Digital Solid: Marketing Technology ROI

A recent post on the 37signals blog helped explain how their project management product was born: Turn the tables on that petty tyrant MS Project. Everyone I’ve talked to who uses Project has the same complaint. It gets the job done but it’s painfully complicated.

The Chicago-based 37signals decided to do something about this complexity and created the award-winning Basecamp. It’s a smart strategy. Users occasionally need to push the limits of their software, but far more often, they just want to get their work done.

I was reminded of this as I had dinner tonight with a friend who has recently taken the plunge and bought an iMac. After working with nothing but PCs, his response was almost comical: “What have I been missing all these years?!?” On the Apple site they list reasons for ”Why you’ll love a Mac.” The first: It just works.

We all pine for the day when something actually gets simpler instead of more complex. Those who deliver simplicity and still allow us to get work done win our hearts and our pocketbooks.

Is it any wonder that the biggest threat to email marketing — if you want to call this new, complementary tactic a threat – is something whose middle name is simple? Really Simple Syndication, known more commonly as RSS, is catching on because you don’t have to fill out a form, you don’t have to open an email program, and you don’t have to go beyond reading headlines, should you prefer not to. Like the iMac, RSS just works.

Read the 37signals blog entry and see if you agree: The Davids of the world are continuing to win their battles against Goliaths, especially if they stick to what’s simple. While you’re at it, take a look at some of the blog’s other entries. This is one of the best “corporate” blogs I’ve come across, if you can call it corporate. These folks really know how to use mildly subversive content to drive home points that also happen to advance their brand. They’re just themselves, warts and all.

Simply refreshing.

One thing in particular strikes me as extraordinary about Second Life, the online community game that stretches the definitions of both community and gaming. As I’ve mentioned before, I’m most impressed with its demographics. Second Life’s 750,000+ “residents” are older than most online gamers, and much more evenly split in terms of gender. Their communities’ inhabitants are much closer demographically to the real world, and most would probably tell you they aren’t playing a game at all. They’re simply … living.

So it should not be too surprising that a real world recording artist has given a concert there (Suzanne Vega) and a real life presidential hopeful has campaigned there (former Virginia governor Mark Warner).

These online community firsts were reported in this week’s excellent On The Media podcast / NPR broadcast. And although they are impressive, I think you’ll agree that the online appearances of trailblazing musicians and politicians are a little too “fringey” to suggest further marketing possibilities.

Then, a few hours after hearing that podcast, I read more details about how Harvard is teaching a law course on an “island” that it has purchased on Second Life.

Yes, one way you can take CyberOne: Law in the Court of Public Opinion is in a virual Second Life classroom. The course description explains that it is, “A course in persuasive, empathic argument in the Internet space.” Students will be, “Studying many different media technologies to understand how their inherent characteristics and modes of distribution affect the arguments that are made using them.”

What separates this genuine taste of things to come from mere headline-grabbing gimmickry is the way the subject of study actually becomes the medium of discourse:

“Students will be immersed in this study through project-based assignments in which they will be using these technologies to make their own arguments.” [Emphasis is mine.]

Having learned about using this medium within the medium, these students will be ready to help the future Mark Warners win real votes in virtual spaces. And if you can sell policy, you can sell a heck of a lot of other things.

Instead of businesses spinning their wheels trying to set up things like MySpace profiles for their brands, perhaps they should start looking at creating Second Life avatars for their brand spokespeople to use to polish their online persuasion skills. If done right, these businesses could find prospects who are closer to the demographics of their customers, and much more willing to hear what they have to say.

NOTE: Another recent piece on Second Life is in the Wall Street Journal. Read about how clothing designers for this online world are creating and selling fashions designed to turn avatar heads.

I admire what Podbridge is attempting to do. They seem to have taken the lead in monetizing podcasts. I doubt they will succeed, though, unless other conditions change and change fast. Podbridge has created a podcasting advertising network, one that promises to match audio ads to podcasts that you download via iTunes (and, eventually, elsewhere).

Ads would be fed to you randomly along with podcast content. The ads, which would be dynamically stitched onto the podcasts, are served up based on your age, gender and location (such as ZIP code). Nice idea, but …

My skepticism has to do with whether people will volunteer this information (age, gender, location) to receive something that they are currently accustomed to receiving for free, and mostly free of ads.

Much more logical (but logistically challenging) is to follow the ad model that Podbridge claims to be mimicking — that of magazine advertising.

In this alternative, each major podcast producer would receive ad insertions and interweave those ads with their content. This wouldn’t provide the flexibility and customization of regional-, age- and gender-based targeting, but it would talk to people based on their enthusiasms. For instance, DVD rental ads would be placed on podcasts such as Filmspotting (as they are now, for PeerFlix).

These ads could still include Pay-Per-Call ads supported by Ingenio, as Podbridge is currently planning. It’s a brilliant use of this phone-based ad concept, which was first introduced and tested in limited Yahoo sponsored listings.

This alternate business model also allows for the strength of product placement, something that started with the early days of radio and television, and has found a new life as a way for advertisers to get their products in front of viewers who use DVRs to blaze past television progamming’s commercials.

True, this lack of scalability makes it a less-profitable business model, since podcasts are typically today such a Long Tail phenomenon.

But the dearth of consumers willing to opt-in to receive ads makes the Podbridge concept fatally flawed in my opinion. At least until there is a critical mass of premium content podcasters who will only distribute their product with Podbridge-provided advertising. That day is a long way off.

A couple of days ago Microsoft officially entered the portable media player marketplace. I’m surprised and impressed with their entry. Microsoft has launched the Zune, an iPod-like device with an innovation that marketing technology professionals should watch closely.

The feature that I find so exciting is its ability to do something that Palm users would refer to as “beaming.” What’s that? Here’s a scenario, overheard from the floor of some idealized trade show, where beaming could occur, maybe:

“Good to meet you, Mr. Jones. Say! I see you have a Palm organizer as well. Why don’t we point them at each other and beam each other our business cards?”

This was always far better in theory than in practice. It required these two people to both possess all of these things:

1. A Palm-based device
2. A properly configured “business card” entry in their Contacts list
3. An infrared or Bluetooth port that’s switched on
4. The habit of exchanging electronic cards in this manner
5. And let’s not forget a thick skin for public ridicule, since you’ve now told the world that you’re a geek

As for the all-important #4, I’m willing to go out on a limb and say no one has ever developed such a habit anywhere outside of the fevered dreams Palm executives.

And it’s not technology holding us back. It’s a shift in paradigm and a habit that is best fostered when you’re far away from business associates.

So beaming is mostly dead. But Microsoft, of all companies, may help it become downright hip. They may be on the verge of training us to use a new marketing medium by making exchanging songs a social experience.

Bear with me a moment: What if your organizer was also your phone, and it also played music files, and instead of capturing a salesperson’s contact information on a tradeshow floor, you were getting far more valuable information. The information would include this person’s name and other facts, but it would also contain, say, a brief audio narrative about the product you’re viewing on the tradeshow floor, or some lavishly produced piece of audio branding. Perhaps it would even give you an offer that would drive you back to a web site when you return to the office.

If the place you’re in is an art gallery or pre-auction exhibit, this locally-shared podcast would describe the items up for sale or bid. It could even provide narratives on the people across the table from you, who you’re about to meet at a singles “speed-dating” event. The applications for “local-casts” are many and promising. And because we’ll already be listening to our portable device for our musical entertainment during our commute or workout at the gym, there will be no stigma associated with this new type of Bluetooth beaming.

This would require a paradigm shift. But it’s not as big or remote as you might think. And for those who say this won’t work because the Zune is not a cell phone, I only need to remind you that Bill Gates and others in Microsoft are themselves predicting that we will someday be listening to our downloaded music on our phones. At the product launch, Microsoft executives were telling reporters that a Zune phone is already part of the company’s plans for the product line.

As James L. McQuivey, a Boston University technology expert put it, “The fun has just begun.” So have the business possibilities.

Postfuture.com, an email service provider (ESP) owned by Harte-Hanks, has released a benchmarking tool for consumer and business-to-business emailers. One of the more useful findings is the comparative click-through rates by industry, ranked best to worst:

• Restaurants: 57.5%
• Publishing: 55.6%
• Pharmaceutical: 23.8%
• Travel and hospitality: 23.4%
• Conference events: 14.2%
• Financial services: 11.0%
• Technology: 10.9%
• Government: 9.5%
• Insurance: 9.5%
• Consumer packaged goods: 8.6%
• Entertainment: 8.1%
• Retail: 6.0%
• Automotive: 5.7%

As you look this list over, it shouldn’t be a surprise that all of the business-to-business (b2b) emails are at the top. Business people are paid to, among other things, keep abreast of news and opportunities. The emails they opt-in to receive help them fulfill this duty.

On the other hand, consumers will be less willing to open a typical email and dig deeper with a click. Overall, emails in the b2b sector had clickthrough rates and open rates of 19.9% and 78.9% respectively, while those sent to consumers generated 11.2% clicks and 67.7% opens.

This is all according to Harte-Hanks, mind you.

As with any secondary research, you’ll want to use the figures cautiously. For instance, I suspect that the company excluded many unsuccessful campaigns from their findings, in order to sweeten the report. It is, after all, a report card of sorts.

What if this ESP was instead selling weight loss programs? I imagine we’d be seeing their customers, of all stripes, dropping the pounds to a degree that might make you concerned for their collective health. (Note: Melinda Krueger thought these figures seemed high as well. Her Comment below explains what she learned when she followed up with them).

But for the sake of comparison, these figures can help. Tempered with a degree of skepticism and your own email track record, they can show you how your enterprise compares with others in your industry, and with the medium of email marketing in general.

What are the lessons to be learned from Facebook’s recent dilemma? This college online social network has struggled this week to quickly deal with an unprecedented backlash against their new RSS distribution of profile changes.

Lesson #1: People can’t be trusted to think through the consequences of posting things about themselves on the internet (big surprise!)

Lesson #2: RSS feeds are a powerful new information distribution channel that we – as an online society — will need to better understand, in the same way we needed time to understand email and web sites.

The power of RSS will someday soon be harnessed, and that power will further propel and advance marketing technology. Until then, prepare, as Facebook did, to be surprised by unintended consequences.

With all the recent noise about new online communication tools such as user-generated content and pushing content through RSS, we shouldn’t forget that some tried-and-true tactics aren’t going away any time soon. Take the the opt-in newsletter, particularly one that is customized to a recipient’s specific interests and tastes.

I challenge you to name an online tactic as powerful as a well-done opt-in email newsletter to draw visitors back to a web site or drive sales across a company’s complementary product offerings. This technique truly has legs.

Sure, it’s easy to see where email newsletters work in categories such as online fashion apparel and leisure travel. After all, is there anyone who hasn’t opted-in at one time or another to a travel site’s “hot deals” email?

But a truly enduring marketing tactic has the ability to surprise us – to show up and shine where we’re least expecting it. The email newsletter certainly has done this for me.

To my knowledge, one of the most effective opt-in newsletters around is in a category of services that no one ever wants to use. That category is healthcare.

Private Health News provides private labeled emails that a hospital or other care provider can use as a way to deliver news about its own offerings. What makes this newsletter so effective is the the fact that consumers truly appreciate receiving it. That’s due to theses two factors:

• The content is customized
• The content is trustworthy

Consumers sign up for it by visiting the site of the provider (let’s say it’s “General Hospital”), and then selecting topics of interest. This customization makes the newsletter unique to each households’ needs, with a selection of over 25 health topics from Blood Pressure to Breast Cancer, Sleep Disorders to Stroke Rehabilitation.

When the newsletter arrives, it reports the latest research, originally seen in articles from over 350 prestigious healthcare publications. The publications include the Journal of the American Medical Association and Lancet. Interspersed with the news — which, mind you, is tailored exactly to a recipient’s current health concerns and interests — are brief bulletins and ads about General Hospital events and offerings relevant to that topic.

For instance, along with a Men’s Health article there might be a notice of a free prostate cancer screening held at the hospital in three weeks, along with a link to the place on the General Hospital site where you can sign up or get more information.

I first met Dan Ansel, the president of Private Health News, six years ago at a healthcare marketing conference in San Diego. When he described his fledgling product to me, I immediately saw how this was the part of the puzzle I was struggling to deliver to my healthcare clients.

Dan’s product was a way to ensure that the valuable minority of consumers who visit my clients’ sites – and care enough about their families’ health to be proactive – can receive, every month, several excellent reasons to come back for more information. In other words, it was a way to retain prospects and patients, and to cross-sell to them wherever appropriate.

Has it worked? My experience and those of my clients says it has. What’s more, Dan has made sure to periodically survey newsletter readers, to get the user’s perspective on its effectiveness. Here are a few of the results of his latest survey, which had a sample size of 10,157 newsletter subscribers:

• 99% consider the health information in their newsletter valuable, with 25% saying it was “very valuable”
• 75.6% have the health issues to which they subscribe or are making decisions for loved ones with those health issues
• Respondents are making healthcare decisions for an average of 3.3 people
• 67% indicate a new awareness of the provider’s services as a result of receiving their newsletter
• Over 13% have used these services because of that awareness

That last metric is the one that always blows me away. Every time the survey is conducted, more that one out of every ten people surveyed said they used a hospital’s services because of awareness they gleaned from the newsletter.

If only half of those people are telling the truth, that means over 600 individuals in this relatively small sample went to the provider of the newsletter for a possibly very profitable high ticket item, all thanks to an email newsletter.

I’ll be returning to the wonderful marketing double whammy of customization and credibility in future examples of online marketing excellence. But I’m not sure any other online technique I’ve encountered has the same high level of ROI as this surprising opt-in newsletter that sells people services they would prefer to never think about getting in the first place.