Abstract

Mass customization and one-to-one marketing strategies have greatly impacted business practices in the last decade. This has been true in advertising where marketers can effectively customize a message based on the nature of the receiver, deliver it in a cost-effective way, and obtain feedback regarding its effectiveness. The purpose of the present study by the Printing Industry Center (CIAS) at the Rochester Institute of Technology (RIT) is to benchmark the amount of personalization and complexity of personalized advertising in the U.S. Two distinct populations, advertising agencies and marketing executives, were sampled to measure their current usage patterns and their underlying motivations for recommending personalization within the context of media planning and campaign execution. The objectives of the research were: 1. To define the dynamics between the advertising agency, the marketing executive, and the print services provider relative to media decisions and campaign direction. 2. To reveal the current preferences for print or non-print marketing programs and perspectives on the best media options for personalized campaigns. 3. To determine the amount of variable information or personalization used and the degree of complexity of the customized communication. 4. To understand the barriers to and facilitators of the implementation of a personalized communication strategy. 5. To determine who measures the effectiveness of a campaign and how it is done. The advertising agency respondents were drawn from The Red Book list, which contains detailed profiles of more than 13,000 U.S. and international advertising agencies. A total of 250 advertising agencies completed a 30- minute telephone interview in the spring of 2003. The marketing executive sample was drawn from the Dun and Bradstreet list and was restricted to financial services fi rms, manufacturers, and retail firms. A total of 1,999 firms were contacted by phone to produce the 205 completed surveys. The results, by research objective, are: Dynamics Among Firms Impacting Media Choice • Over half (53%) of marketing executives in the sample had used an advertising agency in the past year. Only 36% reported that the advertising agency bought print on their behalf. • Approximately one-third of marketing executives printed almost all marketing materials internally. • Media choices for advertising revealed the integrated nature of campaigns. Magazines and newspapers led the way for both advertising agencies and marketing executives, making up 31% and 35% of their respective allocations. Collateral and direct mail made up a total of 23% of advertising agencies’ media allocations and 31% of marketing executives’ allocations. Advertising agencies spent a higher proportion of the media budget on broadcast television and radio than did the marketing executives. • The type of media purchased by advertising agencies varied according to their client base. Those that served primarily business-to-business (B2B) clients bought more collateral, direct marketing, and magazine advertising. Those that served primarily business-to- consumer (B2C) clients bought more broadcast TV, radio, and newspaper advertising. • Advertising agencies were asked to indicate up to five factors that drove the media choices for campaigns. Target market selection or demographic was the top factor at 71%. Cost/budget was the second most important factor at 63%; marketing strategy was third at 56%. ROI target was important to 31% of respondents. The least important specific factor driving media choices for campaigns was the need for a personalized message (14%). Use of Personalization • An average of 23% of the work completed by advertising agencies involved personalization. Nearly 20% of advertising agencies had not produced a personalized campaign in the past year. An average of 33% of marketing executives’ campaigns involved personalization. Only 3% of the marketing executives had not produced a personalized campaign in the past year. • When asked, “To what degree are the messages customized?”, both advertising agencies and marketing executives responded that nearly half of their campaigns used the lowest level of complexity, the mail-merge option, including only a variable address and/ or salutation. Only 27% of advertising agencies and 18% of the marketing executives used graphics in the customized messages. • Over three quarters of advertising agency clients (79%) who requested personalization were categorized as small, with annual revenues of $100 million or less. Nearly half of clients (47%) who requested personalization were categorized as B2B companies. The two most common industry classifications for clients who requested personalization were manufacturing and retail, both at 40%. The third most common industry classification for clients requesting personalization was financial at 34%. • In response to the question of which types of media are best for personalization, 86% of advertising agencies indicated that direct mail was the best. E-mail was rated as effective by 56% and customized Internet pages were rated as effective by 35%. Phone/call center/telemarketing was the lowest rated medium for personalization at 18%. Barriers to Using Personalization • Nearly two thirds of both groups were aware of the new print technologies used for personalization. However, while over half of the advertising agencies said that they had shown samples to their corporate clients, only 36% of the marketing executives reported that they had seen samples demonstrated by their agencies. • The biggest specific obstacles keeping advertising agencies from recommending personalization strategies to their clients were price and lack of a suitable database. For the marketing executives, the lack of resources (money, databases, people, or knowledge) and lack of need were the top obstacles mentioned. • The marketing executives were asked if they used a customer relationship management (CRM) system. Only 21% indicated that they did. E x e c u t i v e Summary Copyright 2003 Printing Industry Center (CIAS) at RIT - All rights reserved. 4 However, almost all had a customer database. In managing the customer database, nearly 60% used sales force management capabilities, 31% used data mining, and 28% used campaign management. Measuring Campaign Effectiveness • We found that advertising agency and marketing executive perceptions differed on this issue. Seventy-five percent of marketing executives said that they measured campaign results, whereas only 37% of advertising agencies indicated that their clients, the marketing executives, measured the results. Sales leads, a change in sales, number of orders, and response to direct mail were used to measure results by 45 to 50% of the marketing executives. In order for the demand for more complex levels of customized communications to grow, advertising agencies and their corporate clients must perceive the importance of personalization strategies in campaign planning. While there is still a need to build awareness, there is even greater need to communicate the cost/ benefi t advantages to customized communication. With reduced marketing budgets and intense ROI pressure, advertising agencies should find that their marketing executive clients are searching for proven techniques that will help them achieve better business results. Creative and cost-effective solutions using digital color printing technology to produce eye-catching, relevant direct postal mail will appeal to the marketing executive, particularly to those who are in smaller, B2B firms.

Publication Date

2003

Document Type

Full-Length Book

Comments

A Research Monograph of the Printing Industry Center (CIAS) at RIT

Department, Program, or Center

Printing Industry Center (CIAS)

Campus

RIT – Main Campus

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