11 Startling Forecasts for 2006

Will these Marketing Mega-Trends make you
– or break you – in the year ahead?

Dear Business-Builder,

If I’ve learned anything in my 30-odd years of promoting investment newsletters, it’s that predicting the future can be a dangerous game.

And so, to prove that I really HAVEN’T learned anything in my 30-odd years promoting investment newsletters, I’ve decided to polish up the old crystal ball – and try my own hand at prognostication.

Sounds like I’m about to crawl out on a limb just before I saw it off – right?

Not really – ’cause I’m cheating a little.

Each of the predictions you’re about to read is ALREADY coming true. Some of these trends have been developing and accelerating for two or three years now. And human beings what they are, each one of them is a slam-dunk to continue – not only in 2006, but for years to come.

The thing is, the marketing environment is changing faster now than at any time in my career – and the Internet is the reason why.

No matter what anyone might tell you, the Internet is NOT just another medium. Other mediums cost money. Lots of it.

Send a direct mail package to 1,000 prospects and it’ll cost you five hundred smackers or more.

Contact the same number of prospects through Print, TV or radio and you could pay $5/m, $10/m or $20/m – maybe more.

But you can send e-mails to 1,000 folks over the Internet for next to nothing.

And not only is the Internet nearly free for marketers, there’s a lot of free stuff on here for consumers, too. Like the eLetter you’re reading now, for example.

See, if this was 15 years ago – say, 1990 – and I wanted to help a bunch of nice folks sharpen up their ad copy and marketing strategies, I’d have:

1. Started a print newsletter …
2. Written a red-hot direct mail promotion for it…
3. Mailed my promo to everyone who had ever bought any information product relating to copywriting or direct response marketing at the cost of around $450 per thousand pieces mailed ($450/M), and …
4. Popped champagne corks if I got my $450/M back.

I would have been thrilled to break even on my new subscriber effort. It meant I got a new subscriber for free. And even though I’d have to spend $12 or $15 over the next year to actually fulfill each subscription, I’d have counted on renewals and additional product sales to those subscribers to make me a tidy profit.

The Internet, of course has changed all that. Now, you don’t have to pay $450/M to attract subscribers. And you don’t have to pay through the nose to print and mail the welcome kit or regular issues to subscribers.

So – at least for the time being, the Internet has made marketing and fulfillment of information products a lot cheaper. But in doing so, it has also cheapened the value of published information. So much on the Internet is available for free, selling informational products isn’t as easy as it once was.

OK – so I guess I’ve pre-ambled enough. Let’s get on with the forecasts …

Forecast #1:
The Cost of Talking to Prospects
And Customers Will Continue to Rise
– BOTH in Direct Mail and on the Internet

Rising marketing costs are a fact of life – and there’s no end in sight.

• Direct Mail Costs Will Jump By Double Digits: In direct mail, new postage rate increases effective January 9 will drive postage rates more than 5% higher in 2006. Paper costs – driven by a global surge in natural resource prices as well as energy surcharges – are rising as well.

  And if history is any indication, soaring federal deficits, combined with downward pressure on the U.S. dollar around the world and accelerating consumer and wholesale inflation here at home guarantee that this trend will continue throughout 2006 and beyond.

• Internet Marketing Costs Will Soar Even HIGHER: While the cost of contacting prospects and customers via snail mail is moving incrementally higher, the cost of making sales on the World Wide Web is also soaring at an alarming rate.
• Search Engine Costs Will Continue To Surge: The explosion in the number of websites vying for top ranking on commonly searched keywords is causing massive inflation in search engine costs.

  In its most recent quarterly report on search engine marketing, DoubleClick reports that search engine cost per keyword was up about 15% and cost per click was 30% higher in the third quarter of 2005 than in July 2004 – and this trend can only accelerate as the proliferation of new websites causes competition for surfers’ attention to heat up.

• Banner Ad Costs Will Soar: The rapid adoption of the new, larger IAB-recommended standard ad units at the expense of smaller buttons and banners has resulted in an overall reduction in the amount of ad space available to advertisers. This is at a time when spending on iNet ads is jumping at the rate of 31.5% per year.

  As this limited supply of advertising space collides with soaring demand in 2006, look for Internet ad costs to jump substantially.

• Email Marketing To Rocket Higher: While there has been no dramatic recent surge in the cost of sending email blasts to prospects and customers, delivery rates are being reduced in many cases by over-enthusiastic spam filters and other things, driving the cost per delivered email substantially higher.

Rising costs mean one thing to marketers: They’re going to have to sharpen their products, marketing strategy and ramp up the power of their sales copy to maintain current levels of profitability. That’s great news for consumers, copywriters – and in the end result, for marketers themselves.

Forecast #2:
Most – But NOT All Response Rates
Will Continue to Decline

• Direct Mail Response Rates Will Continue to Be a Challenge: To anyone who sells books, print newsletters or nutritional supplements through direct mail, it’s no secret that response rates have fallen precipitously since 2001.

  As a result, mailings are shrinking in size and frequency and the universe of current, active buyer names and addresses is declining.

  Increased competition … the propagation of wild and unbelievable product claims … increased pressure from litigators and regulators … and rising consumer skepticism in these maturing markets will keep this trend intact throughout 2006.

• Many Internet Response Rates Will Continue Falling Throughout 2006:
• Search Engine Conversions Will Continue to Decline: In 2005 alone, the number of people who click through and make a transaction (including free ones, such as registering or opting in to an eZine) on the average search engine keyword has fallen 22% – from around 4.5% to around 3.5%.

  Look for this trend to continue as consumers become increasingly bombarded with a dizzying array of choices.

• Email Open Rates and Click-Through Will Continue Their Downward Track: In the latest quarter for which data is available, DoubleClick reports that email open rates declined a staggering 23.6% – to 27.5%. Furthermore, of those who opened their emails, 6.5% fewer clicked the links in those e-mails than in the preceding quarter – about 7.2%.

  Hardly surprising – especially when you consider the sheer volume of emails sent to the average web user each day. As the quantity of emails sent by marketers continues to skyrocket in 2006, expect the decline in open rates and click-throughs to fall even farther in the year ahead.

• Astonishingly, Bottom-Line Internet Response Rates Will Remain Relatively Unchanged: While fewer prospects are opening email advertisements and clicking the links, higher percentages of those clicking through are ordering.

  In the most recent quarter, click-to-purchase rates jumped 27.8% and actual orders per email delivered rose 18.2%. As a result, revenue per email sent is holding steady – at an average of 20 cents per email sent.

  For this reason, the Internet will continue to be a gold mine for entrepreneurs and business owners who adapt quickly in this rapidly changing environment. And again – “adapting” means offering better products, using sharper marketing strategies and more compelling sales copy just to stay as profitable as they are now.

Forecast #3:
Internet Marketers Will Be Forced to Focus
On Accountability, Tracking, Forecasting & Testing

While response rates are dropping and costs are rising in direct mail and the Internet, the World Wide Web still presents the greatest opportunities for attracting new customers and for selling more products to existing customers.

Don’t get me wrong: Direct mail is NOT dead. We’re still mailing tens of millions of pieces each year for nutritional supplement companies and millions for alternative health newsletters. And major positive investment developments have created some strong direct mail promotions for investment newsletters over the last year as well.

But whether you’re a copywriter, graphic artist, marketing pro or business owner, you can NOT afford to ignore the fact that the majority of new customers most direct response companies will attract in 2006 will be generated on the WWW.

However, the reality of today’s rising costs/falling response virtual world will require increasing vigilance in order to maximize profits while minimizing capital risks.

Once upon a time, marketing on the web was cheap or even free. Ill-conceived and poorly executed promotions that would have bankrupt any company paying $500/M for a direct mail campaign were making Internet marketers fat and happy.

With little if anything to lose, few iMarketers paid much attention to tracking which promotions produced a bottom-line profit – let alone which techniques produced the highest response rates and bottom line profits.

Today, with iNet marketing costs rising and many response rates dropping, savvy iMarketers are beginning to demand that each dollar spent to generate an eZine subscriber or website visitor produce a positive return on investment in a reasonable amount of time.

At the same time, the twin demons of declining response rates and rising costs will demand that Internet marketers produce stronger headlines, subject lines and sales copy – and that these lynchpins of direct response be constantly tested for relative effectiveness and to lift response and revenues.

And any way you look at it, that creates tremendous, exciting new opportunities for copywriters, artists, marketing folks and entrepreneurs of all stripes.

Forecast #4:
Cheaper Media & Multi-Step Promotions
Will Gain In Prominence

As email open and click-through rates continue to decline, increasing numbers of Internet marketers will turn to other media – television, radio, print and others – to drive prospects to landing pages and websites.

Internet giants eBay, DiTech, Geico and Progressive Insurance are already leading the way – and in 2006 the savviest entrepreneurs and business owners will follow.

This is exciting because it creates new opportunities for us direct response types to learn and grow, expanding our repertoire into new media – and to seize unlimited opportunities to create winning campaigns in them.

Forecast #5:
Cooperative Marketing Arrangements
Will Gain In Importance & Frequency

In a rising-cost, falling-response environment – both on the Web and in direct mail – cooperative campaigns will bring breakthroughs in 2006.

Affiliate promotions … ride-along promotions … joint ventures and product combinations, and … subsidized promotions will take center stage in 2006, producing massive breakthroughs for cutting-edge marketers and huge new opportunities for copywriters, artists and marketing pros.

Forecast #6:
Innovative, Consumer-Friendly Marketing Strategies
Will Take Center Stage

To overcome rising consumer skepticism and falling response rates, increasing numbers of Internet marketers will abandon “blunt instrument” marketing strategies and messages in favor of …

• “Permission” Marketing or “Invertizing” – in which consumers invite marketers into their lives. Business owners, marketing people and consultants who innovate ways for consumers to request advertising materials will prosper.
• Advertorials that bring value to consumers’ lives while making a sale will double and triple revenues and profits for many companies. This is a HUGE area of opportunity on the Internet, where advertorial advertising is still a novelty.
• Involvement Devices that intrigue and entertain – games, contests, self-tests and other devices that makes sites “sticky” will produce greater increases in traffic and sales.
• Viral Devices – content deemed by recipients to be valuable enough to be passed on to others of like mind – will turn each email address that marketers pay for into two, three or even four that they DON’T have to pay for.

  Come up with effective ways to get sales messages passed around the Internet, and you’ll quickly become a hero – and get rich in the process!

• Blogs Will Become an Even More Powerful Marketing Tool: Blogs – websites on which visitors are invited to share their opinions on a variety of topics are still skyrocketing in popularity. In 2005, 33% more people visited Blogspot.Com than read the New York Times!

  Creating a Blog and requiring visitors to register in order to share their opinions – PLUS including links and ads on your blog site – will become a huge source of new email addresses and revenues for anyone using and creatively using them.

• Rich Media will rule! With about 35% of U.S. households boasting broadband connections to the Internet, the delivery of high-impact rich media (streaming animations, video, audio, interactive games, etc.) will be a major force in boosting response to iNet promotions in 2006.

  In a recent study, DoubleClick found that banner ads featuring animation, roll-overs or other rich media produced FIVE TIMES the response as non-rich media ads!

  Keep THAT in mind the next time you’re tasked to create any kind of iNet ad!

Forecast #7:
Innovative Delivery Formats Will Make Millions
For Information Publishers and “Infopreneurs.”

The format in which information products are presented will become increasingly important. Simple “special reports” delivered as PDFs will continue losing their appeal to consumers while higher impact formats will attract hoards of new customers.

Information products sold and delivered as streaming audio & video reports … PowerPoint presentations with audio … Webcasts & Webinars … PodCasts … live TeleSeminars … group and one-on-one telephone coaching and other innovative products will attract ever larger audiences and earn fortunes for cutting edge marketers.

Forecast #8:
For Consumers, The “Free Internet”
Will Become Harder and Harder to Find

Like the Internet, TV and radio once provided the majority of their content to consumers for free. So long as you were willing to watch the ads, you paid nothing to watch ABC, CBS or NBC.

Today, the television and radio industries derive the majority of their revenues and profits NOT from advertisers, but directly from consumers: Cable TV companies like Comcast and others … content providers like CNN, FoxNews, The History Channel and others … premium channel providers such as HBO and CineMax, XM Radio, Netflix, DirecTV and others.

This trend has already begun on the Internet: U.S. consumers are now paying nearly $2 billion per year to subscribe to websites, eZines and to access other content online – that’s nearly THREE TIMES MORE than in 2001!

Expect many publishers of free eZines and websites to begin qualifying prospects and bringing revenue forward by providing brief trial periods followed by promotions aimed at converting leads to customers who pay monthly, annual or per-access fees.

Forecast #9:
International Prospects Will Gain in Importance

While U.S. consumers have been bombarded with a mind-boggling volume of web-based promotions and are increasingly resistant to their allure, Internet users in many other countries have escaped much of the onslaught. As a result, many Internet marketers will discover rich veins of gold overseas in the year ahead.

According to the CIA World Factbook, 186 million Americans — roughly 63% of the U.S. population — now have Web access. That’s only about 19% of the global web community.

A whopping 81% of all Internet users do NOT live in the U.S. – and to a huge percentage of them, emails and Internet sites delivered in English are gibberish.

• If you translate your email blasts and websites into Spanish, you'll pick up about 76 million more prospects in the U.S., Mexico, Central America, South America and, of course, Spain.
• Add French, German, Russian, and Portuguese sales messages and you can talk to 116 million more future customers.
• And if you can figure out a way to make your sales messages readable to Web nerds in China and India, you'll pick up another 136 million prospective customers.

Look for an increasing number of entrepreneurs and businesses to tap this largely virgin audience of consumers in 2006 – and to get richer than Midas as they do!

Forecast #10:
The Customer Takes His Rightful Place

Many marketers who use cheaper media – TV, radio and the Internet, for example – build their entire businesses on making a single sale to each customer.

Now, with rising costs and falling response rates, look for more Internet marketers (as well as more TV and radio infomercial producers) to adopt the venerable “Lifetime Customer Value” model that has turned masses of direct mail marketers into millionaires.

In the year ahead, increasing numbers of Internet marketers will build vast companies and fortunes by 1) Generating maximum numbers of new customers at break-even and 2) Systematically increasing the lifetime value of each customer through regular monthly, weekly, even daily promotions to those customers.

In short, the most successful Internet marketers in 2006 will be those who view marketing holistically – as an unbroken chain – and who design campaigns which focus on taking prospects from first contact to first purchase in a single step, then continuously upgrade the value of each customer over time.

This will force vast improvements in the quality of products offered. It will also cause savvy marketers to think of each product sold as a promotion for the next product to be offered.

Forecast #11:
Marketers Who Are The First to Capitalize
On These Locked-In Trends For 2006
Will Grow Richer Than Midas in the Year Ahead!

Each of these trends presents truly spectacular opportunities for entrepreneurs, business owners, marketing pros, copywriters and graphic designers.

The old marketing models are fading in effectiveness even as costs are rising. Consumers are demanding radical new approaches to both marketing and in the products they purchase.

Reviewing, testing and revamping product formats, pricing strategies, promotional strategies from the ground up – and ramping up the selling power of both marketing and editorial copy – will pay rich dividends in the year ahead.

Hope this helps make 2006 your RICHEST year ever!

Yours for Bigger Winners, More Often,

Clayton Makepeace
Publisher & Editor
THE TOTAL PACKAGE

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