In a tough economy when businesses are slashing budgets and wanting a clear ROI on every Rand spent, there’s nothing like direct marketing to validate your marketing investment.
An overview of direct marketing in Canada
by Frank Fergus
Frank Fergus was president of the Canadian Direct Marketing Association (1976-1986). He's watched direct marketing in Canada grow by several 100% during that 10-year period. Obviously, he has come into contact with a lot of direct marketing database marketing people, and continues to do so in his day-to-day work as president of Ferguson Personnel, which specialises in recruiting direct marketing personnel. I recently asked him to drop in to talk about his overview of direct marketing in Canada.
Q. Frank, what does direct marketing in Canada look like compared to, say, 15 years ago?
A. Fifteen years ago, 65% of those involved in direct marketing was in Toronto, 33% in Montreal and the rest elsewhere. Few industrial and only two financial firms were using direct marketing as a prime sales tool. There were no direct response advertising agencies in Toronto. Telemarketing was just on the rise, television was only used by the international firms and catalogues were produced in reality by about six firms, perhaps a dozen if you counted all the little ones. However, from 1982 to 1988 we were in an aggressive growth period.
Today many major companies are on the bandwagon. Even retailers have accepted the gospel we used to preach back in the late '70s. And, as projected back in 1982, companies using business-to-business database marketing have caused the huge growth of the peripheral service companies. Plus, all of the provinces now have active agencies with growing customers.
Today, experts abound; consultants on every aspect of the marketing process have sprung up, yet where they got their training could be suspect. There has been a great surge by corporations to look upon direct marketing as the Holy Grail; all their problems will be solved. Those who jumped in the water first are bathing their wounds and reconciling the skills necessary to make this science work. The new entries, waving their collective arms with glee, listening to the soothsayers, will soon take their lumps. It just ain't easy. Not in this country!
Q. How do you rate the skill sets we have in this country?
A. Perhaps, surprisingly, we have many generalists equal to any found throughout the world. We have a rich country, a sound disposable income (even in this economic morass) and a consumer who clearly likes direct mail. However, we are still a small country, with parochial zones and a quarter of the population speaking French. This situation requires a superior marketing generalist, one who understands the market nuances and the value of sound research.
Of necessity, over the past 20 years, there has evolved a group of top generalists who found the way to survive in this market and today are reaping great rewards. Fortunately, this group is busy today teaching those coming up, therefore, the truly skilled group gets larger every year. Many corporations are feeling the pain caused by hiring merely the mediocre, to work in what is really a complex field.
Q. You refer to generalists, do we have specialists?
A. The American market abounds with specialists. In Canada our sample of specialists is found in the service industry. To work in the real world at management level, you must have eaten from many plates and have a voracious appetite. I have a habit of counselling any aspirant for a new position, to not move if they have the opportunity to learn more in their present position. Only when their head reaches the ceiling, move on.
Q. Is there much movement in the Canadian market?
A. We have here a strange equation. If only I could find an algorithm to explain it. Only a few people move for money. Emotional growth (ego), quality of life, financial stability and education all are factors, besides the prospect of unemployment, that will influence an individual in making a move. When more and more companies decide to open up their marketing mix to include our world, then we will have a lot of motion, causing promotions and new trainees brought on board. Such as the period from 1982 to 1988.
Q. Are there any overall patterns in Canada?
A. By measuring, the client calls for new staff on a yearly basis, the recruitment business is clearly the bell-weather for economic patterns. As calls went down, so did the country. And we're not out of the woods yet. Most of our searches now occur only when a firm specifically wants a round peg in a round hole with no variance. The newest pattern is the balance of direct marketing spreading out across the country-both east and west. Both users and services are increasing exponentially, where 12 years ago they didn't exist. All this in spite of, or because of, our two recessions.
Q. Frank, you said, "When more and more companies decide to open up their marketing mix to include our world, then we'll have a lot of motion." What do you include as our world?
A. Our world is the whole field of direct marketing, all the peripheral institutions. The more corporations that increase their mix, then the greater use there is of all the service companies, the agencies, the lettershops, the print shops, particularly the computer houses, to service these industries. All of these will require more employees.
Initially, the companies themselves, in attempting to obtain intelligent staff to run their enlarged departments, are going to revert to the age-old method of stealing staff; one company from another. The moment you steal a person from a company, then somebody has to replace that slot and that usually means a move upward within the individual companies. Once there's big motion at the top, then there's upward motion that follows.
Q. Are more companies opening up their marketing mix?
A. Yes, it's exhilarating. A very simple sample is that back in t985 if we ran a two-day seminar here on the fundamentals of direct marketing, we would be lucky to get 30 students. Yet, here in January 1993, they run a two day seminar and they pulled 60 students. This is outstanding, particularly in the midst of the recession. It indicates that more and more industries are attempting to at least get their junior staff some information on our world of direct marketing.
It's only a matter of time before these companies start to hire true senior staff to efficiently co-ordinate the various skill sets involved. This will be the true indicator of an upswing in overall business.
Q. You mentioned salary levels in the United States vs. Canada, and that a person with a take home pay of $65K U.S. would require about $IO4K salary Canadian to match. Are people getting that kind of money? Are the salary levels getting to where they should be for database marketing people?
A. Yes, yet only in a few specific corporations are salary levels reaching a, senior-ranked position. Starting about eight years ago, the financial services companies upset parity by paying according to internal ranking, rather than by industry standards. Finally today, most people in that area are equal to their income. Most large firms certainly pay equal to American rates. But, how many large firms do we have?
As soon as we move into the small to medium range (and a few large ones), the salary structure will drop as though the direct marketing sector of the company was of less importance. I think that I could actually tell you how many people in this country are earning in excess of $100K. I believe that we are not paid across the board on the same level as traditional advertisers. And, on the average, we are definitely below equivalent American rates.
Q. You seem to indicate there's a shortage because of the lack of proper education or sufficient volume in education to train database marketers (which is a long process). Are many people still using the ad-in-the-newspaper method as a way of getting personnel into direct marketing?
A. One of the great difficulties that the corporations are facing today, even though they can run ads in newspapers, are that they cannot truly define the complexities of our methodology. The fact is that a person must really know and understand not just print production, but really have to understand the end use. And so it goes in all facets. It's totally different than any other form of advertising. At the same time, they still need to know all about media, because they are going to use a variety as part of their reach.
On top of that, they have to be database managers and have to have a good sense of strategy and creativity. Not necessarily to create, but they have to differentiate top creative from just good. Particularly as it applies to direct marketing, since everything is totally divorced from traditional advertising in the manner in which it's presented. That type of knowledge doesn't come easy and is not found just by reaching out and saying: "We need someone to run this show."
The candidate for any position involved in direct marketing has got to be very carefully screened, very carefully selected-not just for their depth of knowledge, but their spectrum of knowledge. He or she has to have touched, as I've said before, great many facets of direct marketing.
Q. Do you have any predictions for the near future?
A. Based on my years of working in direct marketing, where I have had the opportunity to be informed and still remain objective, I'm really very bullish.
A long time ago when the use of direct marketing was very new, I alluded to the science and art of direct marketing as being a tidal wave that would swamp all large industries and at least splash on the small ones. I can see no reason, considering the present buoyancy and determination of the incumbents, to doubt my prophecy in any manner.
First published in 1995, the report is released every other year in conjunction with DMA’s Annual Conference and delivers historic trends, current year estimates, and one-year and five-year projections for direct marketing expenditures, sales, ROI and employment.
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