Friday, October 16, 2009

Branding vs. Direct Response: Which is right for you?

As I’ve written before … several of my real-life experiences influence my blog posts.

A colleague of mine asked how could he leverage a popular email list and drive them (consumers) to a retail store to purchase his product.

My explanation and recommendation led me to explain the difference between branding and direct response marketing.

You see, driving a consumer to a store to “take action” is more "branding". Branding is a form of marketing where a consumer sees or hears your message (albeit email, TV, print ad, radio) and then takes action. The action isn’t immediate (i.e. “direct response”) it typically involves going to a retailer to make the sale (or “convert”).

The marketer has to hope that once the consumer sees/hears the message they remember it. (Advertising studies show that the average consumer needs to see a message 7-8 times before it becomes familiar to them). Then, hope that consumer has enough loyalty or name recognition from that product that when they do go to the retailer to purchase, they don’t get distracted by other competitive products.

Branding is hard to measure. Usually, you tie into the timing of your campaign in to retail sales for the specific product during that same time period and make assumptions.

As opposed to “direct response marketing”, where there is generally one strong message with a compelling offer. One platform (i.e. an email, a newsletter ad, a direct letter, an online ad). You see, it's more controlled … you’re directing the consumer where to go next (i.e. “Click here now”) and your message will be the only one in front of them at that time. In addition, it's quantifiable … easier to measure … looking at metrics like open rates, click through rates, response rates, conversion rates. You can directly calculate your ROI (return on investment), which helps the marketer offset any advertising costs from the profits. Plus, typically direct response marketing overall is more cost effective than branding.

Branding efforts take time, as you have to develop your brand loyalty with the list first to help overall conversions (think of loyal brand followers of well-known products like Nike, GE, BMW, McDonald’s, etc ... these companies spend hundreds of millions of dollars on brand development). Branding is also not as accurate to measure.

For businesses – especially during the current economic environment – unless you’re a Fortune 500 company, the most reliable marketing method in my opinion is direct response marketing.

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