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Digital marketing: goodbye 24/7, hello 60/60/24/7

By Jonathan J. Ariel - posted Thursday, 21 August 2008


For those 21st century marketers and ad executives not besotted with their own brilliance, the message from adland is convincing: thoroughly understanding consumers’ preferences is the currency that will trump all others.

In the last few years, major marketers in the United States, across a range of industries, have realised that consumers have changed the way they view and connect with brands.

Changed forever.

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Winners in the 21st century advertising industry will be those marketers who unearth smart and executable insights that will allow them to bond with their customers in the right place, at the right time, in the right manner, and with the right message.

While companies have long sought to know their customers intimately, that level of knowledge has rarely been achieved. From the dawn of commercial radio in the 1920s, until the launch of the World Wide Web browser 16 years ago, crudely put, marketing was all about the hawking of mass products to mass audiences via the mass media; resulting in consumers never being adequately identified or studied.

The era of marketing (as it has been practiced for 80 years) is dying before our eyes.

In his book, Always On, Christopher Vollmer, a Vice President (Media & Entertainment, North America) at Booz & Co. relates just how far marketing has come in 80 years.

Vollmer focuses on digital marketing and explains this as the space where sellers develop a conversation with buyers; one at a time. Smart vendors are those who not only deeply explore the buyers’ world, but also connect relevantly with them. This contrasts with marketing as it is currently practiced, where brands talk at consumers via the mass media and consumers have no choice but to listen; however irrelevant the advertisement may be.

Very recently, marketing has turned 180 degrees as talking has yielded to listening and monologues have become dialogues. This is thanks mainly to countless outbound communications channels, mostly on the web, a myriad of amateur content providers and a vast array of on-demand and portable media devices, such as Apple’s iPhone.

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And so, it comes as no surprise that this evolution in marketing has made its way from Madison Avenue, New York, to Bella Vista, New South Wales. On May 6, quoting the Australian Financial Review, Australian Food News remarked that marketers at major grocery chain, Woolworths Limited, plan a $200m revamp of the duopolist’s online presence, by offering shopping services that will capitalise on the phenomenon of the popular social utility web site, Facebook.

Extrapolating (US) data for the five years to 2006, Vollmer shows that consumers drastically shifted their media habits. The time spent with music, broadcast TV and newspapers dived by 10 per cent. Time spent surfing the net ramped up four-fold, while spells devoted to mobile devices leaped a massive ten-fold! As mobile devices and the web are more widely accepted, consumers will be empowered more and more over time.

These are the unchartered waters in which Woolworths is setting sail.

For Woolworths, a retailer with a vast product range, obtaining access to partnerships in products (and services) in which it is not represented, and monetising that access is the biggest drawcard to joining the digital age. It not only generates consumer insight, but it allows an expanded capacity to capture measurable data almost everywhere a consumer goes. If smartly designed, in return for data on their behaviour, an opt-in conversation will allow Woolworths to offer customers real value for both their money and their time.

Woolworths can achieve this through cookies (tracking files that follow details about web surfing including sites visited and topics searched), or through directly offering the consumer something of value in exchange for hard information about the consumer’s product preferences. For example, Borders bookstores rewards readers who sign up to their electronic newsletter, or answer surveys with frequent discount shopping vouchers.

To see history in the making, compare two styles of advertising currently being practiced.

First, there is your Sunday morning newspaper, groaning under the weight of colour catalogues from retailers who promote their wares to anyone who happens to have thumbed through the paper, regardless of whether they actually need the product or not.

As an advertising medium, newspapers are chosen for the estimated impressions of a particular demographic; such as the number of 18 to 39-year-old professionally employed women, that it claims to deliver to the advertiser. And, the number of impressions made by the insert is reflected in a cost-per-thousand impressions price tag.

Second, and markedly different, is the modern online hotel survey that targets a real person, who recently stayed at the hotel, and whose direct experience (good or bad) will determine whether a future stay is likely. The hotel can bypass the (not very useful) cost-per-thousand model and can instead satisfy its hunger for accountability. It achieves this by paying its marketers based on measures directly related to actual consumer behaviour.

In 2007, when PepsiCo launched a digital campaign in the United States in support of Aquafina Alive, a vitamin enhanced water, it focused its advertising on about 4,000 websites that the company knew delivered a heavy concentration of consumers interested in what is known as “healthy lifestyles”. This campaign gravitating towards interests, rather than demographics resulted in a 300 per cent improvement in click throughs.

Determining the  relationship building value of different options (touchpoints) is the first step to understanding the customer’s behaviour. Detailed analysis involves understanding where, and when, consumers encounter a corporation’s message and, which platforms (television, mobile phone, or PDA), what media (TV shows, blogs, online videos or social networks), and what brands are preferred?

Vollmer alludes to the fact that different groups may indeed choose different touchpoints, even if they prefer the same brand. For example, as a 42-year-old who has used personal computers for as long as I can remember, and has recently decided to proudly junk my clunky PC in favour of the new Apple iMac, I may prefer a visit to David Jones (the closest Apple reseller to me) as my touchpoint, as I am just getting to know the brand. On the other hand, brand evangelists, like my 30-year-old running partner, may choose an online forum. After all, she has been using Apple since she was in school, and what she has forgotten about computers, is more than most of us will ever learn.

This knowledge enables marketers to develop data warehouses and determine whether advertising should be entertaining or informational in nature.

In 2006, US banking giant, JP Morgan Chase, used a touchpoint based approach when it chose Facebook, to launch a new Mastercard named +1 to university students. According to Chase’s Ms Sangeeta Prasad, “Facebook was chosen given its strong credibility in the student world”. JP Morgan Chase felt that students do not believe that credit card issuers really meet their needs, and the bank wanted to convince students otherwise. The Facebook alliance attracted not only a whopping 34,000 members in a year, but as the Facebook group was restricted to university students, it attracted 34,000 relevant members.

This represents a significant paradigm shift in retail thinking, one where ad executives and marketers will no longer lord over consumers.

The real challenge in the world of new media is to recognise customers across the various channels, and to know what you have already told them and sold them. The vendor needs to deliver, in real time, the most relevant message, to ensure the value of each dollar spent on that communication is maximised.

When marketers form a relevant and never-ending dialogue between the retailer and consumer, so that the probability of a sale increases at each point,  that is when success in digital marketing will come.

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Always On: Advertising, Marketing, and Media in an Era of Consumer Control  by Chris Vollmer and Geoffrey Precourt, McGraw-Hill Companies (April 2008) $29.95.



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About the Author

Jonathan J. Ariel is an economist and financial analyst. He holds a MBA from the Australian Graduate School of Management. He can be contacted at jonathan@chinamail.com.

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