It's no secret that the techniques of sales promotion (SP) and direct marketing (DM) have been bedfellows for many years. It's a rare direct mail pack that does not contain an incentive, while direct channels are often the delivery method for SP campaigns. More than two-thirds of all coupons were delivered by direct mail in 2005, according to the 2006 Valassis Annual Coupon Report.
While the two disciplines have different approaches, recent innovations in digital, CRM and loyalty are causing DM and SP to overlap even more. Digital direct channels are delivering SP messages that are more about long-term engagement rather than one-off sales increases.
So in these days of blurred boundaries between the disciplines, is it still possible to say exactly where an SP campaign ends and a DM one begins?
Many SP campaigns now include loyalty, data capture and retention techniques that are more commonly found in the DM world, alongside traditional SP devices such as sampling, on-pack promotions and vouchers. "A company might want to drive trial, but if there's no mechanism for making people stick with the product, they won't get very far these days," says Edwin Mutton, director at the Institute of Sales Promotion (ISP).
The infamous Threshers 40 per cent off voucher, circulated at Christmas 2006, is a case in point. A voucher might be a traditional SP technique, but in this case the method of distribution was viral email, a direct channel - and the voucher included a data collection mechanism.
Further evidence of this crossover can be seen in a recent league table of the most awards received by SP agencies, compiled by Marketing Direct's sister title, Promotions & Incentives. Craik Jones Watson Mitchell Voelkel came second to SP agency Elvis at the top of the table, with many other DM agencies vying for space in the rest of the list. "Five years ago, what an SP agency and a DM agency did was fairly well understood, but now it's less clear," says Paul Tullo, board creative director at integrated agency Tullo Marshall Warren (TMW).
ISP's Mutton suggests that SP is resorting to DM techniques because brands need to create stand-out - consumers are bombarded by advertising so brands need to do more than lead on price to stick in the mind.
As budgets are squeezed ever tighter, the financial benefits of building aspects of loyalty and CRM into promotional campaigns become ever more compelling - techniques in which DM agencies are well versed. It is little wonder then that they are now combining the two elements.
When DM and SP are used together, it is generally as part of a fully integrated campaign combining sales incentives with loyalty and digital. A campaign for Ambi Pur air fresheners by agency Geronimo combined data capture with a roadshow and sampling, then followed up with an email questionnaire and other activity. The data gathered is now being used to build a relationship with consumers and send further promotional material.
"There's a trend in manufacturing for knowing more about your customer," says Mutton. "And manufacturers are spending a lot more money to do so."
Developments in digital are having an impact on SP, particularly in the CRM space. Websites, mobile marketing, email, viral and search are providing quick-and-easy channels to deliver a message to a receptive public. But developments in digital are making it economically viable to run CRM programmes for low-ticket items or packaged goods that would normally have used mostly traditional sales promotion devices.
"Making regular customer communications cost effective is key," says Andy Snuggs, managing director of agency Geronimo, which offers SP and DM. "In packaged goods, proving the value of DM has been difficult. And although only certain sectors such as whisky and pet food have been successful, digital is changing this."
One example of this integrated digital approach is Unilever brand Flora's 'Test the Nation' 北京赛车pk10, devised by agency Tullo Marshall Warren (TMW). The brand collected customer data at roadshows and sent a follow-up questionnaire via email, adding almost 70,000 extra people to its marketing database.
If SP campaigns are making more use of digital DM and CRM techniques, what are the opportunities for DM agencies? TMW's Tullo says digital is fuelling promotional techniques, but while traditional SP agencies "have not always invested in digital divisions, DM agencies already have. There's a strong future for (DM agencies) in this area."
Marketing databases, including those of loyalty programmes such as Nectar and Tesco Clubcard are also impacting on SP programmes, building sophistication to help target a consumer segment.
"Using the Tesco database, for example, allows you to do a specific campaign for a market sector," says Dave Lawrence, director of SP agency The Promotions Practice. "It may be just a twist on the main work, or a particular reward or competition, but that's how database marketing can enhance SP. It gives the consumer the impression they are being treated differently."
DM agencies have long been fluent in SP - Claydon Heeley, Iris and Tequila all have their roots in it - but SP agencies are also raising their game by moving into the DM arena and gaining expertise in direct techniques.
Earlier this year, the Zulu network launched specialist SP agency The Kitchen. One of its founding clients was car marque Chrysler, which appointed the new agency to work across its entire below-the-line marketing output.
"The days of going to a separate SP, DM and online agency have gone," says Steve Gray, marketing director at Chrysler Group. "We wanted a good 'everything other than traditional advertising' agency, with a strong intellectual and strategic base and outstanding creative output."
Tullo agrees. "SP agencies seem to have moved into DM because there's been a big growth in DM, rather than the other way around," he says.
As with all marketing shifts, for client and agencies alike, combining SP and DM is a way of minimising waste and maximising ROI. And as integrated marketing becomes a reality rather than a buzzword, those agencies that can offer integrated thinking will be the ones that reap the rewards.
POWER POINTS
- Building loyalty and CRM into SP campaigns is now more compelling
- SP agencies are moving into DM because of direct marketing's growth
- Cost-effective communications are key
CASE STUDY: Triple Velvet
Brand: Triple Velvet
Agency: Chemistry Communications Group/Fallon
Brief: To encourage ongoing purchases of Velvet One
Toilet paper might fairly be described as a low-interest product. Customers tend to be loyal to one brand and are unlikely to change on a whim or even devote much thought to the matter.
This presents a problem for a challenger brand: how to encourage customers to alter their purchasing habits for a category they aren't very interested in.
Velvet, second in the market behind Andrex, worked with agency Fallon, creating a nationwide TV spot to promote the brand using an 18-month-old baby 'managing director' as its mascot.
Chemistry Communications Group was appointed to get the product into consumers' hands and encourage ongoing purchase. The below-the-line campaign combined experiential, sales promotion and direct marketing.
Areas of the country where competitor brand Andrex had a high level of penetration were identified using Dunnhumby data. These areas received door-drops containing a sample and promotion of a competition to win a Mini Cooper soft-top.
To win the car, door-drop recipients had to display the pack's 'Baby on Board' sticker in their car window. Winners were 'spotted' by local radio DJs who were also taking part in the campaign.
The door-drop also contained a £1 money-off coupon. Local stores displayed prominent POS, while shopping malls also had POS merchandise and a branded Mini, and gave away samples.
The campaign achieved a wide reach, with more than two million homes receiving samples and 160,000 promotional packs distributed in shopping malls. The door-drop achieved a redemption rate of almost 10 per cent, with more than 175,000 vouchers redeemed.