This research dovetails nicely with a lot of the topics discussed here on the blog lately, so I thought I’d use it (with a nod to Godin’s post on Strategy vs. Tactics today) to provide some fodder for thought.

First, the importance of Psychology in Marketing.  So many of the “discoveries” arrived at through  brute force testing of Online Advertising are already well known in the greater discipline of Marketing through Psychology.  For more on this read “The Other 3P’s” and if you’d like to do something about lack of knowledge in this area, make sure to read this comment on source books.

Second, this research is a great example of isolating the true drivers of behavior.  The idea of looking at baby names to isolate the real behavior from “technology and other commercial effects” while including “symbolic meaning about identity” results in a broad, Strategic-level answer to the question, not a Tactical one. 

Why is this important?  It means the results can be applied across a host of different Marketing situations, rather than only a specific one. 

Much of the “research” done on web topics suffers horribly from pointing to rare, specific successes as a model for everyone else to follow.  Might be OK for Advertising people, gives them a low risk excuse to play with a Tactic.  Useless for Marketing people, who have the Strategic need to describe results before they happen. 

For the analysts out there, Strategy is the Hypothesis.  Do you just create tests aiming for brute force pass / fail, or do you follow the scientific method and have a Hypothesis before you design the test?

Third, the whole issue of web business models, which always seem to be built on the concept of Quantity versus Quality as the Strategic vision.  These models are about the fastest growth rates, total sign-ups, and traffic.  The problem with this approach is this: it’s only really meaningful if “Reach” Advertising is the core business model. 

That’s where the trouble is: successful Advertising on the web is not about Reach and Audience, it’s about Preference and Individuals.  This is the paradox of Display Advertising in Social Media; it’s exactly the wrong approach as defined by everything people say is “Social”.

And, this is why you find that over time, almost every “new” business model that starts as some kind of a mass concept fails until it turns into a vertical concept – the exact opposite of the Quantity / Reach model.  By going Vertical, the model moves from Quantity to Quality and then often succeeds – by serving a smaller, select group of people with certain preferences, building Relationships.

Why?  Because, as stated in the Wharton piece, “the adoption velocity has a negative effect on the cumulative number of adopters”.  Begging the question:  Is your product more like a disk drive, that lacks any cultural identity?  Or is your product “in a domain where people use it to communicate to others” like Fashion?  Auto?  Decor?  Social Media?

The former begs rapid adoption, the latter, slower adoption.  Anything Social, it seems, would benefit from a slower adoption rate.  Paradox, again, right?  That’s the difference between Strategy and Tactics, the difference between Marketing and Advertising.

I can hear some of the cat-calls now.  Jim, we’re all about scale, the VC’s say we have to grow rapidly, it’s the way the business model works.  Network effects, you know.  Really?  Is a larger network always better than a smaller one? 

What if you (and they) are wrong?  What if the Reach model is the wrong one for the web?  After all, it’s an offline, one-way model.

What if rapid growth actually destroys the value of the business, by attracting the “me-to” crowd that abandons the trendy in favor of the new?  What if the early adopters provide a false read on what the important business drivers are, and in fact are your worst customers?

How many of those millions of accounts are dormant?  How long has it been since the early adopters came back?

What’s your Adoption Strategy?

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Adoption and Abandonment

For example, did you even know there is a peer-reviewed journal called Marketing Science, which calls itself “the premier journal focusing on empirical and theoretical quantitative research in marketing”?

Whoa, say what?

This journal is published by the Institute for Operations Research and the Management Sciences, and articles are the work of premiere researchers in visitor and customer behavior from the best known institutions around the world.  In case you didn’t know, “peer-reviewed” means a bunch of these researchers (not including the authors, of course) have to agree that what you say in your article is logical based on the data, and that any testing you carried out adhered to the most stringent protocols – sampling, stats, test construction, all of it.

And, most mind-blowing of all, they show you the actual math right in the article – the data, variables, formulas, graphs – that lead to the conclusions they formulate in the studies.  You know, like this:

So, the opinions coming from Marketing Science are probably a lot more reliable than say, the average blogger in the echo chamber.  Know what I’m saying?  And here’s a surprise, the findings in these  articles often contradict what is passed off in the blogosphere as “common knowledge” by the digerati.

In case you are thinking, “Well, these lab coats can’t possibly be exploring anything that would be interesting to me“, take a look at some article titles in the Mar - Apr 2009 edition of Marketing Science:

* Website Morphing

* Real-Time Evaluation of E-mail Campaign Performance

* Optimal Bundling Strategies in Multiobject Auctions of Complements or Substitutes

* Path Data in Marketing: An Integrative Framework and Prospectus for Model Building

* Click Fraud

 Or article titles for the Jan – Feb 2009 edition of Marketing Science:

* Quantifying the Long-Term Impact of Negative Word of Mouth on Cash Flows and Stock Price

* Going Where the Ad Leads You: On High Advertised Prices and Searching Where to Buy

* Content vs. Advertising: The Impact of Competition on Media Firm Strategy

* My Mobile Music: An Adaptive Personalization System for Digital Audio Players

Tell me you want to put more faith in your RSS feed than in what these folks have to say in Marketing Science.  What blogger shows you the math?  What Research for Press Release piece passed around the echo chamber shows you the survey questions, the sample distributions, the confidence intervals?

But wait, there’s more.

The Research Committee at the WAA has been working hard on a program to open up some of these influential resources to WAA members.  You can see the beginning of those efforts here.  Expect more in the future as the effort ramps up.  The knowledge sources currently in the hopper are these:

By the way, if you are a WAA Member and would like to participate in reviewing these articles for the WAA Membership, volunteer for the Research Committee.  Contact Christopher:

christopherb “at” criticalmass.com

Now, you don’t have to agree with what folks who publish in Journals like these have to say, but as an analyst, I sure want to know what they think, see how they arrived at those thoughts.  And gut-check my own reality against them. 

Because the analyst’s mission is truth seeking, finding better truths.

Can you afford to ignore some of the most respected Marketing researchers in the world when formulating your hypothesis?

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Marketing Science (Journal)

What if what the media / agency complex has been telling you all along about online advertising is not really true.  What if Advertising  – from the end user (visitor) perspective – performs a fundamentally different job online than it does offline?  What if the entire game is different than you think it is?  Might that explain why it’s so difficult to get any agreement on the value of online advertising?

Please bear with me; see if this makes any sense to you.

Offline, it’s important that you remember an ad.  That’s because you are rarely in a position to take advantage of or act on the ad when you are exposed to it – unless you are sitting in front of a computer.  Awareness, Recall, all those nice measurements the offliners do are important for offline Advertising, because the job of offline Advertising is get you to remember it so you can Act on the Advertising when you are in a position to do so.

Online, you can immediately investigate the products or services advertised, get 3rd party opinions, and so forth.  You can convert Awareness to Intent and Desire in a matter of moments, if not take Action as well -  if you are interested in what is being Advertised.

The fundamental answer to every question you have about online advertising might be really simple, if you think this way:

Online Ads are Navigation

They are not Advertising, in the traditional sense of offline Advertising.

Content sources serve the role of traditional Advertising online.

Not the ad itself.

Online, the Web Site is the Ad.

Offline, Advertising sets up Awareness but it doesn’t have much to do with fulfilling Intent or Desire.  That’s why you need tremendous weight (GRP’s) with offline ads.  You have to pound messages into people’s heads so that when they are standing in the grocery aisle, or thinking about credit fraud, or whatever it is, they remember your offering.  “Ah”, you say.  “I’m Aware of a proposed solution to my problem.”  Now you can move down the road to Intent and Desire through examining the offerings, doing some research, asking friends or co-workers, etc.

If you are on the web and see an Ad, you have immediate access to “the answers” to any question you might have about the subject of the ad.  So the ad is just Navigation.  The Ad doesn’t have to be remembered, so is promptly forgotten.  If it’s relevant, it will be pursued.  If not, nothing.

If you think about it, this is the underlying reason why Frequency capping became popular in Display.  Online ads simply don’t carry any “weight” with them – if you’ve seen the ad 5x and you still don’t care, then you just don’t.  This is not true offline, because chances are you never had the opportunity to follow through with Intent and Desire like you can online.  So offline campaigns can run and run and still deliver incremental behavior, because there is such a lag in the Action phase.

Not so online.  If you are interested, you simply Navigate though the ad and it’s over.  There’s no reason to remember the ad.  If you do, that’s nice, but it doesn’t really matter.

And that’s why all the traditional measurements of offline advertising are meaningless online.  Because unlike any other Advertising out there, Online Ads are Navigation.

Stick with me for a story.

In the early days of ads on the web, click-through rates on Display ads were very high.  Display ads were pronounced to “work” and it was off to the races.

But here’s the thing.  This was before there was anything like a functional search engine.  So, ask yourself this question: Was the functional utility of this early display advertising for the user actually Advertising, or is it possible the true utility was Navigation?

In other words, the “value promise” of the ads was not the message of the ad as much as “Hey you, there’s a web site over here you might not know about”.  Recall, this was the age of “surfing” the Internet.  Discovery was the driver; people would click from one site to the other based on ads or links just to see what was out there.

Fast forward to the age of Search.  As search rises, click-through rates on display advertising begin to plummet.  And this should be no surprise, if online Ads are really Navigation.

A Search engine more closely aligns with the web medium where Navigation is a critical functionality.  Surfers found it much more rewarding to Search for what they were specifically interested in rather than “surfing” a random chain of sites.  It’s much more efficient, wastes less time, gets better results.

Later, you have the addition of Pay-Per-Click advertising, which you could argue is really not Advertising at all in the traditional sense; it’s Supplemental Navigation.  PPC ads say, “Here’s another site you might be interested in based on your search phrase“.  In that way, PPC ads are just like the early Display ads.  Except they provide more Value to the end user.  They work better.

If you think of Online Ads as Navigation rather than Advertising, does some of the conflicting information you have seen on the effectiveness of different channels, formats, and creatives become easier to understand?  Would some data help?

So, how can you act on this knowledge?

To me, this all means the most effective way to optimize Marketing Productivity is to think of different media not in terms of reaching different audiences, but in terms of stimulating different behaviors. 

This is the fundamental idea behind my Marketing Bands Model.

Let me know what you think.

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Online Ads are Navigation

That said, we came up with a crackerjack plan that should significantly boost paid Membership at the OI without additional time or money resources.  How?  Path Analysis.

Personally, I have never understood why many web analytics folks don’t care for Path Analysis; I can only surmise these folks are simply not doing it correctly.  For one thing, Paths don’t make any sense without the context of a behavioral segmentation – entry page, campaign, etc.  Just like any other web data, Path is useless without segmentation.  Or perhaps these folks don’t know how to interpret the data they see because they can’t survey a Path for the answers. 

Who knows.  What I do know is Path is extremely important in all the work I do, both online and off.  Path is one of the richest and purest forms of human behavior; I’d take a Path over a survey any day in terms of likelihood to take the correct action based on the data.  Surveys have a long and rich history of leading folks into enormous blunders.  This is particularly true when the behavior of the survey participants is not known first, as is often true on the web.

Anyway, it turns out that the good folks at the OI had not spent enough time thinking about Paths.  And that’s not unusual.

I’m sure most people have heard about Path analysis as it applies to product placement in retail.  You know, the reason grocery stores put the milk coolers in the back.  That’s not a random decision.  Neither are decisions about the height of the shelves certain products are placed on – eye level for adults, eye level for kids, etc.  This is Path; an understanding of how people react with the environment they are in.

In web analytics, Landing Pages are an expression of the importance of Path.  When I set up my very first GoTo (now Yahoo Search) campaign in 1999, I created unique pages for each Ad to point to and tested these pages versus sending the traffic to the home page.  How did I know to do this?

Because it just made sense.  It’s Path.

Just like Outer Envelope > Teaser > Open Envelope > Johnson Box > P.S. > Letter > Reply Device in direct mail.  The more connected and logical the Path is, the higher the response rate.

In Marketing you will often see broken Paths, and fixing them generally doesn’t cost much.  It’s usually more of an organizational issue.  For example, Path will often break when prospects have to cross through silos; the ball gets dropped due to Friction and the sale never closes.

Also, as in the case of the OI, you can have many different contact or outreach programs that all operate independently but don’t create a Path into the core offering.  This means you get really short LifeCycles because as dis-Engagement with one program occurs, there is nowhere for the customer to go - no Path.  So they just drop out completely, instead of moving logically to the next step.

The solution is to create a Path, to stitch these diverse programs together in a logical, sequential way  that maintains the Momentum of the customer until goal (in this case, Membership) is reached.

We then took this same analysis into the physical world – the Museum itself – and discovered (surprise, surprise!) many of the same broken Paths manifested there.  So we literally made plans on the spot to rearrange the signs and fixtures to facilitate smooth, unbroken Marketing Paths to Membership.

Just like you do when Optimizing Campaigns and web sites.  It’s Navigation and Copy; it’s about Path.

If you understood the Marketing Bands approach, you know that each Band served to address the customer most effectively at a particular point in the AIDAS model or Customer LifeCycle.  Customers move through the Bands in a clear and unobstructed way, each Band creating the communication opportunity for the next.  Path.

Bands and Paths.  Questions or Comments on this?

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Offline Path Analysis

Correlation between Google Gross US Revenues to US E-Commerce Growth: .96.

Correlation with Yahoo Display Ad Sales and US E-Commerce Growth: -.04

Now, I understand that Correlation does not imply Causation but at some level when you get directional spreads like this you have to sit up and take notice.

One explanation is this:  e-Commerce sites do not buy any Display to speak of, but we know that’s not true – don’t we? 

Other questions:

1.  Another conclusion would be Yahoo matters very little to e-commerce activity.  Sure, less than Google, but to this degree?  If in fact Display enhances Search performance, you would think Yahoo would have more of an effect.  Perhaps folks see Display on Yahoo and then Search on Google?   Wouldn’t that be a trip…

That scenario would really provide a whole new twist on the measurement of view-throughs.

2.  Google gross rev’s include AdSense, of course.  So we’re not really comparing PPC to Display here, though one could argue AdSense is more targeted than Display.  So what we are discussing here is the relevance of ads, not PPC versus Display.

3.  Does Yahoo Display include Travel ads triggered by selection of Location?  Auto ads triggered by selection of Model?  Etc.  Etc.  You could argue those ads are really “Search” if you look at it from a behavioral (customer) perspective.

Sure would like to find the source on this, and see what we are actually talking about here.

Other questions you would ask / data you need to make a judgment on this?  How about wild speculations on what this data means, if anything?

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Online Stat of the Year?

We met in person for the first time doing a presentation together at the DMA show in Chicago this fall, and because he used to work at Crutchfield – a truly customer-driven remote retailer – we share some experiences and beliefs.

For those of you who might be wondering where a lot of the Marketing Productivity ideas I post here come from, this interview-podcast is probably a pretty good backgrounder.  We talk about a lot of stuff, including:

Monetizing customer experience

Importance of Control Groups / Source Attribution

Multichannel Marketing Strategy

LifeCycle Contact Strategy versus Calendar-based

Retail Business Models / Lab Store

Search box or not? / Serendipity

How to tell if online customers are really engaged – without web analytics

Here’s another link to the Interview-Podcast.  Enjoy! 

That was lots of fun, thanks Allen!

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Interview-Podcast w/ Jim Novo

Some highlights from this group of “Senior Marketers”:

Most important thing they are concentrating on:

Mastering the Basics

Seems unusual for Senior Marketers, to me.  

My guess: the members of MENG are not Senior Marketers, and should not be referred to as such.  Of course, nobody would pay attention to a press release about a survey on a “bunch of pukes”; this is the Source of Sample problem.

Asking “which demographic segment is most important to target” generically without supplying the product to be marketed is a ridiculous concept.  “Senior Marketers” probably wouldn’t even answer this question.

And the biggest gut-splitter: the list of “Most Important Marketing Gurus” includes Al Gore & Warren Buffet.  Now, these are both smart gents in their own ways but I’m not aware of their status as Marketing Gurus.

Of course, an alternative reality is possible: the members of MENG are Senior Marketers.  If that’s the case, I simply don’t know what to say, other than Marketing has probably already Deconstucted.  Or Imploded.  Or something worse.

You can learn a lot more from this really useful Research for Press Release (RFPR?) piece here.

Comments?

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Al Gore & Warren Buffet: Marketing Gurus

Discontinuous Sample - I don’t know if there is a scientific word for this (experts, go ahead and comment if so), but what I am referring to here is the idea of setting out the parameters of a sample and then sneaking in a subset of the sample where the original parameters are no longer true.  This is extremely popular in press about research.

Example:  A statement is made at the beginning of the press release regarding the population surveyed.  Then, without blinking an eye, they start to talk about the participants, leaving you to believe the composition of participants reflects the original population.  In most cases, this is nuts, especially when you are talking about sending an e-mail to 8000 customers and 100 answer the survey. 

Sometimes it works the other way, they will slip in something like, “50% of the participants said the main focus of their business was an e-commerce site”, which does not in any way imply that 50% of the population (4000 of 8000) are in the e-commerce business.  Similarly, if you knew what percent of the 8000 were in the e-commerce business, then you could get some feeling for whether the participant group of 100 was biased towards e-commerce or not.

Especially in press releases, watch out for these closely-worded and often intentional slights of hand describing the actual segments of participants.  They are often written using language that can be defended as a “misunderstanding” and often you can find the true composition of participants in the source documentation to prove your point. 

The response to your digging and questioning of the company putting out the research will likely be something like, “the press misunderstood the study”, but at least you will know what the real definitions of the segments are.

Get the Questions - if a piece of research really seems to be important to your company and you are considering purchasing it, make sure the full report contains all the research questions. 

I can’t tell you how many times I have matched up the survey data with the sequencing and language of the questions and found bias built right into the survey.  Creating (and administering, for that matter) survey questions and sequencing them is a scientific endeavor all by itself.  There are known pitfalls and ways to do it correctly, and people who do research for a living understand all of this.  It’s very easy to get this part of the exercise wrong and it can fundamentally affect the survey results.

So, in summary, go ahead and “do research” by e-mailing customers or popping up questionnaires, or read about research in the press, but realize there is a whole lot more going on in statistically significant, actionable research than meets the eye, and most of the stuff you read in the press in nothing more than a Focus Group.

Not that there is anything inherently wrong with a Focus Group, as long as you realize that is what you have.

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More Tips on Evaluating Research

So here’s a few less scientific but more specific ideas to keep in mind when looking at a press release / news story about the latest “research”, ranked in order of saving your time.  In other words, if you run into a problem with the research at a certain level, don’t bother to look down to the next level – you’re done with your assessment.

Press about Research is Not Research – it’s really a mistake to make any kind of important decision on research without seeing the original source documentation.  For lots of reasons, the press accounts of research output can be selectively blind to the facts of the study. 

If there is no way to access the source research document, I would simply ignore the press account of the research.  Trust me, if the subject / company really had the goods on the topic, they would make the research document available – why wouldn’t they?  Then if / when you get to the research source document, run the numbers a bit for your self to see if they square with the press reports.  If not, you still may learn something – just not what the press report on the research was telling you!

Source of Sample – make sure you understand where the sample came from, and assess the reliability of that source.  Avoid trusting any source where survey participants are “paid to play”.  This PTP “research” is often called a Focus Group and though you can learn something in terms of language and feelings and so forth from a Focus Group, I would never make a strategic decision based on a non-scientific exercise like a Focus Group. 

Go ahead and howl about this last statement Marketers,  I’m not going to argue the fine points of it here, but those wish to post on this topic either way, go ahead.  Please be Less Scientific or More Specific than usual, depending on whether you are a Scientist or a Marketer. 

For a very topical and probably to some folks quite important example of this “source” problem, see Poor Study Results Drive Ad Research Foundation Initiative.  If you want a focus group, do a focus group.  But don’t refer to it as “research” in a scientific way.

Size of Sample – there certainly is a lot of discussion about sample sizes and statistical significance and so forth in web analytics now that those folks have started to enter the more advanced worlds of test design.  Does it surprise you the same holds true for research?  Shouldn’t, it’s just math (I can feel the stat folks shudder.  Take it easy, relax).

Without going all math on this, let’s say someone does a survey of their customers.  The survey was “e-mailed to 8,000 customers” and they get 100 responses to the survey.   I don’t need to calculate anything to understand the sample is probably not representative of the whole, especially given the methodology of “e-mailed our customers”.  Not that a sample of 100 on 8000 is bad, but the way it was sourced is questionable.

What you want to see is something more like “we took a random sample of our customers and 100 interviews were conducted”.  It’s the math thing again.  Responders, by definition, are a biased sample, probably more of a focus group.  This statement is not always true, but is true often enough that you want to verify the responders are representative.  Again, check the research documentation.

OK Jim, so how can political surveys be accurate when they only use 300 or so folks to represent millions of households?  The answer is simple.  They don’t email a bunch of customers or pop-up surveys on a web site.  They design and execute their research according to established scientific principles.  Stated another way, they know exactly and specifically who they are talking to.  That’s because they want the research to be precise and predictive.

How do you know when a survey has been designed and executed properly?  Typically, a confidence interval is stated, as in “results have margin of error +- 5%”.  This generally means you can trust the design and execution of the survey because you can’t get this information without a truly scientific design (Note to self, watch for “fake confidence level info” to be included with future “research for press release” reporting).

More rules for interpreting research…

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Research for Press Release