ROI Efficiencies Online Through Brand-Direct Relationships

To most people, brand advertising and direct marketing are two wholly separate, if not antithetical, practices. One is for generating awareness and making emotional connections. The other is meant to elicit a specific response and generate results. But until recently, the two initiatives had never been thought of as working together.

On the Web, however, brand and direct marketing are not so easily separated. Granted, there are times when one tactic is more effective than the other, but in the big picture of an interactive marketing campaign, ROI efficiencies can only be achieved if brand and direct marketing are used conjointly. The secret lies in combining the perception-shaping power of brand advertising with the one-to-one persuasiveness of direct marketing.

Measurement Makes the Difference

It all starts with strong data mining. The most revolutionary aspect of Web marketing is perhaps its most as-yet-untapped one: the ability to measure consumer behavior and to deliver messages accordingly tailored to fit that behavior in real time. The Web allows marketers to glean the type of information from consumers that makes more traditional marketers extremely jealous. By culling behavioral information during each phase of the consumer life-cycle, we are able to target the right consumer with the right message at the right time, thereby securing response rates that far exceed campaigns in other mediums, such as print or television.

Think of consumer behavior patterns in terms of a ladder, each rung of which is made up of consumers at varying degrees of involvement with your brand. At the bottom rung is the general pool of consumers at large. Your customers are somewhere within this pool; your task is to dive in there and find them.

On the second rung are the suspects—people who fall within certain demographics, psychographics or life-stages and therefore are likely targets for your offer. Suspects who have demonstrated a clear desire to learn more about your offering then become prospects. These are the hand-raisers—people who identify themselves by asking for more information.

Prospects who have made a purchase become customers, and this is where your relationship with the customer officially begins. (It's also, unfortunately, where many marketers fall short, but there'll be more on that later). The top rung of the ladder—the holy grail of marketing—consists of customers with whom you've developed such close relationships that they've become loyal brand advocates—a state in which your customers become advertisements themselves.

In this analogy, either brand- or direct-focused messages are more important depending on which rung consumers are standing. It is the combination of the two, however, that determines how far up the ladder they'll ascend.

For instance, brand advertising is more effective at the bottom rung, where it's essential to build awareness and establish perceptions. Direct response tactics must then take over during the suspect and prospect phases in which the user needs to be given incentive to take action. Direct gives way to brand again in order to transition a user from a customer to loyal brand advocate. But in all cases, elements of both brand and direct must be used in every message. Using the combination appropriately will greatly improve your customer acquisition and retention rates, thereby maximizing your marketing return on investment.

For example, suppose your company sells sporting equipment online. You'll have to conduct a number of brand-

oriented advertising campaigns in order to raise awareness among athletes and sporting enthusiasts who belong within the lower three levels of the consumer purchase ladder, but you'll also have to conduct campaigns that convince users to take action right away. These latter campaigns become particularly important for consumers who are at or near the top of the purchase ladder.

The bi-directional nature of the Internet comes into play when consumers become customers, at which point the marketing process becomes more of a brand-direct operation than a pure branding process. At this point, the same branding tactics that you used in the former campaigns still apply, in so much as you still have to use the tools on hand—e.g., graphics, logos, copy—to tell the brand story. But you'll have to do so while simultaneously using direct marketing mechanisms such as discounts, coupons and time-limited offers to convince consumers to become loyal advocates. These campaigns can take the form of e-mails, banners, pop-ups or complete micro-sites.

The important thing is that you continue to portray your company as a credible sporting-equipment company while moving users along the purchase funnel.

Data Mining for Brand-Direct Relationships

How do you know what type of message to send to which consumers and when? This is where data mining plays a major role. The key in transitioning consumers from one stage of the purchase ladder to the next is in leveraging raw data to understand the types of messages consumers are most open to at certain points. Yet surprisingly, many businesses don't harvest the information they need. And of those that do, many don't take advantage of it.

The data can come from many sources: e-mail campaigns, site traffic analysis, customer service centers, technical support, online registrations, customer feedback, surveys, cookies, etc. In most cases, gaining ROI marketing success is a matter of identifying trends within these data to test and tweak messages for optimal performance.

There lies the true beauty of Web marketing. The reason we can tie brand advertising and direct marketing so closely together is that we're able to collect data so much more effectively online than in the offline world. We know where people are going on our site, how long they're spending on each page, what they buy, what they don't buy, when and where they enter our site, and so on.

We're also able to glean information such as age, gender, ZIP code, job title, income level, marital status and more. This type of information is exactly what we need to craft messages specifically targeted to each consumer. The more we know about our customers, the more accurate we can be in our use of brand and direct messages. (This is what scares the traditional ad agencies ... finally a mechanism to make them accountable.)

In my prior example of a sporting equipment company, for instance, say you're able to gather information about a particular customer that paints a picture of him as a frequent golfer who recently purchased a new driver. The more you know about this customer, the easier it will be to segment your offer with him in mind. Your relationship with this customer becomes a relationship of one, and this is where direct marketing principles take over.

It's less about branding as it is about maintaining mindshare and growing use of your product. At this point in the purchase ladder, this consumer is immersed in your brand. By following up with this customer to offer a free sleeve of balls with the purchase of a new putter at a discounted rate, not only will you improve your relationship with him or her (and therefore improve your brand), but the direct response tactics you utilized will likely land you an upsell and cross-sell relationship.

Accounting for Brand Advertising

Brand-direct marketing requires a careful collaboration between these two formerly isolated practices. No longer is it an "either/or" situation. Instead, direct marketing allows us to strengthen the brand, to go deeper into it. Direct marketing essentially puts the customer in control of the relationship, and in so doing it allows the marketer to substantiate the brand image.

Traditional marketers won't hesitate to place a measurable ROI on direct marketing campaigns, but they would never dream of placing such "restrictions" on brand advertising campaigns. In fact, traditional advertising agencies quickly eschew the idea of measuring ROI within an ad campaign, claiming their efforts have an effect that is beyond measurement. (They hide under the auspices of calling it an art. Selling is not art, it's science.)

Yet the concept of brand-direct marketing is plainly measurable not only in the number of new customers it brings in, but in the retention and advocacy of loyal customers as well. Perhaps this is why so many traditional advertisers have been reluctant to move online; Web advertising, with its ability to combine brand and direct into the same message, makes brand advertising more accountable.

If brand-focused messages can help convert new customers into loyal advocates, isn't that measurable? And if branding can combine with direct marketing mechanisms to transition users from consumers at large to suspects and subsequently prospects, shouldn't it be held accountable as such?

If you're an advertising executive unaccustomed to measuring results, your answer is "no." But if you're an in-house marketing executive looking for intelligent ways to improve your marketing efficiencies, the answer is a resounding "yes."

Paul Epstein is CEO of High Voltage Interactive, Inc., a full-service online marketing solutions firm with offices in San Francisco, Chicago and Los Angeles. A pioneer in the integration of brand management and direct marketing, Epstein has devoted more than a decade to perfecting interactive marketing strategies. He may be reached at paul@highvoltageinteractive.com.