Monthly Archives: February 2008

Marketing is the New Finance

That’s OK, you can spit your tongue out now.

Not my words, but those of Hal Varian, Google’s chief economist. I think what he is saying is Marketing is about to undergo a performance (ROMI) revolution. Here’s the context for the quote, from the WSJ:

“I think marketing is the new finance. In the 1960s and 1970s [we] got interesting data, and a lot of analytic fire power focused on that data; Bob Merton and Fischer Black, the whole team of people that developed modern finance. So we saw huge gains in understanding performance in the finance industry. I think marketing is in the same place: now we’re getting a lot of really good data, we have tools, we have methods, we have smart people working on it. So my view is the quants are going to move from Wall Street to Madison Avenue.”

Varian recently took questions over on the Freakonomics blog that are an?interesting read. On analytics, check this out:

“If you are looking for a career where your services will be in high demand, you should find something where you provide a scarce, complementary service to something that is getting ubiquitous and cheap. So what’s getting ubiquitous and cheap? Data. And what is complementary to data? Analysis.”

Amen, Brother.

Check out the rest of the questions and Varian’s answers on the Freakonomics blog.

Natural Born Clickers

Did you catch the research piece published a couple weeks ago about the behavior / demos of folks that click on display advertising? You can read the whole thing here, but for the sake of getting to the point:

“6% of the online population account for 50% of all display ad clicks”

“heavy clickers skew towards Internet users between the ages of 25-44 and households with an income under $40,000”

“more likely to visit auctions, gambling, and career services sites”

The incredible conclusion the purveyors of this Research for Press Release come to is this: you should still buy display advertising, just don’t measure the value of it using clicks, because “the branding effect of the ads is what’s really important.”

Wow. So, the first thing I want to know is this: where were these ads running? Because where they run has everything to do with the demos; the sites create the demos, not the ads. Did they run on NetZero, for example? Any other free to almost free access systems? Because if the audience won’t pay for the service, you get the audience quality you deserve.

Another thing that would be really interesting to know is the demos of folks who click on PPC ads  Want to bet more upscale, higher income, older? Again, it’s not “clicking” that is the issue here, it’s how the ads are delivered; the network creates the audience.

If the above data is without network bias, my guess is this: the 6% of people that generate 50% of display ad click are people that are bored because they have no jobs. And those people click on ads because they have nothing better to do. They’re “surfing” the way the web worked pre- decent search engines, when you found out about other sites by clicking on ads. An ad meant there was a site somewhere other than where you were!

Now, most folks that have any kind of intent at all use a search engine.

That brings us here: if the majority of clicks on display ads are generated by people who are jobless and bored, then is there any real Branding effect worth talking about from display ads?

In other words, what if the entire audience for display ads is younger and low income, just because of the stupid, untargeted nature of the format / distribution. Some of this audience clicks a lot, because they’re bored and have nothing else to do.

The desirable audiences are off using a search engine, because they have purpose and intent.

So if you run a gambling or a job site, it makes a lot of sense to do “Branding” with display ads. Likewise, debt-related. comes to mind, the banners with those idiotic dancing women to get your attention. Here kid, click this.

But if you sell Expensive Vodka? Luxury Cars? High End Toys? Electronics? Do the targets for those products even see banner ads unless the site is super-targeted?

What if display ads are only seen / paid attention to by “aimless surfers with no purpose”. Gee, that’s an audience I really want to create a Brand impression for – regardless if they click the damn thing. In other words, what if the Natural Born Clicker (NBC) demo is not just of a segment, but of display as a whole?

Otherwise, why didn’t they give the demos of the non-NBC clicks or exposures? Instead, they compare to “total U.S. online population”. That’s a Research for Press Release slight-of-hand trick. What we need to know are the demos of the “light clickers” and the demos of the “exposed” – people who saw / remember display ads.? Not the entire?online population.

Unless, of course – gasp – these demos are the same as the NBC folks.

Most people are too busy to pay any attention to irrelevant display ads in the first place. They use search and completely ignore the side bars where display ads run on a site.?

Active, lean forward, get it done folks focus on the content.

Kinda makes you wonder…

Your thoughts?

Hitting the Wall

Looks like Red Envelope is Hitting the Wall. What they need now is a Relationship Marketing Strategy based on understanding dis-engagement. It’s the only way to dig out of this.

They need higher Marketing Productivity.

Check out this statement:

“We hoped that our renewed creative statement would drive an up-tick in performance in fall and holiday, but unfortunately this was not the case” -CEO John Pound

Got some old schoolers there. That’s a “pray and spray”, offline Customer Marketing approach, not an interactive customer strategy. They have to understand why the behavior is different.

You know, the difference between Brand and Branding.

They have the data. But they didn’t do the analysis, because the effects of dis-enagagement were masked by new customer acquisition. They thought everything was just fine and changing creative could “give them an uptick”.

Not. I’m just guessing, but it seems to me this business model is a case where the Catalog – as they are implementing it – is only driving incremental business in very small segments, and is a loss overall.

In other words, a prime candidate for a Controlled Test to resolve this matter of catalog incrementality quickly by avoiding the “matchback” problem so common when one takes an old school approach to an “always on” interactive medium.

I’m not saying the catalog is a bad idea. I’m saying it matters more than most folks understand who you send it to and when.

So, have you ever shopped with Red Envelope? How was the experience? Did you purchase again from them? What’s your Net Promoter Score with respect to them (giggle).

More details on what Hitting the Wall is all about are here.