Plummeting Effectiveness of Traditional Marketing Channels

Since the rise of direct marketing, companies have relied on outbound channels such direct mail, telemarketing, inserts, and catalogs to reach consumers. More recently, marketers have increased their use of lower-cost outbound channels such as e-mail and SMS messaging to accomplish their goals. Regardless of channel, total spending on direct marketing has consistently increased every year over the last 50 years – despite a number of economic downturns – and now totals over $2.0 trillion annually, according to studies by the American List Counsel and The Direct Marketing Association (DMA).

However, even as marketers have relied more and more on traditional outbound channels, they are becoming less and less successful. Between 1980 and 2000, marketers grew their total advertising budgets by 365 percent and their direct mail budgets by more than 400 percent – even though consumer spending grew only 283 percent in the same period. Today, the typical consumer receives roughly 1 million marketing messages a year, according to Seth Godin, author of Permission Marketing.

The problem, Godin argues, is that the traditional outbound marketing channels such as direct mail and e-mail use “interruption-based marketing”. These marketing campaigns are only effective if they interrupt whatever the customer is doing at the time to gain his attention. The problem, however, is that today’s world has such a glut of information and demands on consumer attention that the typical consumer would rather ignore all marketing messages than sift through the onslaught to find the relevant ones. These overwhelmed consumers are getting better at tuning out marketing messages – whether through e-mail filters to block spam, digital video recorders to skip commercials, caller ID to prevent unwanted calls, or the recycling bin to throw away direct mail pieces without opening them. Of course, these filtering techniques block legitimate, responsible advertising as well. By one count, there are more than 170 different spam filters on the market – and these block up to 37% of all legitimate e-mails at some ISPs. In fact, Jupiter Research estimates that legitimate e-mail blocked as spam will cost companies as much as $419 million in 2008.

In the past few years, marketers have responded by escalating the battle, spending even more and introducing new techniques to get around these blocking mechanisms. Ultimately, however, this creates a vicious downward spiral between unrelenting marketers and the besieged consumers who try to avoid them.