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Advertising Goes High-Tech

It's about data and arithmetic. And it's about time!

Vol. 5, Issue No. 22 | November 10, 2009 By Denny Hatch
7
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IN THE NEWS

Saks Challenges Web Discounters
Beleaguered high-end retailer Saks Inc. is testing online "private event" sales of discounted designer goods, in a bid to compete with "flash" Web discounters that are gaining popularity in the U.S.
Saks on Tuesday launched a 36-hour sale open only to those who received emails from Saks directing them to the site. The limited time sale will be followed by another test in November, it said Wednesday.

—Vanessa O’Connell, The Wall Street Journal, Oct. 29, 2009


Of the eight key copy drivers—the emotional hot buttons that make people act—the most mysterious is exclusivity.

I never really understood exclusivity until Bernie Madoff’s $50 billion Ponzi scheme put a spotlight on it. As Laurence Leamer wrote in The Huffington Post:

It was an honor having him handle your fortune. He didn't take just anybody. He turned down all kinds of people, and that made you want to give the man even more of your money. When he took your fortune, he told you that he would tell you nothing about how he achieved his returns. He was a god. He had the Midas touch.

Web sites have been built on this exclusivity thing. Among them: Gilt.com, RueLaLa.com and HauteLook.com. They offer to “members only” the same upmarket designer merchandise sold by Saks, but at deeply discounted sale prices during specific time periods.

Saks is fighting back with an exclusive online “private event” that the CEO of HauteLook.com calls “the new way of retail.”

It ain’t new.

Saks is engaging in a technique as old as the hills. It’s called good, ol'-fashioned, time-tested, accountable direct marketing.

A Business Model to Emulate
Quite simply, Saks is sending an e-mail alerting selected customers to a 36-hour sale on its Web site.

At expiration, three proprietary pools of information will be in the hands of the Saks marketing people:

  1. The number of responses and revenue, enabling Saks to do simple arithmetic and know quickly whether the promotion made or lost money.
  2. A database of customer purchases (behavior), so relevant offers can be made to those buyers.
  3. The most popular items, enabling Saks to tweak future offers for customers around the world who are online and also shop at the 109 owned and leased retail stores.

This is the Web version of a store sending snail-mail invitations to customers in the geographical area to alert them to an after-hours private showing where they can take advantage of tremendous savings before a major sale is announced to the general public. (“And please be sure to bring this invitation with you.”)

The Mind-Numbing Waste of General Advertising
What triggered this column was foraging around my vast archive of stories and coming across a file titled “Ads Everywhere U Look”—a dizzying array of venues where the consumer can be hit with an advertising message. Consider the effectiveness of ads on:

Takeaways to Consider

  • “The only bank that takes eyeballs is the eye bank.”
    —Bill Bonner
  • Does every employee in your company have the CEO’s e-mail address, and does the CEO welcome ideas from everybody from the mail room on up? If not, why not?
  • The only true measure of advertising success is response and an acceptable ROI. Anything less is throwing money down the sewer.
  • The true value of a customer or donor is the lifetime value.
  • It doesn’t matter whether you like or dislike an ad. All that matters is whether it worked or not.
  • You cannot judge good advertising; it judges you.

Web Sites Related to Today's Edition

"Saks Challenges Web Discounters"
http://url2it.com/bikt

“Flash” Web discounters based on exclusivity
www.Gilt.com
www.HauteLook.com
www.RueLaLa.com

“Bernard Madoff and the Jews of Palm Beach”
http://url2it.com/bilb

“Vespa's Builder Scoots Back To Profitability”
http://url2it.com/bilc

“Put Ad on Web. Count Clicks. Revise.” By Stephanie Clifford
http://tinyurl.com/ncnn3x

Darren Herman on the Web
www.darrenherman.com
http://url2it.com/bild
www.varickmm.com


 

Companies Mentioned:
7

COMMENTS

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Most Recent Comments:
Jeff Ogden - Posted on November 24, 2009
Great article and a great approach.

At night I sometimes turn on the TV and see the mind-numbing array of car and pharma ads. I cannot help but feel the world is ignoring them as I am.

You sum this up perfectly in the comment "The mind-numbing waste of general advertising."
Jeff Ogden, President
Find New Customers
http://www.findnewcustomers.net
Wash Phillips - Posted on November 20, 2009
Denny, I love a turnaround success story. Even if it uses tools well-proven by others (e.g., direct response).

Of the 2 winning test ads shown, neither shows the vehicle or identifies what the brand stands for exactly. Can we learn from that...

a)All the current respondents get what Vespa is (and are likely to be an older demo for whom the brand is known)?

b)These tests were effective for demos as described above and will work less well for a less- experienced segment who need more missionary work?

c)The oil crunch drives buyers of all ages to look into any practical ways to cut driving costs (even if they're unfamiliar with the Vespa name or vehicle)?

d)There's more to click on those ads after all (and that additional info is a serious part of the appeal--not just the heds)? Impossible to judge that from the graphics shown, since hotlinks are not visible.
Darren - Posted on November 11, 2009
Great Article Denny,

Gives me confirmation that the things I'm determined to learn on top of direct marketing. A/B split testing, conversion metric's etc.. are where it's at.

I came across a great you tube video by David Ogilvy praising direct marketers on their scientific approach and how they are the future of effective advertising/ marketing.
Dave Culbertson - Posted on November 11, 2009
Loved this column, Denny. For samples of contrarian email advertising, I recommend subscribing to the emails from Despair.com. Once a year, they do a complete site "black out" sale. Everything on the website is on sale and you can only access the site if you're an email subscriber!
David Garfinkel - Posted on November 10, 2009
Things are changing. Yes, the champions of impressions and share-of-mind are either boasting that they invented something new, or being dragged kicking and screaming into this particular circle of hell (for them) called "Accountability"

In research for a proposal I just completed, I found this quote from David Silverman, PricewaterhouseCoopers, which co-authored a report with the Interactive Advertising Bureau:

"marketers are allocating more of their dollars to digital media for its accountability and because consumers are spending more of their leisure time online."

I don't know about your take on that, Denny, but I read it as: "the world is moving, if even ever so incrementally, to direct marketing."
Gregory Barros - Posted on November 10, 2009
Hi Denny,

Thank you.

Your essay is most timely. All this work is meaningless if it doesn't sell products and increase revenue.

I enjoyed sampling Mr. Herman's test ads and so make the following playfulness my valediction:

"Turns on a dime. Runs on a nickel. Looks like a million."
Dev. Kinney - Posted on November 10, 2009
Denny, your arguments for response advertising are so logical, readers will wonder why very large companies don't bother. And the reason is simple. The main purpose of advertising is domination of consciousness. Selling products is the function of marketing.
Large Advertisers know they have to go where public consciousness exists in mass and compete. Thus we remember such classics as "When it rains it pours," "That's a spicy meatball," "Where's the beef?" etc. Another great article! --Dev.

Click here to view archived comments...
Archived Comments:
Jeff Ogden - Posted on November 24, 2009
Great article and a great approach.

At night I sometimes turn on the TV and see the mind-numbing array of car and pharma ads. I cannot help but feel the world is ignoring them as I am.

You sum this up perfectly in the comment "The mind-numbing waste of general advertising."
Jeff Ogden, President
Find New Customers
http://www.findnewcustomers.net
Wash Phillips - Posted on November 20, 2009
Denny, I love a turnaround success story. Even if it uses tools well-proven by others (e.g., direct response).

Of the 2 winning test ads shown, neither shows the vehicle or identifies what the brand stands for exactly. Can we learn from that...

a)All the current respondents get what Vespa is (and are likely to be an older demo for whom the brand is known)?

b)These tests were effective for demos as described above and will work less well for a less- experienced segment who need more missionary work?

c)The oil crunch drives buyers of all ages to look into any practical ways to cut driving costs (even if they're unfamiliar with the Vespa name or vehicle)?

d)There's more to click on those ads after all (and that additional info is a serious part of the appeal--not just the heds)? Impossible to judge that from the graphics shown, since hotlinks are not visible.
Darren - Posted on November 11, 2009
Great Article Denny,

Gives me confirmation that the things I'm determined to learn on top of direct marketing. A/B split testing, conversion metric's etc.. are where it's at.

I came across a great you tube video by David Ogilvy praising direct marketers on their scientific approach and how they are the future of effective advertising/ marketing.
Dave Culbertson - Posted on November 11, 2009
Loved this column, Denny. For samples of contrarian email advertising, I recommend subscribing to the emails from Despair.com. Once a year, they do a complete site "black out" sale. Everything on the website is on sale and you can only access the site if you're an email subscriber!
David Garfinkel - Posted on November 10, 2009
Things are changing. Yes, the champions of impressions and share-of-mind are either boasting that they invented something new, or being dragged kicking and screaming into this particular circle of hell (for them) called "Accountability"

In research for a proposal I just completed, I found this quote from David Silverman, PricewaterhouseCoopers, which co-authored a report with the Interactive Advertising Bureau:

"marketers are allocating more of their dollars to digital media for its accountability and because consumers are spending more of their leisure time online."

I don't know about your take on that, Denny, but I read it as: "the world is moving, if even ever so incrementally, to direct marketing."
Gregory Barros - Posted on November 10, 2009
Hi Denny,

Thank you.

Your essay is most timely. All this work is meaningless if it doesn't sell products and increase revenue.

I enjoyed sampling Mr. Herman's test ads and so make the following playfulness my valediction:

"Turns on a dime. Runs on a nickel. Looks like a million."
Dev. Kinney - Posted on November 10, 2009
Denny, your arguments for response advertising are so logical, readers will wonder why very large companies don't bother. And the reason is simple. The main purpose of advertising is domination of consciousness. Selling products is the function of marketing.
Large Advertisers know they have to go where public consciousness exists in mass and compete. Thus we remember such classics as "When it rains it pours," "That's a spicy meatball," "Where's the beef?" etc. Another great article! --Dev.