Advertising Metrics Must Change with Advertising Models

Marketing measurement and key marketing metrics will change dramatically over the next 5 years. A recent study on the future of advertising conducted by IBM suggests that "the next 5 years will hold more change to the advertsing world than the past 50 years." These changes wil necessitate changes in traditional marketing metrics. Impressions and reach will diminish in value as metrics while deeper individual lead relationship metrics will evolve and become more critical strategic marketing metrics. The IBM study describes this scenario:

Imagine an advertising world where ... spending on interactive, one-to-one advertising formats surpasses traditional, one-to-many advertising vehicles, and a significant share of ad space is sold through auctions and exchanges. Advertisers know who viewed and acted on an ad, and pay based on real impact rather than estimated “impressions.” Consumers self-select which ads they watch and share preferred ads with peers. User-generated advertising is as prevalent (and appealing) as agency-created spots.

Four key drivers of this change are identified as: Attention (consumer in control), Creativity (user generated), Measurement, and Ad Inventory (increased use of emerging exchanges). How is your business set to handle this change? Will you lag or lead?

Five New Rules of Marketing

In an article by Jack Neff in Ad Age, he reports on a presentation by Simon Clift, CEO of Unilever discussing the role of brands and how social media impacts brand strategy. Below are the five new rules for marketing by as presented by Ag Age. Good stuff.

Five new rules for marketing
The flat-earth, digitized world described by Unilever CMO Simon Clift is one in which the marketing norms have changed. Here are Ad Age's "New Rules."
Listening to consumers is more important than talking at them. As Mr. Clift said, "We may be ahead of our competitors, but we're most definitely behind consumers." The consumer is not a moron, she's the person defining your brand.

You can't hide the corporation behind the brand anymore -- or even fully separate the two. Even this editor's creaking computer only took 0.13 seconds to show that Philip Morris is owned by Altria Group. Welcome to radical transparency, where bad corporate behavior will damage your brands, and vice versa.

PR is a primary concern for every CMO and brand manager. If "marketing" and "PR" are not the same department, tear down the wall. Spend time deciding whether PR is underleveraged in your organization.

Cause marketing isn't about philanthropy, it's about "enlightened self-interest," as Mr. Clift puts it. That doesn't mean it doesn't count. Don't be ashamed of your profit motive, because great branding and doing good are increasingly one and the same.

Social media is not a strategy. You need to understand it, and you'll need to deploy it as a tactic. But remember that the social graph just makes it even more important that you have a good product. Put another way: The volume and quality of your earned media will be directly proportional to the impact and quality of your product and ideas.

eMail Marketing ROI resource

If you are interested in maximizing the return on your e-mail marketing investment, take a look at the latest email marketing metrics report from MailerMail. They've been publsihing this report for several years and there are many fact-based finding that will improve your marketng ROI, such as optimizing the day of week, he subject line length, etc. Other excellent e-mail marketing sources: Constant Contact, Vertical Response, MarketVolt.

Denny's Grand Slam a Home Run?

With all the discussion about the best Super Bowl spots, I wonder which ones really generated the greatest return on investment. Some, like the Doritos spots, were wonderfully creative, but you have to push a lot of retail displays and pull a lot of consmer sales to generate a return on a $2.5-$3MM investment. Some, like Go Daddy, may not have creative that you appreciate but have an immediate call to action that allows measurable results (how many new domains sold this week versus the week prior?).

So what about Denny's? Free Grand Slam breakfasts on Tuesday after the Super Bowl. Postive ROI? One news report suggested that $2MM in free breakfasts were served. I don't have their data, but I suspect the cash cost was far less that the retail value of the free breakfasts. Even if it was $1MM, bringing the total cost of the ad plus meals t $3.5-$4MM, did the exposure and trial generation create enough new customers? I don't think so. When I drove past the local Denny's on Tuesday morning there was a line down the sidewalk (in 15 degree weather, too!). I can't imagine that the dining experience was very pleasurable with the hectic environment, crush of visitors and a burdened kitchen. Would that make you a loyal customer? Not me. (Not that I would wait in line for a free pancake...)

So, was the Grand Slam a Home Run? Let me know what you think.

Maintain Business Databases for Optimal Marketing Performance

Interesting video interview with Eric Groves of Constant Contact advising businesses on maintaining business databases. Worth a view on SBTV.

Content Was King

"Content is King" has long been the mantra for successfully driving visitors to web sites under a paradigm that declares that consumers and customers will flock to sites with the most relevant information. This model generally worked as long as marketers could promote sites and generate initial visits. The fallacy is that the "Content is King" model lives in the old push model of content delivery. The advent of social marketing capabilities and the corresponding ability of consumers and customers to generate their own media/content leaves the content push model behind. Generating traffic and return visits is becoming a function of the ability of your audience to engage and immerse themselves by interacting with one another within your online environment. If content was King, "Place" is now Queen. Is your site a recognized and compelling Place for your customers to congregate? Increase your ROI on web marketing investment by offering a compelling Place rather than exclusively pushing Content information.

One more comment - I love the phrase "consumer generated media" rather than "consumer generated content". First labeled by old compadre' Pete Blackshaw (Nielsen Online), "user generated media" focused on the notion that users create media for consumption by others, making the process an interaction rather than simply a push of content.

Marketers Must Innovate as Economy Tightens

When times are plentiful it's easy for marketers to become complacent. As the economy becomes increasingly challenging every business is looking for new revenue streams. Now is an excellent time to evaluate your current sales and marketing strategies, and look for new innovative approaches. Yesterday, I heard a sales manager bemoan the recent drop in new customer orders. Yet it was apparent that he wasn't modifying his approach to new customer acquisition. As the economy changes, what changes are you making?

One way to consider new alternatives is to assess each of the traditional 4 P's and ask whether your offerings match the current times: Is your product offering appropriate or is there a new feature or way to combine your product/services for your target customer base? Are there new markets that offer new places to sell? Pricing is an obvious lever in tough times, but think about creative ways to bundle offerings rather than simple price competition. Think about all of the terms in your contracts that might offer new ways to be creative. Are your promotions communicating to your customers in the right way? Are they supporting your core value proposition or competing with that proposition?

Now is a great time to evaluate your marketing approaches to maximize return on every dollar spent.

Marketing return during slow times

As the economy continues to struggle business investment will decline, furthering the economic woes of 2008. Marketing spend will be a casualty. This need not be bad news for marketers, except for those locked into an old model where success is dependent upon size of budget. Successful marketers will be fine-tuning programs to demonstrate and expand programs with positive ROI. Not measuring return on marketing investment? What's your excuse?

Democratic Party brand value proposition

Stepping aside from the typical post about Marketing ROI, today's comment is on political branding. Regardless of your politcal inclinations, it's a fascinating situation to watch from a brand marketing perspective. Did you see the speeches by Hillary and Bill Clinton over the past two nights at the Democratic convention? It's a classic case of attempting to integrate all brand messaging into a cohesive brand value proposition. In this case, built around the candidacy of Barack Obama. The brand messaging has been fractured in a highy public way during the competitive primary season. As with any brand shifting it's core communication, the key question is whether the target audience finds the new messages (from Bill and Hillary) relevant, cohesive, and believable. For the Democrats, time will tell. For your brand, is your messaging consistent?

Online Marketing ROI: A Web Site ROI Mental Model

Mental models and analogies often help explain software and technology when experts are explaining solutions to business owners who are not technical experts. One of the dangers is that as technology changes those mental images must adapt to reflect the new state. For the past decade the primary mental model for the traditional web site has been a traditonal house. Thus, the use of the term "Home Page" as a point of entry to a web site, with a variety of rooms for "Visitors" to "Enter". We spend countless hours perfecting our Home page because we know that the entrance is the most important moment to make a positive impression.

The model has changed. The rapid evolution of Search as the primary method of traveling the web and the advanced use of SEO tools to drive users to pages of a site means that many visitors to web sites no longer visit the home page as the point of entry to the site, if at all. I sugges that that the new mental model in no longer the Home, but the Apartment building. Any particular visitor may visit any particular apartment (page)as the point of entry. As the site owner, all of your apartments must be optimized and prepared to make a positive impression on the visitor, and each apartment (page) must consider where you want the visitor to go after completing the visit to that page. So, maximum ROI from marketing investment in the web site must consider optimizing across the site and not simply the Home Page.

Let MarketingWitz know what you think about this updated mental model.

Marketing ROI: Don't Talk to Strangers

One of the most basic lessons from childhood applies to internet marketing strategies as well as how to behave as a kid. Remember being told "Don't talk to strangers?" Apply this lesson to your internet marketing strategies to generate increased ROI. Collecting visitor and customer data is important to help segment your audience and then communicate effectively to each segment, and personalizing your communications will generate an even stronger conversion rate. Aberdeen Group has validated this in a recent study, concluding that personalization improves response and is an effective tool used by best-of-class marketers. So, get to know your site visitors, invite them into the site, capture user data, and communicate with these visitors in a way that reflects and demonstrates an understanding of their needs. This will result in increased conversion rates and improved ROI. In short, talk to your audience and don't talk to strangers.

Brand Value

Brand marketers can learn about ways to drive the ROI and value of their brands by learning from other disciplines. For example, in the world of business acquisition and sale the factors that are used to analyze core business valuation can be used to assess the strength and potential ROI of an existing brand. Buyers and sellers will conduct a SWOT anaylsis of the business, just as brand marketers anlayze the competitive strength of brands. In the acquisition world, the multiple used against EBIDTA is generally larger for larger businesses than small businesses. So to, this general rule might be applied to evaluate the relative strength of a brand. Larger share brands are generally (although not always - strength in a key niche can be valuable) more valuable than lower share brands, and there has been sufficient research conducted to document the strenght and added value of being the share leader. Business valuations typically also look at the concentration among key customers. Too much business with a core customer may lower the overall valuation because of the increased risk. This holds true for brands - too much concetration with WalMart can be dangerous for the brand. Business valuations may be lower for business where the owner is sole rainmaker and future sales are at risk when a change in control occurs. For brands, brand value may be at greater risk when a brand spokesperson or long-term brand leader has too great a role in the personality of the brand. So,take a moment and see what you can learn by looking at your brandin the eyes of a potential buyer.

Marketing Benefits the Community

Today's Post is a bit of a diversion from our core topic, but still an observation of Marketing. I was in attendance at a local awards ceremony last evening where organizations were being honored for programs that represent collaboration to enhance the local community. It was great that four recipients were a collaborative client team that I've worked with, but what influenced me as I listened and learned about what various organizations were doing for the local community, was that it reinforced a fundamental belief that there is a great deal of good to done in the world. And, importantly, the marketing professionals can and do play an important role in many of these achievements. As I listened, I was encouraged by the passion and commitment demonstrated by the individuals who comprise these collaborative efforts. So, my message to everyone today is that while marketing may often be demonized and, at times may be used for less than honorable goals by less than honorable people, marketing can and is often applied for the betterment of consumers and citizens. Go Marketing!

Will brand personalization generate profit?

Interesting comments are popping up in the marketing literature regarding the advent of personalization of brands. This trend has been growing over the past several years and has become more prominent as technology permits efficient implementation of persoanalization. Jim Holbrook, CEO of eMak, summarized the shift toward personalization of brands in a recent eMak e-mail, saying "Now its about brands conforming to consumer preferences, rather than consumers being conformists." In other words, why wear an Izod logo shirt or a Nike cap, when you can personalize your blue jeans to your exact style and size, wear a personalized cologne, and create your own pizza combination (including naming and posting the pizza combination for others to view)?

As consumer marketers, this trend toward personalizing the brand experience is exhilirating because of the many marketing opportunities that it creates (can't you feel the energy of the agency creative teams buzzing on this topic?), but care must be taken to ensure that both short and long-term ROI can be generated from impact of personalizing the brand. Can it be achieved? Yes. But not in every instance. Marketers should evaluate the cost structures implicit in personalization and ensure that the consumer response will justify the operational impact. Ask whether the personalization of the brand permits the brand to command a premium in the marketplace.

Marketing Metrics - The Old and The New

As the year comes to an end it is a good time to ponder what is old and what is new. My previous post focuses on what is new, looking at some of the top marketing trends for 2008. Today I want to make a brief comment about making the distinction between the old and the new.

I read an a recent article in Chief Marketer which discusses "a new way to allocate marketing resources". The article focuses on an excellent description of an approach that suggests three key stages of marketing optimization: 1. Campaign optimization, 2. Contact optimization (using predictive analysis on your customer data to optimize communication over a business cycle), and 3. Market Mix optimization (correlating sales data with marketing efforts across the enterprise). The approach outlined makes sense, but is it really new? Haven't marketers been pursuing the Holy Grail of market mix optimization for more than 40 years? The theoretical approach isn't new. It's old. What is new is the advancement of technology, allowing more sophisticated databases, data anaysis and insight development. The theory and the stages aren't new, our improving capabilities to achieve them are.

Maximize Marketing Investment By Understanding Tool Interactions

[Click the Image above for a Larger View.]

I’ve previously discussed the importance of aligning CMO goals with CEO objectives to maximizing return on marketing investment for the organization. Now, assuming the CMO has ensured alignment, the challenge remains to maximize the marketing mix to deliver on those goals. Maximizing marketing return on investment requires a deep understanding of the often elusive interplay between marketing variables. Whether you define you marketing toolkit as the traditional 4 P’s or as a more comprehensive kit of tools, do you understand how they work together? Understanding the interaction between variables can allow the marketer to enhance the overall return of the marketing investment spend by combining efficiencies with effectiveness. The less the guesswork about the interactions, the lower the inherent risk of any selected set of tactics.

A simple interaction grid shows that the 4 Ps impact one another. Not very helpful, though.

A deeper analytical staircase grid structure provides deeper insight and challenges the marketer to ask the questions appropriate for each cell of the grid. For example, in the grid above (click the image above for a larger view), let P1= Product. Column 1, Row1 is the intersection between Product/Product. Evaluate this cell by asking all of the traditional Product marketing questions to determine if the product is optimized to meet customer needs and profitability requirements. Let P2=Price. The cell below, Column1, Row2, reflects the interaction between Price and Product. Here, the marketer asks questions about the tradeoffs between product features and price points. Are there high end product opportunities? Are there opportunities to introduce lower priced products with a different set of features or services? Let P3=Place. Column1, Row 3 addresses the interaction between Place and Product. Are all products in the portfolio sold in the same channels? Do product features differ by channel?

Note that the questions in each cell can be modified to address situations and challenges specific to any business. By completing the grid with the questions relevant to your business you have a dynamic set of marketing questions to be addressed. Then, assess your ability to answer the questions in each cell. You will quickly determine the degree of knowledge that you have about the performance of the key elements of your marketing mix. Where the data is insufficient and a gap exists, further research may be warranted. Your ultimate goal is to understand the mix tradeoffs to maximize ROI against the marketing goals which are aligned with the business objectives of the CEO.

Note that while this example used the “4 Ps”, the same interaction analysis can be conducted against a deeper list of marketing tools, and it is a simple steps (but a lot of effort) to evaluate interactions at a deeper level with any given element. For example, you might construct a similar interaction analysis against each major element of the Promotion mix, evaluating the impact of print media and sponsorships or between coupon discounts and trade marketing.

Outlive the 23-Month CMO Hurdle.

In an earlier post MarketingWitz notes a report that CMOs are short-lived, lasting 23 months on average. Marketing Witz: Marketing Executives are Short-term. How can Markerting survive? Are CMOs performing that poorly across the board or are they just performing the wrong role? Return on the marketing investment is as much a function of defining the return as measuring the investment. If the CMO is measuring return on the role differently than the CEO then the inevitable turnover will continue.

As CMO, do you view your role to be the prinicpal driver of profitable new growth via new customers and increased sales among current customers? Do you define your role as steward of the brand, enforcing brand positioning and brand communication consistency? Do you view your role as advisor to various constituencies across the organization? Are you the face of the company with the media? If you answered "yes" to most or all of the these questions you are in good company with other CMO's. But CEOs are likely to view the first question as the only truly meaningful measure of marketing return. The other functions are simply marketing approaches to help deliver on the objective of increasing sales and profits. Measuring marketing results based on increased brand awareness or level of internal brand consulting activity is merely an internal marketing process metric while delivering increased sales and profits is the focus of the CEO. Be sure your CMO objectives are clearly defined and in line with the goals of the CEO, and outlive the 23 month hurdle.

How to Maximize Competitive Intelligence

There is a simple thing you can do as a marketer to generate greater return on investment from your market research and competitive intellegence efforts. Marketers spend countless hours optimizing research methodologies, survey questions and analytics (rightfully so, too.) Competitive intelligence can come from many sources, extending beyond formal research to include press tracking, and even simple hearsay from the sales force. So what's the single most powerful thing you can do to improve return? Create an organized central clearinghouse to capture the information. Great insight results from crossing data points from multiple sources. Market analysis indicates Competitor X may be boosting short term sales, HR hears that a key executive from Competitor X may interviewing in the market, and your Regional Sales Manager say the CFO of Competitor X golfing with the President of Competitor Y. Acquisition or merger? You'll need to learn more, but clearly there is a situation to be explored, and only by crossing these points of information are you able to gain the insight. So...create a central repository of competitive information (paper or digital) and review it often.

Good competitive intelligence reads: Society for Competitive Intelligence, Primary Intelligence

Tale of 2 Books - Marketing Metrics

I read two books this month, both focused on metric marketing issues. The first was "Return on Marketing Investment" by Guy Powell. The second book was "Measure What Matters" by Laura Patterson of Vision Edge Marketing. While both authors share a common goal of guiding CEOs and CMOs to measure marketing more effectively to achieve desired outcomes, the two authors approach the topic in decidedly different manners. Powell argues that marketing investment should be evaluated like any other business investment - calculate the expected return on various marketing investments and compare the returns against defined hurdle rates. Apply high hurdle rates for more risky investments such as advertising versus more known marketing tactics such as direct marketing. While Powell's approach is logical and the quantitative model mathematically correct, he fails to fully address an effective way to set hurdle rates or how to effectivey define expected returns on new marketing efforts, other than to say that the hurdle should be higher for higher risk or less known programs.

In comparison, Patterson breaks the role of marketing into three core performance areas that link to business objectives: acquisition, retention, and monetization. She then proceeds to offer specific marketing metrics for each area that can be measured to determine how marketing programs contribute to these fundamental objectives. I particularly like her reference to those metrics that measure business output versus those that measure marketing activity. See my earlier comments about process v. results marketing metrics.

Both share the goal of linking marketing to business results. Patterson's book is an easier read and will be more palatable to most marketers. Powell's book is more academic and by it's very nature feels more like your Finance 101 text, yet offers relevant thinking. Read both and see what you think. Both believe in my favorite line, "Facts Find Funding"(sm).

Segmentation and Niche Marketing

An excellent article in the most recent issue of Adveritsing Age http://adage.com/cmostrategy/article?article_id=117005 summarizes a study by Booz Allen Hamilton that contains an interesting and compelling insight about the evolution of market segmentation. Using the statement that niche marketing is about narrow not small, the important concept is that traditional marketing segmentation looks for commonalities within a diverse group of consumers, while the philosophy today is to look for differences within a common group. Think about that for a moment. Instead of seeking common features among a broad base of consumers to define a segment, today marketers look at a common group of consumers and look for differences (niches). These niches represent comfort zones of consumers. Marketing to these consumers in ways that appeal to these zones makes the brand a part of their lives and lifestyles. Rather than trying to make a broader brand appeal to number of sgements by communicating in different ways, make the brand appeal deeply to a specific niche within a common group. Thought-provoking.