Smartphones sound the death knell for outbound marketing strategies

Telemarketing might not be dead, but the near-complete saturation of smartphones in the consumer market has landed some death blows to outbound marketing strategies.

In early May, the National Health Interview Survey reported that, for the first time, more U.S. households solely used mobile service for phone calls than didn't. That is, these households had no landline.

The National Center for Health Statistics, which conducted the survey, and is part of the federal agency the Centers for Disease Control and Prevention, monitors cellphone ownership to ensure that wireless-only households are not underrepresented in telephone-based health surveys.

While it's only a narrow majority, the fact that 50.8% of residents have abandoned landline phones represents a significant tipping point, and it is a positive sign for businesses focusing on mobile marketing that want to reach customers and prospects. However, it's not good for telemarketers, and is forcing businesses to adjust, or even move away from outbound marketing strategies.

"It's definitely good news/bad news," said Neil O'Keefe, senior vice president of content and marketing at the Data & Marketing Association (DMA).

The bad news first: The Federal Communications Commission's (FCC) Telephone Consumer Protection Act (TCPA) treats telemarketing to cellphones differently than calls to landline phones. The legislation forbids companies from using automatic telephone dialing systems (ATDS) to call mobile phones. ATDS is what makes telemarketing tick.

The TCPA, which was revised in 2003 to include the National Do Not Call Registry, changed telemarketing, O'Keefe said. But that doesn't mean that consumers should expect to never receive calls to their mobile phones.

"Telemarketing is still effective for nonprofits, and is still protected. It plays a very effective role," he said.

How mobile changed everything

If you aren't a charitable entity, telemarketing to mobile phones is a rough road.

Ronald C. Sykstus, an attorney at Bond, Botes, Sykstus, Tanner & Ezzell PC, who focuses on security and privacy laws, said the reason for the distinction between landlines and mobile phones is mostly like due to the fact that telemarketers, at one point or another, pay for each call.

Fines for telemarketers range from $500 to $1,500 per call to a mobile device, Sykstus said. In 2013, changes to the TCPA that included text messages went into effect.

"One caveat: it doesn't apply if the consumer has given consent and permission to call [or text] his or her cellphone," Sykstus said.

Risking more than fines

Even though charitable and political organizations still can, and do, rely on telemarketing and other outbound marketing strategies, they may also want to look for alternatives, even if the TCPA doesn't apply to them.

Telemarketing was a necessary tactic when the only way to target new markets and potential customers or donors was through print, radio and television advertising.

"Telemarketing was an effective way to reach people," said Michael McGuire, vice president of research at Gartner. "Now it's not just a couple of channels. Now marketers have multiple channels, including reviews sites, like Angie's List," McGuire said. He added that user reviews and recommendation sites seem to be the forums millennials prefer.

Local marketing no longer means just one, two or three options. Marketers are now reaching potential customers through blogs, podcasts, social media, organic search engine optimization (SEO), e-books, whitepapers and videos.

"Inbound marketing is more effective than the random and hated calls during the dinner hour," McGuire said.

The DMA's O'Keefe agrees: "Consumers demand more choice in how they are contacted. That significantly impacts the telemarketing industry." And it's further complicated, he added, because regulations vary from state to state.

Gartner's McGuire warns that marketers that use telemarketing, whether tax-exempt or not, may be "polluting their ecosystem." The flood of unwanted calls has caused consumers to avoid interaction altogether. People are not answering their phones, and this is particularly costly to nonprofits, he said, even if they are legally allowed to make Robocalls.

"Consumers are in control," McGuire said, adding that mobile targeting must get better. "The pain isn't just financial. The problem is now that, if it happens more than a few times, [consumers] turn to social media to express displeasure. The cost of alienating potential customers is incalculable. Wiggle room is very small. The pain is not."

The DMA's O'Keefe contends that marketers are well-aware of public perception and want to use practices that are most effective.

"We work with the DAA [Digital Advertising Alliance] and practice the ability to self-regulate," he said. "[It's] important to raise the question of customer choice."

From a practical perspective, marketers don't want to invest in methodologies or outbound marketing strategies that don't offer a good return on investment, O'Keefe added.

And the numbers bear out that shift in spending. The DMA's "2017 Statistical Fact Book" reported that 59% of marketers no longer use telemarketing. And only 10% plan to increase spending in telemarketing. In contrast, 55% plan to increase spending on social media engagement, 49% plan to spend more on social media advertising, 43% plan to spend more on SEO and 38% plan to increase spending on mobile marketing.

Now the good news

The good news is more mobile-only households create more opportunities. Mobile devices represent an unprecedented personal connection. O'Keefe suggested thinking about what you may be willing to leave at home as you start your day.

"I won't leave my house without my phone," he said.

While the FCC guidelines are stringent regarding calling or texting mobile phones, O'Keefe said outbound marketing strategies still have potential if "mobile phones users opt in for SMS," for example.

However, that consent is hard to get. According to FCC documents, "In 2012, the FCC revised its TCPA rules to require telemarketers (1) to obtain prior express written consent from consumers before robocalling them, (2) to no longer allow telemarketers to use an 'established business relationship' to avoid getting consent from consumers when their home phones (sic), and (3) to require telemarketers to provide an automated, interactive 'opt-out' mechanism during each robocall so consumers can immediately tell the telemarketer to stop calling."

While it's a tough task, the rewards can be great, O'Keefe said.

"When you can get someone to opt in, you've made a personal connection." The only connection that's better, he added, is "standing in front of someone."

The survey is in the mail

It's not just online marketers affected by the shift to mobile and restrictions on auto- and random dialing. Researchers such as Nielsen are moving to other ways to connect to a complete sampling of households: address-based sampling (ABS) -- basically a return to mail-based surveys.

According to the American Association for Public Opinion Research (AAPOR), "The accessibility of address frames has reduced the cost of in-person surveys and brought about a resurgence of relatively inexpensive mail surveys."

ABS can also be used to direct selected households to web surveys, and it offers the ability to add geocodes, phone numbers, demographics and other data to provide deep stratification and more cost-efficient studies.

"Quite simply," the AAPOR reports, "the address lists available today are the best frames for national U.S. household surveys."

As companies adjust to doing business without ATDS, marketers may want to pay attention. Despite class-action lawsuits, it's questionable whether cellphone restrictions are influencing telemarketers.

Sykstus said that laws and public reaction should have an effect. Yet, as more mobile users are complaining about telemarketing calls and messages on their cellphones, he said, "I wonder if they see it as a cost of doing business. Otherwise, why would you try it?"

Gartner's McGuire offered a cautionary tale of text messaging telemarketing and outbound marketing strategies gone awry.

"The Buffalo Bills offered to send team updates [to fans]. Somehow, something happened to cause them to send way more messages [than was stated], and there was a backlash against the Bills."

The team ended up settling a class-action lawsuit in 2014 for $3 million.

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