Why direct marketing agencies have to change

This morning, Merkle announced the acquisition of an independent, Chicago-based, direct marketing agency, CFM Direct.  From Merkle’s perspective, the move bolsters their existing agency services and further strengthens their exposure in the financial services industry – CFM’s primary focus area.

But the move emphasizes an interesting trend in the direct marketing industry.  The lines between direct marketing agency and database marketing service provider are blurring.  Both are adding services or acquiring companies that boast the historical strengths of their opposite numbers.  On paper, their capabilities are beginning to look the same. 

But, they are still different beasts - one is creatively focused, the other operationally focused; one sells time, the other sells output; one is often tied to exclusivity, the other will sometimes work with all of the top firms in a given vertical; one demonstrates phenomenal account management and program management rigor, the other, well, doesn’t…

And, that’s one of the most interesting elements of this acquisition.  Database marketing service providers have traditionally gazed in envy at the program management discipline of direct marketing agencies.  Of course, there is value in bringing deep customer insight and creative execution closer together, and Merkle is not the first DBMSP to acquire a DM agency with this purpose in mind.  But, what I found most interesting in talking to Merkle is that priority one for them is to introduce CFM’s program management rigor throughout the Merkle organization.

Database marketing service providers are clearly adapting to the ever-evolving marketing ecosystem.  I think the biggest changes that are still to occur are in the direct marketing agency world.  It may sound odd, but the future of the direct marketing agency isn’t direct marketing.  Unless direct marketing agencies begin to acquire or adopt database marketing capabilities and advanced analytics expertise, they will start to see serious erosion in their business, as database marketing service providers that successfully marry customer insight, creative, and program management discipline will quite simply eat their lunch.

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Comments

re: Why direct marketing agencies have to change

To your point about "advanced analytics expertise": I believe that Google will also make a significant entry in the DM field. http://livepaola.wordpress.com/2007/04/17/two-predictions-about-google/

re: Why direct marketing agencies have to change

Dave,You make some good points. But to boil it down to simplicity, I quote Bruce Goerlich of ZenithOptimedia, who at the Advertising Research Foundation confab last week noted "a dirty little secret in the direct-marketing world." The industry is OK at mining databases and acting on them, but incompetent at managing them.- Max Kalehoff

re: Why direct marketing agencies have to change

To me, the challenge still lies in taking a product-centric person (Database Marketer) and program-centric person (creative, agency type) and putting them in a blender to produce the ideal "super-marketer".Seems easy - but finding these people is the biggest task. Research and execution under one umbrella will be very exciting.

re: Why direct marketing agencies have to change

So which has more value? The agency with the list, or the agency with the right management?