Direct Marketing ‘Discovered,’ at Last

After years of being the poor relative to brand advertising, our direct discipline has finally been discovered by the big brand purveyors — all of those Mad Men who traditionally looked down their noses at any marketing efforts that demanded some form of response and were driven more by results than ego-polishing.

Perhaps we should all now breathe a welcome sigh of relief.

After years of being the poor relative to brand advertising, our direct discipline has finally been discovered by the big brand purveyors — all of those Mad Men who traditionally looked down their noses at any marketing efforts that demanded some form of response and were driven more by results than ego-polishing.

MediaPost’s’ editor Joe Mandese recently wrote an article with the intriguing, if slightly confusing title, “Excuse Me For Being Direct, But So Will You.”

“The most disruptive challenge to conventional media-based, brand-building advertising happened during the earliest days of Internet advertising, when agencies and brand marketers failed to define emerging digital platforms like the Internet — and ultimately, mobile — as a branding medium.

“Instead, direct-response marketers embraced the medium because of its real-time immediacy, access to data to track and ability to modify conversions and sales on-the-fly, and pure ROI efficiency.

“According to some experts, that trend is about to accelerate — as conventional brand marketers throw in the towel altogether and begin leveraging digital media to become direct sellers themselves.”

Conventional brand marketers throwing in the towel … becoming direct sellers themselves: That’s big news for those of us who have spent the better part of our careers trying to explain to those brand giants (and capturing some of all that money they seem to throw around) that while metrics like ‘reach’ and ‘frequency’ certainly have their value, nothing beats affordably capturing the business of new and returning customers and knowing their ROMI, the return on the marketing investment in each one of them. It is surprising they didn’t discover it years ago.

That expression “branding medium” suggests that those marketing initiatives which include a call to action and urge the consumer to “act now” do little or nothing to enhance the brand and often drive general agency art directors berserk, because those calls to action get in the way of their elegant designs.

Some years ago, before there was any significant “subscription” advertising in Brazil, where I now live, the small group who controlled newsstand distribution forbid publishers from advertising for subscriptions on pain of having their publications banned from the newsstands. They reasoned that this advertising would lure magazine buyers away. But when presented with the indisputable fact that offering subscriptions would allow a much greater advertising spend and in the best of all possible worlds, only 5 to 7 percent of the people who saw an ad would reply, while the rest would be positively exposed to the brand and many would purchase at the newsstand, they gave the publishers the go-ahead. Brand and subscription have gone hand-in-hand ever since, to their mutual benefit.

Quoting Publicis Groupe Chief Growth Officer, Rishad Tobaccowala on the reason for the “direct” discovery, Mandese wrote:

“… conventional brand-building media models aren’t working as well as they used to. It’s because big brands are realizing that the only way to have a relationship with and understand their consumers, is to cut out the middlemen and have a relationship with them directly.”

Wow! That’s a quantum leap from the historic paradigm that “direc”’ was, if not a strategy of last resort, well down the list of priorities. Working in big general agencies, how many of us have been asked to prepare 30-minute presentations to be an integral part of the same pitch with the agency’s brand campaign, only to see the time for it reduced to 20 and then 10 minutes or even — as time ran out — being asked to mention the “direct” recommendation while taking the client to the elevator?

Two important factors have principally changed the game:

  1. The emergence of vast amounts of data, the machines to process it and the ability of marketers to creatively use this data for their marketing initiatives;
  2. The growing understanding of CRM, the essential proactive relationship between brand and known customer.

Of course this hasn’t happened overnight. Data-driven marketing gurus have been planting and nourishing these seeds for decades and, as a result, the industry has grown and grown. Lester Wunderman said famously: “Data is an expense. Knowledge is a bargain.” As knowledge has grown and become more widely accessible, brand marketers are being increasingly drawn to it.

Poor relatives no more, “direct” practitioners have finally been “discovered” and have emerged from the shadows.

It feels great in the sunlight.

Fueling the Little Engine That Could

In our compulsion to always be in the fast lane, it’s easy to forget that once upon a time, direct mail was our principal medium of marketing communications and not incidentally, made some of its best practitioners millionaires.

direct mail
“Mailboxes in ivy,” Creative Commons license. | Credit: Flickr by Ryan McFarland

Summer Gould’s recent useful article, “How Direct Mail Is Your Little Engine That Could,” is a helpful reminder for those of us who like to believe we are always at the leading edge of technology-driven marketing. In our compulsion to always be in the fast lane, it’s easy to forget that once upon a time, direct mail was our principal medium of marketing communications and not incidentally, made some of its best practitioners millionaires.

That said, it is also worth recognizing that while the little engine can chug along and “snail mail” gives us the opportunity to put varied and interesting messages into the hands of potential consumers, that little engine needs a good deal of fuel and that fuel is increasingly expensive. According to Ms. Gould: “The average prospect needs to see your mail piece seven to 10 times before buying from you. So a well-planned direct mail program includes multiple drops with various mailers and postcards.”

That’s an expensive statement and raises the question: How much fuel do we need to get the little engine up and over the hill to bring us an order? Perhaps Gould is being too pessimistic. Seven to 10 mailings to get a purchase is almost certain to be wildly expensive and not economic unless your product is very, very expensive.

One way of looking at this is to calculate the cost-per-order (CPO) at different response rates and numbers of mailings to reach the desired response. In this case, 44 sales. Using Bizo and Epsilon data, the DMA’s benchmark says that “direct mail achieves a 4.4 percent response rate.” While that is a higher average return than is informed by my experience, let’s go with it, anyway.

Rosenwald chart
Credit: Peter J. Rosenwald

As we can see, direct mail at a 4.4 percent response rate, for every thousand mailed at a total cost of $1,000 per thousand, the marketer would have 44 orders on a single mailing, each costing $22.73. Assuming he could afford to spend 25 percent of his revenue for marketing, he would need at least a $91 or higher product price to justify just a single mailing. Each one thousand mailing would cost the marketer about $1,000. Whether we like it or not, that’s the cost of the little engine’s fuel. And if he had to mail the prospect three times to get the same 44 orders, his order cost would rise to $68.18 which would suggest that his product selling price would have to exceed $250.

On a CPM basis, as we know, email is likely to be only approximately 1/10 as expensive. Email costs are so varied that it is difficult to establish meaningful comparisons, but $10 per thousand emails sent is as good a rule of thumb as any. Using as our baseline industry average open and “clickthrough” rates, we see that to achieve that same 44 sales, converting clickthroughs to sales at 70 percent, it would be necessary to email 10 times. Even so, the total bottom-line cost would be only just under $100.

In this head-to-head comparison, on the basis of pure cost and response, the little engine would have been overwhelmingly beaten by email. The risk:reward ratios certainly favor email.

As we all know, CPO is only one variable. Of high importance is the comparative ease and speed of email, the ability to test quickly and accurately with small quantities and best of all, the ready availability of comprehensive data permitting large quantities to be analyzed and segmented quickly and easily. But as the figures demonstrate, just opting for email because it is much “cheaper per thousand” doesn’t address the key marketing economic issue: How much do we have to pay for an order and can we afford it? Looking at the entire smorgasbord of media from this perspective is essential.

While marketing costs per thousand and response percentages follow more or less predictable patterns, how much any product or service, single sale, continuing sale or subscription can afford to acquire a new customer depends totally on its own economics; how much the marketer is prepared to risk and how soon he expects to get his investment back.

Direct mail may well be the little engine of choice for many good reasons. But before taking a ride on it, it would be prudent to compare its costs and risks to other media.

LinkedIn Ought to Be ‘LinkedOut’

I have moved up the emotional scale from mildly irritated to pretty angry. I even considered a New Year’s resolution of dumping LinkedIn.

The first time it happened, I thought it was just an error caused by my chunky fingers hitting the wrong keys or clicking my mouse with too little respect for the useful creature. But, as it has continued, and LinkedIn has been impervious to requests for an explanation of whether what’s happening is intentional or not, I have moved up the emotional scale from mildly irritated to pretty angry. I even considered a New Year’s resolution of dumping LinkedIn.

Here’s why.

What would you think if you got this message in your inbox?

LinkedIn notification for Peter Rosenwald
Credit: Peter J. Rosenwald

Like me, you might be complimented that people are searching for you for business, for pleasure or for anything. And you’d certainly be curious about who these clever searchers might be. So, just as I did, you would click the box. Right? And here is what you would get.

LinkedIn search notifications for Peter Rosenwald
Credit: Peter J. Rosenwald

That’s funny. I distinctly remember that LinkedIn told me (in the opening personal email from “Notification. No reply”) that I had appeared in three searches this week. Did the other two searchers get lost?

Only a week or so later, Liz, at LinkedIn Sales Solutions, tells me my 90-day fan club, albeit over an overlapping period, grew by 400 percent.

linkedin sales solutions notification for Peter Rosenwald
Credit: Peter J. Rosenwald

WOW. I really want to see who those folks are.

The only problem is that to see these 13 people, I have to sign up for a 30-day “Free” trial to Sales Navigator Professional with a negative option paid subscription after the 30 days if you don`t notify

LinkedIn credit card notification for Peter Rosenwald
Credit: Peter J. Rosenwald

them you want to quit. And to get the free trial, I have to give LinkedIn my credit card and lots of other data. Why? Helpfully, there is a very smoothly written explanation promising “a seamless subscription experience.” But, despite these assurances, when even the CIA and NSA can’t adequately protect their data, can LinkedIn?

The playwright Tom Stoppard has one of his characters say famously, “There is an art to the building up of suspense.” LinkedIn seems to have mastered the art, taking the curious (or not taking him) to find who is really interested in his profile.

And if that weren’t enough, here’s what came next.

Important LinkedIn notification for Peter Rosenwald
Credit: Peter J. Rosenwald

I know I flunked math at school but, despite a serious effort, I couldn’t figure out where the 267 number came from.

It’s obvious that like many of Silicon Valley’s progeny, growth in number of “subscribers,” paying for the premium service vs. taking it free, is the key KPI. That would help explain the rather over-the-top switch-selling which so annoys not only me, but lots of people who value the LinkedIn service — but not the hassle.

“Get them to sign up” is a standard digital mantra. And as LinkedIn is now owned by Microsoft, its bean counters are no doubt focusing on this and the data that each sign-up brings. Writing for Forbes, Grant Feller said of LinkedIn: “It knows where people work, their skills, ambitions, who they went to school with and what interests groups people share. LinkedIn knows about people better than Microsoft does.”

It is now virtually impossible to get a sense of whether this strategy is paying off. After Microsoft paid a cool $26.2 billion in late 2016 for the essentially profitless company with its tanking stock price, its figures are no longer available. At the time, Microsoft CEO Satya Nadella was quoted as calling the deal the centerpiece of its “cloud services and software” strategy. And it also makes Microsoft a major player in the increasingly competitive social network Olympics. But does this justify such a hard sell?

The question is: Should we all be LinkedIn or Out? That’s something to consider for your next New Year’s resolutions.

Data, Data Everywhere: Nary a Bargain to Find?

Stephen Yu’s recent and extremely thought-provoking piece on AI started me wondering once again about the dangers of data overload and whether we’ll ever really, really understand the purchasing decisions people make, how they make them and be able to track them accurately.

Data mining
“Big_Data_Prob,” Creative Commons license. | Credit: Flickr by KamiPhuc

Stephen Yu’s recent and extremely thought-provoking piece on AI started me wondering once again about the dangers of data overload and whether we’ll ever really, really understand the purchasing decisions people make, how they make them and be able to track them accurately.

Because today’s machines gobble data and — like my dog eats anything he can get jaws around — we marketers seem to search for more and more bytes in the hope that sifting through this mega data will hold the keys to the holy grail of maximum profitability. Perhaps it will. But as a disciple of Lester Wunderman, I can’t let go of his oft-expressed prescient warning that “Data is an expense. Knowledge is a bargain.”

Admittedly, when this was first expressed, data was one hell of a lot more expensive to keep and handle than it is today and shaking knowledge out of it was very difficult. But that’s hardly the point. Our trade press is now overflowing with titles like “Planning and Measuring Social Media Campaigns” (Sysomos), the “Email Marketing Metric You May Not Know” and unnumbered guides to the customer journey. But I’m still waiting for the definitive article that leaves all of the peripheral data by the side of the road and presents a usable and believable knowledge-based metric model to measure the cost of each step in the journey from awareness through to final purchase. In today’s multi-media environment, that’s the metric model we are all waiting for. Will we ever get it? Will AI provide it? I’m not so sure.

There is historically a different focus between top management whose attention is quite sensibly on macro numbers and operational marketers who know that it is the micro numbers that spotlight big opportunities. The ROMI, the return on the total marketing investment, is the bottom line for both: How much did we earn for how much marketing money invested? Simple.

But at what milestones in the customer journey did the momentum toward purchase increase and at what others did the potential customer take a turn away from purchase and why? That’s the type of data we need if we are to optimize our practice and it will surely impact the ROMI. Sadly in many cases, we will never know.

Recently, some of my Brazilian colleagues created a very strong email campaign as the first stage in persuading well-segmented prospects to clickthrough to a website to register interest and gain a price advantage in making a major purchase. The client reported that while the website was receiving a lot of activity, only a tiny fraction came as the expected clickthrough from the emails. The client was understandably angry and it didn’t make any sense.

Every adult Brazilian has a unique CPF number, which is regularly requested and used to identify the individual in financial transactions. It’s rather like an American Social Security number. Because my colleagues were fortunate enough to have the CPFs of the prospects to whom the emails had been sent and as registration on the website also required a CPF, it was a relatively easy task to compare the two groups to determine how many of the registrants had been sent the emails, even if they hadn’t availed themselves of the clickthrough option. It turned out to be a happily large percentage.

While research has been undertaken to determine why, any measurement of the relation of emails to registrations and their cost would have been both misguided and meaningless. If the marketers had decided to stop using the emails because, as they said, ”emails didn’t generate any response,” they would have been making a critical error.

Perhaps that’s a long way around the issue of just why, with all of the enormous data and sophisticated tools at our disposal, we just can’t develop a meaningful metric model that reliably tracks the prospect along the path to becoming a customer. And it argues that while AI will certainly add valuable knowledge, getting inside the head of a prospect and truly understanding his/her actions is a long way off.

‘Truth’ — The Secret Marketing Ingredient

It’s getting harder and harder to watch the news and come away with any sense of what is “true,” what is “fake” or what is somewhere in between. I can’t help but wonder if this climate of disbelief isn’t going to seriously undermine our marketing practice; especially where the liberty of exaggeration is permitted to run a bit wild.

truth in marketing
“truth,” Creative Commons license. | Credit: Flickr by Jason Taellious

It’s getting harder and harder to watch the news and come away with any sense of what is “true,” what is “fake” or what is somewhere in between. I can’t help but wonder if this climate of disbelief isn’t going to seriously undermine our marketing practice; especially where the liberty of exaggeration is permitted to run a bit wild.

Watching CNN the other evening, in one of its endless self-promotional breaks, the screen showed a simple, ripe apple. A quiet voiceover explained that this was an apple. It went on to say that perhaps some people would say it was a banana and even some would believe it. But the fact is, it concludes, this is an apple. Facts matter.

CNN is to be congratulated. I cannot imagine a better modulation of all the noise out there, of all the serial lies emanating from Trump, his White House colleagues and thousands of talking heads filling the airwaves with every possible version of the “facts.” The point is that “truth” is so hard to find anymore that Big Brother can broadcast almost anything as a fact and a certain number of people will be willing to swear that a ripe round apple is in fact, a banana.

A blogger, writing some time ago in Balihoo about “roles that truth, disclosure and deception play in the modern marketers’ world” and how they affect marketing strategies and campaigns, focused on the danger not to a single sale but rather the lifetime value of the customer. Rightly, he cautioned, “just how dangerous outright deceptive marketing campaigns would be for your business as it centers around your dependence on customer retention, repeat purchases and ‘trust’ buying.” There is that word “trust” again.

In the Wharton School’s fascinating book, “Driving Change,” the authors analyze why some business partnerships are successful and some are not and argue that “trust is the basic ingredient of any of these networking or cooperative arrangements. You need a good contract outlining the deal; but without trust, the contract will mean nothing.” The degree of trust needed by a consumer obviously depends, to some extent, on the value of the purchase or its use. How are marketers to gain the trust of consumers at a time when skepticism is high and growing and we don’t know whom to believe for what reason.

Not surprisingly, the Balihoo article echoes the lament of marketers everywhere that presenting a totally unvarnished picture of most products would be a complete turnoff for prospects. Imagine an airline promoting economy seating by showing what it is really like when it is even close to full? Or imagine a software marketer telling the truth about how long it will really take to get the damn thing to work properly and to learn how to take advantage of all its bells and whistles?

As marketers migrate to talking directly to well-segmented prospects, a bond of trust can be built, communication-by-communication. And if the product or service performance lives up to its promise, the essential trust can be maintained.

But it’s getting harder and harder. Not only do we live in a world where chaos is increasingly trumping order, promiscuity — personal and commercial — is on the rise. Brand loyalty in the face of attractive competition is a diminishing asset. And despite the continuing surge in Internet purchasing, watching the explosion in hacking and fraud (don’t just think Equifax and the 143 million stolen files; even the CIA and NSA can’t seem to protect their most sensitive data). For how much longer are consumers going to want to complete personal data sign-ins?

There may come a time in the not-too-distant future when the best marketing has more real facts, less hype and when all consumers can agree that an apple is truly an apple.

How to Negotiate a Risk-Sharing Marketing Contract

The marketing service company’s smooth and promising presentation assures me that hiring it will certainly grow my business. “Trust us,” they say, “We have a winning strategy and we’ll all celebrate the fantastic results.”

marketing negotiations
“Salary Negotiations,” Creative Commons license. | Credit: Flickr by MIke Kline

The marketing service company’s smooth and promising presentation assures me that hiring it will certainly grow my business. “Trust us,” they say, “We have a winning strategy and we’ll all celebrate the fantastic results.”

I want to believe them, but they come at a high price and we are not rolling in cash during these difficult and fast-changing times. If I were the potential client and they offered to minimize my front-end cost and share the risk of under-performance, I‘d find their proposal very attractive and credible. I’d feel comfortable sharing success with someone who is willing to share failure.

Entrepreneurs know that a strong component of commercial success depends upon getting their businesses noticed and engaging customers to buy their products or service. They also know or should know that this marketing and advertising task can consume substantial resources. If they can get their marketing partners to share this investment, through some form of split of the generated revenue, it can be a definite win-win. That’s why revenue-sharing and other forms of remuneration are becoming the new normal.

The historic 15 percent “commission” system was the basis for agency remuneration in the days of “Mad Men,” but tougher times have diminished the number of martinis and brought with them far more competitive systems of compensation. Now they are being asked — compelled, in some cases — to put their money where their mouths are: to mutual benefit. Some of the world’s most successful direct response copywriters have done this for years, and the winners have earned enormous sums from grateful clients who tried and tried, but were unable to beat the controls they created years ago.

Some years past, on a conference panel, I asked an advertising sales director of Globo TV (Brazil’s largest media company) what value he put on a 30-second commercial slot that Globo had failed to sell. Looking at me as if I were an escapee from a gringo nut house, he said it was obviously worth nothing. What, I then asked, if a potential advertiser were willing to guarantee to pay? Say, 35 percent of the normal price for any unsold advertising spots, a standard procedure in the U.S.? He emphatically said he would never even consider it. If he still has a job, it is unlikely he would take that view today, when Google is gorging itself on 80 percent of the fall in broadcast and print advertising.

To make revenue share work, the agency, consultancy or service provider needs to carefully do its homework. This “communicator” will first need to be able to assess the real cost of the time of the professionals who will be involved in the project.

Peter Rosenwald's Chart 1

Using a matrix like this, which sets various ranges of monthly compensation, assumes 1,800 (or some more appropriate number) of working hours per year, it’s easy to see the “Actual Cost Per Hour” for each category of professional. But we all know that 100 percent of the hours will not be billable. (Sometimes, there really isn’t much to do but chat on Facebook.) So we make a guesstimate of the percentage (here, 60 percent) of billable hours and increase the “Cost Rate” accordingly.

And of course we want to make a profit. (That’s the name of the game, isn’t it?) So to establish a minimum “Bill Rate,” we gross up the “Cost Rate” accordingly. And finally, we can round it up if we wish.

The professional responsible for pricing this project only has to input the number of professionals in each category and the estimated number of hours each will have to spend on the project and ZAP, the professional costs (including the percentage for hours not billable and the profit-loaded (29.3 percent) quotation amount for the professionals) is ready and waiting.

Collecting the other costs for the project, data, media, etc., (with or without mark-ups depending on policy and competitive pressure) and then adding them to the professional costs provides the essential baseline for a revenue share negotiation. You know your real costs and you know these costs with profit and the amount you would quote as a fixed fee. The old wise adage says; Never gamble more than you can afford to lose. That wisdom should inform what “revenue share” you are prepared to accept.

Peter Rosenwald's Chart 2

But that’s only from the communicator’s side.

What does the “marketer” have to know? And more importantly, what does he need to share with the communicator?

The answer is simply how much he can afford to get an “open,” a clickthrough, a lead or a final sale. Which of these he wants from the communicator depends upon his briefing of the communicator and whether the marketer knows his historic metrics for the journey from advertising through to the final sale. Keeping it simple, let’s assume that the marketer knows his numbers and has an expectation of selling 500 units at $850 each. He can afford it, but is unlikely to want to pay 10 percent of $85 per unit sold.

Peter Rosenwald's Chart 3

Because the communicator knows that to make his profit objective, he needs $26,125 or an alternative revenue share and must have a minimum of $19,592 to break even, he is well prepared to enter into a revenue-share negotiation.

Let’s look at it this way.

The communicator’s leverage for negotiation is the spread between his cost $19,592 and his quotation amount $26,125. To make its quotation amount, the communicator needs just $52.25 per sale. To cover his cost, he only needs $39.18. If the communicator receives $52.25 per sale, he only needs 375 sales to recover his costs. If the actual sales number is above 500, say, 550, the communicator will receive his full quotation amount plus 50 times $52.25, or an additional $2,612.

The question for the communicator is how much to ask for? Sixty percent of the $85 allowable would give $51 per sale — just short of the $52.25 needed to make the quotation amount at 500 sales: 50 percent would be $42.50. Not bad. Looked at from the marketer’s side, with no up-front cost, sharing the $85 allowable on a more or less equal basis should seem fair.

Peter Rosenwald's Chart 4

I’d argue for $50 per sale as a good compromise, but each negotiation is different and each person will have to define his own limits. Hopefully, the use of these tools and this methodology will help.

Peter Rosenwald's Final

Think Before You Marketing Metric — We Must Stop Chasing Our ‘Tails’

Not so long ago, in a data-driven marketing seminar I was giving for some Brazilian Microsoft executives, I asked how many of the more than 40 participants “have a subscription”? Fewer than 10 hands were raised. Then I asked: “How many of you have Netflix?” Nearly all of the hands went up.

subscription
“Subscribe,” Creative Common license. | Credit: Flickr by Dominic Smith

Not so long ago, in a data-driven marketing seminar I was giving for some Brazilian Microsoft executives, I asked how many of the more than 40 participants “have a subscription”?

Fewer than 10 hands were raised.

Then I asked: “How many of you have Netflix?” Nearly all of the hands went up, and you could see on their faces the growing wave of recognition: While they hadn’t thought of their Netflix access as a “subscription,” they realized that they had “subscribed” for services to be paid for on a periodic basis, with or without a time commitment. Not a bad definition of a “subscription.” They also realized that not only were their insurance policies, cell phone contracts and utility connections all subscriptions, but Microsoft’s move to the “Cloud” business model was a classic example of subscription marketing.

So why should their software customers have to decide to purchase new versions of the tools when they can receive them automatically, without any new investment, as part of their monthly — yeah — subscription?

Had you measured the penetration of “subscription” possession in our group before that “eureka” moment, the metric would likely have been in the 25 percent range. After a different presentation of the question, however, it would have raised the rate to at least 80 percent. Does it matter? It certainly does.

So much of today’s marketing is driven by greater and greater amounts of data. And those of us whose job it is to plough and harvest this hayfield can be simply overwhelmed by its volume.

In trying to find the haystack needles to accurately inform marketing strategies that should deliver the best results for the lowest cost, we risk missing critical insights. Blame it on too much pressure or too little time; it has the same negative result and we wind up unproductively chasing our tails.

How many times have we heard advertising professionals argue for spending the lion’s share of the budget on TV because “we’ll reach more eyeballs, more often, at less cost per thousand”? It’s the same thinking that drives us to defend the proposition that because email is so cheap, we should broadcast our message with greater and greater frequency, rather than pay the price of quality analytics resulting in fewer eyeballs but the right ones.

Imagine that you are the responsible marketing executive for Pampers. You know that you are going to have to pay for a 30-second national TV spot at approximately $25 per thousand impressions. And let’s assume (an impossible assumption) that 100 percent of your viewers are going to be women. Thanks to Google, we discover that the national average of pregnant women in the U.S. population at any given time is 4 percent. That means that if you reach each of them — another wild assumption is that they are all at least thinking about “disposables” — as well as reaching the additional 8 percent who have kids 0 – 2 years old, as you can see from the diagram, you will be paying $208.33 per thousand — almost 10 times the rate card price to reach your target audience.

Image from Peter Rosenwald for subscription postWithout building a media plan, it is obvious that if you can afford $200-plus per thousand for reach, you have a lot of additional media that might be more efficient and cost-effective than TV spots. Certainly, a single viewing is unlikely to have maximum impact. So that cost of $200 will need to be multiplied by the frequency of broadcast.

What metrics do you use to determine the real commercial value of the marketing spend, the ROMI? How do you gauge whether one medium with a higher CPM will bring you customers with a greater lifetime value than one with a lower CPM? Without a direct and measurable purchase metric, traceable to the specific media spend and message, we’ll never really know for sure. Sadly, that’s the reality.

The metrics specialists will have fancy computers full of PowerPoint slides, defining and dashboarding each step in the customer journey and providing KPIs and benchmarks for clicks, open rates, etc. But in my experience, however, no matter how conscientiously these have been developed, they will have major distortions which are the result of failing, somewhere during the development process, to address basic questions like the meaning of words like “subscription” or “engagement.” The “specialists” will get away with their fantasy solutions more often than not because management tends to look at the big picture, not the details.

Perhaps the best preventive for this is for marketing managements to task their planners to provide not just their “objective” recommendations, but to cook up and serve a smorgasbord of choices and, wherever possible, to reference these choices to solid metrics.

Otherwise, we are likely to spend a great deal of time, effort and money chasing our tails.

Delivering on the Marketing Promise

We all know that promises are made to be kept. And let’s assume that most marketers are intent on delivering the promises they make, even if the promotional wording of those promises may be somewhat exaggerated.

marketing management
“community-manager,” Creative Commons license. | Credit: Flickr by Enrique Martinez Bermejo

We all know that promises are made to be kept.

And let’s assume that most marketers are intent on delivering the promises they make, even if the promotional wording of those promises may be somewhat exaggerated.

The problem is that unless we can truly control every step in the journey from the first promotional articulation through to the timely receipt of the goods or service and payment, Murphy’s law — “anything that can go wrong, will go wrong” — may come into play. I remember many years ago making a unique “Act Now: One Day Only” offer for a book club membership drive and being hit by the season’s worst snowstorm at the end of the “One Day Only.” We waited and waited for the response: one day, two days and only on the third day did the mailed orders begin to trickle in. Of course, it never caught up with expectation.

Not long ago, a Brazilian marketing company had launched a major campaign for magazine subscriptions using, as a medium, promotional inserts in a bank’s monthly credit card charges’ mailing. The bank promised that 100 percent of its invoices would have the insert. When response was well below tested expectations, it was discovered that only about 60 percent of the promotional pieces had been inserted: Someone in the lettershop had mislaid boxes of the printed inserts and never alerted anyone, lest it slow the tightly scheduled invoice mailing. Had the marketer endured the boredom and personally paid a visit to the facility when the job was being run, a significant and very expensive disaster could have been averted.

We have no way of managing the customer’s expectation other than scrupulously delivering what we have promised or even a little more than we have promised — just in case Murphy is hanging around. We all know that one of Amazon’s greatest strengths is its delivery follow-through. It doesn’t only “ask” for — it almost insists — on customer feedback. It carefully monitors every step of the process and listens and responds to comments, whether bouquets or brickbats.

Sadly, in my experience, not enough companies listen carefully to the recordings of telephone interactions the law requires them to announce and proactively respond to about customer complaints.

We are at a strange time in marketing’s history.

We have more tools than ever before, and these allow levels of sophistication not even dreamed of only a couple of decades ago in the age of Addressograph plates and before computers were on every desk. But it seems that the promise of the future — super technology to deal efficiently with all the minutiae of the selling, purchasing and payment processes — often falls short of keeping that promise.

The easy thing to do is to blame it on “those lazy, overpaid, long-haired techies” and software that “doesn’t do what they promised it would do.” But, as the saying is, “the fault lies not with the Gods but with ourselves.”

As managers of data-driven marketing enterprises or service companies, most of us have come a long way from the days when management by walking around (such as visiting the lettershop facility in the earlier example) was in vogue. That meant actually seeing if what was happening where the real work is done, away from our elegant offices, matches the promising PowerPoint presentations we see in the conference room.

Our customers want and need us. They applaud with their purchases, in the convenience and economy of the digital world where everything is immediately available and even better than promised.

But for those of us who have left the “reality” down on the shop floor and manage by keeping an eye on our ever-fancier dashboards, it might be good to remember the anecdote about a possible future airline flight whose passengers were told that the flight was historic, the first one to have no crew. The joke about that flight is the announcement promised: “This flight will be flown by a faultless new technology and nothing can go wrong … go wrong … go wrong.”

We would do well to make sure that our promises are being kept the old-fashioned way — walking around.

OK, Folks: Make Your Bet on Harry’s or Goliath

As the Bible tells us, the little guy can fight back against the big one. It’s a good biblical tale and it resonates in today’s competitive environment. While slingshots are out of fashion, now we have the Internet and social media as weapons when the odds are stacked against us.

Harry's Instagram page
(Image via Harry’s)

As the Bible tells us, the little guy can fight back against the big one. It’s a good biblical tale and it resonates in today’s competitive environment. While slingshots are out of fashion, now we have the Internet and social media as weapons when the odds are stacked against us.

Getting my morning fix of the latest news from the New York Times digital edition the other day, I couldn’t help but notice that the news summary was preceded by a dramatic headline that leaped off of the page (screen) at me: “The Truth Behind Gillette’s Recent Ad Campaign.”

Harry's content marketing in the New York Times
(Image via The New York Times)

That’s great positioning and a definite attention-getter, if a rather strange lead for a Times story. It’s more of what you might expect from a sensational tabloid or even Target Marketing. In decidedly smaller type, under the headline, it said “Sponsored|Harry’s.”

When I realized it was an ad campaign by an upstart against a giant that has an obscene market share in its category, I couldn’t help asking the question: Will this counterattack against Gillette be as promotionally valuable for Harry’s as a directly customer-focused campaign might be? Put more bluntly, will it be worth the money or is it simply the proverbial tree falling silently in the forest?

With that in mind, I did what I was told to do; I followed the link instruction to “READ MORE.”

NYT ad clicks through to Harry's landing page
(Image via Harry’s)

And there was a lot more. The landing page was all extremely low-key, engaging copy describing Harry’s start-up business where the partners had “worked our butts off to make sure guys across the nation are excited to shave again.” And Harry’s had been so successful that it had “threatened the bread and butter of a really big corporation” that was now striking back. (Getting excited about shaving is a claim I couldn’t identify with and found a bit over-the-top, but perhaps that’s just me. Maybe I should join the Millennials and grow a beard.)

“Here’s our story” is the wonderful bridge to the next item, what the copy describes intriguingly as a page from Gillette’s “dirty playbook.”

asterisk in Harry's ad in the New York Times
(Image via Harry’s)

The ad explains that Gillette took aim at “what we hold most dear — our customers and their satisfaction with our products.” Not a bad self-serving statement. And then it goes on to say that Gillette “dug up third-party sample ‘data’ ” to try and get Harry’s customers back to Gillette. And it pictures the aggressive Gillette ad.

Taking a leaf from the many publications that are chronicling the multiple lies of the Trump administration, it points a big red arrow at what it rightly calls the “super tiny” asterisk used to reference the Gillette third-party “data.” It says simply, “It is not true” and provides not only convincing customer loyalty statistics, 80 percent reorder, but customer Twitter postings to prove it.

It’s not all anti-Gillette angst, though. Harry’s wants to make sure that for those attracted to the ad, there is a free trial offer, a $13 value. This suggests that even at a 25 percent margin, the freebie must be costing Harry’s around $10 per taker, plus the cost of getting the message prominently on the Internet. That’s real money.

content marketing from Harry's
(Image via Harry’s)

And here is the rub. Will the powerful copy and offer, the Harry’s against Goliath approach, go viral or sufficiently viral to extend the reach of the promotion well beyond the media that has been paid for? Will it bring the cost of trials and conversions down low enough to be “affordable,” attracting customers whose loyalty generates sufficient lifetime value to amortize the total marketing costs over that lifetime and let Harry’s end up with more than a sustainable profit? I’ll bet it’s going to be a close shave.

Hopefully for Harry’s, God will be on its side.

Endit …

 

 

 

Direct, Data-driven Marketing Increase Brand Equity

I may be a ripe heretical candidate to be barbecued at the stake by my more conservative direct marketing colleagues, but I’ve come to the conclusion that communications which enhance brand equity should be accounted for as such, and that this value must be part of and added to the data-driven marketing equation.

Opening Keynote - Dinosaurs & Cowboys: Direct Marketing Secrets Every Marketer Needs To Know Whether You Are Selling Online, Offline or Both
Direct marketing may be an older technique, but it’s relevant and adds to brand equity
Check out even more about personalization and artificial intelligence with FUSE Enterprise.

Back when direct marketing was a tribal affair and its warriors and their acolytes were constantly on the field of battle against the trendy “mad men,” it was a heresy to even consider that any marketing action that didn’t have a measurable call to action was anything but pure waste. The image purveyors had a monopoly on all of the glamor and all of the money. And they could laugh off that eternal question attributed to Lord Leverhulme: “I know half of my advertising expenditure is being wasted, but no one can tell me which half.”

Long before we had computers to churn all of the numbers, our DM tribe boasted that we could exactly determine whether the advertiser was getting his money’s worth by dividing the total advertising expenditure in each medium, or even each specific ad, by the number of measurable sales generated. When a campaign was running, the first place to stop when one got to the office in the morning was the mailroom, because that’s where the orders were.

Until the last decade of the 20th century, the concept of valuing “brand equity” didn’t exist. If you owned Coca Cola or Nescafe, what the brand was ‘worth’ was measured almost totally by the sales and profits generated in the marketplace. In 2006, “The Journal of Consumer Marketing” published an important academic article, “Measuring Customer‐Based Brand Equity” which made a compelling argument that “brand equity positively influences financial performance.” Even the most hidebound direct marketing professionals had to recognize this reality, even if they found it convenient to ignore it in their own work.
Recently, working on a project to present the results of a broad multi-media campaign to a company with the recommendation that it be expanded, one of the factors arguing for that expansion was an analysis of the return on the marketing investment (ROMI). The combined press media and digital campaign invited the reader/viewer to an attractive homepage, which both told the advertiser’s story and offered the next step in the journey — registration to receive a free series of ‘content’ publications and videos.

Peter's media response analytsis
(Note: In Brazil, where this article was written, in the templates, commas denote decimal points and ‘.’denote the commas used to separate thousands.)

Using the standard media response template, it was easy enough to put costs against each of the site visitors and registrants. For the advertiser’s $60,000, he received 5,300 visitors; and of these, 2,060 people registered to receive the additional content. Although it had been established by the client that the lifetime value of a purchaser would average $250.00, because there was no direct sale of the product (although one could have been promoted with an incentive coupon, etc.), the problem was how to show the advertiser what he had gotten for his money.

To value the campaign, we had to start with the concept that only a percentage of the registrants would be “buyers.” So we built a simple “sensitivities” table, ranging possible conversion percentages Peter's blog post chartand established the sum of all of the costs that would be necessary to effect the conversion, had the client wished to promote a direct conversion. Looking at the number of likely sales from the sensitivities table, even being conservative and saying that only 40 percent or 824 would become buyers, the cost per sale at $54.88 would be acceptable: a lower cost would be better.
There is an old saying that: “The heresy of one age becomes the orthodoxy of the next.” If it were a direct marketing heresy in the past to ascribe any value to the frequency a consumer came in contact with a brand message if this could not be traced to a measurable sale, perhaps we ought to revisit this and, in our new digital age, this might be transformed into orthodoxy. That said, how can we reasonably and fairly determine the added brand value: What price should we put on each head?

Another Peter blog post chart

Economics teaches that the value of something is what a willing buyer is prepared to pay for it. If the willing buyer is prepared to pay $5 per thousand to send out email messages, then is it really a heresy to say that these communications have a positive value in conveying the brand message — adding to the brand equity — to the analytically selected audience? Note that in the campaign results summary above, we have valued the 20 million brand impressions at $60,000, almost the entire amount the advertiser paid for the campaign. Adding this to the hypothetical $206,000 of revenue earned from sales means that the ROMI is 3.9 times.

I may be a ripe heretical candidate to be barbecued at the stake by my more conservative direct marketing colleagues, but I’ve come to the conclusion that communications which enhance brand equity should be accounted for as such, and that this value must be part of and added to the data-driven marketing equation.

Learn even more about the convergence of technology and branded content at the FUSE Enterprise summit. Artificial intelligence and personalization will be featured among many other techniques and technologies.