RTM: We can see clear evidence that marketing is less effective than it once was. Response rates have dropped drastically in direct marketing and in advertising. Why is this?

PK: Marketing, as traditionally practised, is losing some effectiveness.  I have advised clients to curb their TV advertising budgets, especially mass advertising.  Fewer people are watching TV.  Many are zapping commercials. The money is better spent on PR: creating press releases, reaching influentials, creating buzz, using guerrilla tactics.

Falling response rates to direct marketing are the result of inadequate information on prospects and customers.  Companies that have developed good customer databases can achieve higher response rates with fewer mailings through ‘precision marketing’.

RTM: So what do you see as the main mistakes that marketeers are making today?

PK: Marketeers develop a fixed mindset concerning the effectiveness of various marketing tools and make the mistake of continuing with the same media in the next period. If they have always spent 50% of the budget on advertising, they will continue to do this, even when evidence shows that advertising is losing its effectiveness, and that they should transfer half the advertising money to PR or direct mail.  Allocations become frozen, and the Chief Marketing Officer is loath to challenge this because it will change the status of different managers in the organisation. 

And many marketing departments are skilled only in the four traditional marketing activities: market research, advertising, sales promotion, and sales force. In fact, even in these, they may not be skilled!  They have failed to acquire the new marketing skills required in the new economy. Here is a useful checklist:
- Customer relationship management (CRM)
- Partner relationship management (PRM)
- Database marketing and data-mining
- Telemarketing
- PR (including event and sponsorship marketing)
- Brand-building
- Experiential marketing
- Integrated marketing communications
- Profitability analysis by product, segment,
  customer, and channel

People should ask themselves how skilled they are in these areas before writing off marketing.