer service
Vertical Market Trend in Direct Mail - January 2008 Winterberry Group

6. 3 Macro Trends in
Direct Marketing in 2008

10. 2009 Direct Marketing Outlook
Vertical Specific trends:
• US economic concerns
• Retention
• Multi-channel solutions
• Postal optimization
• Marketing automation
Vertical Market Trend in Direct Mail - January 2008 Winterberry Group

11. “The trends toward creative populism, personalized
measurements, interactivity, open ad inventory
platforms and greater consumer control
will generate more change over the next
5 years than the advertising industry has seen in
the last 50 years.”
Dr. Saul J. Berman, IBM Global Media Practice

12. Advertising Industry Changes
that will Affect Direct Marketing
• Digital, Mobile and interactive formats
(incl. ads in games) are clearly the key to
overall ad-industry growth.
• Four Change-Drivers
• 3 Critical Success Factors
*IBM Global Business Services report, “The End of Advertising As We Know It,” 2007.

13. Shift in Control in the Ad Industry
• Fragmentation
• 4 change drivers:
• Control of Attention
• Creativity
• Measurement
• Advertising Inventories
*IBM Global Business Services report, “The End of Advertising As We Know It,” 2007.

14. Driver #1: Control of Attention
• Consumers are in control
• Ad-skipping, sharing and rating tools.
• Half of DVR owners watch 50% or
more of programming on re-play
(enables ad-skipping).
• Personal PC time now rivals TV time
• The biggest marketer challenge

15. Driver #2: Creativity
• From campaigns that “Create
Awareness” to those that “Drive
engagement”
• Creative Populism
• User Generated Content

16. Driver #3: Measurement
• Shift to “Outcome based” marketing
• Tied to ROI
• Individual-specific (including
messaging)
• Involvement-based (3-D interaction
with the brand)

17. Driver #4: Ad Inventories
• Convergence – Media Delivery
• Open Ad Platforms

18. 3 Critical Success Factors
Creativity
Business Model Changes
Business Re-Design
*IBM Global Business Services report, “The End of Advertising As We Know It,” 2007.

19. THE “7 PROFIT DRIVERS”
OF DIRECT MARKETING

20. The “7 Profit Drivers”
• A Business Review Model that uses a simple and
logical approach toward improving direct
marketing results.
• Involves a process of rigorously reviewing and
rating the profitability of your direct marketing
results.
•Developing action plans to improve key the 7
Profit drivers.

21. “Move the needle” by Focusing on 7 Profitability Drivers
Rank Level 1 Level 2 Level 3 Level 4 Level 5
Audience/SoM X
Offer X
Contact/Personal X
Experience
Media X
Channel X
Message X
Creative X

22. 7 Profit Drivers of Direct Marketing
1. Audience
2. Offer
3. Contact Strategy (and Customer Experience)
4. Media
5. Channel
6. Message
7. Creative

23. Building ROI
What Makes People Respond?
20%= Creative/Graphics 40%= The piece gets to the
right person
20%
40%
40%
40%= Relevancy
Source: PODI 2006

24. 1. Audience
• Know your customer
• Determine the value of segments
• Work the most profitable segments

25. Where are your Integrated database marketing capabilities?
Reporting Stages 1-4
1. Standard reporting – by segment • What happened?
2. Ad Hoc reporting – by segment • How many, how often, where?
3. Query/drill down • Where exactly is the problem?
4. Alerts • What actions are needed?
Analytics Stages 5-8
5. Statistical analysis • Why is this happening?
6. Forecasting/extrapolation • What if these trends continue?
7. Predictive modeling • What will happen next?
8. Optimization • What is the best that can happen?
Source: Competing on Analytics by Davenport and Harris

26. 2. Offer
• Make selling superfluous
• Two key ingredients every successful offer delivers:
• Value and
• Satisfaction
• Marketers can enhance the value of an offering to the
customer by:
• Raising benefits.
• Reducing costs.
• Raising benefits while lowering costs.
• Raising benefits by more than the increase in costs.
• Lowering benefits by less than the reduction in costs.
*

27. 3. Contact Strategy
• Contact optimization strategies should vary by:
• Product
• Segment/sub-segment
• Must address lifecycle needs.
• Contact Optimization Formula

28. 4. Media - Outbound
• Evaluate ROI
• Dominate with distribution.
• Align media spend
• Leverage Word of Mouth

29. 5. Channel - Inbound
• Measure and optimize leads, conversion rates and sale
rates through all inbound channels.

30. 6. Message
• Impact quotient
• Positioning
• Tailor your message to #1, your Audience.
• Testimonials

31. 7. Creative
• Creative has only a 20% impact on your ROI.
• Utilize an organized approach for “Beating the control”

32. In the Words of Richard Cytowic
“The true marks of creativity are:
• the ability to sense which problems are likely to yield
results, and so, are worth tackling,
• confidence that you can solve the problems that you single
out for a solution, and
• a dogged persistence that keeps you going when others
would give up.”

33. Web 2.0
The Impact of Social Networking
on
Direct Marketing

34. Web 2.0 – The Impact of Social
Networking on Direct Marketing
Malibu, CA – Near Point Dume

35. Web 2.0
• What is Web 2.0?
• 3 Drivers:
• People’s desire to connect
• New and improved interactive
technologies
• Online economics
• There is a revenue model in there
somewhere!

36. May 12, 2008

37. Web 2.0 – A Groundswell?
• Key characteristics
• Growth of Social Networking sites

38. 7 Categories of Social Media

39. 1. Publishing platforms

40. 2. Social Networking Sites
2. Social Networking Sites

41. 3. Democratized Content
Networks

42. 4. Virtual Networking Platforms

43. 5. Information Aggregators

44. 6. Edited Social News Platforms

45. 7. Content Distribution Site

46. $150 Million in Ticket Sales!

47. 7 Social Media Marketing Principles
• Relinquish Control over the message
• Honesty, ethics and transparency
• Participation in the community is marketing
• Communications to audiences is outdated
• Build value for the community
• Inspire your community with real, exciting information
• Intelligently manage media

48. Energizing the Base –
Through Word of Mouth Marketing
• Word of mouth succeeds because:
• It is believable – testimonials are far more credible than any media
source.
• It is self-reinforcing – if you hear the same thing from multiple
sources – then it must be true
• It is self spreading – if a product or service is great, its word of
mouth generates more word of mouth and the effect is exponential.

49. 5 Common Objectives
Companies Pursue
• Listening
• Talking
• Energizing
• Supporting
• Embracing

50. Recommendations for the Direct Marketer
• Phase 1: Discovery
• Phase 2: Planning
• People
• Objectives
• Strategy
• Technology
• Phase 3: Execute – Start Talking to the
Groundswell
• http://www.willitblend.com/videos.aspx?type=unsafe&vid
eo=glowsticks

51. “You can’t behave in a calm,
rational manner; you’ve got to be
out there on the lunatic fringe.”
-Jack Welch

52. Open Discussion

53. References/Acknowledgements
• “Vertical Market Trend in Direct Mail” - January 2008
Winterberry Group.
• “The End of Advertising As We Know It,” IBM Global
Business Services report,” 2007.
• “Groundswell – winning in a world transformed by social
technologies”, Charlene Li and Josh Bernoff. Harvard
Business Press, 2008, Forrester Research, Inc.
• Develop a customer profile at
http://groundswell.forrester.com
• “Now is Gone”, A Primer on New Media, Geoff Livingston,
Bartelby Press, 2007.
• “Social-networking sites work to turn users into profits”,
USA Today, by Jon Swartz, May 12, 2008.

54. http://groundswell.forrester.com

55. Definitions and Consumer Usage
• Social networking sites – content generated web sites that are used to connect
people. Facebook, MySpace, LinkedIn and Spoke.
• Blog - A blog (an abridgment of the term web log) is a website, usually
maintained by an individual, with regular entries of commentary, descriptions
of events, or other material such as graphics or video. 25% read blogs, 14%
comment on blogs and 11% write a blog.
• Wiki – (from the Hawaiian word “quick”) A wiki is a collection of web
pages designed to enable anyone who accesses it to contribute or modify
content, using a simplified markup language. 22% visited wikipedia –the 8th
most popular site on the web; only 6 % of consumers added content to a Wiki.
• Tags - A tag is simply a word you use to describe a piece of content –
bookmark a web site, photo or an article. Unlike folders, you make up tags
when you need them and you can use as many as you like. 7 % of US
consumers use tags.
• Widget – desktop item that streams content.
• Forums and ratings reviews – with posts and responses threaded together
into a discussion. 1 in 5 US consumers are involved in forums.
• RSS (really simple syndication) feeds and Widgets (i.e. weather widget) –
giving people the content, in the form of updates, they want . 8% of US
Consumers use RSS.