Internet Marketing Growth

Forrester’s predicts growth in all areas of internet marketing with the most pronounced increases coming from Social and Mobile.  (Here’s the link)

Thoughts:

• More funds will be directed to online but keep in mind that over 80% will still be put towards “traditional”.  What these top line numbers don’t show is how “Traditional” will merge with “Interactive” over the next few years.
• Social Media is predicted to grow the most over the next few years.  It will be interesting to see how this evolves as Facebook and the others look to develop revenue models.
• Search is king.  Why?  Because Interactive marketing works best for direct response efforts and search marketing is the king of direct response.  As marketers we need to understand when to use which tool and don’t try to shoehorn objectives into unsuited tactics.

This is the billion dollar question — literally.  Online display advertising is a $8B industry so the stakes are high to justify that spend.  A lot of businesses, from Microsoft to iVillage, make a lot of money on display ads.  So there is a lot of data to support the value of this online media.  But there is also a lot of data that questions the value of display ads.  Let’s take a look at the data and come up with a point of view:

1)  Do people click on display ads?

According to this article from MarketingSherpa (link here) the overall average for display ads is 0.21%.  Of course, it greatly depends on the quality of the creative and the quality of the placement.  But from my experience this is a good benchmark.  Note that this number is down from the 3% I saw in 1999 and the 1% I saw in 2002.

So for every 1000 impressions expect 2 clicks on the display banner.  Which means that a $2 CPM works out to $1 per click.

I don’t think anyone would argue that the CTR on banner ads is extremely low.  So low that you have to justify them on some other measurement….

2)  If they don’t click on them than what’s the value?

According to a ComScore study (link here):

• It’s clear that display advertising, despite a lack of clicks, can have a significant positive impact on:
  
• Visitation to the advertiser’s Web site (lift of at least 46% over a four week period)
  
• The likelihood of consumers conducting a search query using the advertiser’s branded terms  (a lift of at least 38% over a four week period)
  
• Consumers’ likelihood of buying the advertised brand online (an average 27% lift in online sales)
  
• Consumers’ likelihood of buying at the advertiser’s retail store (an average lift of 17%)

This ComScore study shows that there is value of online display ads in terms of awareness that drives future actions such as visiting the web site or increased purchase intent.  So maybe they do have value.  But let’s look at banner ads ability to influence the consumer….

3)  Does anyone notice banner ads on web sites?

According to this study by Harris,  37% of respondents found TV ads helpful while only 1% found banner ads helpful.  Pretty conclusive that banner display ads are not noticed.  Just ask yourself when was the last time you took notice of a banner ad.

TV Wins - Banner Lose

4)  So why does it seem that the ComScore study contradicts the Harris study?

These studies are done to prove a certain point.  They are not academic studies for information sake.  They should be taken with a huge grain of salt.  For instance,  the ComScore study says that banners drive future behavior.  But advertisers don’t buy online advertising in a bubble.  They are buying that advertising to promote a product or service that will also be promoted through other channels.  Of course traffic to your web site will increase during the time you are promoting your product via banner ads.  For example,  a company might buy banner ads during the Christmas season to promote a great gift.  That product might also be in print, radio, TV, PR, promotions, and other channels.  As well as the natural traffic increased driven by consumers seeking out info during the holidays.  All driving traffic up.  ComScore’s study is associating that traffic solely to the banners.  Take a look at ComScors’s business model to determine why they are motivated to make that connection.

5)  Why do TV ads work so much better than Online ads?

Why do TV ads seem to have such a bigger effect on the consumer than online display ads?  Because TV ads are delivered in a linear disruption path.  The consumer has no choice but to watch the TV spot.  They have to watch it as they wait for their show to come back on.  This is a Linear Disruption Path.

Online ads are on an  Asynchronous Disruption Path — meaning that the consumer can ignore them while they continue on their primary task of ready the article or watching the video.

6)  If banner ads don’t work what does?

I’m in online marketing for a reason — online marketing can drive business results.  Now more than ever there are huge opportunities to engage consumers and activate them to walk down the purchase path.  This post is already too long so I’ll tackle this topic next time.

Conclusion

Unless you can drive clicks from an extremely compelling banner campaign that then captures the consumer’s contact information for future direct follow up you may want to find better ways to spend your online ad budget.

ADD:  Here’s an article from ClickZ that has data around how online brand marketers are measuring (actually how they are not measuring) campaigns:

http://www.clickz.com/3634438

I started my professional career out in sales and account management.  I was terrible at it.  So the company that I worked for sent me to a ton of training.  I had it all — from Dale Carnegie to Zig Ziglar.  Some wore off on me.  So it kind of drives me nuts when agencies pitching me don’t have the basic skills to close and keep my business.  This just happened again this week so I felt compelled to provide the following 5 things agencies need to do to get and keep my business.  I have always been on the client side so this perspective might be skewed:

1)  Discover My Business Needs

Don’t come into my office and spew on for an hour about your capabilities.  I don’t care.  A better use of both of our time is to come into my office and discover, through questioning and listening, what need I have that your agency may be able to fill.

2)  Your agency is not an expert in everything

I half jokingly state that if I ask any of the agencies I deal with if they could build me a bridge I would get a proposal from each and every one of them.  Tell me what your core competency  is and prove that you have the experts on staff to deliver what you claim to be good at.  Your not good at all things — so please tell me when you actually can’t do a project.

3)  Leave the fancy “Process” slides behind

I don’t care what your process is.  Every agency seems to have some neat acronym to explain their “process”.  Like “NARB”, “VERB”, SPIN”, and “BURB”.  They always seem to be 4 letters.  Having a “process” is not a selling point.  All agencies have them and they are all the same.  So don’t waste my time telling me how special yours is.

4)  Don’t just say “Strategy” a lot

Actually provide strategies that will help me achieve my objectives.  I meet with a lot of agencies that tell me how great they are at “Strategic” thinking.  But when the proposals come in they are just a bunch of tactics that don’t build up to actual long term business value.

5)  Deliver

It’s fun to be “Creative” and come up with cool designs.  But the hard bits need to be done too.  I need solid SOWs, I need Project Management Plans, I need Wire Frames and Logic Maps, I need someone that will think through all the hard stuff so that the final product rocks.  Do what it takes to deliver.

This was a bit therapeutic.

3M is running a User Generated Video Contest via YouTube this month.  By submitting a video showing interesting places to stick a Post-It contestants can win $10,000.

This is the second year 3M has put on a Video Contest.  Last year, according to this post on ClickZ (Link), the contest received 600 submissions.  The article also quotes 3M’s communications manager putting the cost of the campaign around that of a small TV buy — which I’m guessing is in the $1MM range.

Forrester’s Nate Elliot published two new studies that digs into these UCG video contests (link).  Nate’s research shows that over 20% of marketers have run contests that solicit user generated content.

Thoughts:

• User Generated Content Contests are not cheap.  To be successful they require significant promotion.  3M’s $1MM budget generated 600 videos.  If the average views per video was 100 that would result in 60,000 views for $1MM.
• You have to get creative with the content.  User Generated Content is not for every product.  That said, the 3M contest is a great example of a product that at first glance might not seem to be that fun for users to film — but turns out it is.
• As more and more consumers have a video camera with them at all times in the form of a Cell Phone expect more video contests.  The biggest hurtle is for the user to go through the hassle of creating, editing, and uploading the video.  Expect to see simple tools added to cell phones over the next few years that removes most of these hassles. (That’s a business idea that should be developed — easy video editing tools via smart phones).
• I recommend thinking about these types of consumer engagement activities as a part of a larger marketing campaign.  These contests carry a lot more weight in moving viewers into buyers when thay are a part of a comprehensive marketing program that touches consumers at various points along the purchase funnel.

Cleveland Rocks!  This last week I was in Cleveland for a project that took me all around this great city on the lake.  From Westlake to Bedford I got to observe Clevelanders shopping in their natural habitat — otherwise know as Walmarts and Targets.

What struck me most was how unimportant our marketing message is to our consumer.  As marketers we are completely absorbed at how creative and compelling our marketing communication is.  We spend hundreds of hours crafting strategies and tactics to engage and activate the consumer.  It’s natural for us to come to believe that our messaging is as important to the consumer as it is to us.  But while I observed these Clevelanders going through the routines of shopping I was reminded that:

The most celebrated brands occupy a tiny fraction of the consumers mindshare for a tiny fraction of the consumers time.

It’s obvious.  We all know this but it gets lost as we focus on developing our compelling and expensive campaigns.  So it got me to thinking how the consumer is exposed to and digests the messaging we are trying to get to them and then how that messaging gets translated into sales.  As the consumer gets moved down the sales funnels they are in one of the following “modes”:

Passive Messaging Mode: Passive messaging mode is the classic broadcast mediums attempt to disrupt the consumer and create awareness in a product. This is a TV spot, outdoor billboard, instore displays, radio ad, ect.

Active Messaging Mode: Active messaging is when the consumer is in search of information that may lead them to your product or service.  The classic example is a Google search ad.  But we also see this in restaurant guides handed out in Cleveland hotel rooms (which got me to Saigon on 4th Street for a great dinner!).

As marketers we must create strategies around each of these modes.  How we communicate to the consumer depends on where they are in the sales funnel and their current messaging mode.  In practice this means:

• Passive Mode communication like broadcast advertising builds awareness.  It gets the consumer into the sales funnel.
• Active Mode communication like Google Adwords pulls the consumer through the funnel and into the sale.
• Social Networks like Facebook and Twitter are only good for consumers in the Active Mode.  If the consumer is on Facebook in Passive Mode they will ignore your message.  If they are in Active Mode they will be extremely responsive to your message.

The practical take away from this post is to set up a frame work to understand what state of mind will your consumer will be in when they see your message.  Then tailor your message accordingly.