Thursday, December 31, 2009

Grading 2009 Marketing Forecasts

It's that time of the year...when the wonders of the world wide web and its infinite storage give us the chance to review what we it was typed. Mostly for fun.

Back in January, I posted themes for marketing in 2009 [here]. Let's take a quick look, shall we?  Grading is, well, subjective. Your scores and comments--using whatever rubric you prefer--are welcome.

Theme 1: Wearing other people's shoes

The era of the simulacra in marketing--whereby we substitute a representation of what is real for what is real--will further resolve itself in 2009. Defining a customer's values by using a marketer's representation of those values will be discredited by...the customer. Unauthentic marketer monologues that rely on self-referencing notions or that characterize people as collectivist definitions based on gender, race, age, income, or as...consumers...will be cast aside. In their place, favor will rest with real conversations among real people that enable the real people in marketing to catch a glimpse of the real world as it exists where someone else stands.

Grade: B+
Certainly all manner of social media has enabled people to talk with or at one another. I'm not sure if Coke Zero's conversation with 2000 followers on Twitter [here] is a good example of authentic dialogue, but many marketers now seem to be seeking the real thing on social sites like Twitter + Facebook and on open forums like blogs. Even conservative industries like agriculture are taking the plunge to actually, you know, engage customers, critics and competitors...see Monsanto here and here. The conversation isn't always pretty. Unfortunately for some industries (notably ad and news), the point of recognition seems to have not yet arrived en masse.

Theme 2: Increasing the discomfort index

The tools and techniques that have gotten marketers where they are will be unable to sustain them going forward. In a year when many long held beliefs--from capitalism to consumption--are being questioned, people in marketing will need to question whatever makes them feel comfortable. If it's easy, if it's table stakes, it probably needs to be questioned.

Grade: B
With continued weakness in advertising spending, online even feeling the pinch, discomfort is high. In addition, the challenging economics of The Great Recession make Price and Promotion the predominant P's for many marketer's [here]. Clients are asking for more causation in marketing ROI discussions and this continues to challenge investment in the tools that are broad based and hard to measure in realtime. Volume and value in advertising would seem to have a new inverse relationship [here].

Theme 3: Testing the real world

Along the lines of themes 1 and 2, the idea of market-testing ideas will continue to evolve toward a ready, fire, reload approach. With one-size-fits-all focus group and field studies too slow, too expensive and too generalized, creative and product testing will take place in realtime using clickstream data to inform evolution and variation in low cost, perpetual prototypes...much as direct mailers have practiced in paper space for some time.

Grade: C
Examples of crowdsourcing like Netflix' prize demonstrate the concept of the collaboratory in high profile. But on a more granular level, the deployment rates of social media is a broader indication that marketers are testing their ideas in the real world [here] [here]. Whether they are finding that their ideas reasonate is a different question, but the trend would seem clear: everyone continues to know that they must pursue innovative ways of competing against ignorance, apathy and genuinely good competitors. Unfortunately, too many marketers still rely on the 'please let us know what you think by taking our survey' solicitation on receipts, web pages or followup phone calls.

Theme 4: Detailed online impressions

After years of ignoring the online space, many people in marketing have rushed in to fully embrace it...using the traditional models of impressions-based media, intrusion, and branding that they comfortably carried with them from meatspace. In 2009, impressions-based pricing online will continue its deflationary trend and be replaced by pricing models that pay only for performance. Intrusion-based ad units such as rich media and popovers will be ignored routinely. People in marketing roles will focus on the nuances of online brand experiences as defined by a long-tailed view of customer preferences and interactions with a brand. Usable, useful, and desirable will be the criteria against which meaningful brand experiences will be designed and delivered online--and off.

Grade: A
Annoyance with intrusive ad units online remains high. And though some predict huge gains in new video-based advertising online, the only continuous uptrend in online spending even during down times, is with search [here]. Performance measurement is still a way off for traditional TV models, but even Google is getting into the game using DVR data [here]. Customers are in control and if there isn't a clear reason to engage, people won' matter how intrusive you try to be. If impressions are paid for without follow through to engagement, then the price can only continue to deflate as value continues to align with what is directly measurable.

Theme 5: Time as a risk to manage

Time is the one commodity everyone has in equal portions each day. People in marketing will increasingly confront the reality that wasting a customer's time is a brand risk that must be actively managed. Engagement will be defined more precisely in terms of positive and negative engagements where efficient use of and respect for a person's time becomes the expectation. Whether it's call center catacombs, unusable information, spam like solicitations, or irrelevant pitches, marketers will find that a risk premium comes standard with every touchpoint.

Grade: A-
While time is a risk to manage for marketers, it would seem they are losing the battle in capturing it. With Facebook now occupying more time than any other online activity, and games like Farmville, Mafia Wars and Sorority Life becoming major time sinks online, one wonders where marketers will find room to compete. That's why salaries are earned I guess. 

Regardless, marketers are confronted with the idea that even their products are, in fact, services [here]. And where there is service, there is a time risk to manage. The good news is that customer service options are now being deployed in online, call center, and in person channels that are more integrated and efficient for all involved. Usability and human factors are more broadly recognized as critical components of service design.

The bad news is that many marketers still seem to think that their customer's time isn't their concern. Whether it's once a day email promotions blasted to thousands of inboxes or 12-step phone menus just to talk to someone, their remains a great deal of customer time to stop wasting.

Thursday, December 17, 2009

Volume vs. Value: The zettabyte generation

Say, 'Zettabyte'. Let it sink in for a second, then say it again. 'Zetta-byte'.

Like 'one trillion dollars', a zettabyte is  a really big number...and yet, it is the amount of data each of us average Americans consumes annually...3x!

Using the faded power of worn out analogies, if a zettabyte were printed on paper, it would bury the continental US AND Alaska in a layer of paper 7 feet deep...a number 9 zeroes more, even, than all the dollars in the national debt!

National debt: $7,938,000,000,000
One Zettabyte: 1,000,000,000,000,000,000,000

At least, that's the total information consumed according to three researchers at UC San Diego in their report 'How Much Information: 2009 Report on Consumers'

The report's headlines include a deluge of data on media consumption, broken out by bytes, hours, and format.

TV, for instance, occupies 41% of our daily hours, 44% of the daily words we encounter, but only 34% of the bytes we, um, consume. Perhaps hot selling HD video screens will boost our appetite for bytes?

Here's a just a bit (or rather 450,000 bytes) of some fun numbers from the report (click to enlarge):

But beyond the numbers showing:

  • a +5% annual growth rate in the amount of data we consume, 
  • the decades-long relative increase in the amount of reading by Americans (albeit not using the ungreen paper format,) and 
  • the huge amount of data consumed playing video games vs. radio, phone, and print media, 

the report provides an important, mostly obvious, caveat: measures of quantity, whether in hours or bytes, are not measures of value.

Overfed and underread?

The report uses the example of Lincoln's Gettysburg address to show that volume (as in exposures, bytes or costs) does not equate to impact in the general human sense of more-is-more.

For instance, Lincoln's 2.5 minute speech, scrawled on paper, heard by few, but repeated repeatedly to schoolchildren throughout the years, turns out to have more impact--both quantitatively and subjectively--than the much more expensive, high-volume, TV series, 'Heroes'. And yet, looking at Heroes through the lenses of hours of content and bandwidth, one might (mistakenly) conclude the opposite.

Which brings us to a point in all this data masquerading as information...

So what?

For marketers, the message supported by the report would seem clear: as the volume of data consumed by modern Americans--measured by time, volume or format--continues to measurably increase, there is one clear means of breaking through the data noise in a way that leads to measurable informational value: interaction.

And while the move from passive to active engagement in marketing has been underway--at least rhetorically--for some time, it is surprising that so much of our media consumption is paid for based on volume-based models rather than action.

Increasingly, spending on pay-per-action models that support the business and marketing objectives would seem to be the demand of engagement marketers. Engaging one's attention in what marketers have to say comes with the demand that there be value to you. That's hard when you don't know someone by more than their zip code, demographic or gender.

The value of engagement is something that's been evident since before anyone knew what a kilobyte was. Somewhere along the way, we've started to re-discover that our tools alone are poor measures of the ends to which we apply them.

YouTube video showing one type of engagement with our tools (ads included)...for better or worse:

Wednesday, December 09, 2009

Tapped out consumers: what's a marketer to do?

'Advertising is the art of convincing people to spend money they don't have on something they don't need'
-Will Rogers

With credit continuing to contract, unemployment high, and The Great Recession wobbling between green shoots and brown leaves, the macro-level challenges to the consumer's spending habits seem apparent for the near term: Less is more...more or less.

In fact, when one looks at the income quintiles of US Households, the extent of the Great Debt Deleveraging taking place should be obvious:

Household debt as a percentage of GDP has reached 100% only twice in US history...1929 and 2007. Much of what US consumers bought over the last two decades was bought on credit. Much of it, perhaps, because advertising was so successful at convincing people in the way Will Rogers said.

But if thrift and living within one's means is the new required reality, what can advertisers and marketers hope to do going forward?

I took a look at this question by asking myself the following question: if everyone were to live within their income means, what is the value of a consumer's time in terms of their prospect for consumption? In other words, what is the absolute customer value built in to each minute of engagement and attention?

Rather than focus on the cost to reach someone, I thought I'd focus on the potential spending value of that person's time (and thus, the potential revenue value).

The answer? 5 to 22 cents per minute (depending on which income quintile the consumer inhabits) everything...including water, taxes and energy.

See table and assumptions (click to enlarge):

An adjustment to the per minute income value is made by multiplying the unadjusted value by 1.33 This adjustment is meant to account for the one-third of a person's time that is presumed to be unavailable for engagement (e.g., sleep, hygiene). Income conservatively based on lower bound for each quintile. All data from US Census 2004

So What?

Of course people will still make use of some credit. And most customer value calculations would use a multiyear or lifetime value. But whatever you think of the math and the assumptions, the new reality of living within one's means means that advertising, PR and the larger world of marketing have a hopeful using media in a social, engaging way.

I don't mean to imply that every brand has to swap it's marketing dollars from print to a Facebook Fan page. I do mean to imply that there are new, lower absolute values to the return one might expect from an investment in communications that seek only attention or delivering impressions.

Many in media have been slow to embrace planning approaches that went beyond broad-based awareness building, focussing primarily on the spend necessary to get a debt-fueled consumer's attention. In that world, sales lift was generally a sufficient measure of advertising impressions success.

But that approach may be done. In an era of thrift, engagement becomes a primary objective for brand communications. Social approaches to brand awareness through engagement, done well, have among their qualities:

  1. Low cost per minute of engagement relative to the value of the person's time (due in large part to the ownership of the engaged in building awareness and interest among their social network) 
  2. High relevancy (due to personalization and ownership of the message taken by those engaged)
  3. Tight audience focus (self-selection by the engaged reduces the inefficiency of audience descriptions based on gender, age, and race stereotypes)
  4. Trust (resulting primarily from the interaction of people with one another rather than one-size-fits-all, one-way brand abstractions).
  5. Learning (derived from observation of and interaction with the people who incorporate brand engagement into their lives in different ways).
  6. Measurement against predefined value objectives (available from the firehose of data available in near realtime). 
For more on social media measurement see here, here and here. For more on assigning a value to a social media visitor, see here.

    Taken together, engagement-based approaches to communications may provide corporate marketers the best chance of realizing realistic revenue impacts in an era of less consumption.

    No group or organizational unit owns engagement around a brand. In every company, though, there are leaders and those who would be led. Communications, customer service, sales and marketing professionals are all potential leaders along a path of customer engagement.

    The leaders who emerge will be recognized by their obsession with asking questions and listening to the answers.