Direct Marketing

Archive for March, 2010

There are powerful online trends at work sweeping away anonymity as a default position, creating many commercial opportunities for those with a light enough touch.  Firstly, there's Facebook, the web’s 800lb social gorilla.  Zuckerberg's service has given four hundred million people around the world an online identity and the norm is for users to provide 'real' information.  And it's an identity that increasingly follows you around the web, thanks to Facebook Connect.  Then there's the booming mobile web.  While PAYG allows people to disguise themselves, anyone using a contracted service instantly ties their data habits to some type of billing system, thus allowing certified transactions to occur. 
Another mega-trend that will encourage people to 'get real' online is Rupert Murdoch’s decision to throw up paywalls around his online content.  Previously, people have been allowed to read the Digger’s content for free – and without flagging who they are.  However, now everyone behind the News International paywall will be attending a party where names badges are checked on the way in. 
Then there’s ever faster broadband and the continuing march of Moore’s Law, making YouTube-style and webcam communication increasingly common, thus letting people see each other all too clearly. 
And finally, but perhaps most powerfully, the law, in the UK at least, is swinging behind the anti-anonymity drive.  Lord Mandelson’s much-derided Digital Economy Bill may be heavy-handed in the eyes of many, but one effect it has is to batter the walls of the ISPs where, to date, anonymity has been standard fare. 
All of which creates a self-reinforcing norm.  Transparency and genuine online identity becomes widespread, brushing aside the previous default so perfectly captured by Peter Steiner’s famous cartoon, ‘on the internet no one knows you’re a dog.’  This in turn creates an environment where people feel comfortable adding ever-more revealing layers of information to their online identities.  Including location, financial habits and information that, even a few years ago, would have seemed positively reckless to publish online.   As John Battelle writes, the Database of Intentions is extending beyond, ‘What I Want’, to ‘What I Buy’, ‘Who I Am’, ‘Who I Know’, ‘What I Am Doing’, ‘What’s Happening’ and ‘Where I Am’. 
Of course, digital consumption habits have always linked to an IP address making it theoretically possible to identify who was snacking on what binary bytes.  However, this world was murky, with plenty of ways to conceal who was who, including floating IP addresses. 
So what does this new transparent world mean for the marketing industry?   Well, increasingly, the vast oceans of data that flow around the web…

…will no longer be mysterious and faceless.  They will become valuable, real-time flows of personal information, replacing the anonymous data streams currently crunched by web analytical systems.  In retail terms, footfall will no longer be a gloomy description of unknown folk trudging past the door.   Valuable chunks of people’s real-world activity will be published online all in the context of genuine identity information, backed up by reliable checks, both social and financial in nature. 

Rupert Murdoch may have lost his classified Rivers of Gold to Craig’s List et al.  However, by throwing up the paywalls he could be tapping into rich new revenue streams.  Forget the entry fee.   A couple of quid here or there won’t add up to a hill of bean-counters.  However, the creation of a billing relationship with well-heeled ABC1s could create plenty of cash piles as paying customers are offered enticing goods beyond news. 
Today, News International sells advertising space to Big Brands.  Soon they could be selling access to their readers, as the company becomes a massive CRM machine, taking verified customer information and matching it to mega-brands.  And for most people the offers will come heavily sweetened – ‘You have read ten articles from The Times, let us buy you a coffee from our partners Starbucks’. 

There has been a great deal of online discussion about the role of Free in online business.  However, the end of web anonymity is the most interesting aspect.  People are being encouraged by brands to give up personal information in exchange for free services and good deals.  To date that market dynamic has been restricted to web services, such as Gmail.  However, as the mainstream market gets real online, other categories will follow.  You may have already noticed on Facebook the ads that target your profile information, not the content you are reading.  It's a gradual but seismic shift in the exchange of value between customers and the marketing industry.  The greatest advertising cliché of all – 'We know only half of our advertising works – trouble is, we don't know which half' – will make less and less sense as online anonymity is seen as suspicious and people feel more comfortable publishing information online.

However, brands beware.  This shouldn’t be viewed an opportunity for a global spam-fest.   Companies will be expected to treat this personal data with great care.  Customers' fingers will be poised to hit the ‘Block This Brand’ button.  Ready to punish those companies who abuse their trust.   In transparent markets, customer data will be visible, but corporate fingerprints will be just as easy to trace.

Source: James Cherkoff

For a long time the marketing industry closed its eyes to the impact of networked media.  And while it looked the other way, Messrs Brin & Page ate its lunch and built the largest media company in the world.  Over the last year or so, however, possibly because of the Google experience, the marketing industry has done a U-turn and the consensus is now that the world has indeed changed forever.  So which view is right?  Unsurprisingly, the reality is somewhere in between.  A thread of my client work over the last few years has been challenging the notion that the maturing web means we should forget everything we’ve ever known and start again.  Forget the idea of brands, stop using TV as a medium, assume that the customer has morphed into a new type of being, accept that complete transparency is the only choice, believe that the only workable price point is free.  Only a total reboot will do, some claim.  However, this binary view of the world overlooks that while much has changed, more has stayed the same.  Corporations are still operating in markets where consumers are looking for value and trustworthy suppliers.  People are still motivated by the same needs – keeping up with the Jones’, caring for their families, exploring the world, self-expression, ambition, fun.  It’s just that the markets they use to find satisfaction have been rewired. ‘The problems which are not changing are human problems – which remain the same,’ noted Eric Schmidt, CEO, Google last year.  Take for instance, the social net de jour – Chatroulette.  It’s a perfect example of the many new wonderful and unexpected things that are emerging as a result of open networked media and widespread broadband access.  Built by an individual, using powerful distributed technology that now sits in bedrooms all around the world, it offers a P2P-experience that undermines traditional views of private and public identity and drives new types of social interaction.  And what is this remarkable bleeding-edge innovation used for?  Letting young men check out hot girls!  Whizzy new kit, same old motivations.  However, that's not to underestimate the ingenuity and scale of the new markets that people will build when they find their needs unmet.  I was lucky enough to meet Douglas Rushkoff last week and hear him speak about his belief that…

…our relationship with money has broken.  He described it by saying that today’s markets don’t work well because they are built on financial exchange systems from another era.  Drawing on a technical analogy he commented that we are trying to run modern applications on an outdated operating system.  Rushkoff suggested that people are aware of this and becoming fed up of using a financial system designed by the feudal lords and abused by the Masters of the Universe.  So to meet their needs they are turning to new means of exchange created by the web that Rushkoff calls 'private currencies'.  Such talk may sound crazy but the growth of Zopa, the rise of virtual currencies, and P2P markets like CraigsList and even Betfair suggests Rushkoff might be onto something.

Rushkoff's ideas can easily be applied to the marketing
industry, where $500bn is being invested every year by brands into a
system that was designed by the Mad Men.  One dominated by convoluted media metrics and ever more opaque econometrics to demonstrate its
relevance to the real world.  But while adding software patches to Madioson Avenue's mainframe may prevent the machine from
falling over, it can’t disguise the fact that it was designed to power
steam engines not maglev
bullet trains.  And so ordinary individuals are increasingly blocking out the Mad Men media and taking it upon themselves to create new social markets where traded opinion provides clarity about brands, products and commercial value (aka the share-and-compare economy). 

Marketing is about markets.  And markets are about people satisfying their needs using the technology at hand.  The explosion of activity on the web is just about people looking for better solutions to their problems.  In that sense, there's nothing new under the sun.

Source: James Cherkoff

John Battelle updates his seminal idea – The Database of Intentions: "Search was a pristine signal, an eruption of oxygen in the anoxic
ocean of the early web, and an entire ecosystem grew in its bloom. The
first implication was already manifest: Google had launched AdWords and
AdSense, Overture (later to become Yahoo Search Marketing) was
thriving, and a burgeoning paid search ecosystem was in the early
stages of becoming a multi-billion commercial expression of the
Database of Intention's power.  But as anyone who's been reading this site already knows, web search as a pure signal has been attenuating of late
- overwhelmed by the sheer magnitude of data on the web, for one, and
secondly by our own increasingly complicated expectations.  Nature abhors a vacuum, and so does the Internet. In the past year
I've come to the conclusion that "web search" was just the first of
many fields in the Database of Intentions. For those of you who are not
database geeks, and to further pad the metaphor, a field in a database
is colloquially defined as a specific type of information in that
database. Sets of fields are called records, and sets of records make
up the database.  My mistake in 2003 was to assume that the entire Database of
Intentions was created through our interactions with traditional web
search. I no longer believe this to be true. In the past five or so
years, we've seen "eruptions" of entirely new fields, each of which, I
believe, represent equally powerful signals – oxygen flows around which
massive ecosystems are already developing. In fact, the interplay of
all of these signals (plus future ones) represents no less than the sum
of our economic and cultural potential."

Source: James Cherkoff

…the rise of social gaming, and particularly virtual currencies.  ‘EA laid off 1500 employees and spent $300m on social gaming studio Playfish on the same day’, exclaims Schell, ‘what in the world is going on?!’. 

So what does this mean for marketing?  Well, as one or two of you (ok one) might have noticed, my professional starting point is that Marketing is about Markets.  Not Advertising/PR/Sponsorship/DM/Social/Web or any other siloe of the industry.  This gradual shifting of the P-o-P is an example of networked media creating new markets run by different players.  It’s a trend that looks set to run and run, especially with the continued rise of micromedia and powerful mobile groovyware. 

These days there are plenty of ways that you can roll out a campaign one morning and just listen out for the Kerching of the online cash tills later that same day.  So if you are still only measuring media to understand the impact of your consumer insights and creative excellence, you may be missing out on new expanding markets.  Markets that in the lean years ahead will offer elusive areas of growth. 

It was David Ogilvy who said, ‘We Sell, Or Else’.  Today, the question for advertising and other promotional channels is how to make brand communications work (ie sell) harder and get people queuing at these new P-o-Ps?  How can brands be brought closer to these new mass markets that are driven by real-time data and strange virtual credit systems?  
Ogilvy’s simple reminder about the role of the marketing industry is likely to take on an increasing poignancy.  Networked media means transparent markets.  So clients will care less about the line on their media investment schedule (above, below, through or otherwise) and more about the bottom-line on their P&Ls.  Media evaluation and effectiveness targets will look very different as they turn from Reach to Cash.  Or put more simply – You Sell, Or Else…

Source: James Cherkoff