Month: April 2009

Q&A: Mike Jacobs

Mike Jacobs is chief services officer for iMarketing, an online marketing agency serving clients like Yahoo, Dow Jones, eMusic and AA RP. He is a consultant to several hedge funds and was previously co-founder and marketing director for Expression Engines/Bigfoot Interactive (sold to Epsilon in 2005). More information about iMarketing is available at www.imarketingltd.com.

PERFORM: How do you see Web 2.0 technologies fitting in with performance marketing?

JACOBS: It would probably be helpful to start with some definitions, because many people use these terms interchangeably. We define Web 2.0 as the next generation of online services, generally focused on collaboration. Social networking and wikis are prime examples, and older concepts like viral and lead generation are being included in the discussion as well.

Performance marketing is ROI-driven marketing. In theory, all marketing should be driven by ROI, but that isn’t the case right now. Performance marketing focuses on generating revenue to directly impact the bottom line. While brand-focused marketing can eventually help in driving revenue indirectly, performance marketing is generally executed with specific time frames and transactions in mind – sales, subscriptions, etc.

So far, Web 2.0 – particularly the version being sold by agencies – has had little impact on performance marketing. Web 2.0 creates avenues for connecting with consumers, but the commerce hasn’t yet followed as much as the hysteria has.

We’ve seen social networking sites selling tons of ad impressions without resulting in enough sales to justify the cost. When it is so easy for a consumer to create content – through a blog or a MySpace profile – the odds of that content actually being worthwhile are low. Even where page views are generated, you usually see low clickthrough rates and even lower conversion rates. There are some niche players who can use this kind of inventory – ringtone players being one example – but most large-scale advertisers are just not seeing the return.

This lack of performance is generally ignored for two reasons. First, marketers are too often getting caught up in the hype and not looking at the results. They are running campaigns without a clear view of goals and metrics. Second, numerous entrenched parties promote and profit from this confusion. Google, for instance, blurs the distinction between search and non-search media when selling to advertisers. A marketer may think he’s only advertising to users who searched on a particular keyword, but his ad could end up on a blog, on a MySpace page or even on a cybersquatter landing page. He may also pay the same price for these clicks – even though they are worth less – because AdWords makes it difficult to see or optimize the different traffic sources. Until marketers get smarter and demand accountability, these trends will continue.

PERFORM: We’re also seeing a lot more agencies out there offering to create buzz and develop viral campaigns. Does that fit in with your view of performance marketing?

JACOBS: Short term, going strictly by the numbers, no. Viral may never fit into performance marketing because it is nearly impossible to directly attribute results. Viral can enhance many campaigns and products, but it is not a marketing strategy unto itself.

I can’t tell you the number of potential clients who have come to us and said, “We don’t want to spend real money on marketing because our product is going to be viral.” But consumers are on to us. They know that we want them to sell our products for us. After years of getting hit by hundreds of “tell a friend” and other referral options – many making unfulfilled promises – consumers are weary of viral marketers. Furthermore, you need an established base of users at the outset. Viral growth is hard to start with just a handful of users.

“Buzz marketing” often confuses cause with effect. Many large interactive agencies offer “buzz measurement,” which isn’t marketing at all, let alone performance marketing. Talk comes from usage; not the other way around. Consumer feedback can be helpful, but measurement of the buzz often only measures the success of your acquisition campaign.

Some agencies will claim they can reach out to thousands of influencers on your behalf, in theory to drive activity. However, what they usually don’t tell you is that each of those same influencers got 100 similar Emails that day, often from the same agency. Even when we see a resulting product review or blog post, the results just don’t show. Look at referral sources for new customers. Track the referral rates from within the product itself. The numbers rarely match the story. Viral marketing can work, but what is being sold today as viral rarely delivers ROI.

PERFORM: That goes back to the first point, which was, people really don’t know what they’re talking about sometimes when it comes to Web 2.0.

JACOBS: Absolutely. Many marketers are simply acting out of fear. Web 2.0 isn’t well-defined, yet execs worry that they need to be doing something in the space, even if it means they are spending money without results. But that isn’t performance marketing. When the results justify the cost, only then should the money follow. The smart marketers will choose the channels that deliver, even if it means watching others get cut on the bleeding edge.

PERFORM: How about developments in the lead generation space? How do they impact performance marketing and affiliate marketing networks?

JACOBS: Lead generation is one of the core developments in performance marketing. It appears nearly risk-free on the surface, in that you only pay for results. But lead-gen for the most part works only for select categories of advertisers, like mortgage, education and debt consolidation. A close look at lead-gen companies will show that they are almost exclusively focused on these areas, and they have not really had a major impact on e-commerce sites.

There are also very significant risks that are not being taken into account. In reality, lead-gen reduces only CPA risk and creates additional risks like brand and lead quality. The value of leads for even the same offer can vary dramatically by source, yet lead quality rarely seems to factor into the equation. Even where folks are scrubbing lists to produce valid leads, it still doesn’t mean that those consumers actually have an interest in the product. Even valid leads can differ in quality, and incentive sites are a big part of the problem. If a consumer is told that she’ll get a free iPod when she signs up for The New York Times, she is much more likely than a non-incentive lead to cancel her subscription soon after. Leads from different sources have different values, and these need to be accounted for. Companies need to look at the track record of a given vendor or channel – pay rates, cancellation rates and lifetime value. Unfortunately, most aren’t.

The lead generation firms have also been stealing share from the affiliate networks for years. Linkshare, Commission Junction and other affiliate networks have had trouble understanding their place in the value chain. For years they changed direction repeatedly, trying to be technology companies, then marketing companies, then search companies, then technology companies all over again. Meanwhile, they ignored their core offerings – tracking, payment, access to affiliates and overall accountability.

At the same time, other players, particularly the lead-gen companies, built their own technology. And they did so with lower overhead and focused only on the most profitable segments. The high-volume offers now appear on the CPA networks, and the top affiliates have moved to where the money is. Much of the remaining revenue streams have been under attack by Google AdSense and similar automated revenue-generation options for publishers.

The affiliate networks have responded by acting like CPA networks; Linkshare bought a lead-gen company in 2007 and is now trying to roll out its own lead-gen offering. But it might be too late. Tracking technology has been commoditized. You can even rent the technology and build your own affiliate or-lead gen network with just a few calls. I think we’re going to see continued consolidation in this space.

PERFORM: Given all the available tools for Web analytics, data integration and business intelligence, shouldn’t marketers be able to see which campaigns work and which don’t?

JACOBS: The tools and data are readily available, but marketers are simply not using them. I’ve seen multimillion-dollar online media campaigns run by top-tier Web properties with no tracking whatsoever. And I’ve seen millions of dollars’ worth of campaign-tracking technology go unused.

This might be a generational issue. Marketers coming from the off-line space not familiar with the metrics just don’t know what to look for. Many have outsourced the tracking function to IT, which makes as much sense as having coders develop promotions for your website. Campaign data does not belong with IT, it belongs with marketing.

Marketers need to take responsibility for learning the systems. More effort is put into setting up the tools and telling the boss they exist than learning how to analyze the data. People from the top-tier tracking solutions have told me that most of their clients don’t look at CPAs for their online campaigns. That is a very scary notion. Both technology and marketing dollars are being wasted.

PERFORM: As different service providers emerge to help companies with these various marketing initiatives, is there going to be consolidation, or are marketing departments going to continue juggling multiple third-party agencies? How do you see the competitors in this space shaking out?

JACOBS: Right now, I think the marketplace is too blurred. It is very easy to confuse who is who within the ecosystem. Companies of all sorts are trying to grab whatever share they can, regardless of whether or not they should. Conflicts of interest are almost the rule.

You have a lot of lead-gen companies whose pitches sound a lot like agency pitches. You have development shops treating campaign management as an extension of creative, when it really isn’t. You also have single-channel agencies trying to give broad strategic advice. Even the vendors and tracking solutions are getting into the mix, building their own account and campaign management offerings.

The worst trend comes from the vendor side. They don’t just want to sell you media, they want to “manage” your campaigns. This is a clear conflict of interest. Vendors are handling creative, talking about audiences and steering “strategy” in many cases. However, their goal is to generate high CPM [cost per thousand impressions] for their media, not ROI for their customers.

You also have agencies essentially outsourcing their interactive work to these vendors. Here you have the same conflicts of interest, yet clients don’t realize it because they think the agency is looking out for them. But the hands-off agencies rarely know enough to do so, or they don’t want to potentially risk their relationship with Google.

Other traditional agencies are partnering with channel-specific agencies, which leads to multiple teams managing different campaigns in silos. I’ve rarely seen this end in anything but disaster. With no accountability across channels, the campaigns often work against one another. The most frequently seen example is search campaigns conflicting with affiliates doing search. Done properly, with a view to overall performance, these are extremely complementary channels. Done poorly, you will drive up CPAs with no increase – and sometimes a decrease – in overall volume.

I think much of the challenge for traditional agencies is in adapting to a world in which everything is measurable and interactive. Online marketing – and performance marketing in particular – contradicts the approach that’s worked for those agencies for years. In the past, they just crafted one big message, segmented the market from the top down and then tried to cram the unified message through all the different pipes. This is push media.

The interactive space requires you to do a lot more listening than dictating. With pull media such as search, individual consumers can tell you exactly what they are looking for. Marketers can get unprecedented types of consumer feedback online, down to the campaign, minute or even specific search query. Companies now have data in droves, but rarely the experience and knowledge to use it.

In some ways, we’re moving backward. Some traditional agencies are falling back on older techniques that don’t actually work in the online space and setting the entire industry back. For instance, I’ve seen traditional agency types trying to overlay demographic information onto search without realizing they are making their campaigns less effective. Why guess that a site visitor is likely to be a golfer based on her age and income, when you can perfectly target ads to folks who are searching for golf equipment? The reason search costs more than other types of media is because it is almost perfectly targeted, so why revert to an inferior form of targeting and pay the higher media rates?

Too many people try to adapt what they know to the new paradigm, but some of it simply needs to be thrown out. Things are getting so bad that many of the media providers are making their products worse trying to adapt to these mistakes. MSN, for instance, now offers demographic targeting for search.

PERFORM: They’re basically throwing a useless tool at people who don’t know any better?

JACOBS: Yes. And there are other examples. I think day-parting – showing ads at only certain times – is another feature that has been sold in the wrong way. For instance, in a search campaign with a CPA goal, volume does not affect what a click is worth; conversion rates do. Yet MSN and Google are offering the day-parting option without the ability to see hourly conversion rates. Without the data, the tool is useless, but I’m sure it makes some traditional agency types feel better.

PERFORM: I suppose the positive spin is that this is one way of easing the old-school types into the Web 2.0 world, but it is a little misleading.

JACOBS: Right. It eases them in, but at the same time makes it tougher for those who are actually doing it correctly. This contradicts the goals of performance marketing and moves the conversation to the wrong place. Once a client hears a buzzword, it can be tough to get them thinking about anything else, even though the concept in question may not work for them.

PERFORM: Our whole conversation has been about the challenges facing online marketers, but can you boil it down to the biggest one for the next three-to-five years?

JACOBS: I think the fundamental question is: How do we integrate all of this data and all of these fragmented campaigns into one global brand? The different channels and media sources each have fairly specific attributes and customer feedback loops that we can optimize independently. But how do we match this up with trying to build and maintain unified brands? The days of marketing only being about full-color glossy pages and 30-second commercials are over. Now we might have just 30 characters to get our point across. It will be extremely tough to convey a full global message and graphic identity in a text ad on the right-hand margin of a blog. When the customer – not the advertiser – defines the marketing, brand takes on a new meaning.

There is no quick answer to this one. It’s going to take experience and data, and I’m sure we’ll see quite a few mistakes along the way. As I usually say, we’ve got to test, test and test again, and if that doesn’t work, test some more.

The Internet Generation Conundrum

Born with a mouse in their hands and weaned on mobile phones, IM and Facebook profiles, the Internet generation hates me. My carefully crafted collateral, commercials, even my websites are dismissed by this audience as blatant and futile attempts to deceive them. They think I’m selling something that’s not as good as I say it is. They believe I am a liar.

Guess what? They’re right.

But let me back up a bit. Hi. I’m Steve. I’m a marketer. And the Internet generation hates me.

But that’s just part of the game, and I came to win. Composed of young Gen Y’ers and Gen Z’ers – anyone born after 1982 – I call them the Internet generation, or the iGeneration. Many of the iGen’ers think that if I had the time to produce fancy collateral and polished Web pages, then I must have also had time to inject lies and falsehoods into those vehicles to trick them into considering or purchasing my product.

As a marketer, it is my job to consider all of this when I create programs designed to reach a specific audience, even one as skeptical as the iGen’ers. This audience invented online social commentary and word-of-mouth marketing without even thinking about it. They turn first to their friends to learn about a product’s value; they observe what other people are using before they jump in; and many enjoy discovering new things and sharing their finds with their friends. Shiny new things are a form of fashion – hard to discover but fun and easy to spread, even scoop. That process of discovery is something modern marketers must tap. Or be vilified and die.

So the iGen’ers don’t believe our fancy ads in magazines. They don’t believe the advertising we place on TV or radio – though they will pay attention to a humorous or self-effacing commercial, even reposting it on YouTube if it hits the right note. And many refuse to click on our banner ads or fill out Web forms for fear of being targeted for additional marketing. So how do we reach them?

Don’t Reach. Embrace.

First and foremost, remember that the Internet generation prefers to do its own primary research, first asking friends and family what they are using, then turning to Google to see what other people think. I offer these words to market by: Products don’t sell. People do.

Apple has figured this out. Look carefully at Apple’s iPod television commercials, billboards or posters. You’ll see lots of happy, young people dancing in silhouette against a colorful and ever-changing background. Throughout the commercial, those distinctive iPod white headphones flow in sync to the silhouette’s energetic movements. What you don’t see is a focus on the iPod’s product features – how to select a song or change the volume, for instance. And that’s because Apple isn’t selling you an MP3 player. It’s inviting viewers to experience the Apple lifestyle and become part of the iPod community. The implicit message is this: Use any other MP3 player, and you’ll hear good music, but use an iPod and you’ll feel good. You’ll be part of the club. That silhouette is you. (FYI, the silhouette is an old real estate marketing trick: Get the intended buyers to imagine themselves in the space. That’s why you remove all your personal belongings when you show your house – and bake cookies – making it easier for
them to imagine their stuff in your home.)

Apple’s engineers did not design those white iPod earbuds. They are a pure Apple marketing trick designed to make the visible part of the product stand out. But the earbuds accomplish something much more important: They act as a status symbol. They were a way for Apple’s early adopters to reference-sell while also making them feel part of an exclusive club. For $79 – the price of an iPod shuffle – you, too, can join the club. And new members gladly don those white earbuds and continue to flaunt the iPod lifestyle to the few who remain on the outside. The cycle continues until the club is no longer exclusive and the iPod becomes part of our everyday vocabulary, which, by the way, happened in less than three years.

Give Them a Megaphone

So let’s say you don’t have a product like Apple’s iPod, where you can combine great design with great marketing so effectively that you entice iGen’ers to unwittingly become part of your go-to-market plan. Or, worse yet, what if your customers are not happy with something you did before or are upset that your product did not live up to your promises in the past? How can you overcome such a real, emotional deficit?

The best thing you can do is to create a community where your existing and potential customers can vent or view others’ frustrations in the open. Create a space where any member can join the discussion, witness your real efforts to improve and see firsthand how you treat your customers. Add a simple feature to your website to encourage conversations. Create a forum.

Around 2003, I became responsible for product marketing at Avid Technology, Inc., just as the company ran into a huge problem. Ongoing product delays and lingering quality issues were threatening sales of its core revenue engine, the Avid Media Composer video- and film-editing system. Years of product issues and unscrupulous pricing practices were enticing many longtime customers to abandon Avid for the first viable, competitive solution: Apple’s cheaper Final Cut Pro. Previous market research had misled Avid’s management; customer surveys seemed to say, “Love the product, hate the company.” Consequently, little was done to improve the company’s relationship with its users. But now, those users were starting to hate the product too.

The most upset users turned to the only outlet for their frustration, the decade-old Avid listserv (Email list) known as the Avid- L. Here, Avid’s most loyal and most vocal customers vented their spleen against Avid’s management. Concerned that potential customers would be frightened away by this online soap opera, Avid’s gut reaction was simply to shut down the Avid-L. Avid expected that this would put an end to the flames of discontent. But their self-preservation instinct was dead wrong.

Around the same time, I was also given responsibility for getting new users into the Avid fold. We informally called this target group the “future professionals,” and our goal was to reach beyond existing customers we already knew and who already knew us. I realized we would need happy, vocal customers to spread our messages and help generate lift among other new prospects. We called it “the megaphone effect.” If vocal customers told the world how happy they were with our product or, even better, how delighted they were with the company, future customers would believe their words much more than ours. In short, even non-customers would tell their friends good things about Avid, and our reputation would be improved.

So instead of shutting down the one place where our customers’ voices could be heard, I hired a “customer advocate” from a former competitor. Known famously online by just her first name, Marianna, she rebuilt that single Avid-L forum into more than 70 discussion threads focused on specific segments of Avid’s user base (see Figure 1). Furthermore, she invited the most vocal participants to moderate these forums (for free) and she encouraged them (and all users) to express their issues online. If customers could not achieve satisfaction using Avid’s existing channels, Marianna committed to doggedly champion their issues to internal company stakeholders. She shared her office, mobile and sometimes even her own home phone numbers in the online forums.

Simultaneously, we built the Avid user groups from a sleepy handful to more than 65 active worldwide groups. We organized annual user receptions for more than 2,000 customers and shared new product news with them before the opening day of the National Association of Broadcasters (NAB) conference, a key event for our customer base. We even introduced customers to our CEO so that personal connections could be made and grievances aired.

The end result of all these efforts was that previously disgruntled customers, who were preventing new users from considering our products, turned into happy and vocal advocates for the company. And despite nagging product issues, the company recorded record unit and revenue growth during a market downturn.

Reach Them Where They Live

I mentioned before that many iGen’ers are too savvy to click a banner ad, or they are apt to dismiss your website as a pack of lies. So what can you do to get them to pay attention to your marketing messages? The answer is obvious: If you can’t get them to come to you, then you need to go to them.

Late in 2006, I accepted a challenge to become vice president of marketing to convert a failing enterprise software firm into a consumer company and launch a free social-sharing product called Tubes. Tubes lets users share any type of digital content over the Internet, and it is more versatile than the myriad simple file-sharing and backup solutions available on the Web. Yet Tubes’ usefulness was part of our problem: The product did so many different things for so many types of users that it was hard to communicate a simple value proposition.

To gain traction, we needed to occupy a particular, existing shelf in our target audience’s mind and solve a single, specific issue that was problematic to our target group. And we needed a marketing vehicle that would reach our audience where they lived and help them spread the word for us. We decided to use YouTube as the delivery mechanism to keep costs down while leveraging the viral features of the popular platform.

I was familiar with a unique form of advertising I dubbed “Trojan-horse infotizing” (entertainment that sucks you in before you realize it is a commercial), and I hired a new type of marketing firm, French Maid TV, to produce a viral video. I had come to know French Maid TV after searching online for content made specifically for the video iPod. YouTube was littered with amateur (mostly bad) video or professional (mostly illegal) video clips. However, there was a paucity of content made expressly for this medium that had high production values, stickiness and a built-in need to share with friends.

Tim Street, the creator and producer of French Maid TV, offered a unique solution: five-minute videos starring sexy French maids demonstrating a solution to a technical problem; for example, “how to register a domain name” or “how to perform CPR.” A Hollywood producer by trade, Street hired real actresses, and he filmed and edited the French Maid TV clips with the high production values of network sitcoms. The viewers, mostly males between the ages of 18 and 35 (i.e., the target audience for Tubes), would subscribe to get these podcasts from the iTunes Music Store or search and share them with friends via YouTube. I banked on pent-up demand for a new episode of French Maid TV (the last episode had been released six months prior), and I knew that new iPhone users would be eager to try the built-in YouTube video player with content specifically made for the iPhone (our video was encoded in iPhone-friendly H.264 format, while most YouTube video was simply encoded in Flash format).

Our episode, entitled “How to Share Photos,” debuted in June 2007, and it showcased Tubes in the context of a spy caper (see Figure 3). The sexy French maids had to recover a stolen uniform, and they needed physical proof before the sexy police would take action. So the maids went on a stakeout and used Tubes to share spycam photos and videos of the perpetrator with the police. We literally seduced the audience into watching our decidedly PG-13 featurette before they had any idea it was a commercial for Tubes (see Figure 4). As a final viral hook, we presented a unique URL and encouraged viewers to visit our site and sign up for a private “tube” that contained exclusive high-resolution photos and videos that the French maids collected during the caper.

By the first weekend, our viral video had been viewed over 2 million times, luring over 50,000 visitors to our site and over 30,000 new users to try Tubes and share it with their friends. No other medium could have more economically distributed our message right to the hearts of our target users and straight onto their own iPods.

In Summary

While traditional approaches are waning in effectiveness, there are ways to reach and entice the iGeneration. You can make them an intrinsic part of your go-to-market plans like Apple’s white headphones. You can give their voices a platform like Avid’s community forums. Or you can use their own medium and RSS feeds to reach them right within their favorite hangouts, like Tubes’ You- Tube video. Whatever you do, just make sure you give them something of value and a simple way to help them spread your message.

The Kids Are All Right – Are You the Problem?

I have had the great pleasure, for the better part of the past seven years, to act like a kid, think like a kid and hang out with kids – or young adults as they like to be called – as a part of my day job. When I began working at Creative Strategies in 2000, I was tasked with trying to get inside the mind-set of the youth demographic and learn about their demands for technology products. Gaining insights into these future consumers is an increasingly desirable area of research, particularly for larger technology companies.

In this article, I’ll share just a few of my experiences from the past seven years as I sought to answer questions like, “Why is this demographic so unique from a technological point of view?” and “How do we reach this demographic with products, services and marketing in new and fresh ways?”

The Questions

I have found that when trying to get information about a demographic or group, it is important to ask the right questions. When I first began actively working to understand the Millennial mind-set, I found it was fairly easy to relate to them, given that I’m close to the upper end of the Millennial age range. Many of their demands and desires for using technology were similar to mine. But I was very interested in the “why” part of this question.

Exploring ‘Why?’

To a lot of people, the answer to “why?” seems rather obvious – this is the first generation to grow up with technology. While this is true to a degree, I would argue that they actually grew up with the idea of technology. To assume that every person under 30 in the U.S. grew up with a laptop or PC, a connection to the Internet and a TiVo box is a stretch. However, even among those without prolific access to all these technology luxuries, the vast majority in this age-group share many traits. If technology played any role in these kids’ lives as they matured, it was more because of what they understood to be possible with technology, as opposed to how technology directly impacted them. The next generation of kids, the ones who are younger than 7 today, will have much more opportunity for technology to directly impact and shape their entire lives.

I call this Millennials’ technological worldview. When products and technologies exist, the capabilities of that new technology are generally known and understood. This is primarily a result of marketing, but the rise of online community and user-generated content has introduced a new wrinkle. Today’s interactive marketing initiatives, such as viral campaigns, make it possible for anyone to clearly understand what is possible with technology – regardless of whether they actually use it or not. The iPhone is a great example. Ask any kid of any race or socioeconomic status in the U.S. about the iPhone, and there is a high probability that he doesn’t own it but he knows all about it. This is exactly what shapes this demographic’s technological worldview.

Next, let’s take a look at some successful approaches for reaching this demographic as well as some examples of products and solutions that catch Millennials’ attention.

Making the Products They Crave

I’ll address this issue first from a hardware/ software standpoint and then talk about marketing and branding.

To reach particularly the younger consumer, the design of your product and solution has to stand out. I conducted a focus group with teens to gauge their feelings about laptop brand design and was amused when several of them declared, “I wouldn’t be seen in public with that computer.” When I heard this, it emphasized something we already knew: Technology is involved in establishing social status and is regarded as a form of self-expression among young people. If the look and feel of a product does not fit their style or the image they want to portray, they won’t embrace it. Moreover, they want things personalized and customized to their unique tastes. Members of the youth demographic feel they are each individual trendsetters, and they seek to promote their perceived uniqueness. That’s one of the needs that MySpace and Facebook answer for them.

So innovation in hardware design is essential when approaching younger consumers. They must be able to say, “I want people to see me using this.” Apple does a great job at a lot of things, but it has been singularly responsible for making product design a high priority in the technology industry. Our research found a large number of kids at colleges around the country who did not own Apple computers wished they did (if they could afford one). Apple makes products that consumers are proud to carry around and be seen with. This needs to be the goal of any consumer-facing product.

The emphasis on design doesn’t end with hardware. It also includes the software and the marketing. If sites like MySpace and Facebook don’t continue to innovate and improve the online experience, the Millennials will quickly leave and go to the next place that fits their digital lifestyle. Features and functions need to not only work well, but look and feel cool as well.

The same can be said for marketing campaigns; they need to be fresh and artsy but also relevant. You need to speak to these kids about things they care about and do it in the language they want to hear. It’s tough to glean this information about Millennials, but it’s critical to anticipate their needs before they even know they have them.

Marketing to Kids Who Hate Marketing

I am continually asked by marketing folks in all different industries about how to reach a demographic that is so incredibly media and tech-savvy and, in general, resistant to commercial messages.

When it comes to media and marketing, this demographic truly has a nose for B.S. They can tell when a company is trying to sell them a line, and they do not respond well to it. At the same time, however, we have found in our work that the youth of today actually do want to interact with brands, especially the ones they like. They want to be heard and use their voices to help influence that brand to create better products for them. And, perhaps more important, they have the technology at their disposal – whether Email, blogs or discussion boards – to act on these desires and let the brands know how they feel.

Virgin Mobile, for example, has a service called Sugar Mama that embraces this fact. Virgin researched the market first and tested the idea among teens, who reported they liked the ability to join brand dialogues, but wanted to be compensated for their time. So Virgin Mobile structured the service such that users can interact with ads or brand contests in exchange for free minutes.

Marketers must also promote the experience or value of their products clearly. Too often, consumers are left asking, “What does that product or solution really do for me?” Again, Apple serves as our textbook example of how to do things right. Ads for the iPhone show its features and usefulness in practical, relevant ways. Also referred to as “scenario marketing,” these ads featured people explaining how the iPhone helped them in a real-world situation to which viewers can relate. So not only do viewers learn that the iPhone is a cool and revolutionary new piece of technology, they see that it’s also a device that can be useful in consumers’ everyday lives.

Communicating a product’s practical applications to customers’ lives should be every marketer’s goal – as well as reinforcing that message at every touch point.

It’s All About Lifestyle

Lastly, marketers need to recognize the importance of being either a lifestyle brand or fitting into a lifestyle. Millennials are very particular in their desires to have products that were designed with them in mind, so brands need to complement young consumers’ lifestyles, even if it means enabling or complementing an experience from another brand. A great example of this is Nike+, a service Nike provides as an overall health and wellness program. You can buy a simple kit that tracks your workouts, calories burned, etc., and gives you progress reports and tips for staying fit. What is notable is that you can use the service with any shoe; it doesn’t work exclusively with Nike shoes (although Nike, of course, hopes to sell more sneakers as a result too). By letting customers enjoy this service with whatever shoes they buy or own, Nike is adding value to a consumer lifestyle in an authentic way. It sets Nike apart from others in its space.

Closing Thoughts

Younger consumers want lifestyle experiences, and they want the brands they buy to share their values. Be intentional in marketing the experience of your products in ways consumers can tangibly relate to and show clearly how those products enhance and add value to people’s lives. Finally, to reach the youth demographic, strive to be an authentic lifestyle brand that’s not just selling a product but encouraging a responsible lifestyle. You will be rewarded with the loyalty of customers who want to tell others how much they like your brand.

New Communications Approaches in Marketing

The early part of the 21st century has witnessed an explosion in the number of media that marketers can employ to reach their customers. This began in the 1990s with the use of the Internet as an advertising medium. Web pages became the “new” medium, with banner and other types of similar ads (e.g., buttons, rectangles, etc.) that customers clicked in order to be sent to the advertiser’s website. Internet advertising augmented the set of communications tools that marketers had used for decades: television, radio, print (magazines, newspapers) and outdoor advertising.

These traditional media are not disappearing. According to Advertising Age, it is estimated that nearly $285 billion was spent on advertising in the U.S. in 2006, with nearly half of that on cable and national TV. [1] Radio is experiencing a new boom, with the advent of satellite and other digital formats. Outdoor ads are becoming more creative all the time, with digital technology enhancing potential interactivity with customers in urban areas. Finally, while newspapers and magazines have been the most negatively affected by new media, they are still important for business-to-business and retailing marketers, among others.

However, it is clear that major marketers are shifting their budgets today into new media categories. For example, Procter &Gamble spent $3.5 billion on “measured” advertising in 2006, which includes print, TV and other “old” media. But the company also spent $1.4 billion on “unmeasured” media, which includes events, contests and the new digital media.[2] The U.S. auto industry pulled $1 billion out of the traditional “measured” media in 2006 and put much of it into the Internet and other new media formats.

Why Are We Seeing This Shift Away From the ‘Old’ Media?

What is driving this movement toward new media? There are at least four factors commonly cited (in no particular order):

  1. The existence and improvements of new technologies at home and in the workplace. For example, the rapid penetration of digital video recorders (DVRs) that enable people to fast-forward through TV commercials means that advertisers need to seek other ways of reaching their target markets. Also, the increased sophistication of mobile devices provides marketers with another medium offering huge audience penetration. This is in addition to the rapid diffusion of broadband in the home and new devices that make it easy to watch streaming Internet content on TVs.
  2. Marketers today are talking of creating “experiences” for their customers in an attempt to differentiate their products and services from competitors. It is difficult to do this with the traditional media, which tend to be one-way communications from seller to buyer. As a result, marketers are looking for ways to interact more with their customers and vice versa. An example is Kraftfoods.com, where consumers can share recipes and cooking tips and communicate with each other directly.
  3. While advertisers still talk about the popular 18- to 34-year-old demographic, there are vast differences in the media habits of an 18-year-old compared with someone who is 30. It’s generally accepted that today’s markets are becoming fragmented, and traditional demographic breakdowns are becoming less and less useful. In particular, teenagers and early 20- somethings (often referred to as Generation Y) are less likely to watch TV and listen to the radio and more likely to get product information from friends and to communicate via text messaging on their cell phones.
  4. Marketers are more interested in “behavioral targeting”; that is, focusing on developing personalized messages that deliver real-time information where people are shopping. This is particularly easy today on the Web (where it’s possible to track “clickstreams” – the paths that people take when surfing the Web) and is becoming more prevalent in any geographical location through their personal GPS “system,” the cell phone or other mobile device.

The emergence of “alternative” media and increased competition has fragmented markets, shifted power in the transaction to buyers and resulted in less TV viewing.

These changes have impacted marketers and the “modified” mass communications model, as shown in Figure 1. Historically, marketing communications have been one-way, with marketers developing content (ads) and then choosing media (TV, radio, print) for distributing it to customers. Customers in that scenario did not have the opportunity to “talk back.” In the new media environment, customers interact with the messages and the media by blogging, clicking banner ads and setting up pages on MySpace with product recommendations. Customers also talk freely among themselves in chat rooms and on bulletin boards, in addition to communicating with companies.

These changes in the marketplace are not simply U.S. phenomena. The same trends are occurring in other countries. For example, on a trip to India, this author found that people of undergraduate age are just as familiar with and use social networking and other similar media just as frequently as their counterparts in Western countries. The same holds true for China, Singapore, Korea and Japan.

As a result, while there is still a considerable amount of experimentation and searching among these new ways of reaching customers, it is clear that many of them are here to stay and that we will witness continued expansion in the ways that companies attempt to reach their customers. At the same time, users of these new media face an array of problems in implementing and measuring communications campaigns that leverage both “old” and “new” media.

What Are the New Media?

Although there may be disagreement over what exactly comprises the set of “new” media, the following would be included on most lists:

  • Internet advertising: This includes traditional Web page ads like banners and the newer, most popular form of ads called paid search, which was popularized by Google.
  • Product placement/branded entertainment: Because consumers now have the ability to skip ads in recorded programs, more companies are looking to incorporate their brands directly into content such as TV shows and video games.
  • Social networking sites: Of all the new media, social networking sites like Facebook, MySpace, Second Life and YouTube have generated perhaps the most publicity. In fact, the growth of these sites has led to the notion that we are now in the Web 2.0 era, where user-generated content and discussions can create powerful communities that facilitate the interactions of people with common interests.
  • Blogs: A blog is a website, usually dedicated to a theme such as technology or a favorite TV show, established and maintained by an individual who offers his or her opinions and invites others to comment, thus creating a dialogue around the theme.
  • M-Commerce: Mobile commerce (mcommerce) is still in its infancy in the U.S., but it is widely used in many other countries such as the U.K., Japan, Korea and China. Marketers can send a variety of messages via cell phone to consumers who have agreed to receive such messages, termed “opt in” customers.
  • “Buzz” or viral marketing: This is also referred to as word-of-mouth (WOM) marketing. For many product categories, customers rate friends, families and professional colleagues as their main source of information when purchasing products and services. The marketer’s goal is to stimulate WOM about a brand among trusted personal sources, rather than through an unknown actor in an ad. WOM marketing actually employs a number of different media – social networking sites, special events, blogs, online communities and text messaging, among others – to help spread news about brands from personal sources.

Many companies today are using some or all of the above new media to develop targeted campaigns that reach specific segments and engage their customers more closely than traditional media can. For example, the luxury fragrance brand Chanel has used a number of the media outlined to promote its Coco Mademoiselle perfume, including:

  • Ads on websites such as the New York Times and New York magazine;
  • Search engine marketing on Google and Yahoo;
  • A special website where users can take a virtual tour of Coco Chanel’s Paris apartment;
  • Communications with bloggers, such as the Beauty Addict and Blogdorf Goodman; and
  • Email messages to bloggers and VIP customers with passwords granting special access to a new commercial featuring the actress Keira Knightly cavorting throughout Paris.

    • What Are the Major Issues Facing Marketers?

    The new media are clearly valuable additions to the tool kit marketers have used for years. The ability to engage customers through interactivity and communicate with targeted segments delivers benefits that traditional media cannot.

    However, with these increased communication capabilities comes a new set of problems that must be faced by CMOs and other senior marketing managers. The Marketing Science Institute conducted two discussion groups at conferences held in April and September 2007 to explore the major issues these senior marketing executives face and found the following areas at the top of their list:

    Metrics

    There is considerable uncertainty about what metrics to use to gauge the effectiveness of the new media. For example, what are the appropriate metrics to use with social networking sites – site visits? That is one measure, but it does not indicate how engaged a customer becomes with a brand after visiting the site and communicating with others. Brand engagement?

    In 2006, the Advertising Research Foundation surveyed a number of research firms on the definition of engagement, and there were as many different definitions as there were firms involved. Internet advertising has used clickthrough rates for many years, but today’s marketers want to measure completed purchases to gauge the effectiveness of banner and similar advertising, not just count how many people were transported to the advertiser’s website. The traditional metrics used for TV, radio and print (e.g., reach, frequency) do not work in this new environment.

    Integration

    Integrated marketing communications (IMC) prescribes that marketers should be consistent in their messaging and support of the basic brand value proposition, even while the nature of the executions varies widely.

    It is easy to see that, as the number of communications methods increases, it becomes increasingly challenging to ensure that the messaging is consistent across all the media. Moreover, marketing managers no longer control the messaging the way they used to be able to. In TV, print, outdoor and radio, the communications are one-way and controlled; with blogs, social networks, WOM marketing, etc., it is not possible to fully control what customers are saying about the brand. Therefore, a classic IMC campaign integrating one-way media with new media devices presents a control problem that did not exist before.

    Planning and Budgeting

    Developing a media budget and plan has never been more difficult. Despite vast improvements in technology in allocating money over media, the state of the art is dependent upon traditional metrics like reach and frequency. As noted earlier, these metrics are relevant for new media. But on what basis do you allocate money to creating a social networking site? Or a blog? Or WOM stimulation? The new media metrics’ equivalent of reach and frequency measurement generally do not exist.

    Therefore, the following questions must be addressed:

    • What should digital media objectives be?
    • How do you set an integrative budget with traditional and new media?
    • What is the point of diminishing marginal returns with these media?
    • Should the new media be viewed as supplementary (adding some frequency to reach goals) or complementary (delivering something different)?
    • How much money should be allocated to each medium?

    Brand Control

    In the past, there was no question that the marketing manager controlled the message and the media. TV advertising, for example, is classic one-way communications, with the manager controlling what is said about the brand and, through media purchases, how and where it’s being conveyed. “New” media do not permit that level of control. Blogs and social networking sites are largely outside of the authority of the marketing manager, both in terms of the message being delivered about the brand and what is being said in online conversations. This shift in control requires new thinking on the part of the manager about how to (or if to) use one of the newer media.

    Measurement

    Perhaps the key issue is how to measure the impact of spending in these media. While we have many years of experience with marketing-mix modeling, we have relatively little experience measuring the impact of, say, money spent on social networking sites alongside the amount spent on traditional media. More importantly, it is not clear that the sales or profit effects of TV advertising would be the same for new media. They can’t be assessed the same way. An advantage of the new media is that experimentation is relatively inexpensive and quick to evaluate. Thus, it is easy to test different Internet advertising approaches. However, the spending levels in new media are lower than traditional media, which may make standard statistical methods difficult to apply.

    The ‘Bottom Line’

    Companies that wish to communicate with their customers need to consider the impact of the rise of “new” media. Whether it is a business-to-business or business-to-consumer company, manufacturing or service, marketing managers today have to understand that their customers are using a variety of media to obtain information about products and making purchase decisions based on that information.

    While it is exciting to have expanded options, we still do not know much about how to manage them optimally. As a result, many companies today are experimenting with parts of their communications budgets to see how these media “work” in their environments. Within a few years, as marketing professionals better understand how to measure their impact, these new media will be a standard component of most media plans.

    ENDNOTES

    1. Advertising Age (2007), “Top 100 Spending up 3.1% to $105 Billion,” June 25, p. S-2.
    2. Bob Tedeschi (2007), “P.&G., the Pioneer of Mixing Soap and Drama, Adds a Web Installment,” The New York Times, October 15, p. C1.
    3. Adapted from: Donna L. Hoffman and Thomas P. Novak (1996), “Marketing in Hypermedia Computer-Mediated Environments: Conceptual Foundations,” Journal of Marketing, 60 (July), p. 53.

    Q&A: Young-Bean Song

    Throughout his career, Young-Bean Song has been at the forefront of analytic research and development in digital marketing. He currently oversees The Atlas Institute, renowned for its pioneering research in all things related to digital marketing. Young’s work also includes custom research for Atlas’ top agencies and advertisers.

    PERFORM: There’s a proliferation of advertising channels on the Internet: search, display, rich media and social networks, to name just a few. How are today’s advertisers measuring their online campaign performance across channels?

    YOUNG: When you talk about measuring the impact of digital marketing, there’s no shortage of data out there. The reality, however, is that people’s understanding of campaign performance is very limited. The industry standard that’s emerged over the last dozen years gives 100 percent credit to the last ad seen or the last click. Because of this, people’s view of what’s working and what’s not is framed in a very short period of time and only takes into account a single touch point. As this one touch point equals just one ad in one channel, clearly we have yet to measure the true impact of all digital marketing efforts. We’ve developed our Engagement Mapping model specifically to address this.

    PERFORM: Audience or brand “engagement” is of paramount importance to big brands and their agencies. What specific types of engagement can be analyzed in the online world, and why are current models inadequate?

    YOUNG: Until recently, online has been viewed as primarily a direct-response medium or channel. Brand advertisers are just now beginning to take online seriously and recognize the mainstream impact of the medium. The challenge is that, to date, they’ve had very little metrics that mattered to them, and the talk of measuring engagement has largely been theoretical. They’re looking for measures that have more to do with when, where and how consumers are engaging their brands than simply getting them to click on ads and purchase something from their websites.

    PERFORM: So how is engagement measured under this new model?

    YOUNG: We need to start with the tenet that not all ad touch points are created equal. Some ads are more engaging simply because they’re physically larger than others. Some are more engaging because their placements are more useful and relevant. There are myriad fundamental variables that can be measured in a standardized way to differentiate one impression or one interaction or one click from another.

    For example, recency: We all know that ads that are closer in proximity to the sale have more impact and relevancy. The last ad standard can be viewed as an “extreme recency model” that gives all the credit to the last ad served. But what if the user were to see a dozen ads the day they purchased? Shouldn’t each one of those ad impressions get some credit? That data is available and useful to advertisers, but it’s being completely ignored and overwritten by the last ad model. Another example is reach and frequency. Brand surveys have shown that there’s a difference between reaching users once and reaching them multiple times. There have been similar findings about the impact of different ad formats. Banner ads, rich media, Web video and text all have different branding impacts, and even behavioral measures like click-through rates differ dramatically. Each of these elements can be isolated and measured and added to the engagement map.

    PERFORM: How does a planner or analyst determine which of those factors are most important?

    YOUNG: First, you have to understand whether the campaign is focused on branding, direct response or both. When you have direct-response goals, you’re going to care more about things like recency, and you’re going to care less about things like ad size and whether ads are rich or not. Another important consideration for direct response is the purchase cycle and whether what you’re selling involves a long purchase consideration or whether it’s a short, instinctual purchase. Ringtones are not purchases that people lose sleep over, whereas things like buying a new car or getting a new home loan require more time and consideration. The higher consideration products need longer frequency windows, whereas the low-consideration products depend more on recency. All this requires strategic discussions about your business as well as quantitative ones. There are a slew of analyses that can be conducted on your historical campaigns that can help steer many of the assumptions that drive reporting.

    PERFORM: Engagement mapping seems to tie digital marketing more closely to the marketing fundamentals applied to traditional marketing. Is that a fair assessment? If so, what does that mean for digital marketers? What does it mean for more traditional marketers?

    YOUNG: Given the way online success is currently measured, we shouldn’t be surprised that traditional advertisers see the online space as a purely direct-response world. But when you start talking to traditional advertisers and chief marketing officers (CMOs) about recency and frequency, and tying all these different touch points together, it changes the conversation completely. Online marketing becomes something that’s in line with how they view the world.

    So these new standards that are emerging are not only going to be great for the people who have been investing in digital marketing for the last decade, they’re also going to help make this medium make sense to traditional advertisers. We’ll see more dollars come online as these new metrics become the new standard.

    PERFORM: Will advertisers see a significant difference in advertising results when engagement mapping is applied versus the current “last ad” model?

    YOUNG: The answer to that question depends on how much overlap and cross-channel synergy is occurring on a particular campaign. If you’re a large advertiser reaching a lot of people across multiple sites and multiple channels with high levels of frequency, you’re probably making some poor media decisions because of current reporting practices. For smaller advertisers, the change will be less dramatic but equally important from an insight perspective.

    When people are being reached across multiple sites, that’s when that credit becomes fractionalized and shared across multiple sites and placements. Engagement mapping is not done at the site level, it’s much more granular than that. By granular, I mean at the placement and creative levels. As a result, you see conversion credit shifting from one place to another quite a bit more at those more granular levels. The more granular you get, the more credit you see shifting.

    For example, in the diagram we’ve provided of an engagement map (Figure 1), Publisher A gets credit for about 5,500 conversions with the last ad model (on the left). With engagement mapping (on the right), the conversions go up by 47 percent when factors like reach, frequency, ad size and creative type are weighted and considered in the conversion process.

    PERFORM: How big a leap is it for advertisers’ agencies to embrace engagement mapping?

    YOUNG: From a workflow standpoint, there’s no additional work or cost. In fact, many advertisers today are already trying to use reach and frequency reports and intuitively give more credit to the rich media campaigns, even though they don’t appear to be performing on an ROI basis. Engagement mapping has standardized these efforts, creating a transparent, scalable system to accurately attribute conversions.

    The Empire Fights Back

    As if to make the point that Twitter does not rule the roost (yet), on Wednesday Mark Zuckerberg, the CEO of Facebook, announced that Facebook had welcomed its 200 millionth member. To mark the occasion, Facebook is partnering with 16 charitable and advocacy organizations to create and sell gifts through the Facebook gift shop. Go there now to do your good deed of the day.

    Brian Solis usefully reminds us that not only do people worldwide spend 3.5 billion minutes on Facebook every day but also – and I believe this provides a useful perspective – that it took 20,000 years for the population of the world to reach 200 million. One can not help wondering if it might have grown a little faster if it had been enabled by stone-age Facebook hook-ups.

    Twitter Explodes (isn’t anyone bored yet?)

    Comscore released their latest traffic figures for Twitter this week showing a remarkable increase in the first two months of this year from 6 million unique visitors worldwide at the end of December to over 10 million by the end of February. U.S. growth has been equally insane, up by over 1,000% from 12 months ago to over 4 million visitors.

    And we don’t even know what happened in March yet. I suspect it’s going to be huge.

    The Economy Bites. Stuff Changes.

    As companies battle to survive and/or grow in the toughest marketplace for decades, efforts to improve monetization are coming thick and fast. For publishers and advertisers this means that keeping track of what’s new and hot is becoming more difficult. Here are just a few of the new developments this week:

    Amazon has decided that it will no longer pay referral fees to Associates in the USA and Canada who send them traffic resulting from keyword bidding and other paid search. From May 1st, data feeds used these purposes will no longer be made available either.

    YouTube appears to be rolling out AdSense for Video on the professionally-produced content of almost 600 of its Content-ID partners. These ads are context-sensitive, of course, and are in addition to YouTube’s other monetization efforts like click-to-buy and paid search.

    DoubleClick has agreed to offer Adgregate Market’s transactional ad technology across its display advertising network. ShopAds incorporates e-commerce transaction capabilities directly into a display ads. This allows transactions to be completed without the visitor leaving the publisher’s site. It is widget-based and enables advertisers to pay their accepted publishers an affiliate fee in addition to paying Doubleclick. This is A Good Thing for publishers.

    Overlap Matters

    Traditional wisdom says that cross-site duplication of online advertising is bad for business. And indeed duplication has traditionally been seen as redundant – a sign of media waste. A report from your third-party ad server would highlight which sites overlapped with which other sites on your buy, and by how much. That way, you could act immediately to pare back the buy and minimize the overlap. But as more digital media research emerges, the industry is learning that overlap is actually a positive thing. As it turns out, customers who see your ads on multiple sites are your best converters.

    In other words, your target audience – the people who register on your site, fill out your lead forms and ultimately become your customers – have, for the most part, been reached across multiple sites.

    Because overlap boosts the odds of a purchase occurring, we know that a conversion is not simply the result of the last ad clicked. This means that the area of overlap represents a landscape filled with rich resources for marketers. Every engagement a user experiences contributes to the conversion event. And every touch point you share with your consumers contains information that you can use to make better media decisions.

    METHODOLOGY

    The Atlas Institute analyzed 16 advertisers who tracked their media campaigns with Atlas for the first quarter of 2007. Users were classified as either “exclusive” to indicate they were reached by a single publisher or “overlapped” to indicate they saw ads on two or more publishers. Overlap for users who converted was categorized on the same basis. Primary conversions considered for this study were sales, lead or registration confirmations. The analysis spanned more than 300 million cookies, 5 billion ads served and 1.7 million conversions. As with all research done by the Atlas Institute, the analysis eliminates the bias of cookie deletion by using only stable, long-lived cookies.

    OVERLAP RESULTS

    On average, 30 percent of users saw ads from multiple publishers, while 53 percent of users saw ads from multiple placements (Figure 1). Within a campaign, overlap among the sites ranged from 8 percent to as high as 60 percent. Placement overlap showed similar variety, ranging from 35 percent to 72 percent overlap per campaign. In addition, increased overlap dramatically drives up frequency. On average, the impressions consumed by site-overlapped cookies were 4.4 times higher than those reached on a single publisher site.

    CONVERSION OVERLAP RESULTS

    Duplication amongst converters is even more extreme than for impressions. On average, 66.7 percent of users who triggered a primary action tag saw ads from multiple sites (see Figure 2). At the placement level, 86 percent of conversions came from the overlapped group.

    Figure 3 illustrates the variability of overlap across the 16 campaigns. Higher-volume campaigns experienced significantly higher conversion overlap than smaller ones. And users reached on multiple publishers accounted for a higher share of conversions – on average representing only a third of the total users reached but two-thirds of conversions. A user reached across multiple publishers was twice as likely to convert as one reached on only a single publisher.

    What This Means for Advertisers

    It’s critical to understand the drivers of overlap. Not surprisingly, large buys show much greater overlap than small buys. Additionally, buys that advertise heavily on networks or large portals show much higher overlap than those that do not. The degree to which overlap impacts conversions will differ greatly from advertiser to advertiser, since there’s no consistent correlation between reach and conversion overlap. With that in mind, here are our recommendations for using these findings.

    Measure the overlap in every campaign. Overlap varies wildly across campaigns. Spend levels, the composition of publishers, placement choice and the usage of ad networks all have a dramatic effect on the amount of user duplication experienced. Overlap should be viewed and weighed within the context of achieving the overall campaign goals.

    Maximize overlap for branding. Brand advertisers prefer to surround their target demographic with their messaging and increase brand awareness by maximizing overlap. Identify buys that have high reach on your target demographic and then seek publishers that have high overlap with those buys. The ability to identify the exact amount of duplicated reach and conversions during campaigns provides a powerful negotiating tool with ad networks and traditional publishers.

    Manage overlap’s impact on frequency. The Atlas Institute’s Optimal Frequency study proved that increased frequency correlates with diminishing returns for direct response campaigns.[1] Since overlap drives up frequency without the advertiser being aware of it, dropping buys with high overlap and reallocating the dollars to publishers with superior exclusive reach is an easy first step to increasing efficiency. Look for publishers that do a good job exclusively reaching converters.

    Keep buys that deliver targeted reach. The ubiquity of overlap among converters highlights the shortcomings of current reporting standards, which attribute 100 percent of the conversion to the last impression or click. Making smart media-planning and creative-design decisions requires an in-depth understanding of a user’s behavior throughout the purchase cycle. Some buys do a great job of reaching your target audience but aren’t credited for conversions because they’re not the last ad seen.

    Understanding how your buys are reaching converters may provide important justification for more expensive media buys like rich media, web video and sponsorships.

    ENDNOTE

    1. Chandler-Pepelnjak and Song, “Optimal Frequency: The Impact of User Frequency on Conversion Rates,” The Atlas Institute.

    The Corporate Website: Five Strategies for Making Your Site More Relevant and Social

    Corporate marketing messages do not always reflect the market’s perception of a product or service. The practice of “push” messaging was designed to shape a brand and suppress its inevitable weaknesses. After all, even the most reliable products and services have the potential to behave in ways not anticipated by the consumer. And in the past (pre-Web) world, customer experiences were usually self-contained, disconnected and not easily shared with others. Companies were therefore able to control customer expectations and take decisive corrective measures on their own terms if something went awry.

    But in today’s connected marketplace, people outfitted with low-cost digital devices and personal publishing tools like blogs are sharing and distributing content that can have a dramatic impact on brand perception. Companies can no longer ignore the content customers create and the methods they use to spread it. The solution: companies must not only listen to their customers, they must also engage them online.

    AN EVOLVING WEB

    In 1989 Sir Tim-Berners Lee developed the information protocols and markup language necessary for sharing and transmitting pages on something he called the World Wide Web. But many people had already created communities for themselves on the Internet. From the mid-1980s on, technical enthusiasts had been using pre-Web forms of online communication to interact with each other. Bulletin boards (BBS’s), ICQ, The Well and service providers like AOL and CompuServe were the predecessors of today’s thriving social networking websites Facebook and MySpace.

    From a historical standpoint, the origins of the Web are rooted in sharing and collaboration. And the centralized Internet communities of the 1980s and ’90s are now distributed and autonomous, super-connected and armed with blogs, mobile technology, video cameras and messaging tools like Twitter. Services like YouTube and Flickr are free, and annual “pro-accounts” cost less than a month of basic cable TV service.

    The conversations are no longer technical but instead have become product-oriented. An example of this involves the popular new smartphone, the Apple iPhone. A Google search on the term iPhone hack returns blog posts and You- Tube videos on how to extend the functionality of the device. Not only is this content not produced by Apple, it ranks on the first page of the Google search results.

    Indeed, the corporate website serves a different function than it did a decade ago. At first, marketers tried to force it into a one-way monologue designed to push messaging to consumers. The early corporate website was often no more than an electronic version of a company’s print materials. Now – as the iPhone example shows – this is simply not possible.

    But although firms cannot control the “conversation,” they can certainly develop content for it. Features like events, career opportunities, company photos, and product information and demos are not static components permanently bolted to the corporate website. They are instead hosted off-site using specialized Web services like SlideShare, Flickr, Blip.TV and Upcoming. com – services that are uniquely designed for the content they host. These content items behave more like mini-campaigns or social objects that customers can use to write about and share in forums, blogs and social networking profiles (Figure 1).

    FACTORS LEADING TO THE EMERGENCE OF THE SOCIAL WEB

    To fully examine the impact of the social Web on the corporate website, it’s important to identify several of the reasons why the social Web emerged.

    Wireless Internet and mobile. Internet access is now faster, less expensive and ubiquitous. Cities like San Francisco, Philadelphia, Houston, Atlanta and Boston have either already implemented municipal WiFi programs for providing free or low-cost wireless Internet access or have plans to do so. People no longer need to be tethered to their desktop computers or laptops in order to connect with someone online.

    Consumer electronics. Low-cost digital devices like camera phones capture audio, pictures and movies, allowing for instant communication of this media between friends as well as much wider audiences. The combination of Web services and mobile technology gives users the ability to broadcast and publish to the Web from any location. For example, the Nokia N95, when combined with Qik, a Web service for broadcasting video, gives users live video streaming capability right from their cell phones.

    Personal publishing. Personal publishing is either inexpensive or, in many cases, free, and blogging platforms like WordPress, Movable Type and Live Journal are easy to use. Some of these platforms allow their developer communities to develop plug-ins, useful components that increase the functionality of the products. Today, more than 70 million weblogs are being tracked by Technorati, a search engine for blogs, with more than 120,000 being created worldwide each day.

    Web services. Services like YouTube and Flickr are free to consumers; an annual “pro account” costs less than a month of basic cable TV. The range of available Web services includes tools for messaging, keeping to-do lists, managing projects and sharing bookmarks.

    Search. For many, search engines like Google are the primary interface for interacting with the Web. Search engine results pages return a variety of content, including business websites, news, social media sites and various file types (such as video and audio).

    STRATEGIES FOR MAKING YOUR WEBSITE MORE RELEVANT

    By employing the following five strategies, you can ensure that your website will become more relevant to your users.

    Promote disclosure and transparency. Networked markets have expectations. They want access to as much information as possible about a particular product or service. In many cases (particularly in ecommerce scenarios), the buyer and seller are geographically separated. For this reason, the buyer and seller hold unequal amounts of information. Disclosure statements are tools businesses can use to bring information asymmetry into balance.

    For example, PayPerPost, a company that connects content providers like bloggers with advertisers, caused a debate in the blogosphere about the need for disclosure. The company paid bloggers to write about products without requiring them to disclose that the post was paid for in the body of the post. A search for the company name in Google returns the following search results on the first page: “PayPerPost Offers to Sell Your Soul”; “The PayPerPost Virus Spreads”; and “PayPerPost tests your ethics, &Edelman’s fake blog for Wal-Mart.” This is significant because search engines like Google are providing a permanent digital reminder of the issue for anyone searching on the company name.

    Let the network spread your content. If no one knows about your products or services, they can’t buy them or tell their friends to buy them: this is the premise for content distribution in a connected marketplace. Syndication functionality built into widgets gives users the ability to spread content quickly and efficiently.

    Hugh Macleod, a marketing strategist for South African winemaker Stormhoek, has leveraged these tools to good effect. As the writer of the blog “Gaping Void: Cartoons Written on the Back of Business Cards,” he allows readers of his blog to copy the content for noncommercial purposes as long as they give attribution and don’t alter or otherwise transform the work. As a result, his tiny cartoons, often witty and humorous, are syndicated across hundreds or perhaps even thousands of blogs via a combination of widgets and Creative Commons licensing.

    Own your words – all of them. Whatever electronic content you develop, develop it as if it were going to be seen by the outside world – even videos, blog posts and Email that are intended for internal use only. If you don’t want to see a particular piece of content spreading out over the Web, don’t create it. And if it does spread, make sure you can stand behind your words.

    For example, one of Yahoo’s internal memos (to be seen by its executive team only) referred to the company’s waning resources as being “spreadable like peanut butter.” The document was later leaked to the Wall Street Journal, which republished the memo and ran an article entitled “The Peanut Butter Manifesto.”

    Employ microchunks and permalinks. Microchunking is the practice of cutting down digital media into usable pieces. Each piece has its own address (known as a permalink), which should contain relevant keywords indicating what the content is about.

    For example, late-night talk shows lend themselves to the practice of microchunking. The entire show is typically an hour long, including a monologue, some guest appearances and even a musical performance. Instead of distributing the entire hour-long episode as a complete video, the content owner could offer each segment as its own clip with its own address, plus an RSS feed so that all future segments could be automatically downloaded.

    Tear down the walled garden. The corporate website has evolved from a static brochure to a dynamic aggregator of both on- and off-site opinions. Instead of trying to keep visitors on site, the website directs visitors to relevant conversations in blogs, comments and social networking sites. Thus, marketers have evolved into the role of trusted advisors, behaving as custodians who actually send users to other sites that might interest them. The days of “opening a new window” are behind us.

    The computer manufacturer Dell is using its community of PC enthusiasts to influence how the company rolls out new product offerings. Dell Idea Storm is a Dell-sponsored website where users submit and vote on features like the ability to order machines without preinstalled software. The fact that Dell is now selling machines with the Linux operating system is being attributed to feedback that was first discussed on the community-run website.

    Know when to say you’re sorry. When faced with major public relations incidents – for example, a wide-scale product recall – companies often have no time to mobilize the traditional press release process. In such scenarios, a chasm is likely to emerge between corporate messaging and the reality of what’s happening in the market.

    Blogs provide an appropriate business communications tool for rapidly transmitting news and updates to the market. For starters, the architecture of blogs means that their content is microchunked automatically. New posts have permalinks, and posts are assembled into categories. Users can subscribe to feeds, and the comments section is designed to enable the website owner to interact with website visitors. In addition, blog posts are well suited for embedding content from off-site Web services like PowerPoint presentations and audio and video recordings.

    JetBlue, the discount airline, was forced to cancel all fights during a snowstorm in 2007. Faced with hundreds of unsatisfied customers and a major customer relations backlash, the airline’s CEO, David G. Neeleman, decided to use YouTube to deliver his message. The company was able to move quickly, posting the video within days of the first delayed flight. Mr. Neeleman issued an apology, outlined a short-term plan for corrective action and instituted a passenger bill of rights. The video was watched more than 300,000 times, and more than 300 comments were left.

    A Google video search for “youtube + jetblue” returns not only Neeleman’s “Our Promise to You” video but also a video from a delayed passenger documenting the three days it took for him to get home. Both the customer and JetBlue were using a common space even though they weren’t directly engaged in a dialogue (Figure 2).

    Don’t underestimate your audience. Customers no longer have to wait on hold for customer service. Instead, they can post their service issues on a blog, revealing potential weaknesses in a product or service. They can escalate an issue on their own, particularly when a customer-centric super node like Consumerist.com picks up on it.

    For example, in 2006 Vincent Ferrari, who at that time was an AOL customer, wanted to cancel his account with the Internet service provider. The AOL representative did his best to encourage Ferrari to keep the service, but Ferarri, dissatisfied with the experience, posted an MP3 of the conversation to his blog. The recording quickly spread, and many former AOL customers shared similar experiences attempting to cancel their AOL accounts in the comments section of the blog post. Ultimately, more than 1,000 comments were left. Ferrari was later interviewed about the experience on NBC News’ “Today.”

    CONCLUSION

    Given the external factors that helped shape the social Web, marketers are faced with new challenges when developing relevant messages and interacting with customers. Since customers and prospects alike are outfitted with innovative and inexpensive publishing tools today, many customers are finding themselves acting as “influencers,” with their recommendations and opinions capable of reaching thousands of people. By using the strategies for engagement outlined in this paper, we hope that the connected marketplace is brought into balance, and becomes more of an ecosystem that raises the level of customer service, encourages relevant messaging and results in better products.