Create and Satisfy Demand: Two Tools to Complete the Marketing Loop Plus the Advertising Equation

Today Steve Mulder gave us “Create and Satisfy Demand: Two Tools to Complete the Marketing Loop,”, an academic piece in iMediaConnection that well-defines the fundamentals between demographic segmentation and behavioral targeting or what he referred to as “goal targeting.”


Steve talks about customer segmentation based on demographic and psychographic profiling.  Of course you can push this farther and consider buying habits, product preferences and other known store-interaction behaviors which can be categorized.  Anything you know about your customers can be grouped and segmented.  So while Steve talks about the anonymous segments, when we’re talking about customers we can dive deeper and look at the information that our eCRM systems can capture and that our site-side analytics can measure.  If I have a customer who purchases monthly, like electronics (i.e., Target.com) and spends on average over $100 per transaction, I can drop that user in a bucket with other like-demographic customers.  The segmentation possibilities go much deeper.


This is not to suggest paralysis of analysis by creating too many segments, however if you are a Target.com, a BestBuy or other big box retailer, you have many, many customers and you have the ability to create 10-20-30 customer segment groups.  If you are an e-tailor like LLBean, or Amazon or Overstock.com, you can create these segments.


Steve talks about Personas, as a defined “who or what,” meaning “…Why does this product or service make sense to your target audience? Why do the people represented in this audience need it, and why will they use it? How should we structure and design it to satisfy how people will be using it? How do we make sure the site gives people the experience they need and the business results we need?” 


In Steve’s discussion, Personas are the other side of the equation, the behaviors that you target or goals.  This article focuses on web site content placement which is vital to the emarketing equation.  How you react to your customers when they are identified on your site will directly correlate to your recurring revenue potential.  I have discussed the integration of CMS and dynamic content many times before.


When someone logs-on an identifies themselves, you tap into eCRM and you can tap into the segment relationship and/or bucket that user belongs to.  They you can target them with content and messages to promote recurring revenue opportunities.


External marketing, such as email marketing can tap into these buckets as well with customer segment targeting as well.


But a topic we have talked about many times before is how you can recognize and target someone BEFORE they come to your site and identify themselves.  Well, what about when they come to your site and don’t login.  Using cookies enables you to recognize someone and still tap into your customer segment models right?  So you don’t have to wait until they login to identify them.


That takes care of returning customers.  What about someone who blows out their cookie?  Well, as soon as they login you can re-recognize them and re-cookie them right?  Cool.


What about someone new?  They click on an ad and come to your site, you grab the click-thru URL and interpret the source and put that into the cookie as a prospect and let CMS take over until they create an account.  Cool.  Once they become a customer, segment membership begins and more data can be written to the cookie for future recognition and content targeting – more CMS.  CMS is Content Management System btw.


Then there is the external recognition of your customers – what about the topic of choice with regard to advertising.  If you are spending time creating customer segments and you are spending time creating goals for CMS targeting.  Why wouldn’t you leverage that knowledge to benefit from being able to recognize your customers when you advertise online as well?  If you can recognize your customers while you advertise online, you can extend your goal-oriented messages, drive recurring revenue opportunities and motivate your customers to return.  When they do, your site-side BT efforts can take over as Steve discusses and your drive home those sales opportunities.


With both of these efforts in place.  Taking the time to create and analyze your customers to create segments and creating targeting goals that affect both internal, site-side and external, advertising-side efforts you will gain huge insight into what works.  The knowledge gained will improve your ability to make better decisions about your future marketing efforts, both site-side and external.


Reactionary with Insight

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Behavioral Targeting, What Ethics?

Earlier this month, Doug Wintz gave us an inspiring article in iMediaConnection.  The Ethics of Behavioral Targeting offers a glimpse into what behavioral targeting could be like in the offline future.  Transfixing our imaginations into the likeness of the futuristic worlds painted by author Philip Dick, Wintz helps us to question interactive advertising beyond the banner.  But there is a big leap between the 728×90 banner and the beams of light that could be reading our retina in the shopping malls. 


Several years ago people screamed about the use of cookies: “VIOLATION OF PERSONAL PRIVACY!”  The industry cried that we must educate the population so that they realize that cookies are not bad, spyware is bad.  Antispyware came out, and adware came out.  People now feel protected from persistent spyware and third-party cookies now get deleted 45% of the time.  The dust cleared from the cookie fight and yet cookies are still in common practice.  The funny part is that people still don’t understand cookies.  But the industry has moved on; it has stopped trying to educate and now the next crisis has moved to the forefront – behavioral targeting.


BT still involves the use of cookies but the technology is less of the issue.  It is the overall concept of tracking and oversight that people care about.  Once again there are those in the industry that are trying to educate, but then there are many of us that know that you can’t educate people coming from a position of fear.  Moreover, once politicians get involved it’s about swaying popular opinion and not about providing rational explanations.  Remember that some people get charged by the fight while others stay in the background, continuing to develop and position their cards so that they are ready when the dust clears.  A new crisis always moves to the forefront to replace the existing one, right?  Where will you be when that happens?  Battle scared or primed?


Is it ethical to behaviorally target?  Is the internet really free?  Is it ethical to target consumer behaviors like catalogers do?  Doug has a fair argument when he says we probably won’t even care by the time the technology is mainstream.  Right now there is kickback on behavioral targeting, but that doesn’t stop publishers and networks from offering it or from advertisers from buying it.


So where are the ethical lines in all of this?  Publishers use site-side analytics to track your patterned behavior while you are on their site.  It is their site.  You use much of it for free.  So is it ethical?  Is it okay for Safeway or Kroger to track your shopping habits in the supermarket?  You get discounts for using that shopper’s card that also tracks your behavior.  What about Amazon keeping track of your book-buying preferences?  You get recommendations right?  You get benefits in return for providing information about yourself, even online.  So where is the difference between what we have come to accept offline and what we protest online?


Why do people get so crazy about the web?  The point of the whole thing is to put advertisements that are more relevant in front of you.  Contextual advertising has done a great job at this and nobody seems to complain about that.  In fact a lot of people don’t even know that the links along the side of the Google and Yahoo pages are paid listings, nor would they necessarily care since they are usually relevant links that often lead to qualified destinations.  Relevance.  If Behavioral targeting has the ability to present a user with advertisements that are relevant, is there still an ethical violation? 


P-ersonal I-dentifiable I-nformation (PII) is the red line that can’t be crossed and yet it is crossed all the time in the offline realm.  I think that in the end it’s not a question of ethics.  It’s a question of fear.  The futuristic movies like the Minority Report scare people.  They don’t get it and other people take advantage of it to promote their own agendas (like politicians looking for platforms).


 Customer re-targeting introduces the ability to recognize customers – not anonymous individuals – anywhere on the web in real-time using first party ad serving.  Advertisers can recognize their existing customers, not based on events but based on customer profiles.  This is identical to what already goes on in the offline world.  A different message can be positioned to a customer than to a non-customer based on customer profiles – not based on event-based behaviors.  Is this a violation of privacy?  We can go around and around on this one, like we did with the cookie.  And it is the cookie battle that leads me to believe that the smoke will clear before we settle it.  When the next technical invasion comes to the forefront it too will shadow this one.  Maybe it’ll be iTV, which will be more invasive and wider-spread when it hits people while they are relaxing in their living rooms! 


You can go down the ethical rabbit hole if you want with behavioral targeting, just like you can jump into the political debate or stand up on the soap box and try to educate.  But frankly, people will continue to develop and drive forward with anonymous event-based targeting, customer re-targeting, site-side analytics and first party applications that empower advertisers to message to users with the most relevant information, advertisements and content.  Operating as if the dust will clear as oppose to getting caught up in the fight makes more sense.  Helping the web to become an increasingly more efficient use of people’s time with behavioral targeting techniques is not a violation of privacy, it is a provision of relevance.


Reactionary with Insight

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Google Tests Pay-Per-Action Ads

On Tuesday, Google announced the wider rollout of their beta Pay-Per-Action advertising program, originally launched on a limited based in June 2006.  Available only in the United States, CPA on Google will enable AdSense publishers to choose from a selection of ads and will have more flexibility in promoting the ads, according to Google. 


When C|Net reported on the original program last June, they stated: “Because they’ll be tied to a purchase, the new ads are expected to be auctioned at higher prices than cost-per-click ads, which costs advertisers every time an ad is clicked on, despite whether it leads to a sale.”   


Pay-per-action advertising is a new pricing model for Google that will allow advertisers to pay only for completed actions that such as a lead, a sale or a page view after a user has clicked on an ad.  The advertiser will define the action, set up conversion tracking and create ads that AdSense publishers can select to run on their sites.  Smartly, Google is including view-thru conversions with a timestamp of up to 30-days for the post-click events so any action that results following the impression within 30-days will be credited back to the advertisement.


Over the last couple of weeks, Google has been taking incremental, but significant steps towards engaging advertisers with programs that recognize their need to be more flexible and receptive to the demands of the market.  There have been mounting complaints about Google’s inflexibilities.  Pricing has been increasing, technology integration has been restrictive, click-fraud was a huge issue, Analytics counts are well below other metric measurements and so on.


In January 2007, President of Interactive Marketing at AKQA Andrew O’Dell was quoted by ClickZ as saying: “We can’t use [Google’s] networks if they don’t allow third party serving … It’s not worth trying to maintain a separate universe. We’re not going to do a buy that’s got 95 percent of our inventory running on an ad server and the other 5 percent sitting there as an outlier.”


Agencies with significant buying power like AKQA have been vocal about how difficult it is to work with Google.  David Smith of MediaSmith was quoted in the same ClickZ article as saying: “We’d love to have them [as partners for branding campaigns], but they’re going to have to listen to what the agency wants, not what they’re trying to sell.”


Google has finally started to listen it, or so it seems.  After all, Andrew O’Dell is not alone when he said: “I think I could increase my Google spend in total [by a factor of two] if their network was competitive.”


In addition, Google must be feeling the pressure of MSN and Yahoo! – especially MSN.  It has been a while since MSN has done anything of significance, but for the first time their share of market has increased.  Granted it was one percentage point, but they went from 10% to 11% last month and Vista and Office 2007 Desktop Search has a lot to do with it.  Finally Microsoft has found its way to the desktop for search and it has done so with what appears to be a useful and attractive tool.  I have the search tool on my desktop and – aside from the hours it took to index my computer – it really flies now.  I found that not only does it find things within my computer really well, but it does a pretty good job at commanding my search needs online.  I still have my Google search bar on my browser which I am well trained to use, but if my browser is not open, I will give the Windows Search bar a shot – and that is a new behavior, which MSN is counting on.


So Google is on the move, again.  They are taking steps to increase their stride.  First it was banner ads, now we’re talking about video.  And now we have CPA.  Google is creating destination sites, and beginning the process of creating its own content and will soon have the command of its own communities (think Gmail, YouTube).  They offer analytics with Urchin and it is not limited to Google campaigns but rather to any advertising initiatives.  Granted it’s not the best measurement tool, but it works for the small-to-mid size advertiser and there is the long-tail.


So what’s next.  Are they going to step up and answer Andrew O’Dell’s call?  Do they recognize the onslaught of media dollars waiting to flow in with banner advertising when an ad server can be used to manage campaigns on Google?  They have brought the CPM model to the table with banner ads.  They have search integration with their API for Adwords which has been taken advantage of by most of the major ad servers already.  All they need to do is step forward and allow ad servers to pump the banner campaigns through.  Now that CPA is here, it would not be much of a bigger step to allow those campaigns to report through as well.


To me it is clear that slowly, as their foothold continues to stretch and they reach further out into more areas of the online advertising arena, they are beginning to recognize that they have to open some doors of the vault just a crack in order to make it a little easier for companies to work with them.  Maybe they will let a little more light into the room, slowly.  Hopefully so.  But the signs of some listening are there.


Reactionary with Insight

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Marketing Groups: Closing the Great Divide

Ted Shergalis is chief product officer and founder of [x+1], and he contributed Marketing Groups: Closing the Great Divide to iMediaConnection this morning.


Ted’s experience in working with marketers should be significant and therefore I would guess has relevance to the topic.  What concerns me, however, is the generalization with which he describes the silo organizational structure between his clients’ external marketing (media buying and advertising) and customer marketing (web site management, etc.).  Not only does Ted confirm that the teams working on these two functions are usually physically separated but so too are the technologies they use.


External online efforts – media planning, buying, ad serving, email marketing, mobile, search and analytics – are all operating independently from site-side efforts –  like landing page optimization, content management, eCRM, site analytics. 


First, let’s gain a little perspective here.  Ted is from [X+1].  Their whole gig is about optimizing conversions and customer penetration within a site.  Furthermore, they also tout their skills at connecting these two silos together.  Their Media+1 and Site+1 products connect Ad Serving and Site-Side optimization together like an adhesive to offer marketers a cohesive view from the external efforts through to the internal efforts.


I am not going to dive into those two products here much.  Media+1 is basically the former Poindexter ad server, a tier-two player with a couple of marquee clients that has been folded into their primary core competency which is what the Site+1 product is all about.  The rebranding of the company from Poindexter to [x+1] has enabled them to carve this great niche in the industry and now they partner with tier-1 ad servers like DoubleClick when strong ad serving is required or when major clients are on the table.


Anyway, I know I bitch and moan when people get on iMediaConnection and self-promote, so I can’t criticize ted here for not mentioning [x+1], but I like it when people also give us some direction.  In other words my narrow rules say its okay to mention your company so long as you do it in context with other companies as well.  Serve as a resource and not a self-promotional artist.  In this case, however, maybe Ted didn’t feel he could come up with anyone else that could do it like [x+1] J


One thing that comes to mind, however, when I read his characterization of the outward and inward marketing silos is how the head of marketing in those organizations must be failing.  Online is a component of marketing.  If the org is big enough to have a head of interactive – s/he is failing.  If it is not that big and it has a head of marketing alone, then s/he must be failing.  I say this because in this day and age there are too many different ways to pull these two efforts together and if they are not talking to each other the problems are obvious, the tension will be thick as butter and the questions that can’t be answered about the performance of the organization will be more significant than the performance that can be measured.  Intelligence will recognize that there is a major problem.  So I wonder either, (a) if Ted has really screwed-up clients or (b) he is using his worst clients as examples in his articles or, (c) the type of opportunities that I am encountering represent more of what is out there than what is not.


Is it really that screwed up on the back end of the curve?


External online marketing needs to tag web sites and calculate data.  So internal marketing has to get curious about what is going on.  Internal marketing is using analytics to track internal behavioral and CMS to maximize conversions.  A Director-level person who oversees these two units has to be gathering data from both groups and must begin to get curious about the relationships between the two – this would represent common sense intelligence.  If not, then stupid people are running a lot of marketing organizations.  Maybe that is a truth.  But I am meeting a lot of intelligent people.  I work on the front of the curve too … so maybe I work with smarter people … but I think our industry as a whole is comprised of people on the top and front-end of the curve.  I think that a lot of people struggle with these problems, but I also think that the technologies are in place or are being put in place to take maximize.  As always, time is the limited resource.


Anyway, placing these two efforts together is just common sense.  This is why behavioral targeting has become so popular.  This is why lead generation advertising is becoming so popular.  This is why landing-page A/B testing with companies like CoreMetrics is gaining so much attention.  None of these initiatives can happen without internal marketing being at least engaged.


First party ad serving requires the marriage of internal and external marketing.  Maybe that is part of what is so unique about where my projects have taken me.  I sit in meetings with people who know each other, and look at each other and we work together to figure out ownership.  eCRM or site-side analytics will set first party cookies for external marketing to target with the ad server.  Media Planning and buying will set strategy based on the customer profiles that internal marketing establishes.  Creative is built accordingly.  Ad serving targets new and existing customers in real-time.  Leads and prospects and existing customers are all driven back to the site(s).  Internal web site management receives users and pushes them into different directions based on cookie variables and eCRM records transactional patterns while site analytics records behavioral patterns and sets new cookies for future targeting.  New customer profiles are created and new segments are built for future re-targeting and the cycle continues.  With first party ad serving and the marriage of first party ad serving and site side analytics, you have the integration of internal and external marketing within an advertiser.  Everyone works together with a product like DirectServe™ and WebSideStory.


But there are other ways to do this too.  If internal and external are coordinated by a single leadership role, they should be made aware of the benefits of each other’s efforts.  And in my experience they usually are.  Ted could have shed some light on how different technologies can be used to do this in his article, because I think he did a good job at challenging us to question whether our organizations are functioning properly or not.  If you are falling prey to the problems ted describes, what do you do about it?  I guess you can call Ted.  But first you should have some idea as to how you should diagnose your problems.  Then you should have some directive as to who you should call, in addition to Ted, for some insight.  You can’t get all of that from one article I know.  But I’ve given you some thoughts.


Evaluate your chain of command.  If you are the head of the organization, challenge your people to construct an information flow chart to see what they each can capture and then line the two groups up and see where they connect.  Ultimately this is about the acquisition of new leads, conversions and the growth of customers. 


Your external marketing team needs to be empowered to attack the market with tools that will enable them to generate new leads and re-target existing customers simultaneously, since both will exist within any pool (website) upon which they advertise. 


Internal marketing needs to have the capacity to capture both audiences when they come in, continue the messaging strategy, leverage CMS to position the appropriate content and leverage the knowledge gained by the ad serving process (what worked and what did not work) to maximize the conversion rates on prospects and the recurring revenue opportunities on existing customers. 


Finally internal marketing needs to convert the knowledge it gains through its conversion processes into media decision-making recommendations for external marketing so that the cycle can continue specifically with regard to re-targeting existing customers.


Reactionary with insight

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Congressional Spyware Legislation

Yesterday, the IAB presented congress with an appeal to reconsider “spyware” legislation that would potentially hinder e-commerce and information exchange online.  Dave Morgan, who is the founder and chairman of TACODA and chairman of the IAB Public Policy Council was quoted by Online Media Daily as telling congress that “…the proposed “Spyware” legislation could curtail consumer choice and hinder a key economic engine to Web growth.” 


Obviously, as the founder of a behavioral targeting company whose entire foundation technical foundation is based on cookies, Dave is proactively concerned about this potential legislation.  And he should be.  This is a classic example of educating the audience, in this case congress.  In the past I have advocated against wasting too much time educating the masses, however, in this case I believe it to be a worthy fight.  Obviously we can’t have congress confusing the relevant advertising cookie with malicious spyware. 


So Dave and the IAB are charging forward in effort to make that clarification in front of this new congress starting with the hiring of its first lobbyist, Mike Zaneis.  Zaneis, is the former director of congressional and public affairs for the U.S. Chamber of Commerce, a trade group representing 3 million businesses.  He fought to prevent lawmakers from stepping in to legislate in preference for getting industry groups to come together and fix data protection issues pertaining to credit card fraud.  He has the moxy and experience to help generate the support in congress, or at least educate key influencers in congress about the difference between beneficial technologies and malicious ones.


Something that I wonder about is where are the first party cookie beneficiaries in all of this?  Where are the site analytic companies and the retailers?  If the cookie gets legislated, they will not be protected from the restrictions that come with it.  A cookie will likely be generally classified as some sort of technology that is involuntarily placed on a user’s computer without their knowledge.  That means no more site-side analytics even with first party cookies (WebSideStory and now WebTrends).  That also means retailer cookies, bank cookies, stick portfolio cookies.  Anyone other than ad servers and networks who use their own domain to track, measure and target will likewise be impacted.


So why hasn’t the IAB engaged these groups as well.  A coalition of the retail industry would have a HUGE impact.  The involvement of financial institutions, major magnitude.  Bring in the horsepower of Yahoo!, MSN and AOL and their cookie-based tracking and you have mega-lobbyists at the door of congress.  The IAB doesn’t need to do this alone.  And Gavin O’Malley of MediaPost is right, this is a great time to be educating a new receptive congress.

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