You’ve Got Mail

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Elisabeth Pena

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30 J u l y 20 03 PharmaVOICE D Directmail efforts are one of the industry’s most reliable tools for tar geting and reaching consumers. As email has risen in popularity, the use of postal mail as a directmarketing tool has declined. Industry experts, however, don’t believe that new electronic methods will replace postal mail. They predict that the two will be used together as part of multichannel marketing plans. According to a report by The Direct Marketing Association (DMA), 37% of marketers surveyed indicated that their mailing quantity did not change in 2001 compared with 2000, while 71% of those surveyed indicated that they increased the quantity of their marketing email. About 21% reported a decrease in mail volume, and 43% of direct mar keters using postal mail indicated that their mailing quantity increased in 2001. This is a significant decrease from five years ago when close to 70% reported increases in their 1996 postalmail volumes. “We have seen a drop in the use of direct mail during the last 12 months to 18 months, mostly taken up by email,” says Stephen Smith, CEO of Optas. “Another factor is the recognition that direct mail is much more effective when it is targeted and the marketer moves into a loyaltycompli BY ELISABETH PENA You’ve Got Mail Email and other electronic methods are becoming essential directmarketing tools.But this doesn’t mean the endofPOSTALDIRECTMAILCAMPAIGNS. 31 PharmaVOICE J u l y 2 00 3 DIRECT mail ance lifetime value phase of a relationship with a consumer.” According to some, the use of email as a directmarketing tool hasn’t even begun to peak. Because the medium is still relative ly new, directmarket ing experts haven’t fully explored its possi bilities yet. “Direct marketing is changing,” says Kathleen Goodwin, CEO of iMakeNews. “The companies in the directmarketing space — those that have the analysis and database backend and that understand the tech nology and the practice of direct marketing — haven’t really gotten into playing in the email space yet.” Despite email’s impact on the use of postal direct mail, there are barriers to its complete replacement of postal mail. One is the age factor. Older audiences are not as comfortable with receiving important information online. “Direct mail is still a viable tool, particularly in pharmaceutical marketing, because for many of the products the target audience is older and there is a lower penetration of online usage,” says Jim Hathaway, VP of market development at Grafica.eCRM Corp. “People still want print, particularly when there is a lot of information to be communicated.” Marketers, however, know that email is a cheaper option and that direct mail is more costeffective when well targeted. This has resulted in some marketers using email as a testing ground before rolling out a more expensive direct mail campaign. “Email marketing is having an impact on direct mail as a mar keting tool, no doubt about it,” says Jay Bolling, executive VP at Roska Direct. “We are using email much more than we were in relation to direct mail. Email provides the ability to do things that can’t be done through direct mail. We can test offers and cus tomized messages in an email environ ment before we go out with either a directmail, print, or directresponse TV campaign because of the immediacy and measurability that email provides.” While advances in direct communica tion tools offer an alternative to direct mail, some in the industry have not changed their directmail usage. They expect direct mail to continue to be a valued tool. “We really have not seen much of a decrease in directmail use; it is always going to be part of the market ing mix,” says Jim Knipper, president and CEO of J. Knip per & Co. “There is no doubt that there are great numbers of patients and physicians who receive enough spam email who want, and like, to receive a fourcolor or hardcopy piece that they can sit and read.” L i n G ren s i ngPopha l , author of “Small Business Guide to Direct Mail,” has observed that direct mail’s use declined when email market ing first became an option. But she believes that its usage will return to previous levels. “Direct mail suffered a few years ago when the Internet was really hot and companies were investigating Internet market ing as a possible replacement for some of their more traditional marketing channels,” she says. “Whenever a new commu nications medium comes along, everyone predicts that it will replace the previous one; what inevitably happens is that the new medium supplements the previous ones instead of replacing them,” says Ruth P. Stevens, president of eMarketing Strategy. “This hap pened with radio and television, and it’s happening with email and other Internet communications. These methods have become complementary or sup plementary instead of a replacement for other com munications forms.” Direct Benefits “Direct mail is measurable,” says James L. Weaver, president of RediMail Direct Marketing Inc. “Marketers can measure how many people respond to a mailing and when they took action. Marketers can analyze the ROI definitively.” This ability to be measured sets direct mail apart from email efforts. “The operational aspects of direct mail are more mature,” says David Klaum, VP of sales and mar keting at Fougera. “It is easier to slice and dice with direct mail. Most people who work with an electronic medium are still developing their slice anddice operations.” Because direct mail is an established communi cations tool, it provides marketers with more options, especially when creating targeted lists. “Direct mail is such a mature business; it has been around for decades and the services to support it improve every year,” Ms. Stevens says. “The most important strategic advantage with direct mail is that mailing lists are readily available for consumers and intermediaries, such as doctors, clinics, druggists, and the other members of the distribution chain. This Although households claim, in general, that they would like to receive less advertising mail, 68.7% read, look at, or set aside directmail pieces for later reading. Previous customers of an organization are much more likely to respond to direct mail offers. January is the peak mailing month for postal mail, fol lowed by September and October. Consumers with a midlevel education seemmore recep tive to advertising mail. Direct mail represents 46% of all general advertising methods. Last year marketers spent $44.7 billion on marketing via direct mail.This year mar keters are forecast to spend $46 billion. Last year direct mail generat ed $590.3 billion in sales. This year direct mail is expected to generate $634.4 billion in sales. Source:The Direct Marketing Associa tion’s 2002 Economic Impact: U.S. Direct and Interactive Marketing Today, New York. For more informa tion, visit Direct Mail Facts Email lists are limited; the lists have grown substantially and they are better than they were years ago, but the postal service still has all the addresses. It is still the best way to get to somebody. JIM KNIPPER Direct mail as an oldfashioned communications medium is still extremely powerful. It is such a mature medium offering access to plenty of markets, that it really needs to be considered as a valuable part of the mix. RUTH P. STEVENS Physicians are willing to receive clinical information via any format if it can help them with their practice of medicine. The content drives what they open, whether it be electronic or print. DIK BARSAMIAN There is so much more that marketers can do to integrate permission marketing concepts into their email programs to deliver meaningful value and avoid being labeled as spam. STEPHEN SMITH 32 J u l y 20 03 PharmaVOICE DIRECT mail information is not as available through email lists.” “Sixty percent of the success of any mail program relies on the quality of the list provided,” says Lynn Gale, midwest account manager at /alert Marketing. “Marketers must question if they are targeting the correct profes sional and buying their current address. Marketers must inquire as to the techniques email list providers use to ensure accuracy. The old adage `you get what you pay for,’ may come into play when evaluating the cost per delivered emailed communication.” Traditional directmail lists contain qualified customers who have purchased related products. Email lists often contain people who have visited related sites, but may or may not have purchased a product. “The directmail lists have more information about individ uals, primarily because the lists have been around longer,” Mr. Hathaway says. “List providers are starting to move along in terms of matching online and offline data, but there are more data available in relation to offline addresses.” Because of the availability of targeted lists for direct mail, the tool is best used for prospecting, experts say. Email, on the other hand, has been found to be more effective as a customerretention tool. “We are finding that marketers use email mostly as way to offer special deals, special shopping events, and discounts to current customers,” says Christina Duffney, director of media relations and corporate communications at the DMA. Ms. Stevens agrees that email is an excellent medium to use once the customer has been identified. “Direct marketing through email is great for reten tion,” she says. “If a company already has collected the email address of a current customer or a prospect with whom they already have a business relationship, email is unparalleled. It is fast, it is cheap, it is inter active, it is global, it is absolutely wonderful. The problem is that email just is not ready for prospect ing. It’s great for retention, lousy for acquisition.” According to Dik Barsamian, VPof sales and mar keting for Thomson PDR, once a group has been selected for solicitation, marketers need to get the attention of the recipients by providing useful infor mation. “Identifying the appropriate target group is a vital piece of any directmarketing campaign,” he says. “But the major challenge with any type of direct mail or email program is that often the information is too promotional in nature and recipients tend to throw away or delete those types of messages.” ADirect Connection “The majority of our members are taking a mul tichannel approach — a marketer might send out a directmail piece and follow it up with an e mail alerting the con sumer to expect some thing in the mail,” Ms. Duffney says. Through her experi ence with a consumer beauty product, Ms. Goodwin has found that combining direct mail and email is more effec tive than using one route, and she believes this can apply to the healthcare industry as well. “Direct mail can have an incredible impact in terms of the delivery mechanism and then something within that piece may drive the cus tomer to the Web, whether it’s a survey or poll or coupon — all of the pieces can, and should, be integrated,” she says. The use of directmail may be declining, but the industry is not expected to drop the tool com pletely. “Typically marketers don’t have separate online and offline consumers; consumers who want to receive information in the mail also are actively searching the Web in greater numbers than ever before to find infor mation about products and to receive information proactively,” Mr. Bolling says. “No matter how much they’re using the Web, most customers still want to have something tactile that they can hold in their hands and read at their leisure.” Mary Jane Garvey, managing partner at PDQ Communications Inc., combines multiple directmarketing tools in her company’s communi cations for its professional audience, using a different method depending on the message. “We complement direct mail with faxing, which is the best means for instant attention, because when it comes across the machine someone invariably looks to see what it is,” she says. “Faxing alone is not sufficient for a marketing cam paign, but if there is a recall or dosage issue that needs to go out instantly, faxing works very well.” ADirect Negative “For years, direct mail was referred to as junk mail and still is; to a certain degree, e mail spam is viewed even more negatively,” Ms. GrensingPophal says. “There is a cer tain stigma attached to marketing online.” According to the DMA, as a result of direct marketers’ caution to guard against any customer misperception of targeted e mail as “spam,” 92.3% of email marketers do not rent or exchange their email names Direct mail clearly has advantages over email marketing, including vast databases that encompass consumer health profiles, physician prescribing data, and allied health specialty classifications.These databases allow for specific targeting and effective budgetary allocations. LYNN GALE Regardless of whether communicating in an offline or online environment, the best results are going to be gained through the use of anoptin approach, even with direct mail — and especially in healthcare because of the sensitivities around privacy. JAY BOLLING Email is easy,quick,and cheap,but it can be intrusive. With a letter, recipients know who it came from.With email, they don’t know who sent it or its contents until it is opened. JAMESWEAVER Email marketing may be cheaper and marketers are using it, but they also are still relying on the traditional methods, such as direct mail. CHRISTINA DUFFNEY MARKETERSREPORTEDTHAT POSTALMAILWASMOST OFTENUSEDTO: Improve customer retention (89.5% of marketers) Improve customer purchase frequency (81.3%) Reactivate customers (78.4%) Crosssell directmarketing product lines (70.1%) Crosssell across direct market ing to a Website (62.8%) EMAIL MARKETING/SALES STRATEGIESWERE USED MOST OFTENTO: Improve customer retention (80.9%) Improve customer purchase frequency (68.3%) Crosssell across directmarket ing product lines (62.7%) Crosssell across direct market ing to their Website (59.8%) Reactivate customers (58.5%) Source:The Direct Marketing Associa tion,New York. For more information, visit Postal Mail vs. Email DIRECT mail compared with 83.1% of postal mailers. Only 8% of email marketers make their customer files available for rental or exchange for email, compared with the 35% of postalmail marketers. “Spam is perceived as being more intrusive because consumers think an email address is much more personal than a home address,” Mr. Hathaway says. “With junk mail, people can read what the message is; whereas, people delete emails before they read them because either the sending address or the subject line isn’t familiar to them. If a consumer gets a directmail piece and decides not to read it, they are at least getting exposed to the mes sage — it registers in their mind. Emails can be deleted before a person even gets a chance to see what the message or offer is.” Mr. Smith says it will be interesting to watch how permission marketing and spam issues shake out in the next three to six months, adding that because of the amount of spam email and the negative response consumers have toward it, marketers can even damage their brand. Despite the stigma that at times is attached to email marketing, mar keters should not ignore the benefits email can provide in terms of cost and speed, and should take steps to ensure that their messages are not deleted. “Broadcast emails, which offer a timesensitive alternative and reduc tion in program cost, cannot go overlooked by marketers when designing the overall marketing mix,” Ms. Gale says. “The only chance an unrecog nized email will be opened is if the recipient believes the message is valid, secure, and the subject line is crafted in the most compelling language.” According to Ms. Duffney, the explosive growth of email as a directmarketing tool is slowing down as a result of consumer sensitivity about spam. “Due to the proliferation of spam, it is becoming increasingly difficult for consumers to discern which email messages should beopened,” she says. “There fore marketers should take a multichannel approach instead of relying on one medium.” “We are in the business of creating relation ships,” Ms. Goodwin says. “Emarketing is about learning to send the right info at the right time and to bring that prospect or customer along the buy ing cycle. We can only do that through engage ment and ongoing dialogue, and the only medium that can really do that is email marketing.” Because of consumer concerns about privacy, HIPAA regulations also impact the directmarket ing landscape. “The regulations are going to have an impact on how electronic media and direct mail are used,” Mr. Knipper says. “HIPAA won’t eliminate direct marketing, but marketers are going to have processes and systems in place to provide the necessary privacy and security.” ADirect Audience Correlation Marketers need to consider who the target audience is for their directmail campaigns and then choose one, or several, to address the preferences of the selected group. Email is still relatively young, addresses change frequently, and it is much more difficult to find email addresses for high prescribers of a certain product, special niche markets,or geographical regions. MARY JANE GARVEY In the last 18 months to two years, we have found direct mail to be an especially effective way to reach our customer base. DAVID KLAUM 34 J u l y 20 03 PharmaVOICE DIRECT mail “People whohave desk jobs can open email then take the time to open an attachment and look at it; doctors, nurses, and pharmacists are running all over the place and are generally not sitting down at a desk, so they need something they can read when they get a chance,” Ms. Garvey says. “They are unlikely to go through all of their email and click on an attachment and then send it to a color printer. Even if they do, it does not have the same impact as if they are sent a professionally done piece in the mail.” “For us, direct mail is a more effective tool for reaching our compa ny’s main customer base,” Mr. Klaum says. “Pharmacists, who are our primary customers, are increasingly busy. Direct mail has a longerlast ing impact with them than email, which is easily deleted.” Mr. Barsamian, however, believes that email can be used to reach busy professionals, but that it needs to be combined with other meth ods to create the most impact. “Email marketing is an effective way to reach physicians, but it is only one piece of the entire directmail mix,” he says. “Direct mail has a strong place with physicians, especially for branded offerings that can reach a certain target group. A diverse com munications program that combines various delivery vehicles can be very effective.” In light of recent mandates restricting sales reps from distributing or discussing continuing education material, direct mail has become an even more useful way to get information from the marketer to the physician. CDROMASADIRECTMARKETINGTOOLALSOCANBEUSEDASA CUSTOMERRELATIONSHIPTOOL. OsteoimplantTechnology Inc. (OTI), a supplier of total joint replace ments, is using directmarketing tools in a unique way to market its new hipreplacement product and develop stronger relationships with orthope dic surgeons. By inserting CDROMs into a journal focused on the company’s market, OTI is reaching its target audience with a larger volume of infor mation than could be presented in an advertise ment and with a greater ability to measure return on investment. The company is using an electronic tool devel oped by Arcavista Corp. to supply information about OTI’s products directly to orthopedic sur geons via a “smart” CDROM. The CDROMs, which use Arcavista’s Communicator software, are being distributed to more 30,000 orthopedic surgeons as insertions in OrthopedicsToday. “The cost for sales and marketing outreach to doctors is astronomical; it costs a medicalequip ment company about $500 for a single inperson sales call,” says Ian Murray, CEO of OTI.”By using Arcavista’s interactive technology to tar get orthopedic surgeons directly, we expect to dramatically decrease our sales and marketing costs, while realizing a greater return on investment.” The Communicator software delivers a stateoftheart enhance ment for CDs, including a fully functioning commerce and transaction engine that requires no clickthrough or Internet connection until the customer is ready to order.The CDROM’s content includes new prod uct information, corporate and product video, pricing, and company information — and is updated every time the CD is used. “An ad in a magazine would never have been able to convey the amount of information that we are able to get across with the CD ROM,” Mr. Murray says. “More importantly, we can illustrate operating techniques to our audience; the CDROM can show a surgeon per forming an operation and explain his technique.” Mr. Murray says the CDROM links education with marketing through the demonstration of a miniincision procedure that can be viewed from the CD and the company can link information about its products that fit to the specialty. OTI also is using Communicator’s track ing module, which collects information about usage and preferences, whether the user is offline or online,as a leadgeneration tool to reduce costs, while increasing sales. According to Matthew deGanon, executive VP and chief marketing officer at Arcavista, the company can track when the CD is inserted into acomputer and whatactivities the users engage on the CDROM. “OTI can track the actual insertion of the directmarketing piece,” Mr. de Ganon says. “So even before any direct response to the company,we can understand how the cam paign is performing.We can see if physicians interacted with the piece, well past the point of simple branding in a magazine page.” This directmarketing vehicle is being used to promote OTI’s recently launched total hip system,Intrinsic Modular Indexible Neck (IMIN), which was designed to help surgeons achieve better results from hipreplacement surgery. Results from Communicator’s tracking module have shown that 95% of the people who put in the CD browsed it for an average view ing time of about 10 minutes. Results show that users view all parts of the CD,but focused on the IMIN system,which is the primary objective of the company’s campaign. According to Ganon,while the CDROM is a directmarketing tool, it also becomes acustomerrelationship management tool as well. “This technology allows an ongoing point of communication with theprospect or customer,”he says.“So a marketer is leveraging that one campaign or that one ad into a potential ongoing relationship — that has a ROI in and of itself.” DirecttoComputer:The Next Step for Interactive, Electronic Direct Marketing OTI can track the actual insertion of the directmarketing piece. We can see if physicians interacted with the piece, well past the point of simple branding in a magazine page. MATTHEWDEGANON By using Arcavista’s interactive technology to target orthopedic surgeons directly,. we expect to dramatically decrease our sales and marketing costs,while realizing a greater ROI. IAN MURRAY 36 J u l y 2 00 3 PharmaVOICE DIRECT mail “Direct mail becomes very valuable because we can get continuing education material directly to the target audience without having the manufacturer’s sales rep touch it,” Ms. Garvey says. “In every other aspect we work in conjunction with pharma marketers’ sales efforts and their sales reps detail efforts.” ADirect Hit The goal of the directmarketing campaign needs to be determined before selecting the medium for the message. “At the outset, marketers must be knowledgeable in the objectives of the program and the desired outcome,” Ms. Gale says. “If the marketer’s objective is to gain recognition for the product by physicians, a multiplewave program may be required to force a change in prescribing habits. On average, it requires three personal sales contacts to change a physician’s prescribing behavior. The same argu ment can be made for a directmail program.” “It is critical to move into a patientcentric environment and to deliv er customization both online and offline to drive that net result,” Mr. Bolling says. “The most effective way to deliver messages is to use the medium that the end user wants to receive messages in.” F PharmaVoice welcomes commentsabout this article. Email us at feed Experts on this topic DIK BARSAMIAN.VP of sales and marketing,Thomson PDR,Montvale,N.J.; Thomson PDR is part of Thomson Healthcare Inc., which publishes several other annual titles and offers numerous professional educational program sponsorship opportunities to the pharma industry. For more information,visit JAY BOLLING.Executive VP, Roska Direct, Montgomeryville,Pa.; Roska Direct is a fullservice direct advertising agency with proven expertise in integrating brand reputation,promise, and vision into direct communications. For more information, visit CHRISTINA DUFFNEY.Director,media relations and corporate communications, The Direct Marketing Association, New York;The DMA is the leading trade association for businesses interested in interactive and database marketing, with nearly 4,700 member companies from the United States and 53 other nations.For more information, visit MATTHEWDE GANON.ExecutiveVP and chief marketing officer, Arcavista Corp., NewYork;Arcavista develops a suite of innovative software tools,called the Communicator,which helps bring companies and customers closer together. For more information, visit LYNNGALE,MBA.Midwest account manager, /alert Marketing, Sunnyvale,Calif.; /alert Marketing,a division of Jobson LLC, provides the best media for delivery of healthcare information and education to fulfillment, database, teleservices, and recall services for the healthcare industry.For more information, visit IAN P. MURRAY.Chairman and CEO, Osteoimplant Technology Inc.,Hunt Valley, Md.; OTI is committed to the design, development, manufacture,and sales and marketing of proprietary orthopedic joint replacements,spinal systems, trauma devices,and related instrumentation. For more information,visit STEPHEN SMITH.President and CEO,Optas, Woburn,Mass.;Optas is a provider of directtoconsumer marketing solutions and helps marketers form profitable relationships with valuable yet hard to reach consumers.For more information,visit RUTH P. STEVENS. President, eMarketing Strategy, NewYork;eMarketing Strategy assists startup and established companies in building their customer acquisition and retention strategies through a combination of lead generation,businesstobusiness marketing, and database marketing solutions.For more information,visit JAMESL.WEAVER.President, RediMail Direct Marketing Inc., Fairfield, N.J.; RediMail Direct Marketing is a member of the RediDirect family of companies and is a leading provider of sales and marketing support services, combining unique technology with extensive database, lettershop,and fulfillment capabilities to deliver turnkey solutions for direct marketing and fulfillment requirements. For more information, visit professionals and consumers.For more infor mation,visit MARY JANE GARVEY. Managing partner,PDQ Communications Inc., Garden City, N.Y.;PDQ’s mission is to provide an information delivery system that will enable pharmaceutical manufacturers to update healthcare professionals in a timely manner and assist the industry in its goal to educate these professionals through continuing education. For more information, visit KATHLEEN GOODWIN.CEO of iMakeNews, Newton,Mass.;iMakeNews is a provider of emarketing and enewsletter solutions. For more information, visit LIN GRENSINGPOPHAL.Author,Small Business Guide to Direct Mail, Chippewa Falls, Wisc.; Small Business Guide to Direct Mail was published by SelfCounsel Press in 1991. JIM HATHAWAY.VP,market development, Grafica.eCRM Corp., Chester,N.J.; Grafica is a fullservice eCRM (enterprise customer relationship management) advertising agency dedicated to helping clients realize the full revenue potential of their customers through their life cycle — acquisition, retention,cross sell/upsell, and winback.For more information, visit DAVID KLAUM.VP of sales and marketing, Fougera,Melville, NewYork;Fougera is one of the largest manufacturers,marketers,and distributors of a wide range of multisource topicals and ophthalmics in both prescription and overthecounter dosage forms.For more information, visit JIM KNIPPER.President and CEO, J. Knipper & Co., Lakewood,N.J.; Knipper is dedicated to providing a wide variety of direct mail,

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