Database marketing is a form of direct marketing that uses databases of customers or potential customers to generate personalized communications in order to promote a product or service for marketing purposes. The method of communication can be any addressable medium, as in direct marketing.

The distinction between direct and database marketing stems primarily from the attention paid to the analysis of data. Database marketing emphasizes the use of statistical techniques to develop models of customer behavior, which are then used to select customers for communications. As a consequence, database marketers also tend to be heavy users of data warehouses, because having a greater amount of data about customers increases the likelihood that a more accurate model can be built.

There are two main types of marketing databases, consumer databases, and business databases. Consumer databases are primarily geared towards companies that sell to consumers, often abbreviated as [business-to-consumer] (B2C) or BtoC^{[citation needed]}. Business marketing databases are often much more advanced in the information that they can provide. This is mainly because business databases aren't restricted by the same privacy laws as consumer databases.

The "database" is usually name, address, and transaction history details from internal sales or delivery systems, or a bought-in compiled "list" from another organization, which has captured that information from its customers. Typical sources of compiled lists are charity donation forms, application forms for any free product or contest, product warranty cards, subscription forms, and credit application forms.

Database marketing emerged in the 1980s as a new, improved form of direct marketing. During this period traditional "list broking" was under pressure to modernize, because it was offline and tape-based, and because lists tended to hold limited data. At the same time, with new technologies enabling customer responses to be recorded, direct response marketing was in ascendancy, with the aim of opening up a two-way communication, or dialogue, with customers.

Robert D. "Bob" and Kate Kestnbaum developed new metrics for direct marketing such as customer lifetime value, and applied financial modelling and econometrics to marketing strategies. In 1967, they founded the consulting firm Kestnbaum & Co, that employed several notable database marketeers such as Robert Blattberg, Rick Courtheaux and Robert Shaw.

Kestnbaum collaborated with Shaw in the 1980s on several online marketing database developments - for BT (20 million customers), BA (10 million) and Barclays (13 million). Shaw incorporated new features into the Kestnbaum approach, including telephone and field sales channel automation, contact strategy optimization, campaign management and co-ordination, marketing resource management, marketing accountability and marketing analytics. The designs of these systems have been widely copied subsequently and incorporated into CRM and MRM packages in the 1990s and later.

The earliest recorded definition of Database Marketing was in 1988 in the book of the same name (Shaw and Stone 1988 Database Marketing):^{[citation needed]}