Cover Story: The Big Qs of 2012
Is the Great Recession finally over? At the time of this writing, December holiday shopping is off to a good start and unemployment has eased a little—but it's impossible to say if that will last. What we can say—after consulting with industry leaders, marketers, consultants and analysts to determine the biggest questions marketers face in 2012—is that the recession has become a smaller question on the minds of marketers than it was last year.
"Marketers seem to be getting back into the game," says Lois Brayfield, president and chief creative officer of Mission, Kan.-based direct marketing agency J. Schmid & Assoc. "We've witnessed an unbelievable resurgence into brands spending more, trying new things and investing in their businesses. I think this bodes well for our industry."
It's not that everyone is profiting again, but companies that have survived this far have adapted to the down economy. Many have turned their attention to opportunities offered by a horde of marketing tools that emerged during the last five years, and to the perils of a world where the USPS might price direct mail out of existence and privacy lapses keep tempting Congress to put the kibosh on data collection.
It's time to look forward to the opportunities and threats emerging in 2012. If you want to be prepared for them, these are the questions to be asking your marketing team now:
1. How Do You Communicate
"Today's consumers are more multichannel than ever before," says Ernan Roman, president of Ernan Roman Direct Marketing in Douglas Manor, NY. Citing "Voice of the Customer" interview research his company has done on behalf of its clients, Roman says many interviewees "reported using multiple media, often at the same time, to browse and purchase. Marketers will have to get much better at being agnostic and surrounding consumers with multichannel choices."
This is an old question with new urgency, thanks to the increasing types of devices people use to interact with digital marketing. A smartphone is not a tablet is not a computer, but the same messages are being consumed on all of them, often by the same person.
Forrester Research Inc.'s U.S. Interactive Marketing Forecast 2011-2016 (September 2011) predicts that mobile commerce will top $31 billion in five years, and marketers will be spending $8.2 billion marketing in the channel. According to the report, mobile search and display spend already top email and social (although I suspect some part of that may be due to cost differences in those channels), and the next step will be "layering in behavior or intent data to fine-tune the targeting."
Another Forrester report, Welcome to the Era of Agile Commerce (March 2011), called this the "Splinternet": "The Splinternet adds to the complexity and cost of serving customers and puts pressure on enterprise content and commerce platforms to support a diverse set of touchpoints."
"When planning an integrated marketing campaign, you need to be mindful of the customer's experience," says Carolyn Goodman, president and creative director of San Rafael, Calif.-based direct marketing agency Goodman Marketing Partners. "When exposed to your message in each of the channels, will the target feel that your brand is presenting itself in a consistent way? Even though there are now more media channels in the marketing mix, consistency of message is critical to drive marketing objectives (awareness, interest, desire and action)."
This adds layers to the already tricky task of managing customer and prospect relationships between Web, email and traditional direct mail and phone contacts. The core issue is not how do you speak through those channels—although some experiences during the USPS Summer Sale on QR Codes showed that opening a new channel can be more complicated than it looks—but corralling the information.
2. How Do You Track and Crunch Data Across Channels?
"We are still grappling with information silos," says Reggie Brady, founder of the direct and email marketing consultancy Reggie Brady Marketing Solutions. "We have amazing information available, but ... it would be nice to easily marry the central customer database with website, social, mobile and email activity." There are tools out there that do this, she explains, but they are financially or competently unavailable to many marketers.
Russell Perkins, founder and managing director of Bala Cynwyd, Pa.-based InfoCommerce Group Inc., a boutique consulting firm for information publishers, sees the same issues among his clients: "Most B-to-B information companies are drowning in information about both customers and prospects that they can't readily bring together, or sometimes even access, with so many different platforms and services typically being utilized."
However, the issue goes beyond simply storing the data. Different data points are significant in today's multichannel marketing, and interpreting the significance of things like social media engagement or a mobile purchase may require different equations than those direct marketers have relied on for decades.
"We need to recalibrate our core metric tools to better align with the new set of KPIs dictated by the age of social marketing," says Direct Marketing Association (DMA) CEO Lawrence M. Kimmel. "We need to re-engineer analytic approaches to reflect new models, like dynamic algorithm optimization, and statistical methods for social networks. They require learning new techniques. We need to identify new best practices. We need to observe and learn from industries that have become more quick and nimble in how they react to market shifts."
Brayfield offers this strategy for reconciling new consumer and business patterns with proven direct marketing intelligence: "Create customer models that map customer buying patterns rather than rely on older techniques such as pure RFM and less-than-perfect match-back processes. Also, create out-of-the-box promotions that resonate and engage customers at a new level and, by doing so, will leverage traditional marketing techniques."
3. How Does Social Media Impact Your Target Market?
Ken Lane, senior marketing consultant at J. Schmid, summarizes the doubts many marketers have about social media, saying it's being featured more, but is still "searching for the brass ring. The only person making money in social media is Mark Zuckerberg."
He is hardly the only one with reservations. Perkins, for example, opines that "B-to-B marketers are still trying to get their hands around social media, which in large part was never designed for B-to-B usage, [and that is] creating a lot of awkwardness."
Those who spoke more positively about social media did so from a customer-centric position. "Social should continue to be explored with an eye on the consumer," says Brayfield, "serving up content or offers that consumers really care about."
"Social media isn't, well, just media," says Kimmel. "Brands become more real when they are open to outside influence, in real time. Social media is just as much about customer service as it is about acquisition. It is as much about research as it is about response. It is as much about listening and observing and adapting to consumer nuance as it is about meeting short-term business objectives. As marketers are finding more and more of their audiences online and through apps, social media is forcing a structural change in our collective approach to reaching them."
That's a huge mandate for any marketing channel, and one that demands a strategy.
"First you need to understand what your objectives are with social media," says Goodman. "Do you believe that an increase in fan base will lead to an increase in awareness and sales? Are you trying to reach recipients who are heavy users of social media and, therefore, your goal is to influence those users to evangelize your product/service? Depending on your social media objectives, you can then craft a marketing effort accordingly."
Goodman echoes Brayfield and others we interviewed when she says, "using social media for the sake of being able to check it off your list and tell management 'we're using social media,' is as useless as the time spent on the randomness of your efforts."
But despite the misgivings and challenges, there is a great deal of potential in social media, and some marketers see prospects of a new kind of marketing in the channel.
"The most exciting development I have seen in recent years is the transformation in the power of consumers," says Roman. "Marketers only succeed if they satisfy the needs of consumers."
4. Do You Acknowledge Mobile?
"It's become a cliché to say that mobile has arrived, but with almost 50 percent smartphone penetration, it really has," says Kimmel. "Direct marketing has always been about right message, right time, right place. But now, we can deliver against that maxim in new, transformational ways."
What does that mean for your marketing? For one, Brady suggests significant changes to your email program: "It's likely that 20 percent of B-to-B emails are read on mobile, and estimates are that 16 percent of consumers are reading on mobile," she says. "Email design has to change, since many mobile environments do a lackluster job at rendering. Shorten the width of your template, put the most important content or offers on the left and raise font sizes. Remember that mobile users who want to interact with your call-to-action button need enough space around the button so that their fingers can click."
"Mobile usage rates are skyrocketing," says Perkins, "and tablets, in particular, seem to have clear value as real business tools in many vertical markets. Something fundamental and important is going on in mobile. It's just a question of how to best address it."
Tablets received special attention in most of our interviews. Kimmel, for example, says, "The opportunity for expanded mobile engagement is … also about the development of the tablet market, which opens up whole new e-commerce options, and also invigorates classic DR advertising TV, radio, magazines and newspapers." Or, as Lane so subtly says it, "the proliferation of iPads will change everything."
Whether you believe tablets will change everything or not, the takeaway is that mobile is already having an impact on your marketing, and you have to figure out what that means and calls for.
"Understanding the strengths and weaknesses of mobile is critical to success with this channel," says Goodman. "Since mobile can be considered annoyingly intrusive, it can be detrimental to your brand efforts if not utilized thoughtfully. Using mobile to generate text responses can be a clever way to jump start a campaign for a fundraising effort. For example, 'Text the word "eat" to XXXXX and make a donation of $5 to help feed the hungry at Christmas' can be hugely successful, if promoted properly."
"We are encouraging all of our customers to not only test mobile and tablet opportunities, but do it in a way that makes sense," explains Brayfield. "Marketers shouldn't just dabble in techniques like QR Codes, but use them and other techniques in a strategic method. Just like mailings, decide what the offer is, followed by a strong call to action with a plan on the back end to close the sale. Currently, most mailers are treating QR Codes like someone mailing a brochure without any method to engage or sell. And they must begin thinking about how their customers are using and interacting with tablets."
5. Do You Know What You Have To Do To Protect Consumer Privacy?
"It may not happen in 2012," says Perkins, "but it's bound to happen fairly soon: The cumulative impact of so many violations of online privacy is going to result in tough new restrictions on online marketers."
Such statements are not just the rantings of Chicken Little. One of the questions we asked interviewees was, "What's going to be the biggest headache to marketers in 2012?" Overwhelmingly, their answers were about privacy.
"Three recent events indicate the headaches to come in 2012," answers Roman. "Facebook's recent settlement where it agreed to respect consumer's privacy; Capitol Hill's attack on Verizon ('While we understand the benefits of tailoring advertising to customers, we strongly believe that customers should be in control of the sharing and disclosure of their personal information through an Opt-In process') and the Canadian law, which will go into effect this spring, that electronic commercial messages—including email, texts and messages via social media—going to, through or from Canada without prior consent could bring severe consequence."
Roman doesn't necessarily see the focus on privacy as a bad thing. "This continues the inexorable path toward opt-in, consent-based marketing," he explains. "I think this is a good thing. It has been proven to improve the quality of marketing in countries such as Denmark and Germany, who have long had these practices."
"Regardless of the industry, and regardless of the data you collect, you must always be respectful of the proprietary nature of consumer data," says Goodman, and she offers this outline to do so: "Never 'reveal' information that you've collected to your user without knowing it is relevant and respectful of their right to privacy. Using PURL's, for example, establishes an expectation that when your user arrives at a Web page, the information on that page is proprietary to the user (name/address/phone/email). But to get to information beyond those basics, you should require users to log in with their passwords to help them feel that you are protective of their private information. Maintaining data in a database with limited user access is critical. Social security numbers should always be encrypted. Any health-related data should be encrypted. If analysts are working on data, it should be limited to use inside the organization's premises and detailed security protocols must be in place to avoid issues related to theft of laptops, etc."
6. Are You Doing Enough To Keep
Perhaps the biggest questions of all facing marketers as we (hopefully) emerge from this recession are about customer loyalty. Acquisition is expensive, and marketers have never been more aware of that than during the recession.
"Marketers have become more laser-focused in how they market to both customers and prospects," says Brayfield. "The 'when?' 'what?' and 'how many?' are questions that marketers have been re-thinking. They have been more efficient and have cut costs. The good news is that brands are realizing the importance of creating an exceptional customer experience and are managing it with tenacity."
"There's no easy answer to deal with outside lists," explains Brady, "but marketers can mine their own lists. It's important to develop re-activation strategies for prior buyers. Whether you use direct mail or email, develop a special offer strategy to re-engage these people."
Roman has seen marketers move inexorably in this direction, as well. "Our clients are devoting far more budget and resources to customer engagement and retention marketing," he says. "The top companies are spending money and resources to engage customers earlier in their lifecycle. Actions include new customer onboarding strategies and opt-in, preference-based personalized communications at key points throughout their lifecycle." All of which seems to bring us back to multichannel marketing and data.
Those are the questions on the minds of today's top direct marketing experts. Are they the ones on your mind, as well? Let me and the other editors of Target Marketing know on Twitter @TargetMktg, or via our LinkedIn group: Integrated Marketing Mix. We want to hear what you have to say.