The Importance of Print in the Direct Marketing Media Mix: An Interview with John Greco, DMA President and CEO By Barbara Pellow December 13, 2004 -- The art and science of direct marketing is becoming an increasingly popular business tool around the world because no other marketing tool enables a seller to measure the effectiveness of his efforts with such refinement and in such detail. And with all the media options available, one of the most popular and widely used category of direct marketing continues to be direct mail marketing. A seller of goods first compiles a list of the names and addresses of prospective customers. He then prepares advertising materials describing the values and benefits of his offering, including a response device for client use. He mails these ‘packages’ to his prospects and receives replies and orders. He then dispatches the items ordered and begins, hopefully, a continuing mail-based relationship. The ability of print service providers to make a linkage with direct mail marketers in the development and delivery of direct mail solutions bearing higher ROI is critical to the long-term growth of digital print solutions. On August 16, 2004, John A. Greco, Jr., was named President and Chief Executive Officer of the Direct Marketing Association. Because of the importance of print in the direct mail mix, I set up an interview with John to get his perspective on how printers can best capitalize on the direct mail opportunity. Greco brings nearly three decades of marketing and technology leadership at some of the nation’s leading companies as well as a solid understanding of the importance of print in the media mix. He started his career as a design engineer at RCA. Following that, Greco spent 19 years -- from 1977 to 1996 -- at AT&T Corporation, holding a broad range of marketing and business development positions. Between 1996 and 2000, Greco served as a marketing executive at RR Donnelley & Sons Company. He started as senior vice president of marketing and technology, and in 1999 he was named senior vice president of marketing and business development for Donnelley’s Financial Business Unit, which serves customers worldwide who need to produce and distribute information with flexible solutions for content/document management and distribution. In these positions, Greco played a key role in the company’s strategy and new business development, marketing operations, product management/new product development, software/system development, technical services, integrated media laboratory, and planning and operations. From 2000 to 2003, Greco served as president and CEO of the Yellow Pages Integrated Media Association, where he provided the overall vision for the $25 billion global Yellow Pages industry as well as leadership for the 350-member association. Given the importance of print in the direct mail mix, I talked with John A. Greco, Jr., President and CEO of the Direct Marketing Association. John’s perspective on the future of direct mail and strategies for successful participation provides critical insight to printing industry executives. ODJ : What are the key issues facing direct marketers as they look forward to 2005? JAG: There are three key issues that direct marketers are dealing with on a daily basis. The first is privacy. Issues like fraud, identity theft, and irrelevant solicitations are driving the focus on privacy. In the eyes of a lot of people, technology has pushed the privacy envelope. People don’t what to lose control of their identity. Direct marketers need to explain that consumer preferences matter. Secondly, postal rates and postal reform are significant issues. Clearly, these have a major impact on our business. Any increase is in rates not good. It means a decline in overall volume. And, without systemic reform of the 30-year-old law that governs its operations, the USPS will continue to be locked in a death spiral of increasing rates resulting in reduced volume, requiring a new set of rate increases, and so on. Third, we need to emphasize environmental stewardship. I think you could say direct marketing, by its very nature, is earth-friendly. For instance, in 2002, consumers avoided driving 1.3 billion miles. That’s a lot of gas saved. Not only that, it eliminated the emission of almost 50 thousand pounds of carbon monoxide. Furthermore, 65 percent of marketers last year used at least 10-percent post-consumer fiber content in some of their marketing pieces. However, as an industry, the continued use of recycled paper and “earth-friendly packaging” is critical. We also have to do a better job of demonstrating other earth-friendly practices we employ throughout our business processes, like removing bad addresses. As an industry, the continued use of recycled paper and “earth-friendly packaging” is critical. ODJ : In your “State of the Industry” address at the DMA Conference, you talked about five consecutive quarters of revenue improvement for your membership. What do you think are the key contributors to this growth? JAG: There have been significant improvements in the overall macro economic environment, which has helped the industry significantly. In difficult economic times, there is increased executive focus on ROI. Direct mail provides the ability to deliver measurable results. Additionally, it is the most timely and relevant marketing mechanism. Finally, we are seeing new industries start leveraging direct marketing techniques more heavily. For example, automotive manufacturers and pharmaceutical companies are utilizing direct marketing techniques far more heavily than they have in the past. ODJ : With the changing dynamics in media technology options, what role do you see print media playing? How do you view its value versus other forms of media? What do you see as the ROI? How do you view the future for print media? The key for marketers is to blend an array of media and offer the right mix to effectively reach the prospective buyer. JAG: I worked for RR Donnelley in its Financial Services Group, clearly at the forefront of digital printing. My view is that print direct marketing solutions are here to stay. The key for marketers is to blend an array of media and offer the right mix to effectively reach the prospective buyer. ODJ : What impact do you think the next round of postal increases will have on direct marketers, and how will it impact their choice of print as a media? JAG: As for postal rates, there won’t be a rate increase until 2006, probably sometime in the spring. We are doing everything possible to work with Congress to reduce both the amount and scope. In addition, we are encouraged that this is the furthest we have come in a decade of pursing postal reform to allow U.S Postal Service operate more like a competitive business. There won’t be a postal rate increase until 2006. We are doing everything possible to work with Congress to reduce both the amount and scope. ODJ : How should printers respond to the changing dynamics in the media mix? JAG: Printers need to look at complimentary opportunities recognizing that there will be more marketing channels. They need to see how they can participate in more of the entire marketing value chain. Catalogs are linked to Internet sites and consumers view that catalog while logged onto the Web. Communication across various channels actually becomes a force multiplier in overall communications. The ability of print service providers to support print product innovation will also be key. That includes resized mail and postcards, and creative packaging ideas that increase response rates and reduce mailing costs. ODJ : We hear a great deal about coordination of multi-channel marketing programs. What role can the printer play as the world migrates to digital technology? JAG: Digital print service providers will need to distribute content the way that the consumer wants it. This means that they will need to be what I categorize as media agnostic. They will need to work with marketing professionals on multi-purposing content regardless of the distribution medium. ODJ : How do you see “do not call” and “anti-spam” legislation affecting printed direct mail? Digital print service providers will need to become media agnostic. They will need to work with marketing professionals on multi-purposing content regardless of the distribution medium. JAG: All facets of direct marketing play a critical role: e-mail, telemarketing and print. Today there are 64 million phone numbers on the National Do Not Call Registry. While the DMA did not feel the system was necessary, we also acknowledge the need to honor consumers who placed their numbers on the registry. When used responsibly, e-mail is a powerful marketing and fundraising channel. However, spam is a stake pointed right at the heart of legitimate direct marketing e-mail. While we do not yet have hard figures that both of these point to a higher volume of print direct marketing material, the real value in direct marketing will be from putting the consumer in control of the process and communicating using the method that they deem most effective. ODJ : Over the past few years, we have heard much about 1:1 marketing. Is relevant personalization a reality or are we still dealing with the world of “mail merge”? JAG: For custom communications to work, the content and imagery needs to be relevant to the recipient. Recently, I received a personalized newsletter from my veterinarian. While it had general information about the services he had available, it also had detailed information about the shots my dog currently required and those that had been completed. L.L. Bean recently provided a catalog that emphasized the last year’s temperature records in my town. In both instances, the customization was relevant, yet not invasive relative to my privacy requirements. These are the types of applications that will work in the market. ODJ : What do you see as the biggest challenges for “relevant personalization” campaigns in the market? JAG: While some might say that it is available data base information or lack of awareness in the creative community, my personal view is that privacy is the key issue. Marketing technology has been a double-edged sword. On the one hand, databases, the Web and other sophisticated technologies allow marketers to harness billions of pieces of data in ways that permit us to target better, offer better value, and bolster customer satisfaction. The challenge is to effectively use this technology so that the consumer does not feel that we have “pushed the privacy envelope.” ODJ : Will the B-to-B or B-to-C markets offer the biggest opportunity? Marketing technology has been a double-edged sword. The challenge is to effectively use this technology so that the consumer does not feel that we have “pushed the privacy envelope.” JAG: There will be significant growth in both the B-to-B and B-to-C direct mail markets. Our projections are that direct-response advertising spending (over the next five years: 2003-2008) will grow at a 5.7% CAGR in B-to-B and 4.7% in B-to-C, both outperforming many other segments of the economy. To put that in context, B-to-C will grow from $97 billion in 2003 to $122 billion in 2008, and B-to-B will grow from $106 billion in 2003 to $140 billion in 2008. A betting person would focus on both segments. ODJ : The DMA has looked at digital print technology and authored articles about it. How can the industry do a better job of reaching your membership to educate them about the benefits of digital print technology for “targeted campaigns”? JAG: Partnering with the DMA through our tradeshows and conferences is key to communication on the power of digital print. In addition, we continually publish success stories and open speaker slots to companies whose solutions that are making a difference in the world of direct marketing. ODJ : What is the value proposition that would attract a DMA member to explore advances in digital print technology? We need to continually emphasize that direct and interactive marketing are measurable. Providers and direct marketers need to define specific metrics that link to a specific ROI. JAG: The value proposition is a simple one. We need to continually emphasize that direct and interactive marketing are measurable. Providers and direct marketers need to define specific metrics that link to a specific ROI. ODJ : What are your overall recommendations for print service providers that are trying to meet the needs of the world of direct marketing? JAG: My recommendations for developing the custom communications market space are simple. Print service providers need to deliver relevant communications for customers and the customers of their customers. Secondly, convenience is essential. The service provider needs to be easy to work with. Finally, it is the delivery of value. Value links to improved business, enhanced customer loyalty, and overall return on investment. ODJ : Thanks for terrific insight into the Direct Marketing Association and the world of direct marketing.