Archive for 2008

February 5th, 2008

Microsoft+Yahoo! Search: 1+1 doesn’t equal 5

Healthy competition between media owners and communications suppliers is a good thing and should be encouraged. Competition keeps products healthy, prices fair and consumers happy. But I’m not sure a Microsoft/Yahoo! search merger is sufficient to create any notable or lasting impact on the current structure of search marketing.

The problem is that Google is the giant in search - especially here in the UK where it has an 81% market share. That leaves Microsoft, Yahoo! and some others carving up the remaining 19%. The problem with these percentages is that they are real peoples’ behavioural preferences. Changes in industry structure and product ownership will not necessarily change consumer behaviour.

History tells us that dominant brand positions can be very difficult, if not impossible to dislodge. In fact category leaders are not dislodged; categories are dislodged. We can use transport examples to illustrate the point. The leading stagecoach companies gave way to the leading railway companies who in turn gave way to the leading car companies. But the leading stagecoach company didn’t become a leading car company. New entrants created and dominated new travel categories.

So change may not come until someone new invents search 3.0 or even search 4.0. or Web 5.0 - or ‘Somethingtotallynew 1.0′. And that will happen, just as the behemoth Microsoft once looked like it would never lose its dominance, so too will Google one day be eclipsed. But in the meantime, Microsoft and Yahoo! will be hard pushed to displace Google when it comes to search.

Labels: , ,
  • Facebook
  • del.icio.us
  • Digg
  • Technorati
January 21st, 2008

Press ad revenue will fall by £1.6bn - at least

WARC and the Advertising Association have predicted that UK press advertising spend could fall by £1.6 billion by 2019. This recent forecast is at least realistic and possibly an over optimistic scenario for press. At the Newspaper Society Conference in 2000 I identified a stratum of media communication that was dangerously exposed to competition from the Internet. It’s that layer of product and service based advertising - where to go, where to find it, how to do it - often locally. In short, it was press “small ads”; fractionals, classified ads and directory entries. These areas of press are under attack from three sides:

1. Consumers aren’t using press for news in the way they used to
2. Consumers are finding product information in online search when they need it, not in fractional press ads when media planners think they need it
3. As a consequence of item 2, advertisers are finding far greater product sales efficiencies in areas like online search. Some advertisers are spending £500k per month in search - and that is most likely from the very product sales budget that would have gone to fractional and small ads in press and directories.

I thought I’d add some media forecasts of my own for 2019:

1. The media world will look as different in 2019 as a motorway now looks when compared to a dirt track.
2. Many magazines and newspapers will have gone completely, the established brands will continue to exist online with lower circulation ‘feature and comment’ magazines in print.
3. Most TV will be delivered via Broadband Internet.
4. Viewers will schedule all their own entertainment on an on demand basis; the job of TV scheduler will cease to exist.
5. The boundaries between print and TV will fuse with much cross-media consumption and ownership
6. Consumers will organise their own news and TV programme schedules in a framework that looks like today’s RSS readers.
7. The provider of the new “universal reader” will probably be the new Google but they are unlikely to develop this “universal reader” as most companies only have one huge hit and they’ve had theirs.
8. The use of personal devices like ipods will become all pervasive; and they’ll do far more; you’ll be able to turn your oven on with it.
9. The decline in press ad revenue will be greater than £1.9bn by 2019.

Labels: , ,
  • Facebook
  • del.icio.us
  • Digg
  • Technorati
January 14th, 2008

Online revolutionises SME marketing

Targeting Small and Medium sized enterprises with less than 250 employees (SMEs) has been a notoriously difficult area of marketing and communications planning for many years. Even though there are nearly two million UK businesses employing between 1 and 250 people, the available communications options were based around four areas:

1. Direct communications: Direct Mail, telemarketing and email
2. Trade journals (i.e. verticals catering for a specific area of SME activity)
3. Business sections in broader newspapers and magazines (i.e. horizontal targeting of management and business owners)
4. Sponsorship of trade exhibitions and events

Creating something new within these options was a bit like seeing how many different ways one could fold the same piece of paper. Even more difficult was reaching buyers through these channels when they were active and at the point of making a purchase. But now the growth and maturity of internet has spawned a large number of new, highly targeted and relevant opportunities for marketers targeting SMEs. Two new areas that are worthy of strong consideration by those targeting SMEs are:

1) Information Channels - by their nature many SMEs have to solve their own problems when it comes to IT, infrastructure, mobile communications, VAT, finance and email. Because they don’t have many traditional office functions like IT support or finance SMEs have to solve it themselves using access online help sites and user forums. These environments present an excellent targeting opportunity for SME marketers for two reasons. First, they offer good targeting opportunities in terms of audience delivery, but second, they deliver these audiences when they in the all-important ‘problem-solving’ mindset.

2) Business E-Commerce sites – SMEs have to make regular online purchases including IT hardware, software, office equipment and office consumables. It’s easier for SMEs to review products, make purchases and organise delivery online. By shopping online they are able to assure themselves that they have got the best value possible – however they choose to define it. Many of the business shopping sites carry advertising and these offer a new and exciting opportunity to target SMEs when they are in “buy” mode.

Screwfix in the UK offers a great case study in leveraging online for SME targeting. The company is a leading supplier of fasteners (nuts, bolts, brackets, tools etc). They have created a forum which has 12 talk areas - one for plumbers, one for builders, electricians, tilers etc. It’s got 54,000 topics and 540,000 messages across over 1,500 content pages. All the talk areas were active with most showing posts from the last hour as I wrote this post. Screwfix have created their own SME media channel.

Mobile display advertising is going to present the next big SME opportunity. A lot of these guys are glued to their phones. It’s not surprising when you consider that they have to work in a virtual office, taking their phone or Blackberry with them wherever they go by car, truck, van, tube, train, bus or even abroad. Networks are still developing mobile opportunities into commercial packages, but the close “personal space” communication they offer promises to bring an additional set of developments in SME targeting. If these developments are combined with the community based principles of Web 2.0 / 3.0 then we will be witnessing a revolution in SME marketing, that’s if we haven’t already.

Labels: , , , ,
  • Facebook
  • del.icio.us
  • Digg
  • Technorati
January 11th, 2008

Circulation of The Sun drops below 3m

To many outside the media community, this statistic may not seem like a big deal. But to those within it make no mistake; this is a bombshell. Whilst it wasn’t unpredicted it’s a media equivalent of a Thames Barrier breach or a visit to central London by space debris. December is often a tough month for newspapers, but that can only come as cold comfort to The Sun’s executives. They’ll be painfully aware of the significance of this watershed number.

This week’s events with Barack Obama hint as to why this is happening. On Wednesday morning UK newspaper readers didn’t wake up to news, they woke up to the best bet on the outcome as it stood on the previous night. UK newspapers ran generally non-committal, hedge-betting pieces alongside other unrelated headlines. For example, The Times ran a “Cannabis Clampdown” main headline under a picture of Obama (the pollsters’ safest bet at the time) with a sub-head reading “Obama magic lures record number of voters.”

It’s now an inescapable reality that newspapers are no longer newspapers. There was a time when they were the purveyors of the latest events from the last few months to the last few hours around the country and around the world. During the last century and before, that was enough to satiate newspaper buyers. But in 2008 however, with TV, radio, online and mobile able deliver the news as it actually happens, newspapers are left in an increasingly uncomfortable space. Being confined to running only what they can muster to their presses the night before puts them effectively in a non-news position. Something akin to what Michael Porter called being “stuck in the middle” and described as “an extremely poor strategic situation”.

What next for newspapers? Expect an increasing supply of celebrity gossip in the populars and an increasing commitment to analysis and comment in the qualities. But watch out if any of the comment and analysis is based on polls. The New Hampshire primaries provided a case study in how appallingly inaccurate market research surveys can be.

Labels: , ,
  • Facebook
  • del.icio.us
  • Digg
  • Technorati
January 3rd, 2008

Coverage, frequency and response rates - the old rules apply online too

Every now and then the topic of coverage, frequency and response rates arises and marketing or agency personnel find themselves trying to identify the optimal levels of communications spend required to maximise response ROI. Some argue that in order to maximise response rates the message has to be seen ’several times’ before it is acted upon. Others take the view that each ad has to stand on its own two feet and ‘do the the business’ each time it is seen. So what is the optimal frequency level required to maximise direct response ROI?

Over the last few weeks I’ve had cause to dip into both Drayton Bird’s excellent Common Sense Direct Marketing and also Graeme McCorkell’s equally robust and informative Direct and Database Marketing. Both the books emphasise what I know to be the case from countless experiments:

Any direct response ad must wash its face on the first exposure. Adding exposures actually decreases the overall response rate and consequently increases the overall cost per response.

McCorkell’s view is as follows: “each single press insertion or TV transmission is an event in its own right, required to justify its cost by a directly produced return”. Drayton Bird supports this view and even builds his argument with a case study from 1912. He quotes “a man called Shryer who studied what happens when you repeat advertisements. He learned that if you run an ad a second time, it does not get better results. It generally gets worse.”

Nearly 100 years after Shryer, this rule has also been found to apply online. Around 2000 I remember Doubleclick tracked the relationship between online ad exposures and online response rates. They found that with every layer of incremental frequency, response rates dropped by around 50%. This means that in an online environment you will get the highest % return from the first exposure i.e. by building coverage, not frequency. This was re-examined again by Atlas in 2004 and they reached similar conclusions about the importance of the first exposure. The extensive work of John Philip Jones at Syracuse University has also resulted in findings that support the importance of the first exposure. Jones found that:

1) One exposure has a significant effect on purchasing.
2) Two exposures do not have twice the effect of one exposure but usually cost twice as much.
3) This diminishing return deepens as more frequency is added to the campaign.

It’s interesting that “below the line” channels like direct mail and door to door often produce far higher response rates than “above the line” channels like TV, press and radio. Whilst the main reasons for this are related to the personal nature of direct mail and door to door, it is also worth bearing in mind that by definition these modes of communication are very low frequency channels; they basically optimise at 1 exposure. If below the line channels like direct mail were used at the same frequencies as above the line media i.e. 5-8 OTS then their response rates would be more than 90% lower those usually experienced.

Labels: , , , ,
  • Facebook
  • del.icio.us
  • Digg
  • Technorati
January 3rd, 2008

Is this the Mother of All Direct Mail packs?

’s
Whilst this year’s Reader’s Digest prize draw direct mail pack may not win the ‘Most Creative Direct Mail Pack of the Year’ award, what you are looking at here could be the Mother of All DM packs.

The folks over at Reader’s Digest are masters of direct marketing. They’ve been doing direct mail for years; testing, refining, testing and refining, year in and year out. They analyse performance to the nth degree, looking at sales value, customer value, response data files, segment results and ROI from almost every imaginable perspective. They work out what delivers and do more, and they work out what doesn’t and do less.

So, what you see here is not down to chance. It’s based on knowledge. The envelope size, colour, markings of priority and response deadlines you see here are all devices that have earned the right to be there, they are all devices that work to generate the highest possible sales per £ spent.

Given its lack of creative credentials, this pack throws open the doors to the debate about creativity versus performance. Whilst most agency creatives want to win awards to stack on their office shelves, the business managers who are their clients want results. And it looks as though the masters of DM think this is the right route to the best ROI result.

One of the challenges facing direct marketers in the digital age is to think more responsibly about the environment. A core part of this responsibility will be to ensure that where a medium like direct mail is used, it is used as efficiently as possible. If your business needs 1,000 responses, it’s much better to generate that from 5,000 packs as opposed to 50,000 packs. That means improving response rates.

So here’s a question for all marketers buying direct mail creative: How many of the direct mail packs your agency have presented recently look anything like this?

Labels: , ,
  • Facebook
  • del.icio.us
  • Digg
  • Technorati
Newer Entries »