With millions of people signing up to stop receiving pesky sales calls, the nation's biggest marketers are preparing a new round of advertising pitches via e-mail and direct mail.
Companies such as AT&T Corp. and Allstate Insurance Co. have long viewed telemarketing as vital to building their businesses. Some of those efforts could be severely hampered by the federal government's launch Friday of a national "do not call" registry designed to curb residential sales calls. The program takes effect Oct. 1, when telemarketers who ring those on the list could be fined as much as $11,000 per call.
Faced with the prospect of losing a direct line to the living room, marketers plan to flood mailboxes and computers with an avalanche of solicitations. In addition, consumers who call these companies on other business may well find they have to navigate an earful of annoying sales pitches.
Marketers spent $80.3-billion on telemarketing in 2002, according to the Direct Marketing Association. Before the prospect of "do not call" loomed, the group had expected that amount to grow to $104.8-billion by 2006. Now that money is likely to find its way into other selling arenas.
For the beleaguered advertising industry, the move could be a boost, since national marketers will now have to invest more heavily in direct mail, traditional media advertising and Internet-based marketing, which will likely include spam e-mail. However, those working at vast telemarketing operations, or the hundreds of mom-and-pop call centers that dot the country, may well face painful layoffs.
While this looks like a win for consumers, many may soon find that they are bombarded with pitches via the Web or direct-response ads that carry 1-800 numbers. "Selling isn't going to stop," warns Lee Harward, president of ComTec Teleservices Inc., a telemarketing firm in Denver.
Still, James F. Lyons, president of Optima Direct, a direct-marketing consultancy owned by Omnicom Group Inc.'s Rapp Collins Worldwide, says telemarketing won't disappear. Consumers who don't sign the national registry, he reasons, may be more responsive to phone pitches. "We'll be giving the dog what the dog wants to eat," he adds.
As of Tuesday morning, 12.5-million telephone numbers had been logged into the registry, according to the Federal Trade Commission. In addition, 14-million numbers are being automatically transferred to the federal list from various state "do not call" lists. Commission officials expect at least 60-million telephone numbers eventually will be on the registry, which can be found at www.donotcall.gov. Consumers living in the western half of the country can also register by phone at (888) 382-1222, and the rest of the country can do so at the same number beginning Sunday.
Once the law _ which was signed by President Bush in March after being authorized by Congress _ goes into effect, consumers on the list who receive telephone solicitations will be able to file a complaint with the FTC by phone or online.
The effort to rein in telemarketers has been building for a long time, enabling some to prepare. Telephone company Qwest Communications International Inc. slashed its telemarketing efforts by 40 percent in September after hearing from unhappy customers.
Insurance companies, telecommunications concerns and financial-services outlets are seen as the industries most likely to be affected by the new rules. Allstate Insurance, an insurance and financial-services company owned by Allstate Corp., is already looking to redirect its marketing efforts. "We plan to shift into other communication mediums, and rely more heavily on traditional TV advertising and e-mail marketing," says Todd DeYoung, acting chief marketing officer. "We also plan to stimulate inbound call volume by doing more directed advertising and more direct mail."
Some of the country's biggest marketers say they'll thrive by calling people who enjoy hearing the pitches. AT&T, which places hundreds of millions of telemarketing calls each year, intends to keep calling its 40-million customers and others "who want to hear from us," says Bob Nersesian, a spokesman. The company will also use other marketing methods, such as direct mail and bill inserts.
Still, the telemarketing industry, which employs about 6.5-million people nationwide, predicts it will lose as many as 2-million jobs, and many of those left unemployed _ often in rural communities _ may not get back into the job market right away. "These guys are hard to absorb," says Tim Searcy, executive director of the American Teleservices Association, a trade group.
Individual call centers are bracing for the worst. Stuart Discount, president of Tele-Response Center Inc. in Philadelphia, says he's likely to cut as many as 30 of his 400 employees when the federal program takes effect. Discount's firm does contract work for nonprofit companies, which are exempt from the "do not call" list, and banks and mortgage companies, which are not. He says that he had to fire 100 employees in January after state "do not call" lists reduced the number of people he could call for his commercial clients.
The list is also causing consternation at many companies that use in-house telemarketers to peddle their own services. Personal Legal Plans Inc., a Charlotte, N.C., legal concern that uses a staff of 150 telemarketers to cold-call potential buyers of its estate-planning services, has already had a staff meeting to discuss the likely impact of the new federal list. "The people in my call center are all at risk of losing their jobs, and it's a question if my firm will even survive," says Dennis McGarry, the company's president and owner.
Not everyone will stop putting out calls. In addition to the nonprofits, politicians and survey-taking organizations will still be able to call those on the list. And companies that have an existing business relationship with a consumer can continue to call them for 18 months after the program takes effect.
National and global marketers who switch to e-mail may only be buying themselves a bit more time. A tide of mounting consumer anger raises the odds that Washington will soon come after spam as well. Last year, the average consumer received 2,278 spam e-mails, according to Jupiter Research, a unit of Jupitermedia Corp.
In mid-June, the Senate Commerce Committee unanimously approved a bill barring the use of fake or deceptive return e-mail addresses, subject lines, or e-mail headers. Under the bill, each e-mail message would also have to offer a way for consumers to opt out of receiving further messages. If passed, spammers who violate the law would face up to a year in prison.
Some feel the phone still represents a viable way to tap new customers. Marketers may circumvent the ban, for example, by using in-bound call centers, which will push other services to consumers who call in. So if a credit-card customer uses the phone to check a current balance, a savvy marketer might seize upon the opportunity to sell other goods and services. Executives suggest that companies will also begin to use more toll-free numbers advertised on TV and in print media to get people to call in, then use the contact to pitch other products.
Meanwhile, at least one telemarketer says demand has already begun to pick up for in-bound call center work. "Now you just don't want an order taker," says Harward of ComTec Teleservices. "You want to hire someone that can sell when customers call."