How times have changed.

The last time the Direct Marketing Association held its conference in Toronto, back in 1993, conference attendees sat slack-jawed as speaker after speaker talked about a technological innovation that had the power to change the way they approached direct marketing forever. And just what was that innovation? A little something called the ‘Information Superhighway.’

‘There were so many people with these looks in their eyes,’ recalls Joe Racanelli, marketing director for ecommerce+, a Toronto-based Internet and telephony consultancy. ‘Some saw the possibilities and thought, ‘Oh my God,’ and others were wondering: ‘What’s going to happen?”

Quite a lot, as it turned out. In the six years since the so-called Information Superhighway first made an impression on the consciousness of Canadian direct marketers, the Internet has gone from esoteric concept to marketing reality. From a gathering place for geeks to a place where a growing proportion of the population can go online to buy books, order pizza and make travel plans.

‘The lingo has totally changed,’ says long-time direct marketing consultant Joan Throckmorton, president of Throckmorton and Associates in Pound Ridge, N.Y., and a veteran of dozens of DMA conferences, including Toronto in ’93. ‘I mean, ‘Information Superhighway’? That term is anti-diluvian now. It shows how we’ve gone through a total reconfiguration and you can see that represented in new opportunities and changes in our industry.’

John Cooper, vice-president of marketing at Federal Express Canada in Mississauga, Ont., uses the term ‘disruptive’ to describe the Internet’s influence on direct marketing over the past six years.

Cooper, who will be speaking at the DMA conference on the topic of global direct marketing, doesn’t mean by that that the technology is breaking things apart, however.

‘By disruptive, I mean it has shaken the foundation of how we conduct business and relate to customers,’ says Cooper. ‘People have been talking about one-to-one marketing for years, but the Internet gives us the potential to do it.’

Richard Bernstein, partner at direct marketing firm Cohn & Wells Partners in Toronto, says from his perspective, the Internet has made its mark as a new and efficient customer response channel.

”Fax, phone or mail it to…’ has been replaced by: ‘Visit our Web site at, or e-mail us at…” notes Bernstein. ‘It’s a much more timely and cost-effective response channel. It’s an instant, low-effort, low-cost exchange of information.

The Internet has also influenced how data is captured, with the use of passwords, log-ins, and PIN numbers, he continues. ‘A customer’s preferences, interests, likes, dislikes can be captured with a click of the mouse. This allows companies to better cater to customer needs and be stronger overall partners in the delivery of relevant information.’

Throckmorton agrees the Internet is an important new medium but says its use won’t necessarily harm other methods of communication.

‘People ask me if the Web will wipe out other media,’ she says. ‘No, it won’t. It was the same with television in the 1950s. People said it would be the death of radio and newspapers, and that hasn’t happened. But the Web is a very powerful thing and its use is increasing at a rate that is 10 times faster than other media.’

Racanelli concurs. ‘The Web has become an excellent one-to-one communications tool, but for building a brand, I think we’ll still see tried-and-true marketing methods being used. Business won’t give up one model for another, and you can’t give up what has worked so well in the past.’

He points to online booksellers Amazon.com and chapters.ca, which still have to promote their Web sites through billboards and print ads.

While it might have numerous advantages over catalogues and direct mail – timeliness among them – the Internet still has to overcome the same obstacles facing all direct media, says Throckmorton, namely, fulfillment.

A new Forrester Research study lends support to Throckmorton’s belief. Based on interviews with 40 retail, new media and manufacturing companies that have an online presence, fewer than half make a profit on their e-commerce operations. In addition, most fail to accurately measure the total cost of fulfillment, and 85% still can’t fill international orders because of the complexities of shipping across borders.

Racanelli says he isn’t surprised, adding that research has shown roughly two-thirds of Internet shoppers abandon their ‘shopping carts’ before the transaction is completed.

Why is there such a high rate of abandonment? Racanelli chalks it up to the fact that companies have not thoroughly thought through the fulfillment end of their business.

‘Consumers still want the personal touch. If you want specific information for your order status, for example, you’ll find the Web site you used doesn’t always provide you with that interaction to get the desired information.’

But he doesn’t deny the Web has had a considerable impact and influence on direct marketing as a whole.

‘Six years ago, direct marketing included mail and creation of mailing pieces. Today, much of that can be done through e-mail,’ he says, adding many consumers aren’t yet receptive to receiving e-mail marketing messages. ‘They see it as ‘spam’, so direct marketers have to be mindful of that.’

In concert with the rise of the Internet as a sales and marketing tool is the continued development of data warehousing and data mining.

Six years ago, companies were quite capable of capturing the data, says Racanelli, but no one really knew what to do with it.

‘Now, of course, it’s possible to find out much more about consumer behaviour.’

That’s not to say that in the past six years, the majority of marketers are using data mining to take the mystery out of regression analysis in developing their direct collateral. As Racanelli puts it, those in the industry are at vastly different stages of development.

‘Some are like Prometheus standing in the fire and doing wonderful things,’ he says. ‘Others are still rubbing two sticks together.

‘Overall, the companies that are in financial services have been ahead of the game. Just look at the number of credit card applications you’ve probably received lately for an example of data mining.’

As Richard Bernstein points out, there have been ‘incredibly unexpected benefits’ in customer knowledge with the advent of the Internet.

‘The more you know your customers, and the more they actually tell you, the better your ability to deliver the relevant information directly to their desktop,’ he says. ‘Every click tells a company something about the customer at no incremental cost, and any company who is ignoring what each of those clicks reveals is missing out on an incredible opportunity to raise the level of customer intimacy.’

FedEx, for example, gives customers the ability to track online the packages they send. Users simply enter their waybill and account number in order to see when a parcel was picked up, when it was put on the plane, when it arrived at the destination city, when it was put on the van and when it was signed for at the receiving end.

Cooper likens the Internet to the microwave oven. The microwave, too, was seen as a disruptive technology – albeit in the kitchen. Back then, it was primarily used to defrost food. Now it’s used to zap our meals.

‘The Internet has given us another channel,’ he says, noting that with every new channel comes the expectation and responsibility that the marketer will have to target that much more carefully.

Richard Bernstein agrees. Not only have customer expectations risen, he says, but time has remained a huge premium. Most consumers don’t have time to sift through content whether on TV, radio, print, direct mail or the Internet.

‘There is an expectation that the information will be condensed and include only what is relevant to these individual audiences,’ he says.

In other words, don’t bore them, and don’t waste their time.

Also in this report:

– DMA conference promises to cover it all: Biggest event on the direct marketing calendar has something for everyone p.D25