As Apple proved with its Mac vs. PC ads, whether to use a brand or a direct-response approach depends on your customer. A Range Online Media director tells you more.
As all of us who are actively buying media and planning search campaigns know, there is no magic elixir to solve all of an advertiser's strategic needs. The issue becomes even more tangible when an advertiser is challenged to create growth while maintaining a sustainable return on advertising spend. This perceived imbalance between growth and return on investment troubles us all, especially as media costs continue to rise.
Traditional brand advertisers tend to be strong at creating awareness and depend on their brand leadership position and distribution to generate a cost-effective purchase by the consumer. Marketing spend of a brand advertiser will be largely dictated as a percent of sales or percent of net revenue. A direct response marketer will show aptitude at the latter stages of the process and will focus his marketing efforts towards customers that are in-market and could be swayed by convenience, price or features.
The reality is that for all advertisers, there is a blend of brand and direct response activities that will create sustainable growth. Strong brand efforts create sales volume and brand equity. Strong direct response activities create efficiencies that can subsidize your brand efforts.
The trick to making this all come together is to increase your sophistication, but simplify at the same time, by focusing on a customer need. The traditional AIDA approach (Attention, Interest, Desire, Action) must be transformed into a cohesive set of micro-strategies focused on solving a customer need. It sounds complex, but is really quite simple. Put aside your desires and goals as a marketer for a moment. It is really not about you. Instead, truly and intently focus on your customers' decision-making process. If you have accomplished that goal, your marketing ecosystem should shift to look something like this:
Need perception
First, the customer realizes that he has a need. Better yet, his perceived need is one that can only be filled from one created by a marketer, whether it is online or offline. Think about what Apple has done in the Mac campaigns and the iPhone. Current Mac and iPhone campaigns are conceived to imbue potential buyers with an intrinsic sophistication, should they choose Apple over another brand. As a marketer, Apple has created a need. The company is creating brand loyalists who are not in the market for a new laptop, but for a new Mac. Seriously, nobody wants to be the guy in the tie.
At this point, the marketer's goal is to proclaim from the mountaintop to a hundred potential customers in the hopes of finding 10 potential buyers with the unrealized need and capacity for an emotional connection with the product. It's a critical step; your efforts at making this emotional connection make all other activities downstream in the customer decision process more efficient because you are putting yourself in the leadership position. While connecting with the consumer is not necessarily the sales driver, it provides a heavy assist. You should expect to grow demand, reach and brand equity in order to continually grow your sales volume while maintaining a consistent return on investment, across all marketing activities.
Your competitors will have to work harder and spend more to insert themselves in the consideration set downstream and usurp your leadership position. The beauty of online media is that you have a distinct ability to optimize this activity on an ongoing basis. You can automate your placement optimization via the ad networks, optimize your creative via your ad serving solution, target users in their web browsing paths when they will be most receptive to your ad (upstream within the portals or downstream at niche sites) and engagement or interactivity via rich media. All of these techniques allow you to eliminate impression waste and reach more qualified people, expanding your voice from 100:10 to 100:30 and beyond.
Investigation and evaluation
These two distinct process steps are where you begin to subsidize your broader reach activities at the need-perception stage. The more effort you have put in at the need-perception stage to establish a leadership position, the more of an advantage you have when potential customers begin to research and evaluate.
While these customer decision-making steps appear synonymous, they are extremely distinct. Investigation is when the customer is looking for the right solutions to satisfy her need. You are still in branding mode but your media mix becomes much more targeted, and you start to see those returns hit your bottom line. Your targeting can focus on contextual, behavioral or against a specific audience. You also must plan on having more frequent touches with the consumer so your messaging strategy must be well thought-out.
Evaluation is the stage during which the solutions are evident and the decision pares down to very granular topics such as price point, specific features or attacking the pain points in dealing with a competitor. Your media mix may not change from the investigation step, but during the evaluation phase, your messaging strategy begins to change based on your brand strength.
If your brand strength is low or if you are selling a commoditized product or service, you should begin to make stronger calls to action, rely heavily on promotions and skew towards the immediate benefits of transacting with your brand. In other words, it becomes more urgent, manifesting a direct-response flavor.
If your brand strength is high and you have established clear differentiation during need perception and investigation stage, your dependence on direct-response tactics may be less in order to succeed. You may be able to rely more heavily on your brand promise to carry you through the purchase path.
For an example of differing approaches to investigation and evaluation stages, we can again look at the personal computer market and include Windows PC manufacturers. Because brand differentiation is challenging when machines typically run on similar software and have common features, we see aggressive spending focused on the investigation and evaluation stages as opposed to the need perception stage. Basically, for somebody looking for a Windows OS PC, the buying decision will come down to price as the primary motivator.
According to Nielsen/NetRatings AdRelevance, Dell Computer spent approximately $12MM on online media in Q1. What's interesting is that the top IAB-standard ad unit for the period, a PointRoll unit for Dell's Inspiron notebook line which ran on CNN, is focused on three things. You see a partial image of the laptop, you see the price point and you see when that price point expires. This is a very typical direct-response strategy focused around price point and urgency.
Apple, on the other hand, has transitioned one of its TV ads to a PointRoll-delivered unit with absolutely no mention of price point. Instead of price point, Apple is focusing on a "pain point" which comically speaks to the pains in upgrading a PC to Vista. All the user is left with at the end of the ad is a picture of an iMac against a clean white backdrop. Apple also spent about a quarter of Dell's spend in Q1 but to a more tech-focused and younger demographic.
I believe that both of the strategies are effective relative to the advertiser, but it does give you a sense of the larger story. If Apple can compete as a "lifestyle choice" without pricing as a primary concern, it bodes well for margin opportunity as the company is positioning itself out of the pricing fray and more as a premium offering. Positioning yourself as a lifestyle choice also creates an evangelical customer base. These brand fans are constantly influencing their friends, family and colleagues, and luring them into the web you've spun.
Purchase
So you've invested the time and money to create a winning marketing ecosystem, but the potential customers are abandoning your sales funnel once they hit your site. Because of the fear of extensive IT investment and resources along with extensive analytics work required to do constant testing and optimization of your site and sales funnel, many companies drop the ball.
As much as I've been touting Apple as a case study in earlier stages, this is one area in which I see a lot of opportunity for improvement. It is rare that I will click on an online ad or see an offline ad and see good continuity of that message when I visit the Apple site. I follow an ad for an iMac, yet I'm hit with the demo of the iPhone once I hit the site. And as your stereotypical early adopter-techie nerd, that distracts me from my purchase path. Because Apple does not focus on custom configurations as much as Windows PC manufacturers, you would think that this puts the company at an advantage. Less variables of what content to surface to users should make things all the easier.
What never ceases to surprise me is how many advertisers seem to forget that the one medium over which they have complete control is their own website. After all, you own and operate your site and have 100 percent share of voice. It is imperative, whether you're a direct response marketer or a brand marketer, that your site follows through with messaging that brought the user to this point. Better still, there are extensive toolsets and services available to automate this process with limited effort from IT, such as Offermatica and Optimost. At this stage, it's a number's game. Every percentage point to your conversion rate (regardless of what you define as a conversion) is imperative and will be heavily impactful to your growth and profitability.
Additionally, smart companies know the benefits of making the most of their satisfied customers. Gain their loyalty and you'll most likely gain their referral. Whether you invest in database marketing activities, create systematized referral programs or build mechanisms for user-generated content, the lifetime value you get from one customer can be a springboard for 10 more; or, 100 more if your loyalist is a blogger.
Remember, the scientific explanation of an ecosystem is a community of organisms, together with their environment, that operate in an interdependent way. In the same way, each of your marketing activities affects all others and are dictated by your customers' behavior. Take the time and begin your process by creating a solid ecosystem strategy around your customer. Then, your independent tactics -- search, display advertising and your website itself -- are all working towards a common good of sustainable growth and brand loyalty.
Dustin Engel is director of consumer strategy & research, Range Online Media. Read full bio.