Direct mail efforts are being integrated with the Web and other marketing vehicles

After rebounding successfully from the doldrums of the early 90's, high-tech companies in Silicon Valley are facing one of the most volatile periods in the industry's brief history.

Disappointing results for some of the area's best known corporations - notably Apple Computer - have resulted in plunging share prices and rounds of layoffs not seen since the darker days of the last recession. Fierce competition has been the name of the game in high tech for some time. Now, amidst growing consolidation and wholesale technology shifts brought on by the Internet, those competitive pressures have rarely been more intense. This combination of cost-cutting and narrower windows of opportunity means companies are looking for faster and more efficient ways to get their message to the market.

In an informal (and highly unscientific) poll of marketing executives at client companies, we asked what impact this volatility was having on marketing strategy. Not surprisingly (given other recent surveys on nationwide business-to-business trends), most report that direct marketing has retained its central role in helping to penetrate new markets, launch new products, and communicate with existing customers.

Changes are afoot, however. Generating "awareness" is out. Generating leads is in. There's now significantly more integration with other media like print advertising, telemarketing and the Internet. And under severe budget pressure, many companies are rejecting expensive, "high impact" creative in favor of more traditional approaches that yield the same or better results at a lower cost.

Madge Networks in San Jose is a leading supplier of enterprise networking solutions, including switching hubs, network management software and adapter cards. Like many companies in the highly competitive networking marketplace, Madge has addressed recent softness in its business by scaling back on more expensive awareness-building campaigns to concentrate on reaching prospective buyers as directly as possible. This is especially important because Madge recently introduced a range of products that promise to drive its long-term success.

Chad Davies, who heads up the company's North American direct marketing efforts, said the company has temporarily redistributed funding from advertising and other broadcast level programs in favor of direct marketing activities. Madge is focusing more intently on the channel (recruiting new partners and generating leads for existing resellers), as well as pushing some program responsibility from corporate headquarters out to the field to make direct mail and other programs more responsive to the marketplace.

The company is also taking a critical look at its lead management systems. "In the past, the focus has been on generating the highest volume of leads possible in order to quickly increase sales activity," Davies said. "With resources somewhat constrained, we want to ensure we're getting the maximum value from each and every lead that comes in the door. We're fine tuning our lead qualification, fulfillment and tracking activities in order to better capture and gauge the relationship between specific lead generation programs and revenue. Combined with direct marketing, we get a better return on investment from all our marketing efforts."

Emeryville-based Sybase, Inc. is a leader in the relational database and application development software arena. Recently, the company laid off over 600 employees after reporting a $20 million loss for the second quarter. Christopher Ryan is Sybase's director of direct marketing and an industry veteran - he ran his own direct response agency for six years and was formerly a director of marketing for Group 1 Software.

"Right now, the key words for us are clarity and focus," according to Ryan. "First and foremost, we need to maximize the return on every marketing dollar, and this means integrating our direct mail activity with our Web strategy and other marketing vehicles, as well as achieving leverage through joint campaigns with our hardware and software partners. Secondly, we can't afford erratic messages that change from one campaign to the next. We need to communicate our value clearly and consistently."

Measurable results, the ability to target niche markets, and low cost per lead are just a few of the many reasons why Silicon Valley firms say they continue to use direct marketing as a primary vehicle for developing new business. In an era of downsizing, direct mail offers companies like Sybase, Madge and others the ability to deliver their message to the right audience in the most cost-effective manner possible.