U.S. Marketers Shift Toward Trackable Marketing And Media Efforts

Epsilon’s Commissioned Study with GfK NOP Reveals Growing Reliance on Cross-Channel, Integrated Campaigns and Marketing Technologies to Boost Relevance, Relationships and Results

WAKEFIELD, MA. – June 21, 2006 – Epsilon, a leading provider of multi-channel marketing services, technologies and database solutions, today announced results of its Business-to-Business Marketing survey with GfK NOP. The results highlight companies’ shift toward targeted, integrated marketing approaches and the growing reliance on marketing technologies to optimize customer relationships and grow marketing ROI.

Response data indicate that customer insight-based marketing is gaining budget share from traditional mass media efforts, and that marketers are increasingly relying on strategies such as micro-targeting to acquire and retain customers. At the same time many respondents report an inability to adequately track, measure and plan marketing initiatives properly in an increasingly multi-channel marketing environment.

"The marketing world is changing and we are beginning to see a shift towards right-channel marketing based on customer behavior and the demand for improved performance," said Michael Iaccarino, president and CEO of Epsilon. "While there is universal recognition of the growing importance of customer insight-driven marketing technologies, budget allocations and marketing planning continue to lack sophistication despite the prominence of integrated marketing departments."

Budgets Moving Toward Trackable Media

Although traditional marketing channels – TV, radio and print – continue to command the largest share of budgets, the largest spending change among respondents is occurring in trackable media categories. Today more than half of respondents’ budgets go to trackable media, including channels like direct mail, email, telemarketing and search (55 percent), and 79 percent of respondents report that they are decreasing mass marketing budgets in favor of more targeted efforts.

Integrated Campaigns Gain Momentum, Yield Payoffs

Among marketing decision-makers and influencers, 70 percent report that their organizations currently practice integrated marketing. In addition, 72 percent claim that cross-channel, integrated marketing is becoming increasingly important to their organizations, and 77 percent will increase their efforts this year. Meanwhile more than a third (34 percent) were concerned that their organizations were not properly structured to execute a coordinated, integrated, cross-channel marketing campaign. Of those organizations that do practice cross-channel, integrated marketing, however, a majority (62 percent) reported double-digit lifts in marketing performance, with nearly one-in-five reporting a lift of greater than 15 percent. (Typical mean reported lift was 11 percent.)

Data Called Critical, But Infrequently Used In Planning or AnalysisData Called Critical, But Infrequently Used In Planning or Analysis

Nearly all respondents (98 percent) reported that leveraging customer data is increasingly important to their organizations, and many (70%) now structure departments to place traditional marketing budgets and interactive marketing budgets under the control of a single person. But 95 percent still see room for improvement in their customer relationship marketing, and 38 percent do not believe customer data is readily available for use in marketing efforts. Even after the results are in, many (46 percent) rely on rough estimates rather than modeling to allocate future budgets by channel, and fewer than half examine more than overall sales to analyze lift from cross-channel campaigns.

2006 May Be Watershed Year for Investments in Marketing Technology

Although roughly half of respondents (fifty-three percent) say they currently leverage customer knowledge and data analysis, 80 percent say they will within a year. Similarly a minority report using web analytics (49 percent), loyalty/rewards solutions (46 percent), and campaign management and workflow tools (44 percent), but more than two-thirds expect to use these within a year; and 65 percent say they will use marketing automation tools, up from 41 percent currently. Depending on the technology, 21 percent to 37 percent will rely wholly on outside providers for these services.

When it came to marketers’ interest in emerging channels and techniques, Web 2.0 innovations like podcasting, RSS, and blogs took a back seat to word-of-mouth advertising (WOM), with 81% reporting interest in WOM. Product placement (59 percent) and mobile device messaging (50 percent) were the respondents’ other top interests.

Churn Still Built into Marketing Plans

Despite marketers’ increasing focus on their customers’ experience to guide marketing strategy, respondents spent far more of their budgets on brand awareness and customer acquisition (62 percent combined) than on retention (24 percent) and loyalty/reward programs (11 percent). Budgeting appears to still emphasize finding new customers over keeping and building more profitable relationships with existing customers.

Methodology

GfK NOP, a worldwide market research organization, conducted the Epsilon survey from March 28 to April 4 among a qualified sample of 175 U.S. marketing executives to understand their organizations’ 2006 marketing plans, budget allocations, measurement practices, and interest in new technologies and new marketing media/channels. The study included respondents holding the title/position of chief marketing officer, vice president of marketing, director of marketing, and marketing manager; who were involved with marketing initiatives; and who were budget decision-makers or influencers for companies whose annual revenue was at least $250 million.

To request a complete copy of the research, please contact Mary Beth Keelty at mkeelty@epsiloninteractive.com.

About Epsilon
Epsilon is a leading provider of multi-channel marketing services, technologies and database solutions. Through its combination of client-centric marketing solutions, Epsilon helps leading companies understand, measure, manage and optimize their customer relationships. The organization's end-to-end suite of integrated services includes marketing strategy, creative, data, technology, analytics and distribution services to produce multi-channel marketing programs that generate measurable results throughout the customer lifecycle.

In September 2005 Epsilon acquired Bigfoot Interactive (now Epsilon Interactive), the leading provider of strategic, ROI-focused email communications solutions and marketing automation technologies. Epsilon Interactive now serves as Epsilon's key offering in the interactive marketing and communications space. Founded in 1969 Epsilon is an Alliance Data company.

For more information see www.epsilon.com.

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