Banking On Friends: Why Bulk Is Going Bust

Experian Marketing Services' CheetahMail recently released an analysis that ought to wake up bulk promotion supporters, especially those relying on email as a means to deliver messages. The analysis pinpoints just how significantly emails from trusted sources outperform other marketing campaigns, even when the offer is the same or inferior.

• Friends-and-family emails had 43 percent higher open rates and 29 percent higher click rates compared to bulk promotions.
• Friends-and-family email transaction rates were 85 percent higher and 2.5 times higher against bulk promotions.
• Friends-and-family emails generate higher sales per email than bulk promotions and much higher referral rates.
• Friends-and-family emails with links to social networks had higher referral rates than direct-to-offer links.

Bulk Promotions Are Slowly Going Bust.

Before every social media expert nods in agreement, it might be important to point out that the trust measurements are changing in 2011. While the current trend is to trust people with significantly higher frequencies, the public is already beginning to slowly shift away from "brand ambassadors" who are attempting to supplant the blind bulk promotions.

Friends might trust friends who share links to social networks, but when "friendz" share simply to make pennies on the dollar or because they are enamored with a brand, then any established trust will begin to evaporate. In fact, many people have already filtered the top tier of abusive sharers — that one uncle who has nothing better to do than pass along chain emails and conspiracy memos. They were the first to go and certainly not the last.

Only Careful Sharing Will Increase Trust.

While most "influence" measures are built on a formula of little more than "volume times frequency times mass," those score-trumping trends, especially when linked to rewards for the sharer, will eventually crash. Ergo, while we all appreciate friends who share a new music discovery or review site, people are less inclined to "like" pages and "follow" brands because their second cousin likes to win contests and perks.

The trust evaporation factor may even happen faster as those once engaged are pelted by direct promos because they wanted to help a friend win a T-shirt or some other lowbrow novelty. Smart marketers already know this and have adjusted to accordingly. And those that don't? Many are already crumbling, including some who are nothing more than consultants.

Defining People: How Marketing And Advertising Sees The World

On Tuesday, we shared how publicity, public relations, and social media see their audiences or publics. They are not alone. Marketing and advertising see the world in varied degrees too. In fact, marketing and advertising have so many world views and variations that we had to settle on four favorites.

An oversimplified perspective of how professionals see the world.

Branding.
• World View: Branders see the world as the audience, with every person on the planet having an innate obligation to be able to define the company as the company wants to be defined.
• Method: Run mass media advertisements to gain as much exposure for the company's controlled message as possible, regardless of any other factor. Demographics may play a role in selecting the media and some branding efforts include additional tactical elements. The more impressions, the better, just like brainwashing.
• Why It Works: Companies do need to define themselves. When it's done right, non-customers will adopt the brand too.
• Why It Doesn't Always Work: Sometimes the branding effort is so far from reality that it's doomed to fail because customers aren't as stupid as creative folks like to think. Other times, agencies spend more time branding the work than the company in an effort to gain attention, much like publicity. Abused, some agencies sacrifice measurement in favor of impressing peers at various award shows.

Advertising.
• World View: With the exception of mass media media branding campaigns, advertising sees the world as various target audiences as defined by their demographics. Deliver the right message to the right audience and big things happen.
• Method: Plan a media campaign around media that best matches the demographic, and create clever, pretty, or direct messages that are presumed to appeal to those audiences. Sometimes they will even include a call to action.
• Why It Works: It's planned, semi-measurable, controllable, and can change behavior and public opinion. At its best, consumers will relate to the advertising because it will feel like one-on-one communication.
• Why It Doesn't Always Work: Marketers and advertisers don't always look hard enough to find an adequate unique selling point so they attempt to sell the advertisement instead. If anyone is going to ignore public relations, it's advertising. (Who else would buy media time for automakers on a local news program, playing opposite the daily traffic accident tally?) They have a mistaken belief that consumers love to be interrupted online and off. There are an abundance of rules that some people think actually work (they do not).

Direct.
• World View: Direct marketing sees the world made up of demographical data with a certain percentage of each group ready to respond to anything.
• Method: Buy the list and blitz.
• Why It Works: No one really knows why it works, but enough consumers continue to respond to their least favorite form of marketing. As long as direct marketers can meet a 2 percent mark, companies see it as a guaranteed return, which excites them more than branding and advertising.
• Why It Doesn't Always Work: Beyond the possibility of a bad list or maligned message that sounds conspicuously the same as everyone else, direct has the potential to turn people off even if they gave permission. Two percent might be the industry average, but it is a low water mark that requires a sizable investment to pay off. People are nothing more than numbers.

Sales.
• World View: Anyone who hears the pitch will become putty.
• Pitch as many people as possible as often as possible and those people will be compelled to buy, even if it is only to convince the salesperson to shut up. Once they buy, they'll tell their friends.
• Why It Works: Sometimes products really are that good. Some people are really, really good at it. It's so easy, you can hire a room full of people with scripts and telephones to get the job done.
• Why It Doesn't Always Work: Most people are not as good at it as they might think. At its worst, it creates an adversarial relationship that frames up every transaction as open warfare on the consumer: the salesperson's goal to get the consumer to buy as much as possible, and the consumer's goal to make excuses why they cannot buy. Butt kissing is only optional.

Just like publicity, public relations, and social media, all of these views can benefit companies, with an integrated approach and minus abuses. In fact, some might notice the world view of sales and social media is very similar despite very different methods (nothing could be further from the truth).

Unfortunately, most marketing firms and advertising agencies seem to have an aversion to two-way communication, especially if it interferes with the "creative process." And while direct and sales are generally more malleable and accountable, they forever remain misunderstood as long as some salespeople resort to being that guy.

Getting Closer: Disney Looks For Soft Spots

With more than $25 billion spent on advertising this year, most eyes are on New York as Walt Disney Company’s new research facility will unveil some early findings and suggest online ad formats to about 200 advertisers. The formats, according to The New York Times, represent layouts based on what our brains prefer, whether we click on the ads or not.

The emerging media and advertising research lab was launched in May 2008 under the direction of Prof. Duane Varan, an authority on the future of television and advertising. The lab was developed to better understand the emotional drivers of audience behavior and physiological reactions to advertising.

It will be interesting to learn how Disney data meshes with a report released by comScore last year. Its study, on behalf of Starcom and Tacoda, showed that average click rates on display ads in 2008 were less than 0.1 percent. Starcom research also suggested no correlation between display ad clicks and brand metrics, no connection between measured attitude towards a brand and the number of times an ad for that brand was clicked, and that optimizing for high click rates does not necessarily improve campaign performance.

These are some of the same reasons we've avoided some "click" measurement assignments, whereas compensation is based on clicks. All too often, consumers develop a composite of impressions over time and seek out paths to demand fulfillment that they are most comfortable with. For example, after months of being exposed to movie messages, many customers traveled to local retailers over online outlets or visited online outlets from a path different than a source link.

In The New York Times story, much of the Disney research seems to hinge on google-based eye tracking, stereoscopic camera-based eye tracking and heart rate monitoring. While the lab promises to deliver deeper findings in these areas, it would be even more interesting if the lab eventually compares such models to contextual events.

For instance, we already know that the Coca-Cola brand is strong enough to cause people to prefer it over other sodas, even when its label is placed on competing products. Thus, we'd have to conclude brand reputation may have a dramatic impact on how small of an ad or simplified of a message some brands might get away with over other brands.

Communication doesn't happen in a box. And the brain works in some very mysterious ways.

Sure, we can ask questions (as The New York Times does) whether preroll ads that play before video clips are more effective when paired with banner ads. But will we ever know if the outcomes are different depending on the brand? It's hard to say. Neuro persuasion is still one of the least understood areas in the communication field.

What we do know, however, is that the effectiveness of advertising, marketing, and communication is tied to thousands of variables, including the individual experiences of each person exposed to an advertisement. The science beyond the creative or connection (in the case of social media) is attempting to effectively touch more of a mass audience on a scale of one-to-one as possible.

For example, when customers of a resort began writing personal letters to the owner of the property in response to his direct mail letters, we knew the communication mix was right. At that point, where the coupons landed on the page seemed trivial. Whereas, prior to having the right mix, coupon placement seemed to matter a great deal. Weird, but that's how we're wired.

Blowing Air: Why Push Falls Short

In 1982, I had a friend whose uncle sold Electrolux vacuums at a time when they didn't retail for $299 or less. He described it as an easy job, despite the skill sets being part of a dying art.

Nonetheless, every day, he would hit the streets, knocking on door after door in order to provide a demonstration. During a demonstration, the vacuums would practically sell themselves as he walked them through their various tricks: sucking up ball bearings; pulling dirt out of the carpet after the homeowners' vacuum had cleaned the area; and vacuuming a bed to illustrate just how much dirt, microscopic mites, and other mysterious creatures people go to sleep with every night.

The latter example, if the vacuum hadn't sold by then, almost always sealed the deal. After all, who wouldn't feel guilty for making their family sleep on an assortment of alien life forms? It worked so well, he often cut off work after the third sale, which was usually around noon. The company didn't care. Accountability was tied to sales and not time cards.

Why Door-To-Door Push Marketing Died

While he never really knew it, my friend's uncle was employing a combination of demand creation, classic marketing, and a direct call to action. And, it was relatively easy because once he engaged in a conversation and moved it toward a presentation, the only voice that could be heard over the buzz of the machine and swirling dirt was his own: push marketing at the core.

It also relied on a business model that seldom works anymore. It relied on a captive audience and solo sales pitch. Nowadays, that almost never happens. Nowadays, the problem presented by my friend's uncle would more likely prompt homeowners to dash upstairs to the computer and pull down as much information as possible on dust mites, vacuum cleaners, price points, and ball bearings (for good measure).

The end result would not be the same. My friend's uncle would very likely succeed in selling more competitive models than the Electrolux models even it was for no other reason than people feeling empowered into making their own decision. In sum, push marketing stands a near equal chance at pushing people away. At yet, so many companies persist in this endeavor.

What Is Holding Organizations To This Old Model?

Or, as one of Valeria Maltoni's readers recently asked, what is holding organizations back from doing it right? Why don't more organizations shift their marketing strategy in line with social media and pull marketing? Why is everyone ignoring the obvious?

Why? While there are many reasons, the most obvious seems to be the rapid adoption of social media by people who know very little about the composite of communication skills required to develop a successful program.

The two most common culprits, it seems, are internal marketing people who have limited experience in anything but push marketing, and an increasing number of public relations firms that are still trying to hold onto the diminishing return of media relations (less newspaper pages inevitably means less column inches to count).

Unfortunately, both look at social media as a demand fulfillment tool, despite that model being easily likened to pointing an Electrolux toward the ceiling and declaring that sucking air is a return. It isn't. In fact, there is a very good chance such efforts do little more than move dust around.

On the contrary, social media might be a communication tool but the implementation and execution requires something better than sucking air. Not everyone can do it. If they could, then every Facebook page, Twitter account, and company blog would be a success.

So is it any wonder so many organizations are being held back? Not really. I imagine it to be rather difficult for executives to get excited about social media when the only return they hear is the sound of sucking air. Give them a little more time. Sooner or later they will realize that the problem isn't in the tool as much as the operator.

The first step is usually the hardest to take. It's the one that requires them to realize that it's not about them, their product, or their company anymore. Or, like the one mentioned in regard to vacuums, it's less about vacuums and more about clean.

Missing Net Intent: Marketers See Myopically

If Brian Morrissey, writing for Adweek, is right, then online communication has a long way to go before it can right the wrongs of its own success. He correctly points out that the Internet is "blessed because it differentiated itself as more measurable than traditional media — and cursed because it has pigeonholed the medium as an engine of direct-response."

The observation comes from a new survey conducted by Forbes. The survey polled 119 senior marketers and was conducted in February and March. The numbers reveal a surprisingly myopic view of the Internet as a tool to generate direct response as opposed to a critical branding component that could eventually help establish customer loyalty.

• 82 percent identified conversations as a leading objective
• 55 percent identified registrations as a leading objective
• 51 percent identified click throughs as a leading objective
• 31 percent identified brand building as a leading objective
• 11 percent identified increasing reach as a leading objective

"On the Web specifically, advertising has moved into more demand fulfillment as opposed to demand creation. That's not really advertising. There's nothing wrong with it." Jim Spanfeller, CEO of Forbes, told Adweek. "Doing search marketing and point-of purchase displays all works, but it's not advertising. It's not about creating demand and improving brand metrics."

Why Most Top Marketers Still Misunderstand The Internet

The Internet is not as myopic as most marketers would have anyone believe. It's multifaceted, with measurement best tied to communication objectives over the medium.

Clicks, registrations, and conversations are certainly a measurable component on the Internet, but utilizing the medium as a direct response vehicle is paramount to creating a self-fulfilling myth. If you use it as a direct response vehicle, then it's likely to be nothing more than a direct response vehicle, with a diminished return on investment over the long term.

The reality is that the Internet can be all of those things listed in the Forbes survey because the Internet is less of a medium than it is a convergence of media — print, radio, television, direct, display, networking, presentation, public relations, communication, word-of-mouth, etc. And the success of any program is directly related to how you develop that program.

Indeed, its versatility as a communication tool is as varied as any communication vehicle offline, which is why so many people struggle to place it within the various communication disciplines that exist — marketing, advertising, public relations, direct response, etc. All the while, it doesn't really "belong" to any of these disciplines because the medium, or collection of media, is clearly integrated.

Advertising Annoyance: Food For Thought

“It takes a lot of your prefrontal brain power to force yourself not to process a strong input like a television commercial. If you’re trying to read a book at the same time, you may not have the resources left to focus on the words.” — Robert Desimone, director of the McGovern Institute for Brain Research at M.I.T.

That's according to one of the experts in “Rapt,” a guide by Winifred Gallagher to the science of paying attention, as featured in The New York Times today. It's also a book I'll be adding to my reading list, but perhaps not for the reasons Gallagher intended.

The article shares some interesting insights about how our thoughts dictate our world views — we can obsess about problems, drive ourselves crazy by multitasking on e-mail and Twitter, or give the brain a bit of time to focus on and accentuate the positive — and lead to differing realities. While there is ample truth to that, our interest today is a bit more pragmatic in that it reveals some science behind "that guy" as described by Chris Brogan.

The concept was also the cornerstone of Seth Godin's argument that we need to reconsider the interruption model of advertising. He advocated permission marketing, which he defines as the consumer granting permission to be marketed to if they know what's in it for them.

"The interruption model is extremely effective when there's not an overflow of interruptions," Godin told Fast Company. "But there's too much going on in our lives for us to enjoy being interrupted anymore."

Godin is half right in that an overflow of interruptions leads to no one interruption being able to stand out. Where he is half wrong is that permission marketing doesn't necessarily require asking permission to market to people, especially if that permission might lead to future interruptions.

What companies might consider doing is listening. Consumers are very savvy in asking for what they want online. And, if your company is listening, you can provide them the answers that may introduce them to your product or service. You may even send them an e-mail from time to time, provided it has value.

Where companies often go wrong is in their own assessment of what's important. Even in a permission based model, especially those that bombard with e-mail, doesn't account for that moment that the company might have lost permission, or, in other words, lost permission or nurture nothing more than annoyance or aversion.

The tricky part for marketers is that no two people or products or services will ever be the same. Some products and services can support daily news and updates and some cannot. Some will capture public interest for a few days; others for month and years. Everything has a duration.

It doesn't require as much guess work as some might think. The public will often tell you when they've had enough or not. Listening to them and knowing when that might be is the difference between being "this guy" or "that guy," permission or not.

The only difference between being an annoying interruption, pleasant surprise, and invited engagement is much more dependent on an exchange, a dialogue, than we might have ever realized. After all, most companies would prefer to be a focus for awhile rather than an interruption, eventually shuffled off to spam whether you subscribed or not.

Tooting Too Much: And Other Nonsense

Say what you will about the so-called social media blunder of Matt Bacak, the "powerful" promoter, who posted some self-puffery on a social media newswire service. Some of the run downs are pretty revealing too.

Consider the implications of Dan Schawbel's otherwise fine overview on Bacak. Schawbel writes "Let this be a lesson to all of you: You gain the privilege to promote yourself, after you’ve promote everyone else."

Egad Dan! That's no strategy, it's a Genesis song.

I will follow you will you follow me
All the days and nights that we know will be...

Consider the Media Pirate echoing what so many around the Web are saying … "This morning we were shown how social media in the wrong hands can create a backlash go viral and destroy a reputation."

Geesh Pirate! One search shows this is his reputation.

Never mind the scam accusations, there are scores of results that show Bacak's communication is consistent. He creates hype and controversy that gets a lot of coverage and sometimes sympathy. Good posts. Bad posts. It doesn't matter. Or does it?

Specifically, the Twitter release "accident" mirrors most of his communication, including breaking through "the 5,000 followers on Facebook threshold" earlier in 2008. Right on. Just before he ... woosh ... found cause to retire. What's the difference?

For David Fisher and Tris Hussey, there doesn't seem to be much difference at all. Does that make it evil? I dunno. Assuming he isn't a scam artist, probably not. And the only way I can think to explain that thought is by example.

A couple of years ago, a few of my ad friends were joking about the local low-budget in-your-face rent-to-own commercials that had become infamous over the years in Las Vegas. I knew who produced the commercials so I introduced them.

"We tried creative, stylized, and professionally produced commercials," he told them. "But they just don't drive store traffic. This junk works."

Right on. Know your audience. But for most, don't try it at home.

Trending The Inevitable: Retail Leaves Print

It’s no surprise that Kohl’s and JCPenney are reevaluating their newspaper-circular strategy. online advertising has been chasing newspapers for some time.

Losing even a small share of two retail giants will hurt. Last year, JCPenney spent an estimated $149 million in newspaper advertising. Kohl’s spent $136 million. Like many companies, these two retailers are finding that online marketing works.

Since July, JCPenney has seen steady increases in site traffic since July. Kohl’s is up slightly during the same period. The appeal of both sites seems to be their ability to attract online shoppers and entice online window shoppers, with the latter group sourcing online catalogues before visiting brick-and-mortar stores.

Their reasons are simple enough. They can save travel time and money when they know which retail store is having a sale or what particular styles might be in stock. In other words, consumers don’t have to visit four or five stores in person.

Newspapers aren’t dead. Not by a long shot.

While newspapers continue to be hit, they aren’t dead. Early online adopters such as The New York Times seem to be well ahead of the curve. Sure, online advertising revenue has yet to make up the diminishing print revenue, even for The New York Times as Scott Karp, creator of Publishing 2.0, pointed out. Stuff that the Washington Post has been covering even longer.

However, it seems to me that newspapers will eventually make up the losses as online advertising doubles in the next five years, spurred by the realization that they need their own version of product placement — advertising buys that are tied to specific subjects and stories.

In other words, if newspapers can dominate search terms and continue to lead as sourced content, then advertisers will be there. It makes more sense for marketers than the current model, which used to work when people spent better than a few minutes glancing at headlines or waiting for a friend to prompt them to read an actual story. It requires some to rethink media buys.

Ergo, instead of JCPenney relying on newspapers to carry a truncated circular to your door, it relies more heavily on online newspapers to provide content along with direct messages that are designed to entice online readers to visit an entire online catalog. (For example, a back-to-school sale advertisement seems suited to stories about education or fashion.)

Done right, a future JCPenney site will not only provide you the option to buy online, but also let you know which brick-and-mortar store near you has that specific item in stock, and maybe which size. Who knows? You might even be able to place a hold on the item before you pick it up.

E-Mailing Everybody: Marketers Say Spam Works

Forget Facebook and other online advertising models for a minute. Datran Media released a study that says direct-to-consumer e-mail spam works.

More than 82 percent of the marketers surveyed indicated that they plan to increase e-mail marketing this year. That’s a whole lot of e-mails.

Why? As much as everybody complains about e-mail advertising, it seems to work. The Direct Marketing Association (DMA) even released a report that says e-mail ROI can hit as much as $45.65 on every dollar spent, which is twice as much ROI earned from other mediums.

This study mirrors other industry specific releases sent out by the DMA, including one that predicted e-mail from the insurance industry will increase as much as 23.4 percent in the next few years. The insurance industry is not alone. E-mail advertising has become a red-hot choice among marketers nationwide.

Except. There are some things working against e-mail ROI. There is the increasing pressure on state legislatures by the public. There are the issues that cross over into the Federal Trade Commission’s consideration of online advertising. And, of course, there is the growing problem of over saturation.

Simply put, the more e-mail advertisements that consumers receive, the less effective the medium will become and the more likely it will be prone to stricter regulation. There are other considerations too, including that the DMA study on ROI in terms of dollars does not adequately consider long-term brand consequences or negative impressions. It also doesn’t consider the risks that more consumers associate with it.

Like most advertising and communication, direct e-mail advertising is a tool. It does not work for all companies or products, and can even be detrimental for some. Inc. recently published a great column that helps temper the hype and brings it back into focus.

Personally, before considering an e-mail campaign, I think many companies are better off thinking about a well-executed social media plan. Social media can be equally, if not more, effective because it allows the consumer to receive information when they want it and how they want it: RSS feed, e-mail subscription, social network announcement, Google search, etc.

Sure, social media, such as a blog, is considered passive by comparison. But then again, the communication doesn’t rely exclusively on an e-mail list either. In other words, while more than 70 percent of marketers said they intend to use e-mail to enhance consumer relationships, one wonders if consumers share their point of view.