Previous columns in this series have argued that paid search is the most sophisticated current version of a true direct response "machine," and that companies typically under-invest because they fail to see long-term predictable profit potential inherent in the "marketing asset."
Meanwhile, under the "chaos scenario" of rapid deterioration in traditional media and advertising budgets, it's tempting to try to port old media models uncritically into a digital form. That won't work – at least not without old-fashioned arm-twisting and elbow-bending. Frankly, it's ironic that a significant portion of Google's future is tied to old-media-comes-online advertising that's more representative of a Yahoo-like vision. Specifically: anyone who deals with Google now knows that its reps can't repeat the phrase "YouTube home page takeover" often enough. Is this really the future of media, or its past? Of course, brands will buy some of this media, but it will be interesting to watch price trends now that everyone's being conditioned to measure response.
A variety of formats beyond search could hit the jackpot in the future. Some may have legs because they allow for extreme and/or measurable personalization and targeting, while somehow keeping in consumers' good books from a "creep factor" and "don't bug me" standpoint, as search does. Facebook is the most commonly cited example. For some reason, people allow Facebook deeply into their lives – for now. That seems to be a prerequisite for expecting people to pay attention to commercial messages.
Bob Garfield calls this the "Listenomics Age." In typically modest fashion, he calls it "the future of everything." In this age, he writes in "The Chaos Scenario," "survival means institutionalizing dialogue with all of your potential constituencies and sometimes total strangers for the purpose of market research, product development, customer relationships, corporate image and transactions themselves."
Of all of these, he prioritizes the last, "because when you sell goods or services, you get money."
In short, if you optimize highly targeted digital direct response campaigns and conversations, and other aspects of related buy cycle functions, you are the future.
It's immensely troubling to some actors that a whole bunch of the "old stuff" might be going away. Hence a steady flow of name-calling and rationalizations.
Randy Rothenberg, president of the Interactive Advertising Bureau, claims that websites have been "based on the direct-response foundation, infus[ing] the environment with ugliness and clutter." The fact that direct response "has no institutional concern for aesthetic, regardless of what the long-term effect on the brand is," seems to point easily to a remedy: better online ads, a creative revolution, and more impressive TV-like websites and interactive geegaws. Thank heavens, right? Transactional plodding, letting the data ask the questions and seek the answers…is so boring.
This flies in the face of what's driving the current chaos, though. Consumers now avoid advertising. Only in advertising agency fantasies do they regularly and consistently seek it out because it's so "creative."
Yes, there are notable exceptions. Anecdotes about the integrated marketing juggernaut that is the Old Spice Guy are cute, but only serve to prove the point that old media and old agencies will spend just about any amount to temporarily revive certain dead old brands, as a case study in their apparent effectiveness. The resulting social media chatter is great window-dressing, but don't be fooled; watch the aggregate numbers across the whole advertising industry. If this stuff really worked, you could sell foot powder and baking soda with a shirtless model. In fact, all media would be all shirtless, all the time.
In fact, there's no inherent contradiction between creating beauty and fantasy in your brand, and eliminating one specific manifestation of "aesthetic" (short, expensive-to-create films broadcast at great expense to large numbers of people who'd maybe rather not watch). In reality, traditional advertising might be considered an extremely inefficient form of customer acquisition (and a nonstarter at relationship building and dialogue) begging to be replaced by something else. There are hundreds of other ways to build creative and aesthetic touchpoints into your encounters with prospects and customers. Start with catalogues, retail stores, well-produced video content from people who work at the company, product design, Web apps and environments for existing customers promoted through e-mail, social media, and traditional media, and more.
Permission Still Matters
The key to unlocking all of this? It's still acquiring customers, through efficient means, so you have permission: an appropriately wide, appropriately targeted, and cost-effective footprint for attempts to drive recurring transactions.
Permission used to mean opt-in e-mail. Now the means of connection are more diffused: it's also Twitter followers, Facebook communities, RSS subscribers, and much more. The most explicit form of permission, though, is being on a customer list.
Today, we're seeing more sophisticated probabilistic data driving direct marketing. When I say that I expect the value of the keyword "pewter duck" to be $0.68 at 2:00 a.m. in Ohio, I'm marketing based on probabilities, informed by past and related data. With the advent of technology like Google's Conversion Optimizer and similar marketing algorithms, many other variables go into the mix – often inside a black box.
"Creep Factor" Creep
But where will consumers draw the line? It's a lot easier than it once was to hit up against people's creep radar. Spyware and scumware were once nearly mainstream forms of advertising, but now consumers are beginning to understand the nuances of privacy. Search and navigation retargeting seem relatively innocuous to me – if I once searched for "2011 land rover" or almost bought a DeWalt nail gun before abandoning the cart, advertisers can take that information and show me ads that are more relevant and more likely to convert than the garden variety ad. But as reported recently in The New York Times, some consumers perceive search retargeting as "creepy" because the ads are "following you around." Regardless, the power of data will eventually win out, even if targeting methodologies might have to take twists and turns to avoid major fallout.
Call it synthetic direct communications, if you will, or anonymous personalization. This wild-card proxy for permission doesn't require any type of action or explicit permission other than accepting generally accepted privacy policies in your digital life. You don't even have to be an e-mail address, or an identifiable person with a past history, just simply someone performing actions that are statistically similar to others who have exhibited buying behavior. You're an IP address, at best. A "user session," hopefully. And one that types a search query, ideally. And past creepy, you've allowed cookies into your life that have tracked nearly every ad you've seen and responded to in the past year or more. Not that there's anything wrong with that. That's simply "statistically useful behavior" to the marketer; for smaller companies, it's impossible to gather without a market-maker like Google (or other behemoth) facilitating the process.
What Should Companies Do?
So, what will work best for your company? How can you build your own private "database of intentions" so companies like Google, Amazon, and your competitors don't hoard all the data-mining fun?
In this four-part series, have I effectively made the claim that direct response marketing (especially through channels like search, not thought by some to be effective means of building a business, but simply "demand fulfilment") and the building of private silos of customers, permission, and marketing response data are moving to displace what was previously thought to be an effective means of demand creation, namely big brand advertising?
Well, it doesn't matter what I say. We're in a chaos scenario. Companies that make the right moves will emerge much stronger than those that invest in wasteful tributes to the past.
Amazingly, considering all the advertising abuse they've taken online as well as off, consumers haven't fled all commercial messages. In particular, they've embraced those served with search results. And in cases where consumers seem wishy-washy, search engines behave in a proactive, ameliorative fashion – they typically replace low-CTR ads with higher-CTR ones. They're even willing to show white space against many search queries, just to maintain user loyalty to the medium.
Prophet of old media doom Garfield concedes that "the double-edged sword of search is that it captures shoppers in the process of shopping, but does little to build brand awareness for the general population." But that argument isn't to be mistaken as an argument in favor of the old mass broadcast models: "On the other hand, building brand awareness for the general population is wildly inefficient."
Traditional ad agencies and old-media-inspired ad networks have done a poor job of helping companies navigate this sea change. Little wonder: it isn't in their DNA.
Companies like Google, Facebook, Omniture, Acquisio, Trade Desk, and Clickable are at the forefront of the new order; so are e-commerce advertisers, from giants like Zappos to start-up hopefuls like Greeno Bambino. As Garfield puts it, "in order to exploit the Internet's phenomenal capacity for targeting and optimizing messages in ads and on websites, advertisers will have to invest vast resources in information infrastructure – hardware, software, and flesh-and-bloodware – to crunch the vast amount of data that will be pouring in every second of every day."
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Goodman is founder and President of Toronto-based Page Zero Media, a full-service marketing agency founded in 2000. Page Zero focuses on paid search campaigns as well as a variety of custom digital marketing programs. Clients include Direct Energy, Canon, MIT, BLR, and a host of others. He is also co-founder of Traffick.com, an award-winning industry commentary site; author of Winning Results with Google AdWords (McGraw-Hill, 2nd ed., 2008); and frequently quoted in the business press. In recent years he has acted as program chair for the SES Toronto conference and all told, has spoken or moderated at countless SES events since 2002. His spare time eccentricities include rollerblading without kneepads and naming his Japanese maples. Also in his spare time, he co-founded HomeStars, a consumer review site with aspirations to become "the TripAdvisor for home improvement." He lives in Toronto with his wife Carolyn.
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