The role of advertising agencies on the demand for personalized communications

Rochester Institute of Technology

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2004

The role of advertising agencies on the demand for

personalized communications

Kathryn C. Moore

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School of Print Media Rochester Institute of Technology

Rochester, New York

Certificate of Approval

Master's Thesis

The Role of Advertising Agencies on the Demand

for Personalized Communications

This is to certify that the Master's Thesis of

Kathryn Moore

has been approved by the Thesis Committee as satisfactory for the thesis requirement for the Master of Science degree

at the convocation of

May 23, 2003

Thesis Committee:

Patricia Sorce

. Patricia Sorce, Primary Thesis Advisor

Franziska Frey

Franziska Frey, Secondary Thesis Advisor

Frank Cost

Frank Cost, Graduate Thesis Coordinator

Twyla

J. Cummings

The Role of_AdvertisingAgencies on the Demand

for Personalized Communications

By

Kathryn C. Moore

A thesis submitted inpartialfulfillmentofthe

requirementsforthe degreeofMasterofScience inthe

SchoolofPrint MediaintheCollege

of_ImagingArts& Sciencesofthe

Rochester Institute of_Technology

October 2004

Thesis/Dissertation Author Permission Statement

Title of thesis or dissertation: The Role of Advertising Agencies on the Demand for Personalized Communications

Name of author: Kathryn Moore

----~~---Degree: Masters of Science

Program: Print Media

College: College ofImaging Arts & Sciences

I understand that I must submit a print copy of my thesis or dissertation to the RIT Archives, per current RIT guidelines for the completion of my degree. I hereby grant to the Rochester Institute of Technology and its agents the non-exclusive license to archive and make accessible my thesis or dissertation in whole or in part in all forms of media in perpetuity. I retain all other ownership rights to the copyright of the thesis or dissertation. I also retain the right to use in future works (such as articles or books) all or part of this thesis or dissertation.

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I, Kathryn Moore , hereby grant permission to the Rochester Institute Technology to reproduce my print thesis or dissertation in whole or in part. Any reproduction will not be for commercial use or profit

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Ka

t

h

ryn C. Moo re

Date: 1-03-05

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The Roleof_AdvertisingAgencies ontheDemand forPersonalizedCommunications

I, Kathryn _{Moore, hereby}grant permissionto the

Wallace Memorial_LibraryofR.I. Ttoreproduce_my thesisin whole orinpart.

Anyreproductionwill not beforcommercial use orprofit.

TableofContents

ListofTables v

ListofFigures vi

Abstract vii

Chapter 1: Introduction 1

Chapter 2: A ReviewoftheLiteratureintheField 3

Personalized_Printing 3

PersonalizedCommunications: ChallengesandBarriers 4

AdvertisingAgencies Role in_RecommendingNew Media 7

Innovative BehaviorofAgenciesofDifferent Sizes 10

MarketingStrategiesofClient Types 10

Chapter 3: The Hypotheses 13

Agency Type 13

Agency Size 14

Client Type 15

Chapter 4:_Methodology 17

Chapter5: TheResults 19

Hypothesis 1 23

Hypothesis 2 26

Hypothesis3 28

Chapter 6:

_Summary

and Conclusions 31

Agendafor FurtherResearch 33

Bibliography

35

Appendices 37

Appendix A

-Advertising Agency Survey 38

AppendixB - Case

Study on aDirect _{Marketing Agency} 42

ListofTables

Table 1.DegreeofPersonalized Communications 21

Table 2. Relationships Between AmountofPersonalizationandLevels

ofPersonalization Used 22

Table 3. _Primary Services Provided _byAgencies 23

Table4. NumberofAgencies in Each Cluster 24

Table 5. Means Comparison_{(Agency Type)} 25

Table 6. NumberofAgencies Located in Each_AgencySize 26

Table 7. Means Comparison_{(Agency Size)} 27

Table 8. Relationships Between HighandLow Annual Billings

andLevelsofPersonalization Used 28

Table 9. Means Comparison (Client _Type) 30

Table 1 0. Background Information Resultsfrom the_AgencySurvey 38

ListofFigures

Figure 1. PercentageofAgency WorkInvolvingPersonalizationorVariable Data 20

Figure 2. Exampleof aPersonalized Brochure 46

Abstract

Apersonalizedcampaignallows an_agency toutilizeits

clients'

recordstoreach

itsaudience_{by sending}targetedmessages and_promotions, whichoftenresults in

improved businessresults. Thispullisachieved_{by using detailed databases}with alarge

quantityofinformationabout_existingand potential customers. This information, inthe

formof_text, dataand sometimes_images, isthenplacedintoadocument ina_way that is

easy forcustomerstolocateand actupon.Variabledata_technology shouldbeembraced

by advertisingagenciesas adefinite wayto improveresponse rates and generate more

business. Butwhatdo _advertisingagencies_actuallythinkof personalized campaigns?Is

the_{technologybeing}embraced_by agenciestoimprovebusinessresults?Doesthe type

and size ofthe_agencymake adifference inwhether or not personalizedcampaignsare

used?Does theagency'sclientbasealtertheuse of personalization?

To findsolutionsto thesequestions,a_surveywas givento a random_group of

advertisingagenciesdrawnfromThe Red Books list of agencies. Atotalof250agencies

completedthe telephonesurvey. _Also,anin depth questionnaire was completed by a

direct marketing agency usingpersonalizedcommunications,tocomplementthe _survey

results.

Whatwasfoundwasthatan average of_{only 23%} ofthework theagenciesdo

actuallyinvolves usingaformof personalizedcommunications. Seventy-ninepercent of

clients_requestingpersonalization are smallbusinesses ($100millionorless inannual

revenue), 15%are medium sizebusinesses ($101 millionto$1 billioninannual_revenue),

and almost6%oftheclients arelarge businesseswith morethan $1 billion inannual

revenue. Forty-eight percent of clients_requestingpersonalized communications were

business-_{to-business clients.Almost 42%werebusiness-to-consumer}

clients, andthe

other 11%wereboth.

Todetermineifthereisadifferenceintheuseof personalization_accordingto the

agency type,agencies were groupedintothreecategories: ₁₎ direct marketingandweb

agencies,2)traditional full serviceagencies,and₃₎boutiqueagencies.Results indicatethat

thereisno significantdifference intheuse of personalization _amongthese three_agency

types. _{Direct marketing}andweb agenciesusethemostamountofpersonalization at_25%,

followed closelyby traditionalfullservice agencies at24%. Boutiqueagenciesusethe

least amount ofpersonalization at20%.

Todetermine ifthereisadifferenceintheuse of personalizationinrelationto

agency size, theagencies were classifiedintothreegroups_accordingtotheirannual

billings: ₁₎smallagencies with$5 millionorlessinannual_revenue,2)medium agencies

withannualrevenuebetween$5,000,001 and$50_million,and₃₎ largeagencieswith

annualrevenue of$50,000,0001 or more.Results determinedthat thereis no significant

difference intheuse of personalization_amongthese_{different agency} sizes. Largeagencies

usethemost amount of personalizationat_27.6%, followed_bymedium sized agencies at

26.7%andsmall agencies at20.7%.

Finally,todetermineifthereis adifference intheuse of personalizationinrelation

toclient _type, agencies were asked on_average,whatpercentagesoftheiraccounts are

primarilybusiness-to-business (B2B), business-to-consumer_(B2C),and a mixture of

both. Results indicatethat again, thereisno significantdifference intheuseof

personalization _amongtheseclienttypes.Agenciesthatserved a mixed_array of clients

use thehighest percentageof personalizationat_29.5%,whileB2BandB2Cclients use

almostthesame percentage ofpersonalizationat21.5%and_22.1%,respectively.

Chapter 1

Introduction

One ofthe_emergingtechnologies and applications used_{by advertising}agenciesto

reachtheirclientsmarketis personalizedcommunications. Clientscreatetheir_marketing

programs, _includingmediachoices, andthen turntoan_{advertising agency} to_helpthem

executetheircampaigns. Adagencies are thecritical_decidingfactor fortheseclients asto

whether ornot apersonalized campaign willbeusedfortheirproducts or services. Itis

uptoad agenciestobeable toeducatetheirclients onthis_marketingtrendandits linkto

improved businessresults. Forthisto take place,agenciesthemselvesmustbeeducated

ontheadvantages ofthis _{technologyin marketing}campaigns.To determinewhatagencies

aremore_likely tofacilitate theadoption ofthistechnology, it is importanttodiscoverthe

characteristicsoftheagencies andtheirclients thatare_{currently implementing}

personalized campaigns.

Theyears_followingthe introductionof personalized_{printing indicated}that there

was a slowadoption ofthe_{technology by} companies,ad agenciesand print providers

(On-_Demand

Printing, 1998). Sincethen, technicalsolutionstosome oftheseproblems

havebeen_met, such asthe introduction ofPPML(PersonalizedPrint MarkupLanguage),

print withdigital devices. However, practicalissuesare stillpresent _today, such asthe

cost of

_implementing

apersonalized campaign and databaseintegrity. Still,as

personalizationbecomes moreknownthroughout the _advertisingand_{printingindustries,}

it is importanttofind out whetheradagenciesare_facilitatingor are abarrierto the

adoption of personalization.

This thesis_{focuses specifically} onthe_{advertising agency}anditsuse of

personalizationtechnology. Theobjectives ofthis thesisareto:

1. Determine how

many ad campaigns are_usingpersonalizedcommunications

2. Determinewhattypesofagencies are_usingthis_technology

3. Determinewhetherthe _agency sizeimpactstheuse ofpersonalization

4. Determinethetypes ofclients thatuse personalized communications.

These objectiveswill bemetthroughdescriptive surveys sent to adiverse groupof

advertisingagenciesfromall overtheUnited States. Itishopedthatoncethe thesis is

complete, therewillbe a_{better understanding}asto thecharacteristicsof adagenciesthat

Chapter 2

AReview oftheLiterature inthe Field

Personalized_Printing

Accordingto the"Third EditionoftheBest Practices in DigitalPrint,"

personalizationis_{"personalizing}or_customizingadocument_by varyingthe_text,

graphics, andlayoutof_personally relevantinformation_{therebyachieving}the_marketing

goal of effective andefficient

communications."

It_{isn't just moving}elements_around, but

instead, "Thefundamentalvalue proposition ofpersonalized printis it increasesthevalue

oftheprinted page asa purposeful communicationtool."("Personalized Print: a new

modelfor

success,"

2000).

Manyad agencies are_usingthesimplest formof_{1:1 marketing}when names and/or

addressesareplacedonthedocument.Itisused somuch _{todayhowever,}thatit doesn't

seemlikeaformof personalization._{Personalized marketing is}whenaseparate and unique

documentis createdforeach person _dependingonhisorher individual interestsor

specifications. _Any typeof publication canbe personalized,anditcan oftenbe found in

direct mail,promotional_brochures,and sales collateralor event-related pieces. There

are different levelsof personalization as_{well, starting}with asimple mail mergetoa

willfindan_{increase in}response_{rate, the}lastlevelbeingthemost targetedand_havingthe

most promise forresponsefrom thecustomer.

PersonalizedCommunications: Challenges andBarriers

Thereare several reasons_why personalized campaigns aren'talwaysthe first

choiceforan ad_agencywhen itcomesto_decidingona_marketingcampaignfor itsclients.

The firstareaofconcernwhen_decidingon a personalizedcampaigniswhethertheclient

hasa_strong database.The higherthepersonalizationlevel inthecampaign,thehigherthe

demand isfora clean and up-to-datedatabase. Thiscould_possiblybe thehardest but

mostimportant part of_puttingtogethera personalized campaign.Ifa clientdoesnothave

a current_database,oradatabaseformatted _correctlytomergeintoavariabledata

application, therecouldbereal problems.Databasesstartasrented_mailinglistsand when

a_companyreceivesthe_respondinginformation froma_mailingsuch as apromotion, itcan

thenusethat informationto start_formatting databases_(Broudyand _Romano, 1999). The

databasesthatare used are notjust fullof namesand_{addresses;they} have_{demographics,}

psychographics,jobfunctions, purchasingpatternsandevenimagesthat correspondto

individualinterests _(Broudy and_Romano, 1999). Dataabout customers canbe found in

manydifferentplaces_includingsales_records,customer_surveys, censusfilesand other

publicsurveys _(Jones, 1999). Databasesrequiretheirown software and sometimes their

ownhardware alongwithfront-endsystemsto store and accessdata. _Theyalso needto

havea persontomanage_them,andforlargerdatabases, thisrequires advanced database

management_skills, whicharen'tfoundinmost _advertisingagencies. Asaresult, many

agencies

_doing

personalizationneedtooutsource orhire someonetomanagetheir

databases. The lastissuewithdatabases is security.Thereare_many clients who are_very

reluctanttogivetheirdatabasesoverto agencies,sotherehasto betrustanda

partnershipbetweenboth sides(On-Demand_Printing, 1998).

One continuingtrend thatis_improvingthe_quality ofdatabases is Customer

Relationship Management (CRM). This isa_keycomponentin_implementing

personalized campaigns and can_help adatabasebecomeinstrumentaltoan adagency's

success. _Accordingtothe"Third EditionoftheBest Practicesin Digital_Print", CRMis

"technology thatinteractswith_{potentially every} area of anorganization's operationsthat

touches the customer, suchas_{marketing, sales,}and customerservice. This_technology

actsasthe central_repositoryforallinformationcollectedand shared aboutthecustomer.

Ideally, all customertouchpointsuse thiscommon_{database,allowingInternet,} call

center,directmail,andotherinteractionsto shareinformation."Whenthesedatabasesare

incorporatedintoapersonalizedcampaign, theresult isa campaignthatis_{highly targeted,}

building 1:1 customer_loyalty thatwill _helpmaintain_existingcustomers_alongwith

establishingnewrelationships withpotential customers.

Thesecondmajor challengeiscost. Printproviders must provide personalization

expensive,theworkflowismore_complicated,andtheoperators are even scarcer.Itis

necessarytounderstandthegeneral workflowof avariable or personalized campaignfrom

thecollection ofdatato the_printinganddistributiontorealizewhichadditional costs are

associated withthe technology. _Followingarethe 12majorsteps_accordingto_Broudy

andRomano:

1. DataAcquisition/Analysis

-collectdatafromone/severaldatabasesand

organizeinto one

2. _MarketingConcept

-definetheprojectintermsof_marketinggoals and results

3. Creative Concept/Production

-designthematerial andplanforpersonalization

4. Data Finalization

-clean_upand organize_{data for consistency}

5. Data Stream

-Organizedataintoidentifiableunits and standardized_coding

6. Data Construction &_Linking

-linkvariabledatatothelayoutand prepare for

output

7. Print Stream

-OrganizeintoaPostScript datastream

8. Preview/Preprint/Proof/Correct

9. Print Production

-runjobthroughRIP and print

10. Post Print_{Processing bindery}and_finishing

1 1. Verify/Audit

-doublecheckforcorrectness

12. Conversion/Archive

-convertforother applications and saveforfutureuse.

Withcostin_mind, it ishardtosella client onpersonalized printing._Instead, the_agency

needstoselltheclient on personalizationas atool for_buildinga_marketingprogram

(Broudy and_Romano, 1999). John SissonofBanta_states, "Ifcustomersdon't see

anothervaluebeyond theunitcost, they'renot_goingtobeinterested"

(On-Demand

Printing, 1998). Thisattitudeis_very

_{disheartening}

foragencies_{promotingpersonalization}

because inorderfora clienttomakealargeprofitfrompersonalized_{campaigns,agencies}

Thethirdmajor challengeistheadditionalwork neededtocreatepersonalized

documents. Designsneedtobe_carefullyshapedtomeetall possiblescenariosthat_may

befound inthe _database,whetherit'stextlengthortheplacement ofimages. Thesethree

concerns are possible reasons_{why using}personalizationisn'talwaysthefirstchoice

when_decidingona_marketingcampaignforan ad_agencyanditsclients.

AdvertisingAgencies Role in _RecommendingNew Media

Historically,advertisingagenciesingeneralhavebeenmediainnovatorswhenit

comesto_marketingstrategies. The 4 As (American Associationof_{AdvertisingAgencies)}

describean_{advertising agency} as "anindependentorganizationofcreativepeople and

businesspeoplewho specializein_developingand_{preparing advertisingplans,}

advertisements, and other promotionaltools. _{The agency} purchases_advertisingtimein

various media onbehalfofits clients

-various advertisers or sellers to findcustomers

forthe

clients'

goodsand

services"

(Leeand _Johnson, 1999).

Tobeadoptersofpersonalized_technology,ad agencies needtohaveaninnovative

outlookontheirmedia strategiesfortheirad campaigns. Themore_leadingedge_they are

andtheearlier_they educatethemselveson newtypesof_technology,thefaster_they and

theircampaignswillbenefit from it. For_{this study,}itis importanttounderstand the

typesof agenciesthathavea_history of_beingmoreinnovative because itcould_play a role

First, it is importanttonotethe _{differences in agency} types. Agenciescanbe

classified _by the services_theyoffer and_by thetypesofbusiness _theyhandle. Thereare

twomain typesof_{advertisingagencies,} full-serviceagenciesandspecialized service

agencies. Fullservice agencies arelargeragenciesthatperform atleast fourofthesebasic

functions fortheirclient: researchservices,creative _services,media_services,

advertising-relatedlegalcounsel, marketing planningandmanagement and accountmanagement.

Beyond thesebasic segments,afullservice_agency could also offerdirect_marketing,

publicrelations and sales promotionservices(Leeand_Johnson, 1 999). _Many fullservice

agencies are _publiclyownedconglomeratesand_many ofthemareinternational. The single

agencies withintheconglomerates are_separatelymanaged andforthemost part arein

competition with one another_(Jones, 1 999).

The_majority of_advertisingagenciesinthemarket are smaller_agencies,which

typically have upto adozenemployees andhandleaccounts_upto $10,000(Leeand

Johnson, 1999). Some smallfirmscanbeclassified as full service_agencies,butthe

majority ofthemare specialized.There are severaltypesofspecialized service agencies

includingcreative_boutiques,health/medical_agencies, direct marketingagencies and ethnic

agencies. Creative boutiquespreparethecreative execution oftheirclient's product and/or

serviceandtheirsolefocusis ontheideaand creative product.Health/medicalagencies

carry out_manyofthe functionsof afull service_{agency, the}difference_beingthat_they

marketingagencies _primarily specializeinstrategicplanning,creative solutions and

execution,anddatabasemanagementfor direct responseadvertising. _{Direct marketing}

agencies also offer serviceslikee-commerce, Internetmarketing, data miningand modeling.

They specializein relationship marketingandinteractivecommunicationstoreachtheir

clients consumers on a personallevel.Ethnicagenciesspecializein advertisingtoethnic

populations_{by concentrating}on customized_marketingprogramsgeared_specificallyat

thegroup's values andlifestyles (Leeand_Johnson, 1999).

When comparingtraditionalfull service agenciestoboutiqueagencies, studies

have determinedthatboutiqueagencies aremore_likely todemonstrate innovative

behaviors._Accordingtoa report onthepost-adoptionattitudesto _advertisingonthe

Internet_{by Shelly} RodgersandQimei _Chen,traditional_advertisingagencies_lagbehind

other specialized_agencytypes whenitcomesto_advertisingontheInternet (Rodgersand

Chen, 2002). Traditionalad agencieshavea_"legacy

system"

mindset where not_onlyare

they slow_{to change,}butalso resistanttochange.One reasonforthisisthat "Agencies

withthegreatest_monetary investmentsintraditionalmedia will_probably be less_likely

than other_agency typestoperceivetherelativeadvantage oftheInternet" (Rodgersand

Chen,2002). Other agencytypes such as new-mediafirmsandInternetboutiquesdon't

havethatmindset, one reasonbeingthat theiragencies were createdtospecialize in

traditionalad_agencies,boutiqueagencies needtohaveaninnovativeoutlookand market themselvesas agenciesthatare ableto_bringtheirclients _somethingnew.

InnovativeBehaviorofAgenciesofDifferent Sizes

When comparingagenciesofdifferent sizes,thereisnotevidenceofdifferencein innovative behavior betweensmallagenciesandlargeagencies.Largeragencieshave many raw resourcesandhaveanetworkofpeople_workingtogether. _They havethe_credibility toattract more clientswith more_money toinvest inthe technology.Largeragenciesare also_usuallyassociated withthe traditionalfullservice agencies_meaningthat_{they may} havethesame mindset as suggestedinthe previous paragraph.Smalleragencies offer a morepersonalizedtouch intheirservices_(Fadden, 1994). Low_overhead,diversified services,and willingnessto accommodate change are someexplanations forthesuccessof

smaller,boutiqueagencies_{("AdvertisingAgencies",} 2004).

MarketingStrategies ofClientTypes

Theonemaindifference betweenbusiness-to-businessandbusiness-to-consumer

customersisthatbusiness-to-businessclients are_lookingtofillaspacefortheir

customers'

needs andbusiness-to-consumerclients are _lookingforoneitemtofilla personalspace orneed("B2BvsB2CSelling,"2002). When comparingad agencies

whose clientsarebusiness-to-businessor_{business-to-consumer,} ithas beenshownthat

thereisa cleardifference intheamountof_{advertising in}each group. _Accordingto an

articlein InternetWire, B2Bs lack marketingcomparedto_{B2Cs, especially}on the

Internet. As stated_{before,deciding}to use theInternetaspart ofa_marketingplanisasign

of_adoptingtheinnovationprocess. _"Accordingto the study,less thanhalfofB2B

customers _{say they}are_very satisfiedwith theironline_purchasingexperiencecomparedto

52percent ofB2Cbuyers" ("Internet _Wire",2001). Assaidinthearticle,B2Bsare not

adheringto the "fundamentalprinciples of_Marketing 101 whichisto deliverasuperior

online experiencethatisrelevant andtargeted("B2B's Lackof_MarketingDwarfs B2C's

Mismarketing,"2001).

InrelationtoInternetmarketing, accordingto "The DMA'sStateofPostaland

E-Mail Marketing: New Trendsand Results,"over 51%of alltypesof companies

including B2B, B2C,andcompanieswho are_both, sentunder 100,000e-mailsin 2001.

However, 23%ofB2C companies are more_likely to send over 1 million promotional

e-mails.Whenitcameto _sendingpromotional pieces via postal servicesin_2001, 80%of

B2B companieswere_likelytosend under3million_pieces,while_only28.5% ofB2C

companieswere_likely to dothesame. When sendingover30million promotional_pieces,

consumercompanies werethemost _likelytodothisat22%. Thisshowsthat B2C

companies are more_likelyto _{be marketing}throughdirectmail,by wayof e-mail and

postalmail.

When itcameto themost _frequentlyused_marketing strategiesin_{these mailings,}

The Direct

_Marketing

Associationfoundthat 66.7%ofB2Bcompaniessometimes use

personalizedinformationabout acustomer(beyondname and_{address) in}theiroffer,

followed_bycompaniesthatare bothat65.3% and B2Cat56.3%. However overall, the

marketing strategy alltypesof companiesuse most oftenis _customizingmail_accordingto

customer profile at_76%, followed_bypersonalization at61.5%. Inconclusion, while

B2Ccompanies are_mailingoutmorepromotional piecesthan_B2B, B2Bcompaniesare more_likely tobe_{personalizing}and_customizing theirpromotional mail pieces. B2C

companies are_becomingmoreinnovative inthe Internetand e-mailmarket, whileB2B

companies are_becomingmoreinnovative inthe directmail market.

Chapter3

The Hypotheses

Thisthesiscontains three_hypotheses, all ofwhichstemfromthequestion of

what percentage of_advertisingcampaignsis _usingpersonalized communications. Ofthe

agenciesthatare_usingpersonalizationintheircampaigns, it isimportantto pinpoint their

characteristics.

AgencyType

Advertisingagencieshave beenseparatedintothreedistinctgroupsforthis _study

basedontheservices_they said_theyofferedinthe_survey andfromthe _preliminary

researchconducted earlier. Thesegroupsinclude direct marketingand webagencies,

traditionalfullservice_agencies,andboutiqueagencies.Direct marketingagencies_already

havetheexpertisetobuildcompetentdatabasesand arebasedondirectresponse

advertising,makingthemaqualified_agency type touse personalization. Traditional full

service agencieshaveallthe resources_necessary to besuccessful_{in using}personalized

communications _{includingmonetary resources,}diverse _personnel,and connectionsto

outsidevendors. However_they have beensetintheirways when_utilizingnew media.

Boutiqueagencieshavehadamoreinnovative historyand are uniqueinthat _theyare able

tofocus _solelyon personalizedcommunicationsand utilizeitas a valuable_marketingtool.

Hence, it is expected_that,

Hypothesis 1: There isnodifference intheamount ofpersonalized

communications used inrelation to_agency type.

Agency Size

Advertisingagencieshave beenseparatedinto threedistinctgroupsforthis _study

basedontheirsize.Their sizewasdetermined_bytheiramount ofannual revenue.

Agencies with$5million orless inannual revenue werecategorized assmallagencies.

Agencieswith$5,000,001 to $50millioninannual revenue were categorizedas medium

sized agencies.Annualrevenuesover$50million werecategorized aslargeagencies.

Althoughit has been determinedthatpersonalizedcampaigns canbean expensive

undertaking, theuse of personalizedcommunications_maynotbe impacted_by thesize of

the_{agency in} termsofits annual revenuebecause itisuncertainwhat kindof_advertising

theirclientsarerequesting.It may bepossiblethatasmall_agency is_workingwith afew

clientswho_only use personalizedcampaigns;a_{large agency mayhave hundreds}of clients

requestingseveraltelevisionad campaignsthroughout theyear orit_maybethe other_way

around.

Hence,itisexpected_that,

Hypothesis2: There isnodifferenceintheamount of personalized

communications usedinrelationto _agency size.

Client Type

For_{this study, the types}of clients that the _agencyworkswith were divided into

threecategories. These includedbusiness-to-business_clients,business-to-consumer

clients, and clients who wereboth B2B andB2C. Targetedcommunications are abetterfit

forsmaller audiences and an example ofthisis _{selling Coke}versus _sellingi-Gen3s. Cokeis

apopularconsumer productknownaroundtheworld andis soldto thegeneral public and

to otherbusinesses forresale.Itwouldmorethan_likely survive withlittle_advertising,but

wouldbenefitfrommass market campaignsbecause itserves so_{many demographics.}

Sinceit serves_{many populations, targeting}campaignstoeachdemographic wouldalsobe

an obvious method of marketing._Advertisingfor Xerox'si-Gen3 printer,aB2B _product,

needsto betargeted

-not_onlyto print_providers,buttoprint providers who would

benefit from its servicesbecauseit serves a_very specific servicenotneeded_by all print

providers. Thebuyer behavior for B2B andB2C firmsdeterminesthatB2B firms have

smaller amountsofcustomers measuredinthe_thousands,whileB2Cfirms havelarger

amountsofcustomers measuredin themillions. Howeverthedollarvalue of eachB2B

customeris_{significantly larger}than thatof aB2C customer.With_that,the

_buying

and

sellingprocesstakes longer for B2B sales and_ultimatelythecost oftheB2B saleismuch

higher ("7 _KeyDifferences Between B2BandB2C DatabaseDirect Marketing,"

2004).

Hence,it isexpected_that,

Hypothesis 3: There isnodifference intheamountofpersonalized

communications used in relation to clienttype.

Chapter4

Methodology

Inordertodeterminethe_previously stated _hypotheses,researchwasconducted

and_preliminary interviewswere set_upwith local advertisingagenciestobetter

understand theirrelationshipswith clientsand printersandhow their_agency operates.

Fromthese interviewsandtheresearch_objectives, a_surveywas assembled.

The survey (AppendixA)containsboth agency-relatedbackgroundquestionsand

variabledata/personalizationquestions. Tomeasure thedependent variablesforeach

hypothesis, theparticipants wereasked: ₁₎thepercentageoftheiragency'sworkthat

involvesvariableinformationor personalization and ₂₎thedistributionof100points

among thefive levels of personalizationtoindicate howoften personalized

communicationsisproduced andtowhatdegree_they are personalized. Thesefive levels

include: ₁₎variable address and/or salutation,₂₎variableaddress and/or numerical

informationthatgoesinto fixedfields

-thefields donotchangein_{size, shape,} orlocation

fromrecordto record, ₃₎variable_{address,text,} and/ornumericalinformationthatgoes

into dynamic fields

-thefieldscanchangeinsize, shape,orlocationfromrecord torecord

basedontheamountofinformationordatabaseconditions and_{programming, 4)}variable

textor numericalinformationandgraphics

-thegraphics are static imagesinsertedintoa

fixed field based ondatabaseconditionsand₅₎ variabletext or numericalinformationand

variable graphics

-thegraphics arecreated_dynamicallybased ondatabaseconditions and

inserted into fieldsthatcan changeinsize, shape,orlocation.

Tomeasure the_agency typeindependentvariable,participants wereaskedtogive

up to three_primary servicestheir_agencyprovidesthatwerethenclustered intothree

agency types. These primary servicesincluded ₁₎graphic_design,2)brand_consulting,

3) corporate_{identity, 4)}creative_{development, 5)}customer_relationshipmanagement,

6) digitalbranding/web _{development, 7)}directmarketing, 8)media_{planning/buying,}

9) public_{relations, 10)} salespromotion/collateral_development, and 1₁₎ other services. To

measurethe_agency size(independentvariable), participants were asked togivetheir

annualbillingsto determinethesizeoftheiragency. _Finally, tomeasurethe clienttype

independentvariable,theparticipants were askedtheaveragepercentageoftheiraccounts

that are_{business-to-business, business-to-consumer,}orboth.

Thesampleforthis_survey wastakenfrom The Red Bookslist, which contains

nearly 13,500 U.S. and _{international advertising}agencies. A sample of5,325 recordswas

selectedfromthis listand a worldwidemarketresearch and _{consulting firm} contacted a

total of731 agencies.Atotal of250agencies completed the_surveyand 150thatwere

classified as

"production-focused"

and are usedforthis thesis. _{The remaining 481}

agencieseither refusedtocompletethe_surveyordid notqualify. Afterall the_{survey data}

Chapter 5

TheResults

Eachrepresentative _{participating in}the_survey wasasked somebasic

characteristic questions abouthisorheragency. Theaveragenumber ofemployeesforthe

agencies_{participating in}the _surveyis56 (n=223). Theaverageannualbillingsare $26

million(n=198). Therespondentshaveworkedan average of19yearsinthe_advertising

industry (n=249)and_they haveworked anaverage of1 0yearsfortheircurrent_agency

employer(n=248).

Totest each_hypothesis,eachdependentvariablefromitshypothesiswill be

testedagainst the independentvariables inthesurvey. Thedependentvariablesinclude

thepercentage of_agencywork_involvingpersonalization andthedegreeofpersonalization

theyare using. Inregardsto thepercentage of_agencywork _{involvingpersonalization, itis}

importanttounderstandthat_only therespondents classifiedas"production-focused"

(n=150)completedthissection ofthesurvey. Respondentswere classified as

"production-focused"

when_theyreportedthat_theyeither: ₁₎areinvolvedinthe

production of_advertisingmaterials,but donot advise clients_regardingmedia strategies

andselectionor₂₎bothadvise clients on media_{strategy AND}areinvolved inthe

productionof_advertisingmaterials.

It was 139respondents out ofthat 150thatansweredthepersonalization

question _statinganaverage of23%ofthework_they do_{actually involves using} somelevel

of personalization(with astandarddeviationof_27.4.)Figure 1 showsthedistributionof

theresponsesforpercentage oftheworkthat theagenciesdothat involves

personalizationorvariabledata.

[image:32.534.86.447.222.442.2]

0-9% 10-19% 20-29% 30-39% 40-49% 50-59% 60-69% 70-79% 80-89% 90-100% Percentile

Figure 1. PercentageofAgencyWorkInvolvingPersonalizationorVariable Data n=139

As showninFigure 1,37%oftheagencies surveyed use lessthan 10%

personalizationand22% oftheagencies usebetween 10-19%personalizationintheir

campaigns. _Only22%oftheagencies surveyed use morethan 50%personalization.

Theseconddependentvariable wasthedegreetowhichthecommunications were

personalized. Thelevelsofpersonalizationarelisted in Table 1 below,_alongwiththe

instructionof_distributing100points _amongthelevelstoindicate howoften

personalizationisusedintheir_agency andtowhat degree_they are personalized.These

levelsof personalizationrangefromasimplemailmergeto themost complexlevelof

personalizationwherethewholecontentofthepieceisdynamic. Almost halfofthe

respondentstothisquestion_(45.85%)usevariable_addressingand/or salutationsinthe

personalized campaignswhichis lowestandeasiestlevelofpersonalization.Variable

addressingand/ornumericalinformationthatgointo fixed fieldsisthenextlevelused

most often_bythese_agencies, althoughdifferences intheseotherfour levels are_very

minimal withlessthan 4% betweenthem.

Level ofPersonalization

!

Percentage ofUsefor Each Level

[

Variableaddressand/or

salutation

45.85%

Variableaddressand/or

numerical information that

goesinto fixed fields

15.36%

Variableaddress,text,

and/or numerical

information thatgoesinto

dynamic fields

11.95%

Variabletextornumerical

information and graphics 13.73%

Variabletextor numerical

informationand variable

graphics

13.11%

Table 1. DegreeofPersonalizedCommunications n=106

[image:33.534.115.433.410.610.2]

Correlationtestswereconductedaswelltodeterminewhether_strong

relationships occurredbetweentheamountofpersonalizationused andthelevelof

personalization used.Table2 showstheresults ofthecorrelationtests. Twoof_strong

relationshipswerefoundwithin thesetwo_{factors. A strong}negative correlationbetween

thepercent of personalization usedandtheuse ofthefirstlevelofpersonalizationreveals

thatastheamount ofpersonalization used goesup, theamountoffirst level

personalizationusedgoesdown. A strongpositive correlationbetweenthepercentof

personalizationused andtheuse ofthefourthlevelof personalization revealsthat asthe

amount of personalization used goes_{up, the} amount offourth level personalizationgoes

up. Thisconcludesthatagencies thatuse more personalization are more_likelytouse

higherand more complexlevels of personalization.

Percentof variable information or personalizatio nused address and/or salutation Variable address and/or numerical informatio

n thatgoes

into fixed fields Variable address, text, and/or numerical informatio

nthat goes

into dynamic fields Variable textor numerical informatio n and graphics Percent of variable information or personalizati on used Pearson Con. Sig. (2-tailed) N 139 -.256** .008 106 .047 .633 106 .046 .641 106 .024 106

* _{Correlation is}

significantatthe 0.05level (2-tailed).

** _{Correlationis}

[image:34.548.10.536.294.648.2]

significant at the .01 level (2-tailed).

Table 2. Relationships Between Amounts ofPersonalization

andLevelsofPersonalizationUsed

Hypothesis 1

Therespondents to the_survey were askedto namethe_top threeservicestheir

agencies provided.Table 3 provides a_summaryofthe responses withtheirfirst three

responsesaccepted.

Primary Service Percent AnsweredYes

Media _{Planning/Buying} 48%

Creative Development 43%

Graphic Design 28%

Sales Promotion/

Collateral Development 25%

PublicRelations 23%

Brand_Consulting 23%

Direct _Marketing 22%

Digital Branding/ Web

Development 19%

Corporate

Development 17%

Other Services 12%

Customer_Relationship

Management 9%

Table 3._PrimaryServices Provided _byAgencies n=247

For_Hi,each_agency thatansweredthe _survey was classifiedinto distinctgroups

inorderto understand what_agency typesused personalization. Basedontheservices

they offered,aHierarchical ClusterAnalysis_(HCA) was performed. Thisdetermined

[image:35.534.133.420.201.515.2]

threenatural groupingsbasedonresponsestoquestionsofthe _top services_theyoffered.

The three_agency types were: ₁₎ direct_marketingandwebagencies,

2)traditionalfull serviceagencies,and ₃₎boutiqueagencies. Table 4breaks downthe

numberof agencieslocated ineachcluster_equaling247;threeagencies couldn'tbe

clustered.

Agency Type NumberofAgenciesin Cluster

Direct _Marketing& Web 91

Traditional Full Service 96

[image:36.534.126.410.204.319.2]

Boutique 60

Table 4. Number ofAgencies in Each Cluster n=247

Totest ourfirst _hypothesis,Hi: There isnodifference in theamount of

personalized communications used inrelation to_agencytype,these_agencyclusters

becameourindependentvariables. Thesevariablesweretestedagainstthedependent

variablesdiscussed todetermine ifthereis_any differenceintheuseof personalizationin

relationtoour _agency types.Thistestwas performed_bycomparingthemeansofthe

dependentvariablesand_creatinganANOVA Tabletodeterminewhetherthereare_any

smallsignificancevaluesbetween thevariables (p<.05). Table 5 presents theresults ofthe

ANOVA test.

H) was not_rejected,thereforeit is determinedthatthereisnodifference in the

amount of personalizedcommunications usedinrelationto _agency type. Agencies that

areinvolved_{in direct marketing}andweb services usethemost amountof personalization

at_25%,followed_closelyby traditionalfull service agenciesat24%. Boutiqueagenciesuse

theleastamountof personalization(20%). Direct marketingandfull service agenciesuse

the_majorityofthelower levelsof_{personalization,}whiletheboutiqueagencies use more

ofthehigher levelsofpersonalization. _However,therewere no significant differences

betweentheselevelsofpersonalization andthe_agency types.

Agency ;; Percent of variable information or personalization used Variable address and/or salutation Variable address and/or numerical information thatgoes into fixed fields .Variable address, text, and/or numerical information tfiatgoes into dynamic fields Variable textor numerical information and graphics Variable textor numerical information

andvariable,

graphics Direct Marketing & Web Services Mean N Std. Deviation 25.1860 43 28.20694 47.0313 32 30.71354 14.4687 32 13.92372 15.0625 32 17.26816 13.3750 32 20.68153 10.0625 32 14.66164 Traditional Full Service Agency Mean N Std. Deviation 24.1569 51 28.15129 46.5000 40 34.42197 16.000 40 18.68086 12.1250 40 18.63576 12.6250 40 21.27318 12.7500 40 20.53608 Boutique Agencies Mean N Std. Deviation 20.4000 45 26.15287 43.9706 34 26.79268 15.4412 34 17.72550 8.8235 34 12.25109 15.3529 34 16.27395 16.4118 34 25.22399 Total Mean N Std. Deviation 23.2590 139 27.41319 45.8491 106 30.75612 15.3585 106 16.91164 11.9528 106 16.44175 13.7264 106 19.46696 13.1132 106 20.65145

Pvalue .688 .910 .930 .307 .831

.458

Table 5. Means Comparison_{(Agency Type)}

Hypothesis 2

To test our second_hypothesis, H2: There is nodifference in the amountof

personalized communicationsused in relation _{to agency size,}therespondentsto the

survey neededtobeclassifiedintothreegroupsintermsoftheirannualbillingsto

determinethesize oftheiragency. Agencieswith$5 millionorlessinannual revenue were

categorized as smallagencies. Agencieswith$5,000,001 to$50millioninannual revenue

were categorized asmediumsized agencies. Annualrevenues over$50millionwere

categorizedas largeagencies. Table6 breakstheagenciesintothe threegroups. Small

agencies make_upalmosthalfthepopulation with96 agencies.

Agency Size NumberofAgencies

Small Agencies-Upto $5 million

96

Medium Sized

Agencies-$5,000,001 to $50million

77

Large

Agencies-$50,000,001 or more

25

Table6. NumberofAgencies Located in Each_Agency Size n=l98

Thesame procedurein_H] wouldbeperformed for H2in ordertodetermine ifthe

size ofthe _agencywouldinfluencetheuse of personalization. The agency sizebecamethe

independentvariableand_again,thepercentage of agencieswork

_involving

personalization

andthedegreesofpersonalizationusedisthedependentmeasure. Table 7presents the

resultsofthecompare meanstest.

[image:38.534.131.412.348.451.2]

H2was not _{rejected, therefore}itisdeterminedthatthereisnodifference inthe

amount of personalized communicationsusedinrelationto _agencysize. It's determined

that largeagencies use themost amountofpersonalizationat _27.6%,while smallagencies

use theleastamount of personalization at20.7%. Smallandmedium sized agencies usea

higherpercentage ofthelowerlevels ofpersonalizationwhilelargeagenciesuse the

highest percentage of variabletextandgraphics at_33%,whichisthehighest levelof

personalization. Agency Size." " Percent of variable information or personalization used Variable address and/or salutation Variable address and/or numerical information thatgoes into fixed fields address, text,and/or numerical information that goes into dynamic fields Variable text or numerical information and graphics Variable text of numerical information and variable graphics Small Agencies Mean N Std. Deviation 20.7612 67 23.48377 45.0943 53 31.41672 15.3774 53 20.02040 9.3396 53 12.86161 14.0943 53 20.89375 16.0943 53 22.85007 Medium Sized Agencies Mean N Std. Deviation 26.7750 40 28.55717 48.2813 32 30.04323 15.0000 32 12.76335 17.5000 32 22.96561 11.8750 32 13.60443 7.3438 32 18.22726 Large Agencies Mean N Std. Deviation 27.6667 3 36.82843 40.0000 3 43.58899 13.3333 3 5.77350 6.6667 3 5.77350 6.6667 3 11.54701 33.3333 3 28.86751 Total Mean N Std. Deviation 23.1364 110 25.68063 46.0795 88 30.96577 15.1705 88 17.27813 12.2159 88 17.43391 13.0341 88 18.23502 13.5000 88 21.93669

Pvalue .484 .850 .978 .095 .718 .056

Table 7. MeansComparison_{(Agency Size)}

However,thereisa_marginallysignificantdifferenceinlevel fiveat .056,butwith

alow_sample, afirmconclusion can'tbemade. Acorrelationanalysis was conductedto

determine_{any strong}relationshipsbetween the_agencysize andthelevelsof

personalization. Table 8 below showsthe results ofthiscorrelation analysis.Results

determinethat therearen't_{any strong}correlationsbetween agencysize and

thelevelsof personalization.

Variable address and/or salutation Variable address and/or numerical information thatgoes into fixed Variable address, text, and/or. numerical information thatgoes into dynamic fields Variable text or numerical informatior, and Variable_j text or-numerical information and variable graphics High and LowAnnual Billings Pearson Correlation Sig. (2-tailed) N .022 .836 88 -.019 .857 88 .159 .139 88 -.084 .435 88 -.073 .502

* _{Correlationis significant atthe0.05 level (2-tailed).}

** _{Correlation is significant atthe}

[image:40.534.33.505.268.439.2]

.01 level (2-tailed).

Table 8. Relationships Between HighandLow Annual Billings

andLevelsofPersonalization Used

Hypothesis 3

Totest the third_hypothesis,H3: There is nodifference in theamount of

personalized communications used in relation toclient_type,the respondents needed

tobegrouped _accordingtothe typeof clients_they served._They wereaskedtheaverage

percentage oftheiraccountsthatare_primarilybusiness-to-business,

business-to-consumer,and a mixture ofboth.Based ontheirresponses,agenciesthathadahigh

percentage oftheiraccounts_belongingto B2Bclientswere categorizedashigh B2B

(n=91). The same_thinghappenedforthe_majority ofaccounts_belongingtoB2C clients

(n=67). Agenciesthathada mixture of eachwere categorizedamixed(n=91).

Todetermineifthe clienttype made adifferenceintheuse ofpersonalization and

thelevelofpersonalization_used, clienttypewould nowbecometheindependentvariable,

measured againstthedependentvariable

-thepercentageof

agencies'

work_involving

personalizationandthedegreesof personalization used. Table 9onthenext page

illustrates theresultsofthe comparemeanstest.

H3 wasnot_{rejected, therefore}it is determinedthat thereisnodifferenceinthe

amountof personalized communicationsusedinrelationtoclienttype. Agenciesthat

serve a mixed_arrayof clientsusethehighestpercentage ofpersonalization_(29.5%),while

B2BandB2Cclients use almostthe same percentage ofpersonalization at21.5%and

22.1%,respectively. B2B clients use thehighestpercentage ofthelowestlevelof

personalization_(49%)alongwiththelowest percentage ofthehighest levelof

personalization(10%).B2Cclientsuse thelowestpercentageoflowest level of

personalization _(40%)alongwiththehighestpercentage ofthehighest levelof

personalization(16.9%).

Client Type High B2B Percentof variable informationor personalization used Variable address and/or salutation Mean N Std. Deviation 21.5606 66 26.22514 49.2157 51 29.97286 Variable address and/or numerical information thai goes into fixed !elds 13.8824 51 12.81038 Variabilis address, text,and/or numerical information thatgoes into dynam c fields

|

12.4902 51 15.66700 Variable textor numerical information and graphics 14.4118 51 20.33241 Varic text or numerical information and v grapf 10.0000 51 17.89302 High B2C Mean N Std. Deviation 22.1702 47 25.17013 40.5882 34 33.18371 17.2059 34 22.66994 10.8824 34 19.00839 14.4118 34 16.64080 16.9118 34 23.86879 Mixed Mean N Std. Deviation 29.5385 26 33.81506 46.1905 21 28.76216 15.9524 21 15.21669 12.3810 21 14.37176 10.9524 21 22.11442 14.5238 21 21.14857 Total Mean N Std. Deviation 23.2590 139 27.41319 45.8491 106 30.75612 15.3585 106 16.91164 11.9528 106 16.44175 13.7264 106 19.46696 13.1132 106 20.65145 P value

[image:42.534.10.526.54.411.2]

.432 .452 .688 .901 .770 .303

Table 9. Means Comparison (Client_Type)

Chapter 6

Summary andConclusions

The underlyingmotivationfor_usingpersonalized communicationsistoformthe

ultimatedirect marketingcampaigninwhich eachperson wouldreceiveanindividualized

advertisementbasedon demographicsor past _{purchasing information. "The}object of

direct marketingistoget messages todefinedaudiencesinamanner thatinvitesattention

and engenders actions-that_{ultimately lead}to_buyingaproductor

service"

(Broudy and

Romano, 1999). Personalizationand variabledata_technologyisthetool thatcouldmake

thistype of_advertisinggrowtremendously. _AccordingtoPrecision_{Marketing, during}

2003,direct-response advertising spendinggrew5% to$203 million anddirect marketing

salesintheU.S. amountedto$1.7trillion. Amediumthatplaysamajorrolein direct

marketingandpersonalized communications is directmail,wherein_2002,marketers

spent_{approximately} $49.1 billionand generated salesofover$636_{billion,up 9.4% from}

2001 ("Direct Mail_AdvertisingServices,"2004).

Withthese_{industries growing}andafter_examiningeachhypothesis,personalized

communications stillhas incredibleroomforgrowth. _Currentlyon _average,agencies use

personalizationon23% oftheircampaigns. Even_then, almost46% ofthatisa simple

mailmergeand 1 5%iscombined address andnumericaldatainto fixed fields. This

establishesthat thevariabledata_technologyisnot_beingusedto itsutmost capabilities.

Theresultsfrom _testingthehypothesesconcludedthat there'sno differencein_agency

type, size orclient type inrelation to theamount of personalizationused.Whetherthe

agency isaboutique_agency orafull service_agency oradirect marketing_firm;an_agency

with annual billingsof$1 million or$500million; or an_agency withB2BorB2Cclientele

-personalizationisjust anothertool used_by alltypes of agenciesto_help improve

businessresults._{Every agency,}nomatterwhat typeit isorwho itsclientsare,hasthe

same general objectives

-to promoteits

clients'

products, services,and/orideasthrough a

variety of media outlets_{("Advertising}Agencies,"2003). Innovativead agenciesuse

personalized_technology toachievethisobjective_only whenit'sneededforthe success of

thecampaign, whenthetimeis_right,whentheresources aretheretoinvest in that type

ofcampaignandwhen theagency'sclientiscomfortablewith_{takingits marketing}

campaigninthatdirection. Ifpersonalized communications yieldsthekindofresultsit's

beensaidtoproduce,agenciesof all types shouldbe pushingtheirclientstouseit intheir

campaigns and_takingtheirtimeandresourcesto invest inthetechnology. On thesame

note, clients ofalltypes shouldbe askingabout the_technology and_learningif itwillwork

fortheircompanies.Likeallnewtechnologies, personalizationwill needtime to "ironout

thekinks"inall aspects ofits_use, and as of_now,that involvesa competent _database,

designskills, and additional costs.

Agendafor Further Research

Now thatit is determinedthat_agency typesand sizes aswell asclient_types, even

withtheirinnovative_{history, don't play} a significantroleintheuse of personalized

communications, further investigation intotheuse ofpersonalizationin differentmarket

segments_may beuseful.Are theresomeindustriesthat aremoreinnovativeand use

personalization morethanothers?Andif_so, what isthereasonforthis?_Learningabout

industriesthathave hadsuccesswithpersonalized campaigns_{may be}usefulin educating

other_{industries, agencies,}and clients about _overcomingtheobstacles thatareintheir

way. Is itpossiblethat themore_they learn andthemore personalizationtheseagencies

use, themoresophisticated theirpersonalized campaigns will get?_Also, further

investigationinto _{data mining}and_findingthebest _wayto havea stable database isalso

crucialto thesuccessofpersonalized campaigns.

Intheend, it isimportant tounderstandthatthe_{best way} tomake

personalizationaconventional and productive_marketingtool withinagenciesisto_keep

educatingcompanies, agencies and print providers aboutthe_technology andits

capabilities_alongwiththeobstacles_standinginitsway. Asexplained_by adirect

marketing agency (AppendixB), thereisalargelearningcurve whendesigninga campaign

usingvariabledataincludingcreativeelements, production, anddatamanagement. "The

ultimateexample of'onetoone'

marketing wouldbeapicture ofyou_wearingor_usingthe

potential product. Imaginea_day when personaldigital photographsfindtheir_way into

databases_alongwith otherinformationabout each of

us"

(Broudy and _Romano, 1999).

Variabledata_technology placesawholenew world of onetoone _marketingat our

fingertips. It is_up tousto finda_wayto utilizethe _technology to thebestof our ability.

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Appendix A

Appendix A

Advertising Agency Survey

HarrisInteractiveconducted a_survey performed_by250 advertisingexecutivesin

Spring2003. Table 10 belowreportsthebackgroundinformation fortheserespondents.

General _Agency Questions

: -v...

"/' '-"'

Respondents (outof₁₅₀₎

%

Respondents Answered Yes

Minimum Maximum Average Standard Deviation

Number of

employees at

this location

223 1 5000 55.98 341.19

Annual

billings 198 $200,000 $820,000,000 $26,000,000 $73,218,713

Number of

years worked

in advertising

industry

249 60 19.14 11.26

Number of

years worked

forcurrent

employer

50 10.45 9.35

What isthe highest level of education you have completed or the highest degreeyou havereceived? 249

1- Less_than

highschool

0.40%

2-_Highschool

orequivalent

(e.g., GED)

1.60%

3- _Somecollege,

but nodegree 7.20%

4-_{College(e.g.,}

B.A., B.S.) 63.50%

5-_Some

graduate _school,

but no degree

4.80% 6-_Graduate school _(e.g., M.S., M.D., Ph.D) 19.70% Respondent Classification 250

1-_{Strategic 40.40%}

2-_{Production 9.20%}

3-_{Both 50.40%}

What are the

primary

services your

agency

provides?

247

1- Graphic

12-_Not

Sure/Decline to

Answer

0.00%

Numberof

accounts involved with

at _any given

time

247 1 100 11.31 11.33

Amongthe

accounts in which you,

personally,

are _involved, what

percentage of

them are

business-to-business, what

percentage

are

business-to-consumer,

and what

percentage

are both?

249

Business-to-Business 0% 100% 41.40% 37.11

Business-to-Consumer 0% 100% 53.44% 37.24

[image:52.534.21.518.48.421.2]

Both 0% 100% 5.16% 14.97

Table 1 0. Background Information Results fromthe_{Agency Survey}

Fromthe250advertising executives, 150ofthoserespondentswere classifiedas

"production-focused"

andcompletedthepersonalized communications portion ofthe

survey. Respondentswere classifiedas

"production-focused"

when_theyreportedthat

theyeither: ₁₎areinvolvedintheproductionof_{advertising materials,} but donot advise

clients_regardingmedia strategiesandselection or₂₎both adviseclients on media_strategy

AND areinvolved in theproduction of_advertisingmaterials. Table 1 1 belowreportsthe

summary fortheserespondents.

Personalized

Communications-SpecificQuestions

Respondents

(outof₁₅₀₎

%

Respondents

Answered

Yes

[image:53.534.21.518.143.545.2]

Minimum Maximum Average

8&|

Whatpercentage of

thework that your

agency does involves

variableinformation

or personalization?

139 0% 100% 23.26% 27.41

Distribute 100 points

amongthese five items toindicate how

often you produce

personalized

communications and

towhatdegree_they

are personalized:

106

1- Variable

address

and/or salutation

0% 100% 45.85% 30.76

2-_{Variableaddress}

and/ornumerical

information thatgoes

into fixed fields

0% 100% 15.36% 16.91

3-_Variable

address, text

and/ornumerical

information thatgoes

into dynamicfields

0% 100% 11.95% 16.44

4-_{Variabletext or}

numericalinformation

and graphics

0% 1 00% 13.73% 19.47

5-_{Variable textor}

numericalinformation

and variable graphics

0% 1 00% 19.77% 26.33

Table 1 1. Personalized Communications Results fromthe_{Agency Survey}

Appendix B

Appendix B

Case _Studyon a Direct_{MarketingAgency}

The _followingisan example of onedirect_{marketing firm}anditsthoughtsabout

implementing

personalized campaigns anditsthoughtsontheseobstacles_holdingagencies

backfrom_utilizingvariabledatatechnology.

Thisfull service,direct marketing agencywith acapitalized _billingof

$22.5millionhaveclients suchasBausch& _{Lomb,Sony, Citigroup}andNexPress

Solutions. Itsmissionisto _"measurably increaseour

clients'

bottom line_{by adding}value

in everythingwe

do."

Itbelievesthatitseffective_advertisingisbased simply on

knowledge,knowledgeofits client andknowledge-basedsolutions. _{The primary} services

that itprovidesto itsclients are_{strategy development,}market_research,creative services,

productionmanagement, databasemanagement, reporting,analysis andteleservices. On

average,ithandlesapproximately 1 5 accountsthatare inmotion on an_{ongoing basis.}

Approximately45%ofits media allocationisspentondirect_mail, 42%onmediasuch as

telemarketing,point of sale andinserts. Internet-basedactivities suchasdirectemailisat

10%>andthefinal 3%isspent on directprint_advertisingsuch as calltoaction pieces. In

termsofthenatureof_{the accounts,}40%ofitsclientsare business-to-businessand60%

ofitsclients arebusiness-to-consumer.