You may have read recently that the notion of “the Long Tail” (which is a guiding principle in interactive marketing) had been debunked by an article in the Harvard Business Review. I had been struggling with how to explain to my colleagues why the HBR article was, in my opinion, off base (it was, essentially, discussing a different point entirely). Anyway, Seth Godin has saved me the trouble with his post: There it is again.
I attended the Advertising 2.0 conference in NYC on Wednesday. The keynote was Susan Decker, President of Yahoo. She talked about the state of online display advertising and compared it a bit to search.
For the last five years, search advertising has worked well because it’s exceedingly simple to translate a search query into the ultimate intentions, goals, and desires of the user.
Since search-intentions are clear, investments and technologies have been focused on improving the serving and delivery of the search ads themselves (e.g. Adwords, Panama, and bid management systems like Omniture’s). Nowadays, very sophisticated platforms exist to drive search campaigns and the efficiencies are staggering.
The problem? Ninety percent of all online advertising inventory isn’t search based. And this enormous display ad (e.g. banner) inventory is fragmented and inefficient. Susan is predicting a renaissance in display advertising. I think instead it’s facing a revolution.
The online display-advertising inventory is fragmented because it is structured largely on the ancient ideas of content ownership and subscriber profile. That is, online display ads are sold in nearly identical fashion to offline display advertising – a system that was established literally a hundred years ago or more. Revolution is needed.
It’s important to note here that even though these online ads are inefficient, they are so much cheaper than offline ads that the vast inefficiencies involved are easily hidden by agency or media planner or even by clients themselves. (These ads essentially get “fewer miles-per-gallon,” but each gallon is cheaper to buy.) A little better, certainly easier, but not the permanent solution. Frequency works after all, and online ad frequency keeps getting cheaper all the time.
The real problem is not how much less you could be paying for the same impressions (lowering the “C”), it’s how much targeting and reach and response you’re missing out on (increasing the “A”). As a rule, “old fashioned” marketers will be excited by the ever-shrinking-C in CPA. Direct marketers will instead be excited by the ever-increasing-A. Why? Because as direct marketers, we look beyond campaign metrics like CPA to look at lifetime customer value; each missed acquisition represents enormous opportunity losses.
Susan Decker also cited statistics that suggest that in 2012 Internet advertising will be second only to direct marketing and will exceed all print and TV. She spoke with enthusiasm about the vision of Yahoo’s freshly minted display advertising platform – hoping it will deliver on the idea of writing an ad once and publishing it to 500 million users.
Again, I agree with her sentiment, but her choice of words belies an “old fashioned” approach. First, by separating “Internet Advertising” from “Direct Marketing” I think that Sue is participating in the propping up of out-of-date mass-market-mentality about marketing and advertising – the very attitude that created the fragmentation she’s trying to solve! Revolution is needed.
The long tail – of both products and the markets they target – is the single most important concept to understand in this new media landscape. As targeting efficiencies improve (the ultimate promise of improved display ad platforms like those from X+1, Tacoda, and RevenueScience), marketers will find greater opportunities and lower costs through increased segmentation. (That would be the complete opposite of sending the same ad to 500 million people). Products, being sold directly to niche markets of consumers, through one to one marketing methods, will define the display advertising landscape… and that’s direct marketing.
As Seth Godin put it so well almost 10 years ago: “the Internet is the ultimate direct marketing medium.”
Time and again, general advertising and marketing communications agencies have invested, purchased, persuaded, cajoled their way into Web work – without ever really understanding it.
I remember one such example vividly: an agency director muscled his way into a meeting about a Web platform redesign and commandeered the first twenty minutes to highlight the many faults and problems with the client’s existing site. We sat patiently. At the end, the agency bigwig posed the killer question: “Who built this for you anyway? It’s horrible!” To which the client replied: “You did.”To be fair, that general agency exec was setup for a fall. After all, the birth of brands was in the late 1800s, and the birth of the agency came coincidentally with wider distribution of broadcast technologies such as print, radio, and television. It was a “setup” because the Internet is a narrowcast technology—not a broadcast one. While the birth of marketing came in broadcast form, the future clearly lies in new “narrow” ways of reaching customers.
Narrow markets demand narrow marketing
Concepts like the endless aisle, the long tail, the sudden and dramatic line extensions in even our oldest and most revered brands, and the general success of niche marketing on the Web, all tacitly suggest that a narrower approach to marketing will be more successful in this “more narrow” brand and product landscape.
Over the last 30 years or so, only one marketing discipline has been increasing focused on technologies that capture the power of narrowcasting: direct marketing. And while DM agencies have long focused on print/mail, telephone, and television, the rules they apply to their work are a strangely appropriate launching point for Internet success. They get it. They narrowcast. Auragen’s 12 years of experience confirm the best Web applications are built by …
It’s the knowledge of Mary that helps us tune the offer appropriately and deliver the proper creative execution. You will immediately see how this approach echoes the most basic of rules in direct marketing:
The approaches are the same, but for a long time we’ve worked on separate projects for separate objectives, with separate corporate clients.
No longer.
Direct marketing replaces general advertising
The promise of DM 2.0 is the promise of narrowcasting, for sure. But it’s also the promise of true and final integration of Internet initiatives into the marketing mix. But instead of waiting for general advertising to accept new media and direct into their fold, we realize now that the general advertising is an old approach with waning utility and reach. Instead, the promise of truly integrated direct marketing initiatives—spanning and leveraging all media types and formats—is the big opportunity for smart marketers.
Traditional direct marketing has finally merged with interactive services and the Internet. Expect to see integrated approaches and models that result in dramatically more targeted and more effective campaigns. Expect to see brands take on a far more personal and direct relationship with their prospects, members, and evangelists. Expect the brand experience to literally be delivered to customers on an individual basis. And expect this approach to define marketing communications for the next 50 years.