This week, Jaffe talks to G.M. about such topics as the future of Interactive Agencies, the power of pull-through awareness, and what it’s going to take to grow the pie.
In 1987, G.M. founded Modem Media, with a vision that digital communications would fundamentally change the way business is done. Under G.M.'s leadership, Modem Media has become one of the world's most successful interactive marketing strategy and services firms, widely recognized for the innovation and effectiveness of its work in digital channels.
As a pioneer in the interactive arena, G.M. has been recognized as a visionary on digital communications and relationship marketing. He has been cited as one of the most influential executives in the interactive community by publications such as BusinessWeek, Forbes, Fortune, and The Wall Street Journal, and he was the first Internet professional inducted into the American Advertising Federation's Hall of Achievement.
G.M. serves on the board of leading marketing technology companies such as CentrPort and Echomail and is an executive committee member and treasurer of the Direct Marketing Association.
Jaffe: In a previous article I wrote about a line being blurred between advertising and direct marketing. Would you agree with me or tell me to grow up and accept the fact that the line is forever blurred?
O’Connell: The line between above and below the line? I don’t think it matters.
Jaffe: Is this why I’m seeing a lot of interactive capabilities being rolled up into direct?
O’Connell: I don’t know that it’s in the best interest of clients. Everybody looks for easier ways of managing stuff. And you have to think about whether or not the role of interactive marketing and the role of digitization and Internet enablement are ultimately going to be best impacted through a direct response orientation. If you extend the mission of those firms to customer relationships, then I’d say, sure knock it all together. But if it’s to run better direct response acquisition programs for record-clubs, or to get more people to sign up for DSL at a low acquisition cost, then I’d say it’s probably not the way to go.
Jaffe: I think there are other blurs occurring in the advertising world. Advertising as we used to know it is changing, and I think there are lessons in our digital world that have taught us how to take it forward. Madison and Vine is one example of how advertising in its rawest form is going to be rejected.
O’Connell: That’s right. I was talking to an analyst the other day and told him that there are two bookends out there in terms of the future of where advertising can go and where brands can be established and built. On the one side is Madison + Vine and on the other side is Interactive Marketing and the ability for brands to understand how to really build a relationship. The first side is sexy but at the end of the day, I don’t know that it’s the lifeline. We’re not betting on Madison + Vine.
Jaffe: I guess my approach would be to insert a third street at the intersection of Madison + Vine, one really well known in the Digital world.
O’Connell: Maybe someone should think about that. I suppose where Redmond meets…..I don’t know what the answer is. We should spend some more time on this. Putting a label on this would be fun.
Jaffe: Absolutely. I think there are three parts to this puzzle: Entertainment + Brand, Advertising + Digital (the missing link) – the ability to inject technology into the mix. Madison + Vine is the stopgap solution.
O’Connell: I don’t know that if you insert technology into that, the result will necessarily be better. I think you have to be different. That’s why I don’t think advertising is dead. A lot of guys that are working on this are personal friends of mine. And they love to talk about new ways of integrating or sponsoring content -- what BMWFilms has done such a good job of. Now where technology might come in is on the distribution side, but the way that stuff works – just like BMWFilms which I think is brilliant – but quite frankly, I just don’t know how extendable that is; the whole industry can’t just hop on board and do something similar.
Jaffe: It’s funny you mention that. BMWFilms is the quintessential example used to describe a great Interactive campaign, however it’s quite possible one of the worst new media examples – it’s certainly not a media campaign at all. It’s a great integrated marketing case study, but it falls straight into how clients see integration: TV, plus a little bit of print and radio and a Website. How are we going to convince them otherwise?
O’Connell: Part of the battle – and this is a war nobody’s going to win – lies in arguing that the Internet isn’t good at, or can’t help with, awareness. There are studies upon studies that prove otherwise. They’re ignoring a lot of good research at their own peril for sure, but I also think that their belief that a lot of this research is overblown is also not unfounded.
Jaffe: Can you give a quick example of each?
O’Connell: Dynamic Logic is showing all this lift. There’s definitely an impact in traditional advertising measures. A lot of this research is being ignored – whether it’s being promoted by the IAB, OPA or media companies.
Jaffe: So how do we get this in front of the right people?
O’Connell: This is a big thing that the industry needs to figure out. I’ve been talking to people like Martin Nisenholtz, and folks over at the AAAA’s and DMA to try and assemble a way of putting good research out there and making sure that client companies don’t ignore it. But at the end of the day, I think a lot of them are ignoring it because of a lot of personal experience that shouldn’t get in the way and the fact that even if this stuff works, it’s hard to do and it’s easier to use other channels that are also effective at creating awareness. Here’s the difference though – so maybe you could argue that we should be spending more money on online with research showing that incremental online spending in the mix can help boost overall brand metrics – but there’s something else going on, which I talked about at @d:tech – it’s the nature of pull-through awareness.
What the Internet is doing is effectively compacting how this happens in a huge way; linking need with preference in a way that has never been done before. It’s why Google and Overture are growing; it’s why eBay works; I have a need and I can get to my answer quickly and I don’t care how much awareness is out there; my short list gets lengthened because of the Internet; because of the research I do. So if I go on Google tomorrow to look for powerdrills,….suddenly I become aware of Black & Decker, Makita and a couple of others. The outcome is a whole new consideration set. This is how customer behavior is changing
Jaffe: Let me throw in a few caveats. While I wholeheartedly agree with pull-based advertising, where the Internet is becoming a matchmaker so to speak, helping to narrow the gap between marketer and consumer, I think there’s still a wider funnel out there which rests in the awareness camp: Sometimes consumers don’t know what they want or need and that’s where advertising comes in. On the cynical side, marketers have been able to manipulate, influence or create needs.
O’Connell: I completely agree with you.
Jaffe: The other view is that there is value in the service of broadcasting-relevant messaging. And one of the things that the Internet delivers in spades is contextual relevancy.
O’Connell: I’m not sure what your distinction is. If you’re saying that advertising can supply air cover so that it’s going to install a need or influence a consideration, then I agree completely.
Jaffe: Take your power tool example. The problem (and I don’t know the answer) is, with changing media consumption patterns, how are consumers ever going to build that association or relationship with B&D or Makita without the awareness or generic primer?
O’Connell: And I would say that’s why we’ll continue to have advertising. I just don’t know if this is where all the spend should be. If we had to assign the Internet’s value or impact on the customer, it’s totally in evaluation and establishing preference and ownership of services.
Jaffe: I look at this and say if we want to talk the same language as traditional marketers, I’m not as interested in R&F and GRP discussions; I’m more interested in the consumer adoption process and understanding how consumers use the Internet and then carving out the Web’s role.
O’Connell: That’s exactly what we’re trying to do
Jaffe: And since the beginning of time, smart marketers have been saying, stop wasting your time and money with people who will never buy your product; invest in your customers and turn them into advocates. Secondly I agree that the research phase is the sweet spot of the Internet. They’ve given you permission to connect with them.
O’Connell: You can summarize a lot of this by looking at various industries and analyzing the gaps between consumer time and involvement, and marketing spend. Take auto because it’s the most egregious. Roughly three out of four consumers are heavily influenced by the Internet when it comes to researching a car. And yet only a fraction of the total marketing dollars (from awareness through loyalty) is being spent against them. That can’t continue. It’s unsustainable. So everything we’ve been talking about comes back to this gap.
Jaffe: So what’s it going to take to bridge this gap?
O’Connell: A lot of hard work. What have advertisers done in the past 10 years on the Internet? Applying a technology model: spending IT dollars on often failed/underutilized applications. What else did they do? On the “non-Website side”, huge portal deals, most of which were oriented towards messaging.
Jaffe: So wrong stage of the consumer adoption process?
O’Connell: Messages, sponsorships, awareness. Applying an ad-model. What they didn’t do was to apply a customer focused marketing model. And that’s the opportunity. These guys will still spend a majority of their money on awareness, but it pales in comparison in terms of where they should be spending their money. The only industries that have adjusted and understood this really well are the financial services and travel industries – because fundamentally their products changed and they realized they needed to do something about it.
Jaffe: This might be because of the access to commerce or conversion opportunity i.e. buying online …
O’Connell: In terms of a direct relationship to their customer, yes, I would agree with that. Here’s the difference: If you believe all this pull through stuff, let’s define another two book-ends: service-based marketing and message marketing.
Jaffe: So its form and function?
O’Connell: And here’s how marketing is going. You’ll have to be really good at either one potentially. So I would ask you which one is really going to impact your customers more in a world in which they’re more and more in control – embracing that control or trying to out control them.
Jaffe: Or manipulate them…
O’Connell: …your word…a better word.
Jaffe: I believe there are three camps of clients out there that we need to tap into: the 1%’ers (1% is optimal), the twice-shy’ers (once bitten…) and the non-believers (don’t believe or don’t want to believe).
What’s the elevator pitch or selling message to each audience that would help convince them to invest at all, or invest more in this medium?
O’Connell: Get your head out of the sand… Get your head out of the sand… Get your head out of the sand…
There is no difference between 1% and 0%.
Jaffe: I love that. No need to elaborate.
You mentioned in our conversation that you hate the word branding, why?
O’Connell: Branding is for cattle. It’s such a misused term. I hear people asking if they did a good job branding in terms of adhering to a proper corporate identity standard and proper logo type positioning, which is indicative of good branding or being true to the brand in terms of a consistent look and feel. As we all know, a brand is so much more than an outward veneer that establishes the visual connectivity with the brand; that’s all it is; it’s an interface to something that’s much larger; it’s a promise. So when I talk about stewarding brands going forward, it has nothing to do with stewarding a corporate identity or tone and manner of advertising; it has everything to do with extending the promise, and keeping the promise of your product and your company in the marketplace…and that’s what the Internet can do.
Jaffe: Promise, delivery, consistency.
O’Connell: Yeah, and I think the role of the Internet from a brand perspective is to establish and deliver proof. It’s about what you get. So branding on the Internet can’t be about how it looks, but what it can do. That’s how you build a brand on the Internet.
Jaffe: Finally, let’s talk about the future of interactive agencies. Will the few remaining digital agencies be swallowed up or absorbed into the big four? Or is this the time for the birth of the next hot agency or new breed of agency?
O’Connell: I think it’s the latter. If you believe that what the larger communication companies are involved in is helping companies to message better and more consistently to their customers and to integrate look, feel, tone across a wider mix of communication channels, then yeah it might not be a bad way to go at all. It’s driven right now by clients’ desires to save money, not have best-in-class in these economic times.
If you believe -- and this might get back to the elevator question -- if you feel the inexorable draw of digitization and the Internet in terms of your business, then I don’t think it can really get wrapped up. There’s a new integration out there – it’s not about look, feel, tone, manner on a surface level, it’s about integration of processes, data, IP-touch points. You can’t do that in a large company.
Jaffe: To wrap things up, I’ll ask my usual question: If Jaffe Juice were a drink, what would it be?
O’Connell: The world’s best Bloody Mary well served.