Category: Behavioral Targeting

We’re firm believers in the power of utilizing behavioral data to solve business problems. With the availability of reliable quantitative data, goals like marketing optimization and efficiency become a reality. Under the old database marketing paradigm, life was straightforward: Every marketing dollar was tracked against resulting customer-specific, transactional metrics. Inquiries, registrations, purchases, and profit could all be tied to addressable prospects and customers, and the cost of soliciting those actions could be calculated with precision. What we learned about consumer behavior informed our efforts, and the outcome was, in most cases, measurable improvement in our marketing efficiency over time.

But recently, the avalanche of new online data has threatened to derail us, cluttering our minds and our marketing dashboards with an ever-expanding array of disparate tables and graphs. A significant amount of time and effort is invested in compiling and reporting on these new metrics. But are all of them really advancing us toward our goal? Impressions, clicks, page views—where did the customers and sales go?

Author and business consultant Eric Ries wrote a post for the Harvard Business Review titled Entrepreneurs Beware of Vanity Metrics that really gets to the heart of the matter.  In it, he presents a discussion about Actionable metrics and their nemesis: Vanity metrics.  Whether you are a Start-up or Big Company, we think his observations apply to the multichannel marketing arena.  We agree with him that metrics should be:

Actionable—If you don’t believe it or you can’t repeat it, you can’t be confident in your decisions.
Accessible—To support effective business decision-making, reports must be understandable, available, and timely.
Auditable—Metrics must be credible, with no loss of integrity between the individual customers and atomic activities that roll up into summary numbers that appear in reports.

The Web brings us a lot of instant gratification and a mountain of data. As Mr. Ries accurately points out, people have a tendency to believe (and take credit for) positive metrics while they excuse (and deflect responsibility for) negative ones.  The most successful organizations will be those with the objectivity to discriminate between the actionable and the feel-good data. In other words, let’s be picky about what we measure and separate metrics that capture the essence of consumer behavior from metrics that reflect our own marketing department’s output.  If we maintain our focus and believe in our metrics—positive and negative—our business decision-making will be cheaper, clearer, and better.

Dan Ariely, behavioral economist and author of Predictably Irrational, made a highly enlightening and entertaining presentation on the flawed nature of the human decision making process. Using examples ranging from magazine subscriptions to organ donor registration forms, Ariely shows how the wording, selection, and arrangement of choices can have a massive influence on the outcome:

Raise your hand if you think analyzing response data to measure the effectiveness of online advertising (or any DM channel) is a new idea.

Nobody?

That’s what we thought.

Now raise your hand if you think this idea has been around in some shape or form since, well, let’s just call it A REALLY LONG TIME.

There we go, all of our loyal readers, with their hands raised high.

This article, titled “Put Ad on Web. Count Clicks. Revise”, was published just a few days ago in the New York Times (yes, we double checked, ‘cos we too thought maybe it had been written ten years ago) posits that advertisers and their agencies are only just now “putting numbers to an industry that’s never had numbers before.” That is an actual quote from Darren Herman, president of Varick Media Management located in Manhattan.

More on that topic, from the article:

Mr. Herman had run 27 ads on the Web for his client Vespa, the scooter company. Some were rectangular, some square. And the text varied: One tagline said, “Smart looks. Smarter purchase,” and displayed a $0 down, 0 percent interest offer. Another read, “Pure fun. And function,” and promoted a new T-Shirt.

While we all know that this is called a test plan, where one tests formats, offers, headlines, etc., we are astonished that this concept is considered new to anyone in marketing.

By the way, we don’t want to pick on Mr. Herman, or his clients, just because they had the misfortune of being quoted in this article, so please if you’re reading this, don’t take it personally.

The article leaves us with this thought:

Don’t assume that your clients, your colleagues, your research partners and vendors, your boss, or your direct reports are familiar with the age-old concept of measuring marketing effectiveness. Assume that it is your job to be the analytics evangelist! Whether you are an account executive, a creative, or a strategist your first question should be “how are we going to measure the success of the marketing?”

If you want some inspiration, please visit the excellent site of web analyst extraordinaire Avinash Kaushik. You will not only get fired up, you will also understand why I have a web-crush on him.

Last week we wrote about the impending death of the “spray-n-pray” approach to direct mail. The upshot? Mining data for business intelligence will allow us direct marketers to deliver relevant, better targeted, higher value direct mail campaigns. Versus, you know, spray-n-pray.

This week, we thought we’d highlight some of the ways that we can better target our online spending. Timely, because today Google announced that they’re testing new behavioral targeting techniques:

The company today announced it will launch a beta test of “interest-based targeting,” which lets advertisers target web users based on where they’ve been surfing across the internet. If a user is reading sports articles on NYTimes.com and also visiting CBSSports.com, for example, it could get lumped into a sports audience bucket, which advertisers can target.

Google will also let advertisers “re-market” web users across its content network, so if a person visits an advertiser’s site or abandons some products in an online shopping cart, that advertiser can find that consumer again on the web and serve him or her ads.

Hey, we’re all for any technology or technique that leverages behavioral data to target messaging. This approach cuts down on waste and increases response and sales.

Delivers nicely on the mantra of 2009: Do more with less.

In an article published on MarketingProfs, Michael Barr describes how Hyundai has successfully stayed afloat in a sinking industry. From the source:

Hyundai discovered that as the market changed so did their segmentation. Significant numbers of prospects were no longer focusing on gas mileage performance, and they weren’t necessarily looking for more discounts…Hyundai determined that the fear of losing one’s job was a high barrier preventing prospective buyers from purchasing a car.

After defining the segment, the company developed and aligned sales and marketing strategies to reach this new segment. By targeting prospects concerned about job security, Hyundai broadened its audience and increased the number of customers who considered its cars.

Hyundai was one of a few auto makers that posted an increase in sales in January. They took the shakey economy head-on and won. Read the full article here.

If you’re a regular reader of our blog, then you know that we are not a big proponent of the spray-n-pray approach to direct marketing. Especially when it comes to direct mail, which is more expensive than digital direct marketing. We believe that a rigorous session with behavioral data should guide marketers towards targeting their spending against highest potential segments. Segmentation of almost any kind is better than a mass mailing. Makes sense, right? You’d be surprised.

We’ve posted on this topic here and here and here and here. Just to cite a few

Well thanks to the “triple assault” of the recession, rising postage rates and growing marketer preference for low-cost digital communications, the direct mail channel is finally being reimagined by more marketers as a medium used more for precise targeting than saturated mailing. That’s the scoop straight from Winterberry Group’s white paper entitled “A Channel in Transformation: Vertical Market Trends in Direct Mail 2009”.

The paper highlights the bad news for direct mail (spending declined in 2008, falling 3.0%), and also the good news – lower volume, better targeted, higher value direct mail campaigns. You can download the white paper here. Spray-n-Pray, may you rest in peace.

Natalie Zmuda of AdAge wrote an article today about the big winners in retail over the last year. The grocery giant Kroger was ranked among them, thanks to gas discounts, free groceries earned through loyalty cards and 10% off all purchases made with tax rebate checks. Kroger also gives credit to their highly targeted and personalized direct marketing campaigns. From the source:

“We understand and appreciate that no two customers are alike,” said David Dillon, Kroger’s chairman-CEO. “Some may live in the same city, some in the same neighborhood and even on the same street, but we know that they don’t have the same shopping habits. This level of personalization is a direct link to our customers [that] no other U.S. grocery retailer can replicate.”

We love your approach Mr. Dillon. Why send canned beet coupons to an entire ZIP when you know that only 317 loyalty card members have bought them in the past month?

The Federal Trade Commission released a 48-page report this week addressing concerns about behavioral targeting practices in online advertising. Of course the larger issue at hand is privacy rights, and whether marketers need consumer consent to track behavioral data.

While the FTC cited “financial data, data about children, health information, precise geographic location information and Social Security numbers” as examples of sensitive information that could be tracked by marketers, they concluded that behavioral targeting practices should be self-regulated.

This declaration had plenty of caveats, including the strong recommendation that any website collecting information for behavioral marketing should provide a clear privacy policy, give consumers a choice to opt out of tracking, and retain data only as long as necessary for legitimate business needs.

If you’re into reading stodgy government reports in their entirety, feel free to download the PDF. Your tax dollars paid for it, after all.

We’re all feeling the pressure of meeting sales goals in a rough economy with ever-shrinking budgets. We have to be more nimble, creative, and resourceful to get the job done. All areas of our marketing need to be examined for optimization.

One area that can provide pretty immediate return without a lot of investment is developing consumer insights. I wrote an article published on MediaPost today in which I dole out some techniques for gaining insights without spending a bunch of money, including talking to your sales force and monitoring social media channels.

Just to set the record straight, we’re not against doing professional market research. We see it as a fantastic way to develop consumer insights, but it should be one thread in a rich tapestry of research and data that ultimately drives consumer insights. In most cases, looking at behavioral data and getting input closer to the point-of-sale is going to help drive the messages that sell.

When America’s classiest madam (aka The Mayflower Madam) dispenses advice on how to get existing customers to spend more, you betcha we’re going to listen. Who better understands the benefits of longitudinal contact strategies, customer referrals, and offers you can’t refuse?

Tee Hee.