There’s a great radio station out of Annapolis, Md. - WRNR 103.1 FM - which plays John Hiatt, Beck, Steve Earle, Peter Gabriel, Lucinda Williams, with the occasional Stevie Ray Vaughan, Marshall Crenshaw or Jimmy Cliff gem thrown in for good measure. Every time I drive to Maryland’s Eastern Shore or Delaware beaches, I keep WRNR on until the static overwhelms any discernible music signal. Yes, I’m showing my age and my slightly obscure musical tastes, but I have a point.
Three of the eight FAQs on the WRNR Website (www.wrnr.com ) deal with increasing station signal strength or improving reception across the broader Washington, D.C. area. Clearly, demand is outstripping supply. WRNR thrives by realizing that sophisticated listeners don’t define themselves by the rigid formats established by traditional radio programming. Tell me into what category on the typical commercial radio dial should Elvis Costello, Wilco or even John Mayer fit?
The same ridiculous concept of narrowly defined classifications exists in corporate marketing organizations and it represents the primary obstacle stopping clients from fully exploiting the value of the online medium. Online behavioral marketing not only encompasses both Brand and Direct Response, but it is the bridge that connects the practices and all of the subtle distinctions of consumer action in between. However, right now, hundreds of companies are knee-deep in their 2004 advertising media planning, and nine out of 10 of these firms will divide their marketing department budgets and staffing into only two columns: Brand and Direct Response. You may know the categorization by other names such as Awareness and Sales Promotions or National and Local.
Think about it. Despite the explosion of media outlets and marketing vehicles in the past 10 years, the philosophy behind most client marketing department personnel and financial resource assignments hasn’t changed in decades. An overwhelming number of companies are in denial regarding evolving media consumption, shopping and buying habits. Changes in consumer conduct demand a blend of Brand and Direct Response strategies, and an official endorsement is needed, linking accountability between the two disciplines. Behavioral marketing is that link -- a means of matching messaging to a prospect or customer’s actions -- dynamically. That can only be accomplished in the online medium.
As ING's Tom Lynch discussed with iMedia, “Anyone arguing the DR vs. Brand argument is missing the point and the possibility of this medium.” But typical corporate marketing organizational and budget structures don’t grasp the hybrid role that online marketing plays. The overwhelming opinion is that there are no shades of gray -- it’s only black or white.
Consider the challenge facing most consumer package goods (CPG) firms. Their marketing budgets are divided neatly into “Brand” and “Sales Promotion.” But since we can’t buy salsa, beer or candy directly online from CPGs, the Websites and interactive media campaigns for these products are nebulously labeled “Brand.” The theory is that if the online marketing effort doesn’t result in a real-time sale, then it must be Brand by default.
Why should online purchase count as the only tangible “conversion” action for CPGs? In other words, why is Direct Response limited to being a last-100-yards, instant sales-closing catalyst? It is shocking to me that more CPGs haven’t harvested their Website traffic through cross-channel promotions and online coupon programs with their retail partners. Can’t an effective blend of Brand and Direct Response for CPGs, i.e. Behavioral Marketing, be achieved through capturing email addresses, which can then be used for future marketing campaigns featuring offers redeemable at traditional sales locations?
When forced to choose where online marketing belongs, the vast majority of corporate marketing management invariably falls back on the concept that is the simplest to understand -- Direct Response. In my opinion, this is the biggest roadblock to behavioral marketing and the online medium gaining more client dollars. Even in past iMedia interviews, marketers and agency representatives are always asked whether “Brand” effect is considered when using online marketing. This is to see whether we have evolved beyond the assumption that online marketing is used for Direct Response only. But where is the logic in lumping the online marketing budget in with local media advertising and direct mail just because it’s considered Direct Response/Sales Promotion, when online media is bought predominantly on a national basis and a company’s Website is globally accessible?
As a result of this paradox, there are also far too many marketing department heads who regard their own Websites with little more than ambivalence or only consider online marketing for last minute inclusion in cross-media deals. Worse, we are stuck with Direct Mail vice presidents, with only cocktail party knowledge of the Internet, who manage client online marketing budgets and are obsessed with an archaic reliance on click-through rates.
You may be saying: “Wow, you paint a pretty bleak picture. Can the appreciation of behavioral marketing in the online medium break through this organizational and budget hypocrisy?” Well fellow brethren, there is hope on the horizon.
In January, I spoke at a CBS SportsLine sales training event. I predicted that within the year, a household name corporation would anoint online marketing’s “Jackie Robinson” by handing over the reigns of its traditional marketing communications to its top online manager. I contend Rob Sherrell of Delta Air Lines has broken the barrier.
Why? Delta realized that its online presence eclipsed traditional media marketing with regard to sales influence. Naturally, Delta’s initial online advertising efforts concentrated on transaction promotion. After monitoring customer buying cycles and use of the Web, now the airline also deploys brand strategies in its Web marketing campaigns and partner marketing efforts. To quote Sherrell: “I think some lessons we’ve learned are just around how we impactfully reach our consumers through the way they live, work and play.”
And encouragement must be gleaned from the positive results generated by the IAB XMOS case study participants. For those who haven’t seen the Phase One presentations, well known brands such as Colgate, Unilever, McDonalds and Kleenex tested shifting advertising budget away from traditional media into online marketing. These firms found that increasing the budget allocation for online resulted in higher brand awareness, greater purchase intent and an increased return on investment versus maintaining the standard media advertising distribution status quo. The news just released this week that Phase Two IAB XMOS case studies have been commissioned featuring Ford, Astra Zeneca, Universal Home Video and Verisign certainly provides optimism that momentum is gaining for breaking online marketing out of its organizational silo.
But, we still have a long journey ahead. Rare is the corporation that has a centralized ownership of acquisition, retention and growth through the online medium. The companies that "get it" have advanced beyond the petty internal squabbles and have secured cross-department commitment to prioritize e-business initiatives. A client’s organizational angst in determining where online marketing belongs must be met with flexibility and the courage to do “what’s right for our customers,” not “what’s right for my marketing department.”
At past conferences, I’ve often heard the cries of “Don’t all of us here already get it?” Perhaps we should force senior corporate marketing executives to attend and learn from future online marketing industry events, with eyes taped open like Malcolm McDowell in “A Clockwork Orange,” to ensure proper indoctrination. Just an idea.
Larry Everling is recognized as an industry leader for driving progressive brand advancement and marketing ROI results in the online medium. Working with leading brands such as Nextel, Novartis, CareerBuilder, IBM, Sheraton Hotels, BMW and UPS, he possesses the rare combination background with 10 years of online expertise, plus client side and agency traditional campaign experience. In May 2003, Everling started Grady Rose Consulting (www.gradyrose.com), providing strategic online marketing guidance.