The Future of Direct Mail & How to Optimise It

1. The Future of Direct Mail&How to Optimise It Keith Wiser Managing Director – 5th Dimension

8. Part 1A Critical Review ...The Future of Direct Marketing

9. Let me make my position clear ... I believe in mail

10. From a recent edition of “Advantage” • The World of Web 3.0 • Meta Tagging • Mi Money (Mobile Wallet) • The Grid (Local Social Network) • USSD (Unstructured Secondary Supplementary Messaging) • The Sacred Space of Social Media • Let Your Fingers Do the WWWalking • NOT A SINGLE WORD ABOUT DIRECT MAIL

11. From the same issue of “Advantage” • THE 7TH MASS MEDIUM – THE CELL PHONE • SA population = 48 million • 10 million people in SA currently access the internet via cell phone • Expected to increase to 17 million by 2013 • SA has 114% SIM card penetration • 57 million active SIM cards • 37 million unique cell phone users • Mobile Adspend projected to be over R2 billion by 2013

12. A few other interesting facts • (UK) (2008) Online Advertising overtook TV as the largest advertising medium (23.5%) • (2008) Online accounted for 17% of US Adspend ($23,4 billion) • There are now more cell phones than radios in the world • Vodacom in SA sends 14 million "Please Call Me" messages per month

13. A few more interesting facts Victoria’s Secret has 2,7 million fans on Facebook Starbucks collected 7 million fans in 2 weeks\Earth Day Promotion

14. You must be barking mad ...

15. Mail in the USA Down by 9 billion Down by 28 billion 2007 2008 2009 (Est) Source : USPS – Billions of pieces mailed

16. Global Mail

19. You must be TOTALLYbarking mad ...

20. The question has to be asked ... Does direct mail have a future ?

21. “I come not to bury Caesar but to praise him” Mark Anthony – “Julius Caesar” (William Shakespeare)

22. Let’s not write mail off • Europe (2007) – 92 billion pieces • USA (2009) – 170 billion pieces • UK (2009) – Direct mail probably still around 10% of Adspend • SA (2010) – Mail actually grew by +- 4%

23. Some other interesting facts about mailThe Print Council\Pitney Bowes Survey (2008) • 85% claimed that they open and read selected pieces of mail every day • 55% reported that greater enjoyment from reading regular mail vs email • 75% claimed they closely examine their mail for coupons and special offers • 40% said they had tried a new product after receiving direct mail • 70% stated that they had renewed a business relationship after receiving direct mail

24. “For every action there is an equal and opposite reaction” Isaac Newton

25. In summary, mail is decliningBUT it is still an important mediumIt has specific roles to play

26. Mail will continue to be viable when ... • Your focus is acquisition • You know who you want to talk to • You can personalise your content • You have a lot to say • The value proposition is reasonably high • You need a considered decision • You want to cut through the clutter & noise • You use it in conjunction with other media

27. Part 2Optimising Direct Mail

28. Optimising response ... the essence of direct marketing

29. Inertia kills response ....

30. Time is not on your side Jim Rosenfield (1986) According to Any Owen (2009) this is now 5,5 seconds The outer envelope receives between 1,5 & 4,0 seconds

32. “Scientific Advertising”Claude Hopkins (1923)

33. “Ads are not written to entertain.” “Do nothing to merely interest, amuse or attract.” “The reason for the non-success in advertising is trying to sell people what they don’t want.”

34. “The purpose of the headline (or Johnson Box or whatever) is to isolate the people you can interest” “The entire return from an ad depends on attracting the right sort of readers”

35. “The More You Tell the More You Sell” “Long copy does sell, as long as you are talking to the right person” “People don’t quit habits without good reasons”

36. “We do not admire salesmen who talk in loud voices. People read all they care to read in 8 point type.”

37. The 3 Core Elementsin Direct Marketing

38. THE TARGET AUDIENCE CREATIVE COPY LAYOUT\DESIGN CONTENT THE OFFER THE PROPOSITION

41. Who you talk to ... segmentation Life stage Lifestyle Psychographic Transactional Demographic Geo Demographic Sexual Orientation

42. Betting styles – horse racing CLUSTER HIGH MEDIUM LOW MODIFIER COMPLEXITY COMPLEXITYCOMPLEXITY BETS Complex Hedgers 88% - 96% 2% - 8% 1% - 4% 70% - 96% Big Spenders 74% - 85% 4% - 12% 10% - 15% 67% - 83% Prudent Punters 25% - 31% 10% - 16% 53% - 66% 54% - 63% Middle Roaders 16% - 25% 51% - 65% 19% - 28% 72% - 80% Simple Winners 4% - 10% 1% - 6% 84% - 95% 3% - 13%

45. Database Overview Value /Share of Wallet Analysis SHARE OF WALLET Low Loyalty No Loyalty High Loyalty HVLL Increase value HVNL Convert High Value HVHL Retain VALUE MVHL Up-sell MVNL Convert MVLL Cross sell Medium Value LVLL Ignore LVHL Upsell LVNL Ignore Low Value

46. M1 M2 N1

47. Distribution of potential opportunities

48. Value Segmentation We have identified 7 value segments for Edgars according to visit frequency and spend… One-off Occasional Small Loyal Small VIP Infrequent Occasional Large Loyal Large

50. What you say