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Rewriting DM Rules for the Web

Paul Epstein
Rewriting DM Rules for the Web Paul Epstein
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Ed Mayer literally wrote the book on direct marketing. In the 1960's, after 30 years as a mail advertising pioneer, he popularized his "40/40/20 Rule," the formula that still guides most of the world's direct marketing campaigns. By his assessment, successful direct marketing campaigns should be built by focusing one's attention on audience, offer and creative in the following percentages:



  • 40 percent audience

  • 40 percent offer

  • 20 percent creative

Mayer also said, "Direct Marketing is a 'what' medium, not a 'why' medium. If I send out 1,000 mailers and 100 people show up, I know 'what' happened -- I had a 10 percent return on my mailing list. But I don't necessarily know 'why.'"


Ed Mayer died in 1975, when the internet was still the stuff of science fiction. He probably couldn't have predicted how, in a mere quarter century, our lives would revolve around personal computers. And yet many interactive marketers today, when developing their own direct marketing campaigns, still live by the rule that Ed Mayer created over forty years ago.


A lot has changed in that time, and the abundance of audience metrics available from interactive campaigns today is in fact turning direct marketing from a "what" medium into a "why" medium (more on this later). And that's only one of the changes leading us to consider whether the 40/40/20 Rule still holds true across all media.


The 4-Way Split: a new rule for a new era


There's no question that the 40/40/20 Rule is still a valid operating principle for direct mailing. But any company that bases its interactive marketing strategy on 40/40/20 is missing a critical piece of the 21st century's DM (direct marketing) equation: technology.


Is there any real comparison between sorting through a handful of paper from your mailbox and interacting with the online world?  With that as a starting point, we propose what we'll call the "4-Way Split Rule:"



  • 25 percent audience

  • 25 percent offer

  • 25 percent creative

  • 25 percent technology

Targeting the right audience with the right offer is no less important than it was in the 20th century. However, the nature and delivery of creative content changed dramatically when a whole new world began happening on a screen 18 inches in front of our eyes.


Creative is now more accountable than it ever was. As the first thing people see, it carries the burden of engaging their attention and asking for more of their time. They'll never know how good your offer might be, or how relevant it might be to their lives, if your creative is not compelling or somehow unique. Online consumers are under such heavy data bombardment that offers lacking creativity simply cannot penetrate their defenses. You could lose their attention with the next flick of the eyes or click of the mouse.


It's helpful to think of online creative -- whether in the form of a banner, an email or a glimpse of rich media -- as an envelope. In traditional direct mail, the ideal envelope captures the consumer's attention and screams, "Open me!" On the internet, we use banners, buttons or paid search engine listings for the exact same purpose: to invite them into our advertisement. Traditional direct marketers operate under the assumption that if a professional-looking envelope hints at an offer, a good percentage of its recipients will want to open it. But interactive marketers operate under a reverse assumption: that potential online consumers will rarely open even the most effective "envelopes." If your creative is less effective, rarely becomes something close to never.


Higher expectations for the "why" medium


The 40/40/20 Rule assigns a mere 20 percent of the pie to creative content because, in Ed Mayer's time, the main variables in creative messaging were limited to font choices and background colors. Under our 4-Way Split Rule, however, interactive marketers are free to play with an increasingly versatile media array. An advertisement's creative could incorporate audio, video or even a full advergame. Rich media becomes an attention-grabbing tool through VRML, Flash and Shockwave. DM strategies are beginning to explore the webinar as an educational forum, the program-oriented entertainment context of podcasting, and the easy-access populism of the blogosphere. Indeed, it's increasingly clear that the best way to boost ROI is to creatively exploit any media that's still buzzing with development possibilities. And it doesn't have to end there. Online presence could be just one piece of a larger campaign integrating radio, magazines or other offline media.


Let's revisit our earlier statement about how the online model is turning DM into a "why" medium. When direct response campaigns depended on the postal distribution of hard copy, the feedback took months to materialize. Now those months have been reduced to mere hours, as it's possible to micromanage everything from lead generation to site design changes by studying the shapes of data aggregates and metering clickthrough rates. Measuring real time response results in a better awareness of what works and what doesn't, enabling more fluid brand strategies. In short, technology can help make creative more accountable than ever: if it isn't performing at a high level, you can easily replace it with more compelling creative that will capture more eyeballs.


The road to successful interactive campaigns


In interactive marketing campaigns, the roles of creative and technology are every bit as important as the roles of audience and offer. Divide your resources equally among these four areas, and see how fast your campaigns achieve the expected results.


Why are we tossing out a time-honored formula? We're not. We believe that traditional direct marketers should build their campaigns around the 40/40/20 Rule. However, we also see the need for the 4-Way Split Rule, an updated formula that applies to the 21st century's emerging formats and practices.


Direct response marketing is a decades-old communication art that has grown into one of the most powerful marketing vehicles on the internet. It is the surest way to get consumers to buy your product, visit your website, or subscribe to your service. But it cannot be performed the same way it used to be; the old rules no longer apply.


Paul Epstein in the CEO of High Voltage Interactive, the internet's premier lead generation and customer acquisition company. Paul may be contacted at [email protected].  

Often, those that are willing to take risks and who do it consistently in a smart, savvy way are also the market leaders. Market leadership and success is not always about being first, but rather about being the first to do it well while managing a certain level of risk.


Being consistently successful with new toys -- particularly in a deep, enduring way -- requires marketing discipline and savvy that begins with understanding your customer. It then extends to having enough digital insight to understand how the new toy can deliver, support, and advance your marketing goals. The character, organizational structure, resources, and culture of an organization often define the possibilities and limitations. If you work for a company without marketing discipline or vision, odds are clearly against you to succeed as a market mover -- that is, unless there is a major shift in senior decision making. Market leaders are those companies that we tend to hear about over and over with marked successes in emerging media and with "new toys." Companies such as Kraft.


As iMedia's own Lori Luechtefeld commented in her recent blog about Kraft's iPad application, "Kraft has done it again. I know I'm not alone in singing the praises of the brand when it comes to its digital marketing savvy. But the company's new iPad app is just one more reminder of how completely Kraft understands its audience and its brand value."


Kraft's latest innovation is certainly not its first. Historically, Kraft has been a leader in digital marketing with a dedicated team, resources, and focus stretching back to at least 1997 with Nabisco's launch of the wildly successful Candystand. This was one of the first, if not the first, application and use of a third-party microsite, as well as the first use of online games to market a brand. It won numerous awards, garnered significant press, and was the first major adver-game portal. (It has since been sold a couple of times and is now owned by Funtank.)


More recently, in addition to the well-received iPad application, Kraft's iPhone application, "iFood Assistant" (released in January 2009), rose to become one of the most popular lifestyle apps.


 


As quoted in Ad Age, Ed Kaczmarek of Kraft Foods recognizes that being first requires a certain amount of risk. "We have to take a leap of faith," he says. "If we waited around to have hard demographics and numbers, we wouldn't be innovating."

We don't read or hear much about how a breakthrough campaign, effort, or shiny new object initiative has impacted a brand versus its competition. And for good reason -- it is competitive information. Often, the client or brand doesn't want you to reveal its metrics or success because the company sees emerging media, new technologies, channels, and so forth as a way for it to gain a competitive advantage. I can speak to our direct experience at NetPlus and tell you that we have witnessed clients' measurable market gains against competitors with the strategic insertion of breakthrough media. With that insight, I scoured my memory for examples of where brands seemingly could have gained competitive advantage with their breakthrough applications.


I remember -- do you? In 2002, rich media was all the rage. It was the industry's hottest new toy. Perhaps the most famous of which is the 2002 Ford Explorer ad. This was not just because it was the first or one of the first "outside" the banner ads. But it was more compelling than others. It was reported then that Ford invested a significant amount of time and money to develop and test the ad before it launched.


Clearly Ford had made a level of commitment to "new toys," and it can be inferred that its business was benefiting as a result. According to Nielsen NetRatings, The Ford Motor Co. topped the list of car manufacturers using rich media ads in Q2 of 2002. The Ford Expedition line was the No. 1 auto product employing rich media technologies, with expanding Flash ads on MSN taking up 19.4 percent of the entire auto ad voice.


Following up on this, in 2003, Ford unleashed one of the first roadblocks to promote its F-150 truck on AOL, MSN, and Yahoo. It was reported that folks visited the Ford website from those ads at a rate that reached 3,000 per second. This increase in website traffic led to a 6 percent jump in sales over the first three months of the campaign.


More recently but also memorable, in April 2009, Ford launched its Ford Fiesta social media campaign -- one of the first to engage evangelists in a thoroughly connected way across social media platforms. The brand invited 100 "social agents" to try the Fiesta for six months and share their experience through social media, including Twitter, YouTube, and blogs.


 


"While we're trying to build excitement and awareness for the vehicle with the Fiesta Movement campaign, there's something bigger happening here," Scott Monty, Ford's social media boss, told Wired.com. "We're also going to be building broader awareness of Ford."


Broader awareness for sure -- and then some. These endeavors are not isolated examples of Ford's smart and savvy market moves with shiny new objects. And while the results for each of these initiatives are notable, it is the potential cumulative impact of these successes over the years that produce larger gains.


Take note: In a down economy and amid the auto industry's serious financial pressures, Ford is the only one of the top automakers that did not take a government bailout. And it just recently posted its highest quarterly profit since 2004. The company's quarterly results provide more evidence that it has distanced itself from U.S. rivals General Motors and Chrysler.


Behold, the number of photos generated on Flickr from the Fiesta campaign:


 


Most importantly, the company had 50,000 requests for information about the car in the first six days of sale.

@ComcastCares is one of the first, and certainly the most cited, examples of an effective use of Twitter in the realm of customer service. In the fall of 2007, Comcast started to listen to its customers via social media and connect with them. The capacity of the new toy, Twitter, to engage directly with customers to resolve issues went to the heart of a major perception problem. The perception might have been reflective of some realities in the organization, but regardless, the company's launch and successful application of Twitter helped to keenly address a core issue -- a pervasive perception that Comcast customer service sucked.


Clearly, changing perception is not enough. The reality has to support the perception. In Comcast's case, even if its customer service was initially lackluster, it appears to have improved right along with the perception of it. As Frank Eliason, the man behind the ComcastCares Twitter account, writes on the Comcast blog, "In July 2010, Comcast is a vastly different company. Last year we publicly introduced the Comcast Customer Guarantee. We even changed our Credo to: 'Comcast will deliver a superior experience to our customers every day. Our products will be the best and we will offer the most customer-friendly and reliable service in the market.'" (Sidenote: Frank recently announced he is leaving Comcast.)


Regardless, is perception now reality?

Almost every example in this article generated significant press and recognition in high-profile industry and business publications, social media, and other venues. Whether it was awards, speaking engagements, articles, or interviews, they all benefited from lots of buzz and positive recognition. People still talk about many of these initiatives today, many years after their launch.


And yes, just as these are positive examples, there are also examples of those who played with new toys and failed. So here are some key takeaways to maximize your opportunities for success and minimize your risk for failure when toying with a shiny new object:



  • It's not just about being first. Being first might garner you more attention, but success comes from being smart about it first.



  • The largest gains come from being consistently smart and selective with new toys as they fit with your overall brand objectives and strategy.



  • A shiny new toy has to enhance, advance, or support your existing playground. It is not an isolated object, but it can create a compelling "spark" to advance your overall efforts.



  • Minimize your risk by applying your proven experience in digital marketing, invest in understanding how the "toy" works, and marry that with knowledge of your customers and your brand.



  • Start "playing" early but plan the execution appropriately. There has to be a certain level of adoption and market readiness to have a measurable impact at launch. So timing plays a key role.



  • Planning is essential, test if possible.

Denise Zimmerman is president and CSO of NetPlus Marketing Inc


On Twitter? Follow Denise Zimmerman at @dzimmerman. Follow iMedia Connection at @iMediaTweet.

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