Pedro Laboy » Articles

Social Marketing Best Practices

Pedro Laboy — Fri, 05 Mar 2010 04:45:18 +0000

Unleashing the Power of Social Media – Social Marketing Strategies

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Best Practice: Anatomy Of An Integrated Campaign

Pedro Laboy — Fri, 04 Dec 2009 15:42:57 +0000

While conducting a competitive audit of the financial services industry for a client I came across a campaign that does a superb job at integrating print, search and display advertising. The campaign was deployed by T. Rowe Price (TRP)—by the way, I have no association with TRP or any of its agencies. The campaign supports two lines of business: mutual fund and retirement services. It is glued together by a web of well thought-out landing pages, unique toll-free numbers and tracking codes. These allow TRP to segment its audience, deliver unique value propositions and track performance of different channels as well as creative. I will give you a visual breakdown of the campaign starting with the TRP landing pages before analyzing print, banner and search ads.

Landing Pages

Each ad sends users to a unique landing page or URL. The messaging on the ads and the landing pages works seamlessly. Great content is included for those looking to learn more about the brand and its products. Unique toll-free numbers are displayed for those users further along the conversion funnel.

Print Ads

The print ads are nicely done. They include both unique landing pages and toll-free numbers. TRP should have tested different creative approaches, though. Based on research I recently read, the use of images on financial services advertising results in higher conversion rates.

Display (Banner) Ads

For this campaign, TRP took a contextual approach to its digital media. I am sure the media plan included behavioral and retargeting buys as well. The ads were created by the book. The include message segmentation and unique toll-free numbers. Each ad is tied to a unique landing page.

Search Ads

TRP’s paid search campaign was built around a robust keyword list. The ads include clear value propositions and a call-to-actions. Ads placed within the three top positions for all keywords. I would have done one thing differently, though. I would have used DNI scripts to dynamically generate Toll-free numbers on landing pages

Putting All Together

The image below demonstrates how the campaign comes together through TRP’s website and its landing pages.

What About TV?

Interestingly, TV ads have been running concurrently with the campaign above. However, these ads are not tightly integrated with other channels. Viewers are not directed to unique landing pages and a general toll-free number is used. Also, the messaging is not inline with other ads. I imagine that, as usual, TV advertising is handled by a different agency or team.

Best Practices in Online Publications

Pedro Laboy — Sun, 11 Oct 2009 04:04:07 +0000

Undoubtedly, the media world is in disarray. Specially, traditional, old-school, newspapers and magazines. The purpose of this review is not to join the choir and tell printed publications that they must embrace the digital world. Rather, this analysis will provide best practices online newspapers and magazines should follow.

Target Audience

Who are the intended readers of the new website? What demographic, psychographic and other qualities define them? What is their current online media diet? How do they differ from the existing audience of the printed edition? For example, as we can see from the sample information for three online publications, audiences cover a wide demographic spectrum—particularly, it is important to note how theonion.com and wsj.com compare. Thorough research should be conducted in order to define and understand the right audience for the online publication.

wsj.com

theonion.com

Visual Branding

In an increasingly crowded online media world, with sites like Slate and DailyBeast attracting huge audiences, the online publications must have a compelling visual approach that immediately connects visitors. Should the website share a visual style with the printed version, or should it appear completely different? What “personality” should the website project? Here are some best practices to follow:

Typography – whether online or in print, one of the most important decisions publications must make is that of typographic treatment and guidelines. While the visual look and feel of online publications can vary from the rich media driven (i.e. washingtontimes.com) to the typography focus (i.e. nytimes.com), recently online newspapers and magazines are striking a balance. Two publications that have re-launched with a more balanced visual layout are newsweek.com and popsci.com.

Color scheme – Choosing a color scheme is as important as choosing an online publication’s typographic treatment. Approaches vary from owning a color (time.com’s red) to no color (nytime.com) to using color as a wayfaring guide (usatoday.com).

Navigation – The one rule of thumb when it comes to navigation is that most publication websites place it at the top. Two notable exceptions are nytimes.com and msnbc.com.

Layout – From a usability perspective there are, in fact, a few things we can learn from the printed world. In specific, how to layout information so it is easy to consume. Virtually all online publication use a grid-based layout for their pages. This approach not only creates a clean layout but it is also an effective way to present and manage content rich websites. Good examples are telegraph.co.uk and theonion.com.

Content Strategy

Some publications face the daunting challenge of offering sufficient engaging content to attract the loyal readership required for a sustainable business model. Thus, an effective yet feasible content creation roadmap must be at the core of an online publication’s strategy. Online publications should leverage technology and users to support and complement content created by its staff writers and/or bloggers.

Blog driven – Today, the lines between a blog and an online publication are blurred—with most magazines having a prominent blog section. The trend for online publications is moving towards a blog-driven model where traditional news and content take a supporting role. Best in class blog-driven sites include good.is and wired.com (also best in class for layout and visual feel).

Auto Content – Auto content generators are a good way to enhance blog postings and articles with other proprietary content or content from other websites. The San Jose Mercury News (mercurynews.com) uses such auto content generators very effectively. For instance, the page below was auto generated.

Auto Content for Blogs – Even bloggers can benefit from auto content technology. A product from TextDigger allows bloggers to automatically generated complementary content based on the semantics of the posting.

Debates – A great idea for generating content as well as engagement from targeted audiences is to sponsor debates on relevant topics. Bloggingheads.tv sponsors debates through their website using a video format. However, I feel that The Economist Debate Series take the concept to a new level—using a social media approach to drive engagement and participation.

Inbound Syndication – Another trend in online publications is that of using syndicated blogs to enhance existing content. Sites such as reuters.com, statesman.com and foxnews.com use blog syndication services.

Tagging – Tagging articles and pages based on the semantic meaning of the content rather that on individual words is a great tactic to follow. This allows for publishers serve more meaningful pages by suggesting related content that is pertinent to the user. For instance, star-telegram.com uses semantic technology to create a web of relevant content that engages users.

Social Media

Online publications should leverage social media to engage and create a true “conversation” with users. Research will uncover how the target audience prefers to interact online, whether through on site social features on the website or on social networks like Linkedin or Facebook.

Commenting – User comments are extremely important to blog-based magazine websites. For those publications that cover sensitive or controversial subjects, a structured approval process for comments can be put in place. At the same time one must take into account users expectations that their comments must be promptly posted—or their level of engagement will quickly dissipate. From wsj.com to foxnews.com most news organizations allow for near real-time posting with only the use of automatic filters to keep out profanity and/or specific words.

Sharing – Sharing functionalities are ubiquitous in online publications websites. Given the spread and fragmentation of social and sharing sites, we recommend that the largest number of sharing options be offered to users. Technology from ShareThis and TryThis allows sites not only to share content across social sites but to email, AIM and/or text content as well.

Leveraging a Community – the last thing that users want is to join one more social network. Rather than creating their own social networks, online publications should leverage existing social sites such as linkedin.com, facebook.com and myspace.com. Nevertheless, a social strategy must go beyond creating a fan page and ensure that fresh and relevant content is delivery through these sites. newsweek.com does an excellent job at engaging its users through Facebook by conducting live interviews. nytimes.com puts Twitter to good use.

Creating a Community – Although this is something that will not fit most websites, there are online publications that deploy their own custom made social sites. For instance, my.stltoday.com is an online community created by the St. Louis Post-Dispatch.

Multimedia Options

Online publications should seize every opportunity to incorporate multimedia content. This might include audio podcasts, video or interactive graphics. However, the right multimedia strategy will depend on audience preferences as well as budget constraints.

Video, Webcasting and Podcasting – As users’ download speed increases, online publications are delivering more of their content through multimedia. I consider nytimes.com’s podcasting series to be best in class. For video, I like the format used by bigthink.com.

Interactive Features – another trend worth mentioning is that of data visualization to summarize and convey information that would otherwise be difficult to digest. Msnbc.com, nytimes.com, usatoday.com and even foundations such as rwjf.com publish interactive features on a regular basis.

Outreach Strategy

Building a compelling site with compelling content is no guarantee that it will attract an acceptable level of traffic. The new online publications must be developed in concert with an integrated outreach strategy. Content and syndication partnerships should be at the center of this strategy. Newsletters, emails, and feeds will help acquire and retain users.

RSS Feeds – while major news sites tend to minimize the use of RSS, niche publications make the most out of feeds. huffingtonpost.com and wired.com provide guidelines worth following.

Newsletters and Emails – the key to a solid newsletter/email strategy is quality of the list used. While we might have to initially use purchased a list, it imperative that the publications develop their own qualified list of users—most can start with their subscriber database, if they have one. Another way might be by requiring users to create an account if they want to comment or participate on forums. Always provide options to opt-in or out.

Platforms

A thorough technology evaluation must take place before a content management system (CMS) platform is chosen. For publishing purposes, CMS come in four flavors: open source, specialized, enterprise and custom made.

Open Source – When it comes to open source CMS there are three platforms that usually make to the top of the list. The first two, Movable Type and Wordpress, were originally blogging content management systems that have evolved into full-fledge online publication platforms. For example, barackobama.com was built using Movable Type and the Wall Street Journal’s new magazine was created using Wordpress. The third option is to use Drupal. This option is particularly attractive since Drupal offers a plug-in from Open Calais that allows for semantic tagging—theonion.com, obsever.com, fastcompany.com and usmagazine.com are built on Drupal.

Specialized – There are several software companies that specialize in the publishing vertical. The specialized CMS is made by Nstein (ft.com). Vignette, now part of Open Text, offers the Vignette Media CMS . Ektron and CoreMedia also offer a products with strong publishing features.

Enterprise – There is no need to go into detail about enterprise level CMS platforms—as there are only a good fit for only a handful of organizations. Enterprise level CMS are offered by Oracle, IBM, Microsoft and EMC.

Custom Made – Another approach popular among online publications is custom develop their own CMS platforms. These are usually developed on either an open source or .Net framework. There are development shops that specialize in the publishing sector. The one shop that makes it into every short list is Optaros (note: I have no affiliations with this company. I have worked with them in the past, though). Optaros has developed custom CMS platforms for washingtontimes.com and nytimes.com.

Contextual Advertising Gone Wild – 20 Examples

Pedro Laboy — Fri, 25 Sep 2009 02:55:47 +0000

Contextual advertising can be an effective approach to effectively reach consumers when they are most receptive to the messaging being delivered. However, contextual advertising, when not deployed properly, can be a dangerous tool. The examples below speak for themselves.

Happy Feet

Somebody Is Watching You

Bright as Day

Sweet Dreams

A Cup of Joe

Trouble in Paradise

Smells Like Something is Burning

Burn Baby Burn

Only the Lonely

The Job is Done

Famous Last Words

Only The Lonely – Part Deux

So Wrong in So Many Levels

The Importance of Higher Education

I Will Keep More Than The Change

Cadillac and Buick… Are They Not Both Made By GM?

We Fly The Friendly Skies

We Fly the Friendly Skies – Part Deux

Mama Mia!

A Smear Campaign

Best Practices in Digital Marketing – Part One – AMA Presentation

Pedro Laboy — Fri, 24 Jul 2009 05:24:03 +0000

This is part one of my two part presentation on digital marketing. This section covers website strategy and usability best practices. Part two covers email, landing pages, SEO/SEM and display advertising. This presentation was prepared for the American Marketing Association and presented to its Boston and Pittsburgh chapters.

Best Practices In Digital Marketing and User Experience – 1 of 2

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Doing More With Less In a Down Economy

Pedro Laboy — Mon, 01 Jun 2009 04:01:32 +0000

In today’s faltering economy, marketers are under pressure to do more with less and make every dollar count. As profits evaporate and corporate budgets are slashed, marketing programs built solely on beautiful creative or humor are unlikely to make it pass the drawing board. CEOs and CFOs are asking marketers to implement programs based on demonstrable ROI models—however, this can only be achieved by leveraging technology and mining data in order to understand and predict purchase behavior.
Contrary to common belief, an ROI driven approach to marketing is no longer a strategy exclusive to large organizations with deep pockets. Increasingly, marketers at smaller companies are overcoming their fear of numbers and technology in order to follow a metrics approach to customer acquisition. This has been made possible by advances in technology and an array of low cost—and sometimes free—data collecting and mining tools.
Making marketing more effective and efficient requires more than simply collecting more data or purchasing data mining software. Having the right mindset and knowing what to do with the data collected are just as important. Marketers should adhere to the following strategies as they shift their marketing approach from one that speaks to a broad market to one that engages, acquires, and retains profitable customers.
Defining success
The cornerstone of a solid ROI-driven marketing strategy is a clearly defined set of goals or measures of success.
• Organizational alignment—Key players in sales, marketing, finance, IT, and HR should be aligned behind a common definition of success and a set of business goals. Goals must be specific, measurable, achievable, realistic, and time-bound (S.M.A.R.T.).
• Strategic alignment—All marketing tactics should support specific strategies and all strategies should drive defined business goals.
• Measurement—Define a starting point by benchmarking business goals. Establish milestones to ensure that strategies are on track, and progress is being made towards achieving the desired outcome.
Closing the loop
It is essential for companies to establish a measurable link between marketing initiatives and financial results.
• Targeting—Marketers should start by combining marketing strategies with data-gathering and analysis techniques to develop highly targeted campaigns based on customer insights and behavior.
• Close the funnel—Campaign results should then be tied to demand generation, sales conversion, and brand experience. This closed-loop funnel system creates a common view of the demand-to-sale-to-experience continuum across marketing, sales, and customers.
• Optimize—Closed-loop marketing allows companies to innovate value propositions and fine-tune marketing initiatives in order to continuously and efficiently acquire and retain valuable customers.
Collecting the data
Before companies start collecting data they should determine what, where, and how products are being sold, and who is buying them. Data gathering can be a daunting task. But costs and effort can be kept to a minimum, if companies follow a systematic and targeted approach.
• Profiling—Start by developing profiles that paint a demographic, geographic, psychographic, and behavioral picture for each customer—and assigns a monetary value to him or her. If individual profiles are not possible, break down your segmentation into as many groups as is feasible.
• Secondary data sources—Secondary data and information can be obtained through government reports, academic research, data brokers, and libraries.
• Primary data sources—Primary data and information can be obtained through interviews, focus groups, surveys, and customer transaction data.
• Become data-driven—From the Web all the way to the cash register, every customer point-of-touch should have a data collection component.
Eliciting a response
Companies should shun marketing strategies that rely solely on mass advertising. Rather, they should embrace a customer- and data-centric marketing approach that delivers the right value proposition, to the right customer, and at the right time.
• Call-to-action—If possible, all marketing initiatives should include a call-to-action that directs customers to purchase, visit a Web site, call a toll-free number, or otherwise interact with a brand’s many points of touch.
• Marketing mix—Call-to-action messaging combined with tracking technologies allows companies to determine which marketing initiatives are most effective in delivering the desired results—and thus, allocate resources accordingly.
Developing actionable instsigh
Mountains of data alone cannot guarantee business success. Often, those who “own” the data within an organization are either unable or unwilling to share and mine the data. Data collected must be mined and synthesized, in a timely manner, into relevant actionable insights. These insights should be put in the hands of decision-makers across the organization. Information should be grouped into four categories: customer, brand, effectiveness, and efficiency.
• Customer—Data collected should be used to determine which customers present the highest lifetime monetary value. Insights should be developed to identify how to best acquire and retain these customers.
• Brand—It is essential for a brand equity index to include measures that go beyond brand associations. Understanding how employees embody the brand is as important. Also, an effort should be made to quantify the impact of brand assets, such as patents or proprietary processes.
• Efficiency—Data and analytics should be leveraged to help companies stretch their marketing dollars. A key measure of efficiency is cost-per-acquisition (CPA). Marketers should track CPA and related metrics to ensure that the return marketing investment is maximized.
• Effectiveness—Just because a program is low-cost and efficient does not mean that it is effective. Metrics such as click-through rates and impressions are meaningless unless they can be linked to specific business goals. Rather, marketers should focus on measures that show that effective initiatives are resulting in growing sales and building long-term financial value.
Choosing the tools
Data-centric marketing strategies do not necessarily require heavy investments in hardware or software. Today, the right set of tools exists for companies both large and small.
• Database—Volume and scale allow larger companies to purchase enterprise-level databases and customer relationship management (CRM) systems from IBM and Oracle. Smaller companies can rely on relatively inexpensive, simpler tools. They can start by creating a database using Microsoft Access or MySQL, for instance.
• Lead management—For basic lead management, a product from Act! might suffice. Mid-size companies might choose to move one step up and purchase one of the many products offered by Salesforce.com.
• Web metrics—For most companies, Google Analytics is all they need to track and analyze Web traffic. There are a number of more advanced Web analytics tools in the market, with Omniture being the most dominant.
• Ad serving— Given the complexity and scope of ad placements made by large companies, they are likely to continue to rely on media agencies to handle ad planning and placement. Smaller companies can rely on a variety of tools to place and manage their media assets. Google’s Adword allows companies to place and manage both print and online media. A service from Spotrunner provides thousands of customizable TV ads, which can be bought and placed at a fraction of the price charged by advertising agencies.
• Data mining—For consumer companies with millions of customers, mining data collected might require advanced analytics tools such as SAS or MatLab—but these are fairly expensive and require special training and programming skills. Open-source business intelligence tools such as Pentaho provide a low-cost alternative, but require advanced programming skills. For companies with a small database, Microsoft Excel might be all they need. A popular alternative would be to outsource the data mining overseas.
As you can see, company size and budgets are no longer a roadblock to implementing data-centric customer engagement strategies. Start small, and scale up as business growth justifies larger investments in data systems and analytics. Remember, though, that being data-centric is not about implementing systems or tools; being data-centric is a mindset and business philosophy that marketers at all levels should embrace.

The Future of Marketing is Now

Pedro Laboy — Tue, 05 May 2009 04:24:08 +0000

“Change is the process by which the future invades our lives.”
It is 5:45 p.m. on a Thursday and Todd Martin heads out the door after a long day at work. His wife is recovering from a cold and he is eager to get home to care for her. As he enters his car, his mobile phone beeps. It is a message from BigMart, a national chain of stores that sells consumer products—from produce to plasma TVs. The BigMart email informs Todd that he likely needs to purchase milk and cereal and offers a 10 percent discount on these products, if purchased before 9:30 p.m. Todd calls his wife who confirms that, in fact, they ran out of milk that morning, the cereal box is almost empty and, by the way, she needs cold medicine. Todd usually shops at a BigMart in the suburbs, but tonight he decides to look for a store location closer to his office. He uses a voice command to request the address of the nearest BigMart from his car’s navigation computer. Within seconds, a map is displayed with the fastest route to the nearest store. At the store—like at all BigMarts—getting a parking space is easy. Digital displays at the end of each parking row indicate which spaces are open.
Todd is certain that there are other items he needs to purchase besides milk and cereal. However, this is not a planned grocery trip and he does not have a shopping list. So, as usual, Todd’s first stop at BigMart is the Digital Customer Kiosk by the entrance. He swipes his mobile phone over the scanning receiver and the kiosk prints out a shopping list with items he is likely to need—in addition to special offers. As Todd reaches the end of the first aisle, a digital touch screen mounted on the shopping cart displays a list of items that might complement the products he just placed in the cart. For example, it suggests three different kinds of cheeses that would go well with the bottle of Pinot Noir he selected. On the next aisle, the screen proposes chicken soup and tea to go with the cold medicine he selected. Todd moves along at a brisk pace, but in the last aisle he cannot decide which brand of spaghetti sauce to purchase. He engages the touch screen to retrieve both product information and recommendations from other BigMart customers. From the recommended items, he chooses a highly rated sauce.
At the checkout counter, yet another screen automatically lists the items being purchased—without the need to scan the items one by one. All Todd needs to do is press the accept key and swipe his mobile phone. His bank account is automatically debited. Todd always shops at BigMart. The shopping experience is effortless and, yes, fun. They always seem to know what he needs and when he needs it. Why would he shop anywhere else?
The day before Todd’s present shopping excursion, BigMart’s powerful computer network—encoded with statistical formulas and predictive mathematical models—sorted through 1,000 terabytes of data. The database has been compiled—and is continuously updated—from a variety of sources including store and warehouse inventories, customer information, loyalty programs, purchase transactions, public records, credit organizations, weather forecasters, business and social networking websites, research companies and consumer data brokers. The data is used to develop multidimensional, predictive behavioral models for existing and prospective customers. Each day BigMart’s computers draft a list of likely buyers to target with offers. A score—based on monetary value and likely offer-response rates—is assigned to those on the list. The offer content and timing are then customized for each individual prospect.
One of the prospects with the highest score is Todd Martin. He has been a customer of BigMart for approximately three years and is a member of its loyalty program. Thanks to its robust database, BigMart has been able to accurately estimate Todd’s after-tax income, home size and value, place of employment, hobbies, travel preferences, automobile type and many other characteristics and behaviors that define him as a unique consumer. In addition, BigMart knows every item that he has ever purchased at its stores. It knows that on average, Todd makes a major purchase of groceries every four weeks and stops for perishable items—such as milk and bread —once a week. According to his record, it has been four and one-half weeks since Todd did a major purchase of groceries and precisely eight days since he last bought milk. Based on his behavioral profile and purchase patterns, BigMart mathematical models estimate that there is a 45% probability that Todd will respond to a discount offer on milk the day it is received. Furthermore, the models calculate that if a 10% discount on cereals is also offered, there is a 65% likelihood that he will turn the visit into a $217 shopping trip. An electronic offer for milk and cereal is drafted and scheduled to be sent at 5:45 p.m. on Thursday—the time and day he is most likely to respond.
At 6:03 p.m. on Thursday, BigMart computers receive a customer login request from one of its stores downtown. The login identification number matches Todd Martin’s record. Within seconds a suggested shopping list based on his profile is sent to the Digital Customer Kiosk. The shopping cart is fitted with digital touch screen and a Radio Frequency Identification (RFID) receiver that has locked to Todd’s RFID-enabled mobile phone. BigMart is able to track the cart’s location at any given time. If too much time is spent at any given location, a customer service associate is dispatched to offer assistance. As each item is placed in the cart, the computer sends product suggestions to the cart-mounted digital display. The suggestions are neither random nor generic. Only items that match Todd’s behavioral profile are displayed. Furthermore, discount offers are made only if they increase the likelihood of purchase and meet profitability criteria. At the cash register, the total purchase comes to $223.
Over the next few days BigMart will analyze the data collected during Todd’s visit to its downtown store. His predictive behavioral model will be refined. New offers that will increase Todd Martin’s response rate and monetary value to BigMart will be customized and scheduled.
This story is fictional, but the technology and know-how necessary to make it real exist today. In the twenty-first century, emerging technologies, media, mathematics and an unconventional generation of consumers have rendered the 30-second commercial obsolete. Successful companies must blend digital technologies, data mining, and a fragmented media landscape to reach the new millennial consumer: a consumer who is always on the move, multitasks, has little brand loyalty and is mistrustful of traditional advertising. Companies must shift from business models that center on launching a never-ending number of products and services to customer-centric micromarketing that focuses on meeting the specific needs and problems of select customers. Most companies; however, are failing to understand—much less adapt to—this new reality.
A new kind of marketer will be at the forefront of tomorrow’s leading companies. From consumer electronics to business information systems to digital media, she will be well versed in technology. She will be part researcher and part social scientist. She will have strong analytical and mathematical skills and focus on making marketing more science and less art. More importantly, she will be accountable for delivering results—financial results.
Nevertheless, these new, essential marketing skill sets will not entirely replace old ones. Rather, they will supplement a century of marketing thought and practice. Like a living organism, marketing will continue to evolve – sometimes by slow steps, sometimes at light speed.

Crunch or Be Crunched: Data Rules The World

Pedro Laboy — Fri, 20 Mar 2009 00:44:30 +0000

Given the sheer volume of marketing data out there, you can’t afford not to have a data-mining strategy. Data are at the core of today’s technology revolution. In 2007, some 500 billion gigabytes of digital data were created every day. That is equivalent to 50 million times the contents of the Library of Congress. Internet devices, mobile phones, network and satellite television, traditional and satellite radio and other digital media make possible more targeted, frequent contact with the masses. At the same time, whether collected at the cash register or through the Internet, companies are amassing troves of consumer data. This demographic, geographic and psychographic data should be fully exploited to help companies predict consumer behavior and preferences.

The collection and use of customer data to optimize marketing efforts are nothing new. In the 1920s, General Motors discovered that loyalty among Ford vehicle owners was very low—a Ford driver was not likely to purchase his second vehicle from Ford. So General Motors began surveying these drivers to collect data and develop insights into customer preferences. These insights were then used to develop marketing campaigns that targeted Ford vehicle owners. Today, data-centric companies like online retailer Amazon.com in the U.S. and brick and mortar retailer Tesco in the U.K. rely on mathematical modeling to ensure that the right products are offered to the right consumers at the right time. For instance, Tesco’s deployment of its loyalty-card program and the resulting data gathered from its users are credited with helping Tesco fight off Wal-Mart’s entrance into the U.K. market. The data collected is used to tailor marketing programs for its customers. For example, Tesco customers who buy diapers for the first time receive offers for baby wipes, toys and beer—as data analysis show that new fathers are more likely to drink at home. Tesco’s loyalty-card program is so successful that major consumer products companies buy reports based on data collected and analyzed by Tesco.

Companies are also leveraging technology and analytics to target, track and optimize marketing campaigns. For example, Dell uses campaign management tracking software to track near real-time responses to its online, direct-mail and print advertising. Analysis of the data collected allows Dell to continuously optimize its marketing efforts, resulting in a higher return of marketing dollars invested.

By no means are companies the only ones benefiting from today’s data-rich world. Consumers have more data and information at their fingertips than ever before. They are just a few clicks away from the best mortgage rates or the entire collection of the Library of Congress. The last few years have seen the proliferation of Internet companies that provide pricing and product information for millions of items and services in a fraction of a second. Without leaving the comfort of a chair, a buyer can determine which companies offer the lowest prices, free shipping, etc. However, unbeknownst to most consumers, the data flow is often two-way. Most of these companies collect data on site visitors for their own use. Google, Yahoo! and MSN, for example, keep a record of every search ever made through their search engines. The data collected includes the IP address of the person doing the search, keywords entered, results returned by the search engine and websites visited. Other sites, like pricegrabber.com and pricescan.com, play both sides of the fence. They provide product data to consumers and consumer data to companies—by tracking consumer shopping behavior on their websites.

As marketers continue to embrace new technologies and channels such as mobile and IPTV, they will be inundated with even more data. The industry leaders of the future will be those who are able to collect and mine this data to understand and predict individual consumer behavior. However, it seems that many companies still have a long way to go before they fully embrace analytics, CRM techniques and other measurable marketing strategies. In a summer 2008 survey conducted by Epsilon, only 30% of CMO’s said they agree with the statement “You use sophisticated modeling tools to analyze existing customer data (behavioral, preference and demographic).‘’ And this in spite of the fact that almost 70% of CMO’s are generating more data than ever before by increasing their spend on interactive advertising.

Interview: Ride The Digital Wave

Pedro Laboy — Fri, 23 Jan 2009 23:08:10 +0000

(This was the cover story for the October 2005 issue of Marketing News)

Marketing News:
Why do you think advertising executives are finding it challenging to manage their online media and digital marketing efforts?

Pedro Laboy:
Speed of change of technology makes this a challenging medium. More importantly, most companies and their agencies are not adapting to new technologies at the same pace that consumers are. This is due to a combination of lack of skills and insufficient resources.

Marketing News:
How much should advertising execs carve out of their budget for testing and/or market research to help with their online media efforts? And what type of research should be conducted in order to obtain the most efficient and useful solutions to help ad execs get the answers they need?

Pedro Laboy:
We believe that testing and market research should be an essential component of every company’s marketing mix. Increases in testing and research will undoubtedly result in more effective traditional and interactive marketing and advertising. However, the more money you spend in research and testing; the less you will have for execution. There is no magic formula. The investment in testing and research required will be a factor of product, business model, desired outcome, and industry in question. We recommend that clients lean on marketing mix modeling when making marketing investment decisions—including research and testing.

We believe that the type of research that is conducted should always be based on well defined objectives. Typically qualitative research is done for creative ideation and refinement. On-line focus groups can be extremely efficient to gather this type of information. Groups which span several days are particularly appealing because they allow alternative messaging, copy or imagery to be developed and tested while the groups progress. However, traditional in-person focus groups are still very cost effective and have the added benefit of the face-to-face interaction.

If the ads are delivered online with a direct response goal, then real-time, in-market testing is an extremely efficient way to determine what specific messaging, imagery and media work best. However, if the campaign’s goal is not direct response (for instance, if the goal is to raise awareness or change the brand positioning), then surveys of the target prior to and after the campaign should show the impact on the key measures. Online surveys are generally the most cost-effective; however, on-line samples are typically not as high-quality as random samples conducted via phone. So a trade-off generally has to be made.

Marketing News:
One source said that ad execs should look at ad agencies to help guide them with their online media efforts. What specifically should they look for in an agency?

Pedro Laboy:
Good agencies meet all of the following criteria:

• They focus on solving the client’s problem and providing them with business building ideas

• They are knowledgeable about the client’s industry, products, and customers

• They are opportunistic and entrepreneurial

• They drive efficiency and effectiveness by measuring and optimizing

• They are in alignment with the client’s marketing and business goals

• They are flexible and adaptable and thrive in a fast-paced environment

• They keep pace with changing technologies and the changing consumer

Marketing News:
How can ad execs get ahead and stay ahead of the curve? In the study I cited, many executives feel that managing online media efforts is difficult let alone staying ahead of the curve.

Pedro Laboy:
The best thing marketers can do is to stop viewing online media as “the other media.” Media neutrality is key to successful communication efforts. Today, online media should be central to all marketing efforts. Tomorrow, the concept of online media will be as trite as the concept of a digital clock. Generation X and Y consumers no longer differentiate between online and offline media.

Relative to managing online media efforts, the difficulty is primarily in clearly understanding objectives and measuring success. Implementation and deployment should not be difficult to manage if you have a competent agency.

Marketing News:
How will online media and digital marketing change the course or future of advertising, as we know it today? Do you think online media and digital marketing will overshadow television advertising, eventually, or is that impossible?

Pedro Laboy:
Three factors will define the future of advertising: media fragmentation, technology convergence, and the changing consumer.

a. There are more than 1,600 (Forrester) broadcast and TV channels in the US alone. Add to that outdoor, print, radio, mobile, and web and the number of media available to marketers are almost infinite. As a result TV has lost much of its effectiveness. According to Forrester Research TV ad recall plummeted from 40% in 1960 to 6% in 2003.

b. Technology is rapidly changing in order to keep up with media fragmentation. In the future, consumers will own devices that will give them access to multiple media. Some of these devices are already entering the market. Take the PSP from Sony for example. It gives you the ability to access video, music, gaming, TV, web, and GPS mapping. Future versions will include phone and email access.

c. Today’s consumers are defined by what we refer to as “M3.” That is, multitasking, multimedia, and mobility.

Marketers need to think not only beyond TV but also beyond “online” and “digital” media. Successful companies and agencies of the future will leverage technology and data analytics to develop media neutral ideas that resonate with individual consumers. And media content will have to be interactive and delivered on cue. That is, advertising will reach the right consumer at the right time. We call this “Ubicom” or ubiquitous communication.

Marketing News:
Do you think ad execs are making a lot of mistakes in their online media efforts, and that’s why, in part, they’re so frustrated? What types of mistakes might they be making?

Pedro Laboy:
The biggest mistake we see is that marketers look at online media as a channel independent of other media. They overlook opportunities for integration with mobile, web, rich media and other channels. They are limiting the online experience to a banner and a form, when there so many tools available to them.

Other mistakes include:

• Lack of alignment with the company’s business goals

• Unwillingness or inability to define and measure success

• Unwillingness or inability to change and adapt to a new reality

• Unrealistic expectations of what technology and marketing can do

• Lack of resources and/or budgets

• Silo mentality within the company

• Lack of knowledge management

• Media bias and/or lack of marketing strategy/execution integration

• Short-term focused

Marketing News:
What specific steps can advertising execs take to better manage their online media efforts and digital marketing efforts? Can you list them, and expand on each one in terms of how they can go about executing them?

Pedro Laboy:
We recommend that marketers focus on the following:

• Align internally with the organization’s goals

• Take a media neutral view to marketing and integrate your media efforts

• Define and measure success and optimize according to results

• Tie short-term marketing decisions to long-term business objectives

A Flawed Approach To Marketing Investment

Pedro Laboy — Sun, 04 Jan 2009 21:55:57 +0000

In most companies, brand and marketing investment is a foreign concept; that is, branding programs—along with the marketing initiatives that support them—are viewed as discretionary expenditures that can be postponed or eliminated at the first sign of revenue slowdown. It is easy to blame marketers for this. After all, historically, they have shunned financial accountability and embraced an approach to marketing that can be best described as “trust me advertising.” However, simply making marketing executives more accountable—and we must—will not fix the problem. Rather, we must look at the flawed decision-making framework financial executives rely on when determining the quantity and timing of brand investments.

Parmenides’ Fallacy

Parmenides, the 5th century B.C. Greek philosopher, believed that change is an illusion and that conditions in the real world always remain constant. In other words, when making decisions about future outcomes one should assume that the current situation will remain unchanged, if left alone. However, quite the opposite is true. In the real world, the only constant is change, and over time normal circumstances deteriorate. This is Parmenides’ fallacy.

So, what does brand investment have to do with this fallacy? Executives tend to make investment decisions by comparing the status quo to a desired outcome, rather than with other possible outcomes. Let’s look at the financial industry, for instance. At a time when the industry is on the verge of collapse, chief financial officers (CFOs) at troubled banks see fit to decrease operating expenses by slashing branding and marketing budgets. They fail to realize, however, that consumers will not sit idle as their banks try to set their house in order. While budget cuts might lead to a decrease in operating expenses, profitability will spiral downwards at an increasing rate as customers—and revenue—head out the door.

Discounted Cash Flows

Discounted cash flow (DCF) analysis provides a good example of Parmenidian logic in action. DCF analysis is a valuation method used to estimate the attractiveness of an investment opportunity. In simple financial terms, a DCF model estimates the value, today, of an investment that will generate anticipated cash flows in future years. These cash flows are discounted to account for the time-value of money—since a dollar today is worth more than a dollar tomorrow.

There is a problem with overly relying on the DCF models when making investment decisions. From a CFO’s perspective, most brand investments provide two likely scenarios. If the investment is approved, the financial risk can never be greater than the amount invested. After the initial investment is made, incremental future cash flows are generally assumed to be greater than zero—but can never be less. If the investment is not approved, on the other hand, it will not be possible to generate incremental cash flows, but the financial risk is assumed to be zero.

Yet, we know that the financial risk of not making the right brand investment is not zero. Rather, a company’s financial risk increases and business performance declines when it fails to make appropriate and timely branding investments.

Accounting for Intangibles

Financial executives must understand that a company’s brand is an asset—an intangible asset—but an asset nonetheless. However, brand investments are typically expensed, and not capitalized, which makes no sense.

For example, upgrading personal computers for a company’s sales force is likely to have a non-material marginal effect on sales. Yet, this investment will be capitalized over three or four years. Brand and marketing investment, on the other hand, is expensed in the financial period incurred.

Let’s say that a CFO is given the choice to upgrade new computers for $10,000 or spend the same amount on a branding program. Under accrual accounting rules, he would only have to expense $2,500 during the first year if he buys new computers but the full $10,000 if he chooses the branding program. Obviously, buying computers makes for a more attractive investment. The true implications of these investments can be seen only from a cash perspective. When the IT upgrade and branding program are capitalized over the same period, the effect of both investments on cash is the same. The branding program, however, has a greater effect on revenue and shareholder value. Besides, the useful life of a brand is likely to outlive that of
a computer.

Capitalization accounting principles are the main reason why marketing budgets are the first to be slashed when corporations are looking to trim costs. Accrued earnings do not deliver shareholder value; cash does. It is wrong to make investment decisions solely based on short-term accrual accounting implications.

In most companies, marketing budgets are set as a percentage of projected sales or based on an arbitrary increase over the previous year’s budget. When sales decline, finance cuts the marketing budget; but, marketing spending drives sales—not the other way around. It, therefore, makes no sense to indiscriminately cut marketing budgets when sales are declining.

Building Value

Brand value equals customer value, equals shareholder value. Brands and customers, not products and services, generate the cash flows that create long-term shareholder value. Finance and marketing must work together to:

• Hold marketing, and their agencies, more accountable for business results
• Create investment decision tools that take into account all plausible outcomes
• Develop the models and infrastructure that link marketing programs to financial results
• Take a long-term approach towards brand and marketing investments
• Rely on measures of long-term growth—such as customer lifetime value—rather than short-term metrics such as monthly sales
• Create pro-forma statements that include the company’s brands as financial assets
• Set marketing budgets based on what the company wishes to accomplish in the future, and not based on what is happening today