My mother-in-law has a great expression.  In the family we call it, “updating your prior.”  What it means is that you always have to remember to update your prior view of things, because otherwise you are making false assumptions based on outdated information.

As marketers we often fall into the trap of neglecting to “update our prior.” We pick a demographic and a target profile, and we stick with it. This is natural byproduct of having studied and chased after a singular customer segment for many years. Over time, however, customer needs may have changed, and new prospects may have emerged unnoticed. Examples of this tendency include industries like automotive and electronics.  In these markets brands have been targeting men forever, not realizing that the wife in the family may be the primary decision-makers for household purchase decisions. Unfortunately, a narrow focus on demographics can cause marketers to miss critical shifts in their audience profiles.

A recent study by Microsoft confirms this theory.  The study shows that premium brands have been missing up to 50% of their best audience by relying too heavily on targeting only to the affluent. Purchase behavior turned out to be a more important indicator than affluence.  In fact, 43% of online customers in Europe are premium buyers, yet this group is not affluent by any traditional measure.

So what are some of the other reasons marketers may be missing their targets?

1. Customers Are a Moving Target

Changing habits and overlapping interests and hobbies can sometimes be hard to correlate with buying behavior. While there is a preponderance of information available on the Web, many data providers offer a limited view of the user.  With the right audience measurement tools, however, marketers can put the pieces together to create a coherent picture.  A story in Ad Exchanger describes a marketer targeting home-based business users with children.  In order to reach this demographic, he had to combine data for micro-business users, home-based users, and households with children from three separate data providers. Scaling audiences can be particularly difficult without the ability to normalize and aggregate audience profiles in one place. Using web-based tools to measure who is engaging with your messaging and who is responding to your offers will give you a better view of a larger potential customer pool.

2. Aiming at the Wrong Target

Products are often delivered to market with preconceived expectations about who the audience will be.  When David Roberts, the CEO of PopCap launched a game called Bejeweled on Facebook, he fully expected the game to appeal to a young male audience.  Instead, he was astounded to learn that 70% of the game players were women.  The social aspect of the game was an attraction for young mothers who were stuck at home, and wanted to play and interact with friends and family.  I’m not sure why anyone thought a game called Bejeweled would be a magnet for young males, but never mind. The company had to integrate this new view of its customers into its marketing strategy.

3. The Unintended Target

Toyota Scion was a car designed specifically to appeal to a youth segment with a focus on customizable features and a low price.  The original target was young people, 20-25 years old, and Scion avoided the Toyota brand name because they felt it was too ‘old’.  Toyota soon discovered that the Scion appealed simultaneously to both millennial upstarts and empty-nest boomers.  Auto makers now are looking to replicate this model and design more Twin Peaks Cars. That is, cars that have two peaks in a line graph of the age distribution of the buyers.

So how can brands best identify and consistently maintain the right targeting?

The key to developing good market targets is to be clear on your segmentation strategy, and then market specifically to those targets. But don’t fall in love with a target profile, be flexible and ready to make changes based on updated data.  Ideally, marketers should measure customers based on three yardsticks, behavioral, transactional, and demographic. Behavioral marketing allows brands to identify their highest value segments.  Transactional data allows marketers to revisit their current customer profile to see if anything has changed.  Demographic data makes it easy for brands to understand their audience and identify customers.

Marketers need to learn how to optimize marketing based on business intelligence gathered during the campaign.  The real-time technology platforms that enable audience measurement and campaign management provide an advantage to the marketer.   Those platforms, coupled with smart targeting techniques, create a new opportunity for greater scale and efficiency in online marketing.  Marketers can discover new customers by using audience measurement that provides more insight into those responding to your message. In other words, sometimes you just need to update your prior.

According to the study, email marketers are excited to start using video in email.  73% of respondents thought video would raise clickthrough rates for their email programs, and the same number believed video made email recipients more likely to convert.  However, unlike posting a video on a Web site, there are some challenges with getting video to work in email.

Besides needing the right technology in place, video email requires an ISP that can successfully deliver the “see-mail.”  Therefore, marketers believed the most effective way to integrate video with their email campaigns was to link recipients to a video landing page, closely followed by embedding video players directly in email messages.

We’ve actually seen some success using embedded streaming video first hand.  Last year, leveraging technology from Goodmail, Datran Media helped deliver live embedded streaming video within the body of the email for PGATour.com  Not only did the campaign win multiple awards, it helped PGATour.com see a staggering 142% increase in clickthrough rates.   I guess it’s true what they say, seeing is believing.

As marketers rev up their new acquisition programs, it’s important to think about the customer as more than just a number in a database.  Customers are savvy and are clearly in control more than ever before.  So to truly be able to penetrate a new audience, you must treat them like you would a close friend.

Every great relationship, be it with a friend, co-working or customer, is dependent on good communications and a continuous fair value exchange.   Without that, someone always feels left out, abused and taken advantage of.  If you don’t understand how to listen and value your friends and relationships you’ll have limited success in your personal and business endeavors.   How often do you hear of people or groups of people being referred to as Readers, Customers or Consumers?   Those names are a bit impersonal, but not as bad as Aggregators, Data, Leads or Screamers.   How a company refers to its prospects and customers tells you lot about how those people are treated and valued.   How do you like it when “that friend” (and you all have one) call you or stops by only when they want something but are never interested in returning the favor or bringing some sort of value to the table…beyond what you’d expect from an acquaintance.

We’re all somewhat dependent on each other and while developing a competitive advantage is important in business, it’s much more important to building trusting, efficient, scalable and sustainable relationships.    If we pick a few important common goals, we’ll be much more aligned with our partners and that’s one of the most important competitive advantages you can have.

Remember, if you put the customer’s needs and wants first, you will generate not just a lead, but a loyal customer.

According to a new report from AWeber provided to eMarketer, many small businesses have plans to increase the integration of social and email.  More than three-quarters consider integration of email and social at least somewhat important. A majority plan to allow users to sign up for e-mails directly from social media sites like Facebook. This tactic allows email marketers to grow their lists—cited as the top benefit of integrating social and email by one-third of respondents—by allowing consumers to use their channel of choice and sign up on their own terms.

All of the tactics mentioned in the report are valid, and sophisticated email marketers have been testing them in an effort to a) build their email lists and b) syndicate email content throughout social networks.  Both are worthy goals.  None of these tactics, however, will do a marketer any good, unless they: 1) have a sound strategy which is tightly aligned with their business objectives, and 2) are producing extraordinary content worthy of being shared.  ie: Slapping on a “share this button” is not a viable social media strategy.

The Shift to Digital according to Datran Media's 4th Annual Marketing Survey. In 2010, what percentage of your company's overall multi-channel advertising campaign will be allocated to digital marketing channels?*

12.4% in 2010 to $61.0 billion. Plus, it will grow 64% from there to over $100 billion in five years.  That’s certainly good news for the industry as a whole, especially considering the gloomy forecasts that were being predicted just over a year ago.  So what does this mean for you?  It means the online marketplace is going to get increasingly crowded with your competitors; and unless you have smart plan to reach your ideal audience, you’re going to get lost in the crowd.

As more and more advertisers move their media budgets online, consumers are going to be inundated with more choices from more brands.  That means you’re going to need to tailor your messages to be relevant to your perfect audience.  The problem most marketers are unsure who their ideal customer really is.  Do you know the composition of your audience?  DO you know who is really engaging with your campaigns?  What metrics or key performance indicators (KPIs) matter most to you when measuring campaigns?

More than ever, measurement is going to be crucial part of your success in the digital space. Audience measurement may be a nebulous term, especially in digital media where there is both linear and non-linear communication with your audience, and the ability for that audience to receive and reciprocate communication through multiple channel lines at once. As a result, there are a variety of dimensions that can be measured as it pertains to the audience; composition, awareness, engagement, social influence, and path preference to name a few. But regardless of the definition, what you measure needs to provide the opportunity for insight while furthering the quest to understand the value that is delivered for both you and your audience.

Measurement is ineffective unless it provides insight into delivered value. Therefore, advertisers have to define the value they seek to create before determining effectiveness.  Those that do it correctly will prosper; those that do not will have little to show other than wasted media budgets.

So how are retailers reaching out to customers this holiday? They are sticking to the basics; using tried-and-true marketing channels like email and search. According to BDO Seidman, in its Retail Compass Survey, email promotions were at the top of retailers online marketing strategies. A focus on free shipping offers just edged out search marketing for second place. Not surprisingly Shop.org found that 100% of online retailers surveyed planned email marketing efforts to house lists this holiday season.

Despite the fantastic numbers being reported for Cyber Monday, the busiest online shopping day tends to be later in December, usually the Saturday before Christmas, and is the last day that gifts can be shipped to guarantee delivery by Christmas Day. So retailers can expect another boost to what was a challenging year revenue wise.

The beautiful thing about email is that campaigns can be produced in a relatively short amount of time, which means you can still take advantage of the upcoming holiday shopping surge. Just be sure to employ these crucial email strategies with this email marketing holiday checklist.

Everything, from the rise of data-driven ad targeting and social media, to episodic online video, mobile, and apps, were discussed in the context of significantly changing media consumption habits. With many companies still scrambling to embrace these new tools as a way to deliver their marketing messages to customers, the panel reviewed some important strategies marketers must employ to keep from falling behind in the ever-changing digital landscape. Audience discovery was a crucial part of this discussion.

One of the most innovative digital trends seen in 2009, according to Datran Media’s Chief Revenue Officer Sean O’Neal, are the new methods marketers have to leverage data for better audience targeting and measurement. Advancements in behavioral technology have given marketers the tools they need to truly understand their audience beyond simple Web browsing statistics, like site visits and time spent on a site. Transactional, behavioral and search data can be blended to better define and discover your customer. What’s more, the opportunity to leverage offline data like retail transaction history and household-level demographics has created the most effective form of addressable media. Being able to reach a targeted audience rather than investing in the mass distribution of your message will drive better results by precision and cost-savings.

So what’s on the horizon for digital marketers? Sean O’Neal believes there will be a major convergence of devices leading to new media channels. New technology will essentially combine the PC and the television, creating a whole new channel opportunity for marketers. Consumers will use a single device to access media, read email and chat with friends and family. Devices like AppleTV are already making this a reality. With the level of data available to marekters, they will be able to hone their messages to their customers at the height of the consumer’s media engagement.

The next 12-24 months are very exciting for anyone in the digital space. But not just for us marketers, consumers will truly benefit by the way we will be able to deliver messages to them.

Selling ad space in email newsletters is proving to be the bright spot of the acquisition market — especially in the media/news industry. The Magazine Publishers of America stated that in the first quarter of 2008, email was a central driver behind 70 million unique consumer visits to online magazine sites.

To provide a comprehensive resource for publishers and marketers, the Interactive Advertising Bureau (IAB) today announced the release of Email Monetization Strategies, the next step in the IAB’s ongoing efforts to establish a solid foundation of guidance and tools for the email marketplace. It provides publishers, agencies and marketers with recommendations and best practices for the successful execution of email marketing campaigns.

The recommendations outlined in this document offer best practices and advice for:
Advertisers
o Leveraging email newsletters to reach a valuable audience
o Using the email channel to test offers and promotions
o Driving sales and site registration through stand alone email advertising
o Criteria for choosing a email publisher
o Emerging trend of video in email campaigns

Publishers
o Revenue opportunities through sponsorship and ad units in email newsletters
o Pricing models for email monetization
o Inventory management
o Data collection
o Developing a video email campaign

“The email channel offers a unique opportunity to reach consumers with relevant, differentiated and personalized content and messaging,” said Sherrill Mane, SVP, Industry Services, IAB. “Email Monetization Strategies provides an in-depth assessment and guide to maximizing the success of email marketing.”

“Email is one of the most effective direct and brand marketing mediums,” said Sean O’Neal, Chief Revenue Officer, Datran Media, and co-chair of the IAB’s Email Committee. “These best practices provide the latest information and strategies to marketers and publishers so that they can maximize their email communications with their customers.”

1.Know Your Audience:
Leverage behavioral, demographic & transactional data to define your audience & create new monetization opportunities.

2.Invest in Advanced Advertising Technologies:
Enabling targeted buys featuring rich media is key.

3.Email is Targeted & Effective:
Mobile growth & new technologies (i.e. email video delivery) will enable email marketers to become even more effective.

4.Email is Targeted & Effective:
Mobile growth & new technologies (i.e. email video delivery) will enable email marketers to become even more effective.

5.Use the Power of Video:
Video’s engagement metrics can help maximize your impact with your audience and your advertisers.

If you would like to learn more about any of these topics, contact us and check out some interesting articles on the topic in our thought leadership library.

With the new season of Mad Men in full swing, it’s a good time to reflect upon how far the advertising agency business has come since the early 1960s. From the dysfunctional inhabitants of Mad Men, to the sardonic and witty tales from James Othmer’s recent book Adland, agency life is portrayed in the media as a high-octane, creative profession with a pathological dark side. In other words, it’s fun to watch. At the fictional Sterling Cooper agency, viewers are subjected to excessive smoking, drinking, sexism, self-loathing and self-destructive behavior on a weekly basis. Yet there is something about the place that makes you really want to work there. Advertising, after all, is where the magic happens.

As Don Draper once put it,Advertising is about one thing and one thing only, happiness.

So what has changed in advertising over the last 50 years? Surprisingly, the basic DNA of ad agencies is largely the same. Madison Avenue is still trying to sell happiness to consumers who long for it. Brands are still trying to make us feel hopeful and happy so that we continue to consume. Advertising success is predicated on igniting creative sparks that flare into an increased share of voice within today’s fragmented audience.

In a more profound sense, however, the world around the advertising industry has changed absolutely. Agencies are facing shrinking budgets, widespread adoption of social media and new disruptive technologies. The lines between companies and customers are beginning to blur, as brands question the value of agencies as intermediaries. As advertising budgets are slashed, campaign return on investment is scrutinized through new audience measurement and ad performance technologies.

Metrics & Accountability Matter

I know that half of my advertising is wasted, I just don’t know which half.” John Wanamaker

With performance data widely available, clients are now looking for revenue-based results. Brands have begun to explore alternative compensation models for their agency partners, signaling a potential shift in the traditional hourly pay model. While only about 10% of today’s advertising compensation agreements are value-based, that may increase as brands leverage more tools to measure advertising effectiveness.

Some media critics today estimate that up to 80% of ad dollars are wasted as a result of three factors; inflated media prices, a decline in the effectiveness of traditional advertising, and poor decision making. That is a bitter pill for brands to swallow considering how many billions of dollars are spent on advertising each year. Brand management can also be ambivalent about the important role that advertising plays in their business. A recent survey conducted by the Marketing Management Analytics (MMA) and the Association of National Advertisers (ANA) showed that 39% of senior brand management viewed marketing as an expense, while 43% viewed it as an investment in brand equity.

At the same time, leaders on the agency side of the equation struggle with the current business model as well. Advertising and media are complicated businesses that take years to master, and agencies don’t appreciate having to validate their contributions every few months. To make matters worse, navigating the new social media channels for clients can be challenging and time consuming. While social media can be a force for good when users champion a brand, it can also be destructive if users decide to wage war. Agencies have had to develop a new level of expertise in this area.

Another aggravating factor for agencies is that they are often required to spend considerable time and money developing full blown creative concepts for which they are never reimbursed. What’s more, clients often try to renegotiate fees after the work is already done. This creates tension in the business relationship as well. Roger Sterling of Mad Men puts it this way,Being with a client is like being in a marriage. Sometimes you get into it for the wrong reasons, and eventually they hit you in the face.

The Tipping Point in the Advertising Model

While assigning a value to advertising initiatives is difficult, finding new and better ways to reward agencies for their work can be even more challenging. We now appear to be at tipping point that could transform the role of advertising agencies going forward.

Some large advertising brands like Coca-Cola have recently adopted a value based compensation plan for their U.S. ad agencies. The company says that the objective is not to cut costs but to inspire creativity and efficiency (http://tiny.cc/wEgdV). Coca-Cola’s plan will cover all agency costs, plus provide a bonus of up to 30% based on sales performance metrics. Consumer-goods giant Procter & Gamble has also stated that they may abandon hourly fees in favor of a performance related fees for their agency partners. Other global brands like Unilever have recently adopted a performance-based model as well.

A few forward thinking advertising agencies have proactively moved towards a new business relationship where both the agency and client agree to certain key performance indicators (KPIs). Once met, these KPIs ensure that the agency is well compensated and rewarded for meeting specific corporate objectives.
Leo Burnett’s India Chairman and CEO Arvind Sharma, recently said that brands sometimes provide them with compensation incentives linked to sales. Mr. Sharma stated, “We love this model. Since 90-95 per cent of our projects exceed success parameters, the model benefits us. (http://tiny.cc/6ELgQ). Similarly, the chief executive of Crispin Porter + Bogusky Jeff Hicks has said that a value-based approach has helped his agency work more closely with clients by aligning the agency’s compensation with the advertiser’s profitability (http://tiny.cc/wEgdV). This kind of progressive thinking may allow advertising agencies to get into the driver’s seat to initiate real change throughout the industry.
The New Normal

As time goes on, the economy will no doubt rebound, and social media, blogging and micro blogging will all be seamlessly integrated into strategic marketing plans. Meanwhile, the demand for hard data and ROI metrics will continue until reaching critical mass, at which point full accountability for advertising will be expected as the new normal. That is when the truly creative agencies will find ways to reinvent themselves in order to take advantage of the new advertising paradigm.

Great agencies are in the business of creating real and lasting value for their clients, and I believe they will become the designers of the new agency model. Their contributions run much deeper than simply increasing brand awareness to drive sales. An agency’s work enhances a brand’s reputation, and creates a deeper emotional connection between brands and their customers. An excellent advertising agency partnership is about so much more than the cost of a billable hour. It is about the true value of collaboration and the strategy, positioning, targeting and business intelligence that helps companies to grow and thrive. At the end of the day, we still want advertising to be about the magic.