Fresh Data Blog
Fresh Data Archive
Direct Marketing Spotlight: Germany
Date: August, 2014 --
Direct Marketing Spotlight:
In Germany what
we in the US commonly refer to as direct, data-driven or response marketing is
more commonly known simply as ‘dialogue marketing’. Brand marketers, both
in-country as well as those selling cross-border into the market, well understand
its ability to generate a high ROI and, therefore make dialogue marketing an important
component of their overall strategy. For those of you looking to begin or boost
your initiatives into the German market, here is a brief review of the state of
direct/dialog marketing in the largest and healthiest economic market in
Market for Direct Selling
or ‘catalogue’ as it may be, industry in Germany has a long history in the
country, paralleling the evolutions in the discipline seen in the UK, France
and the US.
household names are found in, or have their roots in, the catalogue industry. Otto,
Heine, Spiegel, Klingel, Wenz, Bader and Schwab and many others are household
names which continue to occupy the market. Otto has annual revenues of $16
billion and operations in 20 countries, including Crate & Barrel in the US.
US entrant Staples has a successful catalogue operation there begun before the
the German Mail Order Association (the BVH or Bundesverband des Deutschen
Versandhandels e. V.) has 270 member companies, which constitutes a substantial
association size in Germany. As elsewhere, these companies are multi-channel
and deploy catalogs, eCommerce websites, direct sales as well as short and long
format “show and tell” television ads known in Germany as “TeleShopping”.
It is not
without good reason that cataloguing sometimes referred to as “Home Shopping”
in Germany, since companies make the process of returns as simple as in a
customer-friendly store. Similar to consumer behavior in the US and other
markets, it is not uncommon for a customer to order three different colors or
sizes of a dress, keep one, and return the unwanted two items in the original
box, which contained a return address label, often postage prepaid. And
customers expect this ease of returns. This of course results in higher initial
prices on goods, which has surprised more than one American company that had
initially expected higher profit margins.
Digital Marketing Environment
Statista reports that digital ad spend in Germany was $5.65 billion, the
highest in Europe, and expects that figure to reach $6.22 billion in 2014. While
no segment allocations were available, we can report that in 2013, social media
ad spend in Germany stood at US$1.1 billion. This was 10.6% of online
advertising. Since 2009, social media advertising in the country has increased
at a CAGR of 49.3%.
spending was projected in 2012 to reach $349 million in 2013 and $1.8 billion
in five years. What spending there is occurs among the mega-advertisers, and
Germany lags EU the leader in mobile, which is the UK.
well known for having stern data protection regulations and was a relatively
early adopter of a strict opt-in requirement for email marketing
communications, which is today more common within the larger EU Data Privacy
regulations. Some applications of these privacy regulations are likely to
affect organizations with a presence in the local market more than those based
abroad, especially outside the EU, but it’s always best to seek a legal option
as to how any local privacy directive applies to your specific business as it
will all areas of data management from marketing to your obligations to those
on your database in the event of a data security breach and much more.
Direct Mail and Multi-Channel
postal service, Deutsche Post or DP, takes direct marketing very seriously and
maintains its influential “direct marketing” research lab which has provided
valuable insights on customer behavior for many years. It was one of the first
institutions to develop an “eye-tracking” tool to enable advertisement
designers to literally follow where the reader looks, how long he/she lingers
on any image, and the path his/her eye follows in looking at the piece.
recalling that the postal market in Germany, as in all of Europe, has been
fully liberalized since 2010. Consequently, DP is at liberty to enter lines of
business and offer services which are closed to the USPS. Nevertheless, it is
publicly-owned, has shareholders expecting a profit, and faces competition in
nearly all areas of its business, including mail delivery.
It is an
understatement to say that DP has merely survived. Its addressed mail services
are not seriously challenged by any local competitor and its “Post Bank”, once
a small savings institution, is now one of the largest multi-line financial
institutions in the country. Its parcels subsidiary, DHL, has operations
And DP seriously
measures its markets. Its annual survey report on the state of “dialogue
marketing” among 2700 reporting companies is Dialogue Marketing Monito. That DP conducts this research
proves the importance of direct
marketing to its own business.
for non-polyglots, Dialogue Marketing
Monitor 2014 is published only in German. However, as a sample of the Monitor’s content, we provide the
following insights and statistics surrounding multi-channel marketing, which in
Germany is referred to as “crossmedia”. This is a term for using (nearly)
identical content and layouts in two different media (mail and landing page,
for example) in order to make one plus one greater than two.
aforementioned practice is becoming more common. In Germany 16% of companies
are using crossmedia and about 33% of the total ad spend consists of
companies (revenues under € 250,000), only 15% use it and 40% use one medium or
no “dialogue” (direct response) medium at all.
companies (revenues more than €25 million) 50% use crossmedia. They average 8
campaigns per year and on average engage four media, for example email, direct mail,
TV and website.
large companies, 75% state that their main “medium” is the homepage. An
interesting measure is made of the crossmedia spend on linking the companies’
home pages to various media. In
descending order of spending, the homepage is linked to/combined with print ads
(QR and other devices), trade fair displays, followed by outdoor posters and
only then online and physical mailings.
appears that measurement disciplines are very similar to the US. About 50% of crossmedia
using companies try to measure the success of their campaigns. On the other
hand, 33% of the businesses report that they focus only on single channels. The
majority try to measure their success in all media.
recognizes that its direct marketing customers are not “mono-channel”. This is
wise because the report finds that direct mail (addressed only) decreased from
18.6 percent of users to 15.6 percent from 2012 to 2013 and spending dropped
from €9.2 billion to €8.6 billion. Declines were most noticeable among
manufacturers and service companies. Spend by smaller companies remained
stable, but medium and large companies mailed less.
Data Management Service Availability
As one would
expect of a nation with a very modern postal service Germany has a robust
postal database, meaning targeted address verification is possible. Data
Services classifies Germany as a Level A country on our Hygiene Scale (see
page 2), given our ability to not only ensure proper address formatting and
standardization, but to further validate the accuracy of the elements that make
up the address all the way up to the delivery point.
targeting the German market also have a number of address enhancement and data
updating services including National Change of Address (NCOA), Suppression
Processing and more. Important Note:
Due to those strict privacy laws we
mentioned earlier, if you are looking to utilize the German NCOA service, you
are required to have a brick and mortar presence within the country in order to
an example of the quality of service a marketer can expect when undertaking
German direct mail campaigns, take note of the real-time “on the door-step”
change of address system. If the postman discovers on the doorstep that an
addressee has moved or died, he uses a mobile device to transmit a picture of
the envelope and a request to the sender for instructions on handling the
letter: complete delivery, forward, return, destroy? (Note: extra charge for
Data Services, Inc. will catch all the COAs, Gone-Aways and address corrections
and ensure your German or other international marketing data is in perfect
working order before you mail. Anything can happen in the interval. Germany
being a very developed environment for data-driven marketing initiatives, you
may find success there justifies the effort.