Category Archives: Database Marketing

Using the power of computing to draw a straighter line between a business and its customers, to the benefit of each

Mobile marketing of tomorrow is beyond anything you can imagine

Here’s another long post, but I suspect you’ll find it worth the ride. It will paint a picture of what mobile marketing will be like, much sooner than you may think. Actually, it will paint a picture of what person-to-person retail (as opposed to digital retail) will be like, because mobile devices will merely be the means that will take us to this fascinating future.

If you’re a new reader, I need to explain why I write this thing. I strive not to be part of the echo chamber that is current public discourse. By echo chamber, I mean the repetition of the same hot concept or idea until it starts to sound credible. Many occupational blogs (as opposed to recreational blogs), merely convey the industry “news” of the day. Sometimes that’s worthwhile. But other times, the repetition contributes to a pattern of half-baked ideas taking on more significance than they deserve.

My hope is to make sense of what’s happening or about to happen in marketing technology — and occasionally to pass along a juicy tip or two that you can use right now. Rishad Tobaccowala, chief innovation officer of Publicis, put it well. He’s with one of the world’s biggest advertising groups. Tobaccowala was quoted in The Economist as saying, “All of us have been classically trained, and now we’re in a jazz age.”

We’re all riffing, my friend, and I’m hoping this blog will help keep the improvisation going.

Let me steer us back from that digression. I mentioned The Economist, which you must understand is not just a magazine about economics. Although, to use a famous Seinfeld quote, “Not that there’s anything wrong with that.” On the contrary. Living, breathing economics is much like living, breathing history. By that I mean the following:

  • Economics bears no resemblance to what most of us were exposed to in school
  • Economics is extremely helpful in making sense of this furiously changing world

A case in point is the mundane and exciting observations of economist Tim Harford. In his recent book, The Undercover Economist, he sets us straight about Starbucks. We think they are larger and more powerful than they are because they have a location on every corner of major cities — or so it seems. He uses the example of how you cannot pass into or out of Washington D.C.’s Metro Station without encountering at least one Starbucks.

Yet that is proof not of the seductive draw of their products, but of the weak gravitational pull that they exert. By contrast, Mr. Harford points out that there is only one Washington D.C. Department of Motor Vehicles. If you have a problem with your driver’s license, you must go there and suffer. And people do. They must.

That’s power. That’s scarcity! Conversely, Starbucks knows that the majority of coffee drinkers are quite fickle about where they buy their coffee. It just so happens that Starbucks is big enough to buy up those scarce good locations so that they consistently arrive in our faces when we round the next corner.

The scarcity is not in the lattes and cappuccinos, but in the prime locations from which they are proffered. This is why, he asserts, Starbucks is not nearly as wealthy, in relative terms, as the merchants of those selling opportunities — namely, the landlords who rent to Starbucks and the property owners and brokers who sell to Starbucks. A validation of this theory can be found in a recent New York Times article about the proliferation of bank branches and the property boomlet that this industry expansion has ignited.

Banks, too, know that they are selling a near-commodity. And so it goes: the tyranny of location, location, location.

Imagine if these industry leaders could say, “To hell with these physical locations. We’re stuck in place while our customers travel around the city. That’s just dumb!” Or more likely, what if this declaration was from non-leaders in their industries? After all, the leaders in gourmet coffees and financial services have much invested in their physical brand. It stands to reason that it is the upstart competitors who will stage the more nimble attacks, just as small bands of guerrilla-fighting American Revolution soldiers sprung out of the bushes to fight and ultimately defeat the legions of lockstep Redcoats.

But how will this assault be staged? I’m suggesting that there will someday be a mobile army of coffee merchants and bank branches. These establishments on wheels will find their customers around the next corner because they will see them coming from ever-changing maps of movements and probabilities.

Why maintain a brand address, after all, when you’ve trained your customers to expect you to show up exactly where and when they need you? Of course, this data will come from the only possession other than our wallets that we dare not leave home without (and soon enough those two will merge into one!). I’m speaking of course of the cell phone.

Already, privacy-protected surveillance is being done on a city-wide scale. You can read of several such studies on the following MIT web site, but I’m going to quote from one such study, about a “realtime” Rome, Italy:

In the visualizations of Real Time Rome we synthesize data from various real-time networks to understand patterns of daily life in Rome. We interpolate the aggregate mobility of people according to their mobile phone usage and visualize it synchronously with the flux of public transit, pedestrians, and vehicular traffic.

By overlaying mobility information on geographic and socio-economic references of Rome we unveil the relationships between fixed and fluid urban elements. These real-time maps help us understand how neighborhoods are used in the course of a day, how the distribution of buses and taxis correlates with densities of people, how goods and services are distributed in the city, or how different social groups, such as tourists and residents, inhabit the city. With the resulting visualizations users can interpret and react to the shifting urban environment.

How cool is that?

When I first saw these maps, which surge and pulse with life, I thought they were interesting but were like many technologies — a solution in search of a problem. Now I think I’ve found the problem: Taking power from the owners and renters of real estate and putting them in the hands of retailers. And in doing so, making life for their customers easier and more pleasant.

I’d love to go on and address the objections that I’m sure you have about privacy, and the ability to move branch locations through congested urban streets. Those answers will have to wait (unless you’d care to ask me in the Comments area — in which case I’ll be much obliged). But for now, I’ll leave you with this thought:

If a retailer …

  • Analyzed aggregate cell phone data about your movements as well as everyone else’s who want the same services as you, and …
  • Anticipated through statistical means where to locate itself to fulfill those needs, and …
  • Alerted you through that same cell phone where they are in real time (e.g., “We’re two blocks away — care for your favorite beverage?”) …

Would you choose instead to go out of your way, back to those place-bound merchants you visit now?

I suspect that this consumer choice is quickly on its way.

Two good resources to prepare yourself for the next 10 years

Thanks to Seth Godin for reminding me today that many readers may have missed the The Long Tail by Chris Andersonhoopla on Chris Anderson’s long-awaited book, aptly titled The Long Tail. This is an important book for those interested in the future of marketing and business design. It reports on a paradigm shift that we all need to get our heads around, in a similar way that The 1-to-1 Future was good intellectual grounding for what was to come, when it arrived on the scene in the mid-1990s.

You can find other support for your studies on the Long Tail Squidoo lens. And for this resource as well I have Seth Godin to thank. He is the original “squid” of this fascinating and fast-growing user-generated reference site.

Quad Graphics buys a cool company

Success begets success. So I was not surprised when I learned this week that Quad Graphics has purchased a controlling share of OpenFirst. The company provides direct mail and digital printing solutions, but what has impressed me about them, ever since they formed ten years ago (under the name EPS) is their slavish devotion to database integrity.

I met the company’s president and CEO, Robert Kraft, shortly after they opened their doors, and what wowed me were stories about how they convert, merge and scrub the databases they use … as well as other ways that they use data, which I’ll get to in a moment. It should be common sense, but the programming and safeguarding that Robert described to me was something so thorough and ironclad that one might think he was talking about a nuclear power plant instead of a digital printing company. The reason for that is their chief technical officer, Chuck Olszewski. He’s an engineer who came to OpenFirst from the nuclear power industry. The guy is trained to prevent meltdowns … Exactly what a pricey and time-sensitive direct marketing program needs.

Okay, I know I’m gushing a bit, so I’d better give you an example of what impressed me back then, and still blows me away today. OpenFirst uses something called dataglyphs for at least one of their direct mail clients. It’s a way to embed a great deal of data, encrypted in a photograph or other screened graphic. This data is invisible to any observer other than a properly tuned scanner. To you or me, the photo looks perfectly normal.

What’s more, if you tear, stain or otherwise damage the image, you can still retrieve the data. Check out this dataglyph demo from PARC Research. You’ll be invited to use Photoshop, Paint or some other program to compromise the graphic that you create, and then see how accurately it pulls out and reports that graphic’s hidden contents. Incredible!

This application, which was originally created for the whole cloak-and-dagger-cold-war-passing-of-secret-information thing, is used by OpenFirst for a client who needs to get back from consumers information about them that is only available for use once the consumer has responded to a mailing. It’s a long story about how mailing list companies only consider their client owners of their data once the people on the list respond the direct mail message, but suffice it to say that this clever and private passing of data saves mailers a boatload of money.

And hey, it’s really cool.

Congratulations to OpenFirst. You’ve earned this opportunity to make yourselves and Quad Graphics shine even more brightly!

Portable marketing is ultimately about place

I attended a seminar on portable marketing yesterday, and was interested to learn that the most popular promotions using mobile phones are still using SMS — i.e., text messaging. I wonder, for instance, when the sending of photos or videos from our phones will figure into large promotions.

We were presented with several examples of promotions where texting was a major component.

In the more exciting of them, the key to success was the place where the user participated. In other words, it wasn’t just that the participant could play a game or request information from anywhere, it was that they could do it somewhere quite specific. For instance, the Van’s Warped Tour is offering the ability to get news on band line-ups and autograph opportunities via your cell phone. According to Cingular, the sponsor, participation so far is over 100,000 messages sent. All branded, I’m sure, with Cingular enticements.

And what could be more place-based than to be updated with what’s happening on the grounds of the very festival you’re milling about in?

Text Message Enabled ChandelierThat reminded me of what is still my favorite “place-based” mobile device. It’s a beautiful spiral chandelier that spells out the messages of people congregating under it, in animated, LED lettering.

Probably the only reason we haven’t seen more of this type of display is the demographics of texting. By far the biggest users of text messaging in this country are those under the age of 30. Two-thirds of all frequent text message users are between the ages of 15 and 35.

Which means that unless you’re organizing a very high-end prom, or are filming an episode of MTV’s My Super Sweet 16, this device isn’t going to be a hit. You might as well hang a disco ball.

But I suspect the demographics will change fast. Especially with more executives of all ages using cell phones with QWERTY keyboards and large displays. I predict that it won’t be too long before I find myself under one of those chandeliers or something like it, watching the guests reveal — via SMS messaging — declarations of their silver wedding anniversaries and not their high school’s supremacy.

Progress in measuring TV viewership comes too late to help network ad sales

As Tom Peters famously put it, you can’t manage what you don’t measure. For too many years, network television executives have relied on incomplete and inaccurate measurements of viewership of their programming. This inaccuracy — plus the emergence of other, online ways to reach the same market — has finally come back to bite them, in the form of alarmingly soft TV ad sales.

This week the bulk of ad sales for the TV networks’ fall season has come to a close, and the reports aren’t pretty. I’m reading estimates that the major players will see a drop of 3 percent or more in sales compared to last year at this time.

Many think this is primarily due to the fact that DVRs now filter programming in 16% of American televisions. That means millions of viewers who would otherwise be exposed to advertisers’ messages have the opportunity of fast-forwarding through commercials.

What’s more, television viewership in general is down, regardless of whether a DVR is intervening.

Just as with other industries such as recording labels and movies, technology is changing the rules and causing the ad-driven networks to retrench, if only belatedly and with baby steps.

How? More technology. Nielsen Media Research, whose largest customers are these television networks, recently announced a comprehensive plan to measure electronically all TV viewers, regardless of video platform. With this initiative, called Anytime, Anywhere Media Measurement (A2/M2), Nielsen is developing technology that will measure viewership on the Internet, cell phones, iPods, and other personal devices — all with the intent of eventually merging this data into its Nielsen National People Meter sample.

Other reports from last year described an even more aggressive “People Meter.” This one, the Portable People Meter, would literally be carried by participants in the sample like a PDA. It would pick up ultrasonic identifiers broadcast on television and radio, to meet the pesky challenge of measuring media consumption in taverns, gyms, airports and other public places.

I am fascinated to watch how these huge industries are confronting their eroding markets. A final measure of the level of erosion, and desperate nature of these attempts to win back ad customers, is that avowed competitors are joining forces in the fight. In the Portable People Meter initiative, radio listenership would be measured as well as television viewership. Arbitron, a fierce competitor of Nielsen and a leader in radio audience measurement, is a partner in the technology’s development.

Will these attempts be able to turn things around for broadcast media? It’s hard to say. Tom Peters would point out that they may be taking steps toward better measurement, but that’s only the beginning. Then these measurements must be put to use, to manage better the products being broadcast.

They’ll have a clearer view of their customers — one that’s closer to what database markers are accustomed to seeing right now. And that means they’ll be able to see all of the dissatisfaction and the defections, as they happen. Then what will they do about it? Now that will be interesting to watch.

The fat end of the long tail

In my observation about NetFlix as a purveyer of long tail media, I hinted at all of the other ways that online marketers are prospering with this new business opportunity, made possible by word-of-mouth, suggestive selling and virtual — instead of real — merchandise inventories.

I’ve since realized that so much of marketing technology can be heaped under this category that I need to add it as a tag, along with my intentionally general tags of direct response, database marketing, etc.

True, the term long tail has more than a whiff of a meme ready for replacement, much as how push technology in the early 1990’s crystallized into RSS, and how the overworked online communities, the other buzz of the 90’s, turned into what we’re now calling online social networks.

Regardless of what the phrase long tail becomes, it certainly has legs (why am I thinking of a lizard?). This Google Trends graph shows that in terms of searches and news coverage, it also has a fat end.

More evidence for the power of the long tail

A few days ago my wife and I were in a restaurant, commiserating with a friend about her difficulties as a film fan on a mission. She told us she has been taking in as many of the films of Woody Allen as she can rent. It hasn’t been easy. She has been forced to rely on the shrinking inventory of the neighborhood video store, Video Adventures. Not surprisingly, the store just announced it will be going out of business next month.

Alas, our friend has a lot of Woody Allen yet to cover. My wife and I almost simultaneously blurted out the obvious solution: Netflix.

Netflix has an extensive film selection, excellent search capabilities and the brilliant ability to build and share your film wish lists. It’s the perfect tool for a film completist such as our friend.

Allowing customers to rent videos from home, without the threat of late fees, is an obvious point in the favor of Netflix over the brick-and-mortar video store business model. But the other major reason Netflix has become such a marketing force, and a threat to the video store, is its ability to exploit the long tail phenomenon.

If the term long tail is new to you, I recommend you read Wired editor Chris Anderson’s article, if only to learn the origin of the name (here’s a hint: think of the slim, wedge-shaped outer region of a graphic showing gross sales numbers along the vertical axis and the amount of variety of titles along the horizontal).

The significance for marketers of the long tail is described well by Anderson below:

[The emergence of] unlimited selection is revealing truths about what consumers want and how they want to get it in service after service … People are going deep into the catalog, down the long, long list of available titles, far past what’s available at Blockbuster Video, Tower Records, and Barnes & Noble. And the more they find, the more they like. As they wander further from the beaten path, they discover their taste is not as mainstream as they thought (or as they had been led to believe by marketing, a lack of alternatives, and a hit-driven culture).

When I first read that article I was skeptical. After all, Hollywood has done a great job of dictating to the masses what they should be viewing. And true “video adventurers” like our friend are rare.

Are we truly willing to take a chance? When given the opportunity to scratch an itch for more movies like those that we’ve enjoyed, even if they are obscure and heretofore unknown, is the typical consumer really going to risk disappointment?

Now I have my answer.

In his latest column, New York Times technology writer David Leonhardt explains that Netflix stocks approximately “60,000 movies, television shows and how-to videos that are available on DVD (and that aren’t pornography).” He continues below:

Just as important … Netflix lets users rate movies on a one- to five-star scale and make online recommendations to their friends.

The company’s servers also sift through the one billion ratings in its system to tell you which movies that you might like, based on which ones you have already liked. [Something described in a blog entry last month.]

The result is a vast movie meritocracy that gives a film a second or third life simply because — get this — it’s good. [Here’s a]  brainteaser I have been giving my friends since I visited Netflix in Silicon Valley last month. Out of the 60,000 titles in Netflix’s inventory, I ask, how many do you think are rented at least once on a typical day?

The most common answers have been around 1,000, which sounds reasonable enough. Americans tend to flock to the same small group of movies, just as they flock to the same candy bars and cars, right?

Well, the actual answer is 35,000 to 40,000. That’s right: every day, almost two of every three movies ever put onto DVD are rented by a Netflix customer.

I’ve personally experienced the long tail in music. My musical diet is more varied today than it has ever been, all thanks to access to a nearly unlimited variety of musical genres and artists in digital format. It’s exciting to read that the same exploration is taking place by consumers in the film industry, with the same predictable disruptive effects.

Although I hate to see neighborhood businesses fold, with the resulting ripple effect on local economies, in this case that is outweighed by the fact that I’m a fan of many of those films found in the outer reaches of the long tail (and not found in any video store).

So I find this latest news comforting. Less so, the news that our friend actually enjoyed Woody Allen’s Celebrity.

When is an email click-through not a click-through? Think “unsubscribe”

When is an e-mail click-through not a click-through? When they’re telling you to kiss off!

It’s hard to believe it’s been nearly a year since I had lunch with my friend and long-time career doppleganger, Medlina Krueger, and she told me about her latest email metrics discovery. It was a way to take into account the click-throughs that people register from your emails when they are in fact clicking through to unsubscribe.

She described it, and it made perfect sense. Melinda’s formula in many cases would take meaningless data and actually tell us something. Specifically, it measures the power of a specific offer or message to cause a segment of your email audience to decide that enough is enough.

She was thinking of calling it the DI, the Disaffection Index. Personally, I thought something a little more dramatic was in order for a metric that could enter the email lexicon. I suggested, because it measured their very last click-through with you, the LCI — the Last Click Index.

She thought otherwise, and DI it remained. Do read this article, and the other articles and advice that Melinda provides as MediaPost’s “Email Diva.”

Crunching the numbers can expose myths

A recent article in the New York Times Magazine’s Freakonomics column, and one of my favorite books of the year, both remind me that a careful examination of data can dispel long-held myths. Neither is directly related to a particular marketing challenge. But they both inspire me to continue to goad my clients into thinking beyond the obvious. We can seize a strong competitive advantage by assuming nothing and testing our premises whenever possible.

The Freakonomics article is ostensibly about soccer and an odd correlation between player excellence and the month that player was born. In analyzing data about the birth months of some of Europe’s best soccer players, it was found that they were born far more than you would expect in the first three months of the year. When researchers looked deeper, they realized that a logical explanation is that children born in these months were exposed to more months of coaching in their schools — more repetition, more chances to excel.

It suggests that the power of the Two P’s of practice and passion — as opposed to simply having “raw talent” — is far more important in excellence than is commonly believed. Thus the title of the Freakonomics article: “A Star Is Made.”

If you know me, you know I care little about sports. But after reading Moneyball by Michael Lewis, I was so inspired I bought three copies*. One to keep, one to pass around to co-workers, and a third to give to my father as a gift. The message of the Freakonomics article was that stars are made, not born. Similarly, the message of this book, about the unlikely, data-driven success strategy of the Oakland Athletics baseball team, is: “A winning baseball team is made, not bought.”

Read the book, and marvel at how Billy Beane, the general manager, refused to believe the group think of baseball scouts and the status quo. He wouldn’t listen to them when they told him how to identify promising players for his under-financed, under-performing team.

It’s a great read, and another reminder that looking at the data instead of listening to the way things have always been done can pay huge dividends.

*Thank you Bret Stasiak, my boss from my BVK/respond360 days, for letting me know about this wonderful book!

Many customers who made the same types of phone calls as you also bombed The World Trade Center

I’m not ordinarily a defender of Bush Administration actions concerning its response to The World Trade Center attacks, but the database analysis proponent in me feels something should be clarified in the minds of most Americans. According to a recent NEWSWEEK poll, “53 percent of Americans think the NSA‘s surveillance program ‘goes too far in invading people’s privacy.'” This of course is the taking of cell phone and other telephone records and mining them for clues to possible terrorists.

The outcry, I think, is in part because when we think of phone surveillance we think of wire-tapping (or, in the case of cell phones, wireless-tapping). However, if I understand this situation correctly, the NSA used this vast database of phone call numbers (both of originators and recipients), along with call dates, times and lengths, to look for suspicious patterns that were similar to those found in known terrorists’ phone behaviors.

I know, I know. If you analyze for this type of activity, you can also find patterns in the activities of your political enemies. Imagine the blackmail potential! It could shut down Washington! (Hmmm … could the blackmail have already begun?)

But let’s assume for the moment that we could somehow shine some light on the activity, thus preventing such abuses. Is this data mining an invasion of privacy? I suspect it’s closer to the surveillance we’re all accustomed to — and appreciative of — in our quiet suburban neighborhoods.

Probable cause is a term used to justify a police officer pulling over a citizen for questioning. I would equate this database research to looking for probably cause. So how is the research done? It uses the same technique that marketers use to predict whether a consumer will like this product versus that one.

For instance, you buy a CD on Amazon, and the web site immediately says, “Other of our customers who bought that CD also purchased these.” Then it lists three or four other, often surprisingly unrelated, artists, along with their latest CDs. If you have a big enough music collection, and predictable enough tastes, you’re surprised that you already love the work of one or two of those other artists. Amazing!

Amazon, and other large marketers using this profiling, let you know in advance that they looked into their database and found those correlations (through the statement, “Other customers of ours …”). What they don’t tell you is that usually, those data relationships are — on their own — too obscure or unrelated to be recognized in any way other than by using a sophisticated statistical regression analysis.

The same for this NSA action. I think a lot of Americans are concerned because they imagine an all-seeing computer is examining every single phone call they make or receive. I also suspect they are angry because now they have yet another privacy vulnerability to worry about, along with identity theft, spyware, etc.

But I suspect the process of profiling that was done by the NSA is more along the lines of the Amazon example. The predictive model takes into consideration thousands of weak correlations — possible coincidences that are only significant because when added together they match the behavior of known terrorists, (I would say convicted, but good ole Mr. Moussaoui is about it, and that’s an awfully small sample to try to model against! Known domestic terrorists would include the guys who died in their planes on 9/11, and made plenty of phone calls before they did).

So, if that is the case, is this intrusive? That depends.

 Is a police officer driving down your quiet residential neighborhood invading your neighborhood’s privacy when looking for probably cause to investigate a possible crime? This officer may not stop if one suspicious fact is noted about someone in your neighborhood. Maybe even two or three aren’t sufficient for probably cause. Each on its own may be too subtle — too similar to the behavior of those not breaking the law. But if there are enough suspicious facts concentrated around the behavior of, let’s say, that guy parked outside your door, then the officer will conclude the correlation is too great. The behavior and evidence surrounding that guy show too many similarities to those of convicted criminals. This behavior taken as a whole is too close to that of a burglar, let’s say.

The brain of that cop isn’t going to retain much information the next day, or even the next hour, about the non-suspicious behaviors that were observed, and in a similar way, I don’t think the NSA’s computers will be able to do much else but identify the behavior patterns they are programmed to sniff out.

Which brings me back to my original observation. How in the world did I become a defender of Bush? The answer is the NSA, under his watch, found a non-intrusive way to comb this country for possible criminal activity. I only pray that there will now be enough judicial (and judicious) oversight to ensure that the profiling being done is for real enemies of the state, and not enemies of the administration and its incumbents.