Marketers: Show Me the ROI…with Direct Response

Seeking measurability and concrete ROI, more national marketers are shifting their dollars away from brand-building efforts to direct response promotional channels, according to a new study by New York-based strategic consulting firm Winterberry Group.

“It’s a continued affirmation of what many leading marketers have come to realize,” says Mike Petsky, a partner in the New York-based investment bank Petsky Prunier, which is affiliated with Winterberry Group.

The report defines and quantifies the shift in spending from above-the-line (ATL) marketing channels to below-the-line (BTL) media. Winterberry Group defines ATL channels as those that strive to reach mass audiences with messages that reinforce brands, communicate general product information, or inspire emotional response. These channels include television, radio, print, and outdoor advertising. Conversely, BTL marketing uses targeted efforts that offer convenient response mechanisms and comparable ease in measurability. Examples include catalogs and other direct mail, search marketing, and e-mail.

“The Internet obviously got many multichannel marketers thinking more about measurability and accountability,” Petsky says. “Direct marketing was the backbone of it all.”

ATL spending was expected to grow 5.6% last year, compared with BTL spending growth of 7.3%. From 2003 through 2007, ATL advertising is expected to increase an average of 5.5% a year, while BTL spending is projected to grow 7.8% a year.

Winterberry Group identified seven key trends directly affecting the shift in marketing budgets:

• changing consumer demographics decreasing the influence of traditional mass-media marketing messages

• growing consumer sophistication, which heightens the demand for channel-agnostic communications

• widespread marketing “clutter,” which diminishes the impact of commercial messages that don’t address specific and individually relevant consumer needs

• enhanced information availability

• heightened client pressure to deliver quantifiable value

• growing effectiveness of multichannel campaigns

• rapid technological advances that allow for consumer/marketer interactions that are frequent, easier, and more relevant than previously possible.

“Simply stated, above-the-line marketing that utilizes generic messages to build awareness is no longer the best way to influence customer behavior,” Bruce Biegel, managing director of Winterberry Group, said in a statement. “Below-the-line initiatives are more successful because they stress targeted and customer-centric communications. Below-the-line also creates measurable results and return-on-investment metrics.”

The report was commissioned by New York-based V12 Group, which specializes in below-the-line marketing services, using its databases and multichannel delivery model to provide measurable customer acquisition results for more than 400 clients.

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