Data-Driven Direct Marketing: Quality over Quantity

by Liz Gray, with research from Stephane McLean

Recent years have seen considerable change in the direct marketing industry.  Marketers now aim for ‘quality over quantity’, preferring to reach the most likely targets rather than larger numbers.  Achieving that quality takes ever-increasing amounts of data, as marketers refine their ‘ideal customer’ by using any information they can.  These changes in the industry have been fueled by many sources: shifting demographics; a shifting legal landscape; and the explosive uptake of new technologies, with their extraordinary data-gathering potential.

The new techniques and their causes

Direct marketers used to “spray and pray”, blanketing an area with ads and hoping that someone, anyone, would respond.  But with so much more data available, and with stricter spam and marketing laws, marketers are turning to more precise techniques.  

Blanket marketing, whether by mail, email, or phone, has been on the decline for several years.  New laws are partly responsible for that decline: the introduction of the Personal Information Protection and Electronic Documents Act (PIPEDA), the Canadian Anti-Spam Law, and the CRTC’s Do Not Call List added risk to the already inefficient spray-and-pray techniques.  Big mailing lists sold by third-party list brokers now come with potential liabilities, and consequently, more marketers are choosing to keep their lists in-house.  (Of course, third party “list management” services have sprung up in place of the list brokers—firms like Markitors offer list hygiene and analytics to keep email marketing running smoothly.)  

Additionally, missing the Long Form Census in 2011 meant serious, multi-year gaps in the big mailing lists.  The advantage of the big lists was the near-total coverage they’d permit: without that advantage, the paucity of detail that the big lists offered couldn’t compare to new data-gathering techniques.  Marketers now have the opportunity to efficiently understand what drives individual customers and target their best fits—much better value-for-money than the old shotgun approach.

Demographic shifts have also changed marketers’ tactics.  Typical assumptions based simply on age, sex, and income are no longer valid.  Baby boomers are working longer and retiring into urban centres; millennials have less disposable income than traditional models predict.  Immigration—which, by 2016, accounted for roughly two-thirds of Canada’s population growth—means that the “average Canadian’s” spending patterns, interests, and attitudes are less predictable than ever before.  

Additionally, and unexpectedly, digital marketing has increased the value of flyers, mailers, and other print-media tools.  Consumers, inundated with digital ads, engage more with the comparatively few pieces of print media that are delivered directly to their homes.  They’re both more likely to remember a mailer than a banner ad, and they’re more likely to follow up. That said, marketers who combine well-targeted digital and paper campaigns can be more effective than those who choose just one type of ad (“synergy, not silos”).  The key remains “well-targeted”—few products have universal appeal, and a marketer who focuses on likely targets has the best chance of success.

Where does the data in ‘data-driven’ come from?

The data that drives the new direct marketing comes from lots of places, including social media, brokers and intermediaries, and the marketers’ own records.  Campaigns increasingly leverage consumers’ engagement with other platforms, both to reach new potential customers and to gather data from those they already have.

For instance, American Express ran a campaign in 2011 called “Link, Like, Love” that took advantage of their cardholders’ Facebook use.  By opting in, the consumer agreed to AmEx’s monitoring of their Facebook likes, shares, and geolocated check-ins.  In return, AmEx offered personalized deals and discounts. AmEx is notable as an early adopter of social media and data-based marketing, and for its targeting of “tech-savvy millennials”, even offering a credit card designed specifically for millennials’ interests (dining and travel, generally), and offering small businesses targeted social media advice.  AmEx’s kind of multi-platform integration lets marketers pull data from many sources (e.g., mobile wallets, social media profiles, credit card purchases, and more to

Back in the physical world, in addition to its broad-beam “Neighbourhood Mail” and its ultra-targeted “Personalized Mail” service, Canada Post (CP) now offers “Postal Code Targeting”.  “PCT”, as the name suggests, lets marketers deliver to consumers based on their postal code—which most businesses collect with billing data.  Representatives of Canada Post stress that amalgamating over the postal code (usually around 20 households) preserves each individual’s informational privacy—and on CP’s end, it may.  But the collection is done by the marketers, not by CP, and that amalgamation may obscure exactly what’s being collected. In addition to direct mailing services, Canada Post also offers businesses the ability to rent “prospect lists” of potential customers, operated through third-party “service providers” to limit the disclosure of personal information.

To sum up…The new direct marketing has turned away from mass advertisements distributed indiscriminately.  More and more marketers are adopting data-driven targeting techniques, using new and more precise ways of obtaining information on consumer demographics, psychographics, and buying habits.  Some of these changes are in response to tighter Canadian privacy laws, but rather than preserving privacy, the new techniques may just implicate privacy in new and different ways.  For instance, marketers are warned to be careful of “the creepy line” when reaching out—in this sense, not to reduce their data holdings, but simply not to reveal how much they know.  A Facebook like might result in a flyer, or an automatic discount, or nothing at all.  Even with opt-ins, in the age of multi-platform integration, it’s hard for consumers to be sure who knows what, or where their information is going.