Wither Digital Marketing?

Every so often I like to stop for a moment and look at the stats for online marketing, broadly defined. I’m such a believer, that I need an occasional reality check, positive or otherwise. Today’s eMarketer newsletter asking “How Much Marketing is Digital?” suggested this was a good time. And the news in terms of continuing spending and future estimates is positive. eMarketer forecasts (newsletter, March 31, 2008) online to be 10% of all media spend in 2009. Will growth in online slow as a result of poor economic conditions? At least some analysts don’t think so. According to Karsten Weide, of IDC, “A bad economy forces advertisers to save money by eliminating the least-effective forms, thus speeding up the adoption of new media advertising.”

Nielsen data for May (the most recent I could find) shows the Internet share at just under 7%. That’s a bit different from the eMarketer data, but there are lots of data sources, lots of definitions. There doesn’t seem to be any argument about the trend; it’s upward and the best argument seems to be the effectiveness one.

Today’s eMarketer article refers to the same Sapient study reported on by Marketing Charts on September 5. They quoted survey data that showed CMOs planning to spend more on digital with some of them inching up toward 50%. The main focus in this popular article was on agency relationships and the ability of agencies to meet digital needs. The CMOs surveyed weren’t confident they have that ability. According to the article: “More than one-third of marketers surveyed said they are not confident that their current agency is well-positioned to take their brand through the unchartered waters of online digital marketing and interactive advertising.”

What are the CMOs looking for from agencies? The article has a top 10 list, all worth considering. I’ll list just the top 4:

1. Greater knowledge of the digital space
2. More use of “pull interactions”
3. Leverage virtual communities
4. Agency executives who use the technology they are recommending

All this makes perfect sense, and agencies clearly have a major role to play in helping their clients navigate the choppy waters of new media, made even more difficult by economic conditions. Agencies have been struggling to service their clients in newest media and technologies (think direct and database marketing, for example) for as long as I can remember. And that will undoubtedly continue.

But it’s not enough to place the entire burden on agencies. Marketers have to understand the issues; they have to ask the right questions; they have to demand objectives and metrics that encompass the new media environment. Look at item #4 above; they want executives of their agencies to be users of the technology.

Marketers have to follow their own advice. I keep saying there is simply no substitute for using the media, trying out the technology for yourself. But marketing managers can go a step further.

I wonder how many marketing departments have any kind of a coordinated approach to who needs to follow which disciplines, newsletters, webcasts; who needs to spend some time on Facebook or MySpace or in relevant virtual worlds. None of us are going to learn to deal with the new media environment by staying in our comfortable traditional media cocoons.

More on that tomorrow.

Next Step in Behavioral Targeting?

Marketers know that segmentation is key to targeting which, in turn, leads to increased marketing ROI. From the beginning of the Internet savvy marketers have seen the potential for improved targeting that comes from tracking customer activities on the web, as indicated in the chart from eMarketer (newsletter, June 19, 2008). Behavioral targeting is well established, although not without issues from the consumer perspective. Remember the controversy over Facebook’s Beacon advertising program?

Consumers are wary that their privacy is being invaded by ad targeting efforts. eMarketer’s July 29 newsletter quotes a study from Harris Interactive that shows 55% of respondents “very” or “somewhat comfortable” with the privacy and security policies of sites that allow targeted advertising. That leaves 45% who are “not very” or “not at all comfortable” with those same policies. That’s an interesting split! In the same newsletter they quote a TNS study in which a large majority of respondents describe themselves as knowledgeable about both privacy threats and tools to deal with them. With due respect to our customers, I absolutely don’t believe they are knowledgeable. I know how much trouble behavioral marketers have in trying to explain behavioral analysis and targeting to potential customers. I also know how unaware my own graduate marketing students are of the basics of behavioral targeting on the web. Consumers think they are aware, but it’s highly unlikely that they understand the intricacies. If they knew, would they be more or less concerned? My guess is more, not less.

That’s not going to stop the unrelenting advance of technology though. In this iMediaConnection video Jim Calhoun of PopularMedia describes what his firm is doing to add data from the social graph to targeting models. Direct marketers have long known that people gravitate to others like themselves and have used that kind of affinity in segmentation and targeting. The next step may well be mapping out the social graph and using those connections to better understand consumers. The first 2 minutes of the video talk about the behavioral marketing developments; the second half is a bit of background on the social graph. Watch either or both segments—it will either fascinate you or creep you out—depending on your personal perspective!
View the video here.

Then think about your customers, and how they’re likely to feel. Then consider the following quote from Fran Maier, executive director of TRUSTe, the privacy organization.

“Education once again appears to be the key to finding a constructive balance between behavioral targeting and consumer privacy, because no matter how much we assure anonymity, there is still significant discomfort with the idea of tracking . . .We have a solid indication that consumers want us to find a way to get them the advertising that is relevant to them. In order to do this, behavioral targeting is one of the most promising methods, but at the very least, it has to be made more transparent, provide choices, and deliver real value.”

While I agree with that statement, I still have a question. Is “education” best done by a single enterprise or would it be better received from an objective third party? Third parties like TRUSTe have a major role to play, but so far it’s not clear to me that they are reaching the great mass of Internet users with any impact. I think businesses should worry about that. They should also make a herculean effort to let their customers know what they are doing and to explain the value that targeted advertising does bring. They have to do that in a way that’s comprehensible and not too self serving. That’s a tall order, but it’s necessary to build and maintain consumer trust!

Sears Goes Virtual

Sears is not known for being either fashion forward or a particularly desirable destination for teen fashionistas. An article in AdAge (subscription required) yesterday points out that they are trying to change that. They have created the ArriveLounge (I don’t have a clue about the implications of that name) as the centerpiece of the campaign for fall back-to-school. Here’s the top and bottom halves of the web page so you can look at it and make your own judgment about whether this will attract the teen and tween crowd.
The AdAge article points out that Sears is partnering with sites including MySpace and Disney for custom content and sponsorships, creating games with a number of partners, and that they will have events such as fashion shows in virtual world where teens can also create their own avatars and clothe them in Sears garments.

The virtual worlds aspect intrigued me, because there was a list of sites that—not surprisingly—I had never heard of. So here’s a quick rundown:

•Zwinky is a portal of the IAC division of InterActive Corp. It is fashion-oriented and offers a variety of ways to be creative and expressive.

•Meez, a brand of Donnerwood Media, promotes the creation of avatars, which would offer opportunities for trying on Sears clothing.


•WeeMee is a WeeWorld social network that lets members interact through their WeeMees. What’s a WeeMee? “It's a cartoon that looks just like you. Think of it as your own personal avatar or icon.”

•The N is a brand of Nickelodeon Kids and Family, which is part of Viacom. Nickelodeon has experience in experience in virtual worlds and has a robust strategy for creating and monetizing virtual world that feed off their successful TV series and characters.

•Poptropica is part of Pearson’s Family Education Network. As you can see from the graphic, a “Costumizer tool” is prominently featured on their home page.

There may be more social networks in this teen/tween space, but these are the ones Sears has chosen for the Arrive Lounge campaign. Their media choices seem reasonable. The key to success will be how well they engage their target audience.

Several months ago I wrote a series of posts for eBrandMarketing about the “Mommy Ecosystem.” This strikes me as the same sort of social and marketing phenomenon. These teens and tweens are highly social creatures, so social networking is a big part of their lives. Not surprisingly, a number of networks that are more highly targeted than, say, MySpace has grown up to take advantage of the phenomenon. Marketers who target the segment clearly want to make use of these networks, as they must do to reach their target audience. However, they have to reach these young men and women on their own terms, not the marketer’s terms. That’s not easy. Sears doesn’t seem to have made any major missteps so far. It will be fun to keep an eye on this campaign and see if it does connect with this difficult-to-reach target market.

DIY Advertising Takes Off

When I wrote about AdReady several weeks ago I set up an account to keep an eye on this interesting self-service display advertising concept. We’ve gotten used to this process with Google AdWords, and AdReady has services like a library of standard ads that make DIY banner advertising a reality. Following the model of AdWords, you can set your own advertising budget and monitor campaign results.
Because the system is easy to use, it’s easy to test competing ad messages. In their June newsletter, AdReady gave an example of running a test on an advertising button of its own. It’s a nice, clean test, with the only change being the call to action. I’d have guessed that “Click Here Now” was a fairly weak call to action, but personally, I’d have thought “Build it Now” would outperform “Get Started.” That’s why marketers should run tests! If you’d like a direct-response testing primer, please read the free testing chapter from Paul Berger’s and my direct marketing text. There is additional testing material in my Internet marketing text; I’ll do a post on that soon, because it’s an important tool.

So—with AdReady you can create your own ads and test versions. Now you can do it on the New York Times site. It seems like a no-brainer. Small advertisers are not worth the time of the advertising department, but, in the aggregate, they could provide another significant revenue stream. Why not give them self-service capabilities? Using the AdReady platform, that’s just what the NYT has done.

For publisher sites that need to add revenue streams—and who doesn’t—this is an interesting option. For sites that are free to the user, like AdReady and so many others, it has something interesting to say about monetizing the site.

That leads me directly to what I’m planning to write about tomorrow. Please stay tuned!

Collaboration, Technology and Culture

Over the past few weeks I’ve had conversations with several different groups of people about collaborating over time and distance. We’ve come up with several approaches. One of the simplest for a small group seems to be Google docs.

Not surprising, then, that an article in yesterday’s WSJOnline caught my eye. It focuses on interactive advertising on Meebo; I was taken by the site itself. So apparently are the VCs; it has just gotten third round venture funding.

The basic premise is that Meebo connects all your IM accounts in a single place and gives you a lot of options to connect with “buddies.” They have apps like a widget you can put on web pages, an iPhone app, and they are working on Meebo Rooms, which sound particularly appealing to corporate users. Meebo has gone out of its way to create interactive options for advertisers to connect with this wired (young?) community (see whe WSJ article also).

There are other web spaces that offer collaboration opportunity. Business Week has an article in the May 2 edition, “The (Virtual) Global Office,” that focuses on Second Life. Out of deference to their use policy, I won’t link to it; I’ll just let you find it for yourself. Or maybe someone knows someone at Business Week Online. . . This policy sure seems shortsighted to me! I do, however, agree with Norma’s comment that technology doesn’t make people collaborate better. “Process precedes technology.” Absolutely true. It seems to me that culture precedes process.

A recent post on the AlwaysOn network calls this the social era of management, which they define as follows:
1.characterized by, or inclined to working together in organizations and communities
2.Of or relating to the structure, organization, or functioning of the organization as a social organism.
3.Something worked out to explain, resolve, or provide a method for dealing with and settling a problem of performance and progress.
They go on to describe a model they call Socialutions that involves Priorities, People, Process, Products, Progress and Performance.

And here I thought it was only about people communicating over distance and time! Seems there’s a lot going on in this space that all marketers ought to be thinking about in pursuit of Progress and Performance!
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Auto Marketing Takes Sharp Web Turn

Auto makers all now have interactive websites that let prospective users examine and experience their models to some degree or another. Advertising also continues to move to the web. Just a few weeks ago GM let it be known that within three years fully half its advertising budget would be spend on the web (AdAge, March 17, 2008). Yesterday Chrysler announced that 29% of its budget for the new Journey would be spent on the web, with strong visitation numbers at the beginning of the launch.

It’s less of a surprise that BMW is spending half their budget for the US launch of their 1 Series on the Internet. BMW has been a leader in creative use of the web from the beginning with their BMW films series early in this decade followed by BMW comics. Their 1 Series is a lower-priced version aimed at a younger target market, so the emphasis makes sense. They cut their teeth on this type of strategy when they used the films to attract a younger, hipper audience. Now it’s an introductory video on YouTube. Take a look—it’s definitely not your father’s auto advertising!

Among other things, BMW is offering a Facebook app that will let users build their own BMW and send it to friends. Presumably that’s a repurposing of the functionality they have on the website. Makes sense to move it out onto the web where they can make it more visible, presumably by attaching it to advertising on Facebook and elsewhere on the web.

Another thing that isn’t new news is that young people spend most of their media time on the web, so that’s where you have to engage them. It takes integrated programs there, just like it’s always done in mass media. The difference is that we’re integrating a different set of tools; targeted online display ads, search advertising, microsites, videos, widgets and other specialized apps to name some of the main ones. Basic marketing principles still apply, but the execution is very different!
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Shopping is Now Social

Today’s eMarketer newsletter is about social shopping—a rapidly-growing phenomenon. The lead chart reminds us why it’s becoming so important. People have always placed a great deal of credibility in recommendations from their peers—that’s why WOM is so powerful. Social shopping is the electronic age manifestation. The article goes on to say that people contribute to social sites because they want to feel part of a community and they seek the recognition of their peers. I’d add that people simply want to help; they want to provide useful information to others who are engaged in the same activities/facing the same issues.


That being said, these sites have the potential to be incredibly volatile. I was under the impression that Kaboodle was the largest. According to the comparison I did on the Compete site, it has been left in the dust by a site called Pronto. The site attributes its explosive growth to the addition of social shopping tools, but it’s not clear why that has caused it to outdistance other social shopping sites that have similar functionality. My hypothesis is that it’s much more broadly based and therefore appeals to a larger audience. The diversity of search terms seems to bear that out.

Marketers need to use these sites by ensuring their products are listed and advertising on the sites. Pronto has a “certified merchant program.” The widgets available from Kaboodle let users make connections between things like their MySpace pages and the site. Are there partnership opportunities here?

Social shopping is another Web 2.0 feature that seems to be here to stay. Marketers, especially those whose target audience is young or family-oriented, need to be in the game.
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TV Commercials on Facebook?

I’ve been conflicted about this subject for awhile. I don’t go to Facebook for commercials, but I do go to YouTube. I love being able to play ads in class. Imagine being able to show a class of Vietnamese marketers ads from around the globe. So, wherever I am and whatever marketing subject I’m teaching, I love to be able to find ads on the net. What I wonder is, “Does anyone else?”

Josh Bernoff of Forrester pretty much agrees that people don’t generally care to watch ads. Why should they watch them on the Internet when they change channels on TV? There are a few exceptions—remember the Cadbury gorilla?

Note the ad on the screen capture then view the video here.

That essentially confirms Bernoff’s point—people don’t watch ads unless they are really special. But they do watch videos; we know they are doing that in large numbers. Here’s a list of the examples he mentions in the video:

•Blendtec. People enjoy a light-hearted look at products.
•RayBan. It’s just plain funny. Note it has spawned others.
•Dove Evolution. I’ve written about the Dove Campaign for Real Beauty before. It’s a wonderful integrated campaign.
•TIBCO. If you don’t look at any of the others, look at this. I apologize for not beliving that software engineers can have a sense of humor. They’ve created a whole world for this little guy!

Three of the four I found on YouTube. Each of the brands has created its own “channel”—essentially its own page on YouTube. TIBCO couldn’t have done what they have by just posting on YouTube; they needed a microsite. I was interested to see that Beet.tv, a video site, had its own channel on YouTube.

Here’s a bit more advice, quite accidentally from another Forrester consultant. Jeremiah Owyang created a corporate Facebook page for his brand—his Web Strategy blog. Then he took a small amount of advertising to promote it. The results weren’t overwhelming, but it worked. It's a great example of a social network marketing experiment that cost only $20 and some of Jeremiah's sleep time. Here’s his latest post on corporate Facebook efforts and if you search his blog you’ll find more. Thanks, Jeremiah!

The message? Well thought out campaigns on Facebook (or other social networks) can work. Engaging videos will be viewed. But only advertising instructors are likely to thank you for posting your run-of-the-mill commercials on the web!
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Customer Acquisition--How the Internet Has Changed It

As I wrote on March 4, the Internet has changed the core marketing communications processes fundamentally and forever. Marketers are still trying to come to grips with that fact and to learn how to leverage and optimize the power of the Internet in integrated marketing communications programs.

We all know what the Hierarchy of Effects looks like. We were weaned on it as marketers. Unfortunately, it’s still the mental model that many of us use. I argue that it is simply not the way marketing works today. It probably was never entirely hierarchical. Today it’s more like a maze with many ways of getting to the end goal—a trusted brand. That makes it hard to specify a process that fits all situations, much less make it one that is hierarchical. Earlier I described it as circular and I think that’s an improvement, but that still doesn’t express the complexity of the decisions marketers face.

In the mass media era we spent time and money to reach our target segment and create brand awareness. In the Internet era the more direct approach is to attract the target’s attention with relevant content. The Internet supports the acquisition process in two significant ways:

•Marketers can target an audience for acquisition with little of the wasted reach of mass media. Targeting by display advertising on carefully-selected web vehicles (sites, blogs, social networks) is similar to mass media and we know that it accomplishes brand development as well as generating action. PPC advertising based on contextual keywords targets to an individual’s current behavior. Behavioral advertising, based on actions already taken by anonymous visitors, offers more precise targeting and is consequently growing in favor with marketers.

•Marketers can incite to action, which usually requires driving people to their website. They must carefully consider the actions they want target customers to take on the website, how they will encourage them to take desired action, and the experience visitors will have while they are there and afterward—in the fulfillment and service process. They must also make decisions about how to measure success and how to capture data from newly-acquired targets.

The set of possible actions represents basic objectives that marketers may choose for their campaigns. They include, not in any order of priority:

•Drive first-time visitors to a retail location to make a purchase.
oThat may be as simple as offering store location information, often with maps and other ancillary information. It can include sales promotions like coupons.

•Encourage an immediate purchase on the site. This can rely on compelling content—from product descriptions to customer reviews—and a well-designed and maintained site that leads visitors through a planned, step-by-step process.
•Provide incentives to make an immediate purchase on the site.
oThe incentives can be part of the advertising—a free shipping offer, for example. They can be presented on a landing page as part of a formal conversion process. They can be presented on the site—an offer to “buy two and get a third for half price” shown, at a minimum, on the home/main product page and on the order page.

•Invite visitors to register by offering relevant content:
oAdditional product information—brochures or demos
oSite functionality—build your own product
oA newsletter or alerts with offers of interest
oCoupon downloads
oParticipate in brand community activities

•Encourage visitors to stay on the site longer
oContent like videos
oActivities like games and contests

•Give visitors a reason to return
oCompelling content, excellent experience, ongoing events

These generic objective types have an element that is familiar to B2B marketers but less so to most consumer packaged goods marketers. They imply a multi-step process, except in the minority of cases in which the first-time visitor makes an immediate purchase. If not, the visitor must be enticed to return. Successful retailers have been good at doing that; producers of mass-marketed products (and some services, insurance sold through agents, for example) have not.

The multitude of possible actions and the fact that not all culminate in an immediate sale pose two additional questions. First, how do we measure success? It is not enough to simply attract visitors to the website. We have to get them to make a purchase. Even though that may take several visits, the process is relatively easy to track on the web. Once it leaves the web for a retailer or a dealer, it becomes much more difficult

Second—and necessary for developing the correct metrics—is what is our working definition of acquisition? Is it merely getting an anonymous visitor to the site? Probably not; that’s the click-through dispute. Is it capturing an email address so you can begin to develop a dialog? If you are marketing a genuinely multi-step product—cars or real estate, for example—registration may be an acceptable definition of acquisition. In those two cases, conversion occurs off the site, so that argues for a more limited definition of acquisition. You may hold out for an initial sale as the only acceptable measure of acquisition. That depends on many things including the product itself and your ability to track through to the sale.

Acquisition is a complex task. The Internet hasn’t really made it simpler. It has, however, made it possible to target--even at the acquisition stage. It has made it possible to measure, not only success in ROI terms, but the path of getting there. Finally, it allows marketers to plan campaigns based on data, both consumer behavior data and programs results data.

The change in approach to acquisition is not an option. Marketers cannot afford to ignore the potential of interactive marketing in their total mix, both for reasons of cost efficiency and because consumers are demanding the relationships.

The changes in acquisition lead to a greater role for conversion. More about that in a forthcoming post.
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How Has the Internet Changed Marketing Strategy?

The answer is that changes have been great, but I don’t know of anyone who has verbalized the changes in a specific way. I’m going to cut off a chunk and give it a try.

I like to try to boil what we do as marketers, which often gets pretty complex, down into simple concepts. As far as I’m concerned marketers basically do three things. We acquire customers or sales leads. We convert leads into actual customers. We retain existing customers. There are many things we have to do in order to accomplish these three key goals. In addition, marketers of frequently-purchased consumer goods and services and some lower-priced business goods and services may not be in the lead conversion and generation business. With those provisos customer acquisition, conversion and retention form the core of what marketers do.
Internet 1.0 changed all those activities irrevocably. As this blog has often pointed out Web 2.0 is already here and the requirements for marketers are changing again before we fully came to grips with Web 1.0. This is a good time to sit back and try to organize the changes we know about into a simple, understandable form.

So, over the next couple of weeks I’m going to write a series of four posts, with this being the first. In the second I’ll discuss customer acquisition. Then over a few days I’ll write about conversion and then retention.

I keep being reminded that many of us who are now in the higher echelons of marketing were educated in traditional mass media marketing and it’s hard to get away from that and understand how fundamentally marketing has changed. Understanding the changes that have taken place--and maybe looking ahead a bit--is the purpose of this series of posts.

Please stay tuned!
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