Manhattan Marketing Maven

Google's Radio Gaffe Reveals Their Vulnerability

Google's decision to quit radio after investing north of $100 million and 3 years of effort reveals a great deal about the organization and its vulnerabilities. Keep in mind that Google isn't half as benign as it wants you to believe. They didn't become a colossus by being everyone's BFF.

In this case they started out with a good strategic idea -- marry their price-bid auction technology to an existing radio distribution tool and then disinter-mediate media-buying firms, bring down prices and dominate the $19 billion radio advertising market. But as Jessica Vascellaro documented in her comprehensive Wall Street Journal article on May 12th, getting from a big idea to an agile execution wasn't in the cards.

Google purchased dMarc Broadscasting in 2006 and figured it would roll-up into their overall strategy to apply their auction-bid tools systematically to other media markets. They would amortize the R&D costs of the technology, slaughter the existing players in those markets and become the buying conduit of choice across online and offline media. After all, if you're Google you might as well thing big -- really big. 

They got some initial traction and engaged with some of the leading radio firms like Emmis, Clear Channel, Saga and Greater Media. But they underestimated the power of inertia and conventional wisdom in the radio business and basically ignored the concerns and profits of the companies whose inventory they sought to sell.

So what do does this reveal for those of us eager to handicap Google's current and future state?

1. Google is a large hungry bureaucracy. With shifting priorities and plenty of cash to burn on not-so-hot executions, they can afford to try and fail where others can't. They skimped on the due diligence in vetting dMarc's owners as partners. They didn't talk to many radio guys at the outset and they didn't take the time to listen. But in the end flushing $100 million is just a rounding error for Google which allows them to retreat without feeling the pain and probably without absorbing the lessons.

2. Google believes its own press. The bias toward doing it their way, their hubris about how things should be engineered and their complete unwillingness to listen to willing allies, adopt to market norms and nuances or sell the way buyers buy set them up for failure. The radio ad market was a de facto auction long before they showed up, but they refused to see it. This kind of "we know better" attitude is not unique in Silicon Valley or among high tech giants. But it suggests that in some cases they can't get out of their own mindset or out of their own way.

3. Technology Uber Alles. They built and bought the component parts but they could get them to work together nor could they measure and report on sell-thru or the impact of the ads. Their belief in technology as the universal cure blinded them to the marketplace realities and deafened them to course corrections that could have produced an alternative outcome. 

The B2B Database Dipstick Report

Lists are the bane of database marketers existence. Everyone thinks their own data sucks but the real disappointment usually comes when you rent a compiled list and realize they suck too. Everyone wonders why this is but few have done anything about it -- till now.

Ruth Stevens and Bernice Grossman have been writing white papers on database marketing since 2005. Both are well known independent thinkers and marketers with extensive direct marketing and database chops. For their seventh outing they devised a wickedly simple test titled "Online Sources of B-to-B Data: A Comparative Analysis" to understand the limitations of compiled lists. 

They convinced ten database compilers to participate and asked them to find 10 selected executives from 10 different industry verticals in their databases. It was a dip stick exercise to quickly measure the coverage and quality of leading databases. The vendors ranged from big data houses to online cooperatives. All have online ordering capabilities which generally means they are willing to deal in small lots and/or niche verticals.

Bottom line -- when they had your data it was pretty accurate, though coverage was spotty across databases.

In addition the study turned up a bunch of surprising results:

• There was a wide variance in company and contact counts. In one category -- stone, clay and glass products -- company counts ranged from 386 on one database to 36,382 on another.
• Email addresses were the hardest datapoint to find. Unfortunately these days its the datapoint most in demand.
• When a vendor had your record, there was a good chance of accuracy.
• But many vendors didn't have the 10 executives in their database. In the worst case only 2 of ten vendors could find Jim Carey of Northwestern University. Maybe its a subtle hint about academics.
• C level names seemed to be evident in more databases than lower ranking players. This could speak to the method of compilation. 

So what's a B2B marketer to do?  Bernice and Ruth recommend these steps.

1. Quiz the vendors on what they have and how they got it.

2. Don't assume subsidiaries of large compilers have the same data or use the same compilation or cleansing techniques. They don't. Ask.

3. Be very specific when placing list or database orders. Use SIC codes or other tools to keep 'em honest and to be sure you get what you thought you ordered.

4. Check for industry or vertical specialization. Test their coverage before you buy. Shop for the vendor who has the best data on your target audience.

5. Run a data append test before you buy to test coverage and accuracy and to compare multiple vendors. Build in some house names that you know for sure as an accuracy benchmark. Better yet buy a small number of names and verify the data yourself by phone before you place a bigger order.

There's about 12 million companies in the USA and evidently getting to someone in them still isn't easy as you think it might be. These kind of exercises help us understand the realities and limits of databases which in turn drive our thinking on how best to use the data we can get our hands on.

Measuring Marketing Magic

Marketing remains one of the elusive frontiers for performance management. For years marketing performance measurement (MPM) vendors have been working both sides of the aisle -- the CFO and the CMO -- in an attempt to define and measure marketing's magic and graft onto the marketing department the same fiscal discipline imposed throughout the corporate structure.   

For the last eight years VisionEdge Marketing has been surveying MPM issues and their 2009 report entitled, "Closing the Gap Between Marketing and Business" concludes that 

1. Marketing still has a long way to go to align with the business it supports and measure performance
2. Marketing departments still lack the skills to run themselves like a business
3. When  the marketing department measures; its not measuring the right customer-centric stuff.

You can get a 20% discount on the full report by clicking here.

These are sobering conclusions especially in a recession when every dime of marketing spend is under intense scrutiny by corporate and brand bean counters looking to hold back every marginal idea and expense. It also reinforces the stereotype of marketing guys as frisky kids masquerading as grown-ups in charge of the fun factory and accountable to no one. 

In practical terms, it seems obvious, at least to me, that the 23 month average CMO tenure documents the fact that CMOs are not playing the game as CEOs and CFOs see it. Few have invested in dedicated marketing operations people, essentially a COO for the marketing department, and even fewer have bought MPM packages or vendor services. And while a CMO's ears glaze over with the first mention of so-called "best practices" nobody is really happy with what gets measured or how they figure out how money spent by marketing impacts on the objectives of the business. 

What has caught on are dashboards. There are lots of them ranging from simple graphs to dramatic colorful eye-candy. But these devices are more show-and-tell than useful gauges of business success. Intended to be a "connection between marketing and business which facilitate fact-based strategic decisions", they are more CYA than FYI. The proof of this is that in spite of the dashboards, few top decision-makers see a clear correlation between money spent on marketing and advertising and sales or profitability goals. Herein lies the challenge -- connect the dots convincingly with enough data and intellectual rigor to withstand questions from the finance folks. 

What gets counted is political. Marketing guys count inputs. Finance guys want them to count outputs. There is also a bias toward counting the sexy acquisition programs rather than the under-loved and lower key retention programs which have a much more predictable impact on sales and customer satisfaction.

Since these are not new issues, I quizzed VisionEdge co-founder Laura Patterson , a serial entrepreneur who learned her marketing and measurement stripes in 14 years of service as a marketing executive at Motorola. Laura believes that CMOs need to build-into their consciousness and their tables of organization "a culture of accountability that's native to marketing." Rather than fear measurement marketers have to think about what they are trying to accomplish and craft measurement methods at the same time they craft big ideas.

Laura argues that this orientation starts with looking at the marketing activities that drive business value rather than simply measuring activity. If marketing programs are tasked to find, sell and retain customers, measurement must demonstrate how they did it or didn't do it and take a stab at explaining why. In her experience CFOs are less interested in exactly hitting the numbers than in marketing guys thinking and planning for results using a disciplined process which includes advance planning and post-campaign measurement. Among her clients, Laura reports a huge shift in perception when marketers create a process and set performance targets at the same time that they develop messaging and campaigns.

For top management, in Laura's view, measuring performance versus plan is table stakes for efficient operations and control. Marketers have to plan for expected results measured in business terms -- leads, revenues, share or market, margin contribution or repeat customers. Measuring the efficiency of the production process or the cost-per calculations of media efficiency are secondary. 

Bottom Line: The C Suite yearns for CMOs to tun the marketing department like a business. The 2009 Survey shows we're not even close.

 

eTailers Start Prepping for Black Friday 2009

Prepping your eCommerce site for Black Friday is as much a Rite of Spring for e-tailers as daffodils in bloom, the start of hay fever season or the run-up to Mother's Day, Father's Day and Graduation.

This year "optimiization" is on the minds of the 190 senior executives responding to the e-Tailing Group's 8th annual merchant Survey. These executives charged with leading the only real bright spot in the retail landscape are looking for the tactics and investments that are the cheapest to implement and convert the most customers fastest while delivering a satisfactory online experience.

How do I know this? auren Freedman told me.

Lauren, who leads the Chicago-based e-Tailing Group, is the doyenne and the den mother of eCommerce merchants. Twice a year she surveys the waterfront. This 8th annual survey asks operating executives what they think. It is the sweetheart part. Her ten year old mystery shopping survey is a hard, cold, gut wrenching  reality check that many of these same executives live in fear of because she measures the distance between their talk and their walk. In between Lauren and her gang consult with many of the top and insurgent online brands. If anyone knows what's really going on in online commerce; Lauren does.

eCommerce is the only part of retail showing any kind of growth and even those projections are modest. But Lauren says "management is growing somewhat dissatisfied with ROI and dropping conversion rates." Therefore according to the survey results year-over-year the top three strategic focal points for merchants are  1) greater emphasis on profitability, 2) improving KPIs and 3) applying the right resources. The objective in this recession-tossed year is profitability; defined as making your revenue and margin goals PLUS doing it in the most financially efficient way possible. Evidently eCommerce is well enough established as a channel that it must adhere to the same tough metrics that govern retail plan-o-grams and deliver the same kinds of measurable returns.

As merchants cull through the lessons from last Christmas and look ahead, they are looking to bet smaller budgets on key moves to increase revenues, drive greater conversions and keep customers loyal, happy and coming back. If you have a choice of where to put your chips, Lauren believes these tactics will yield the greatest bang for your buck:

1. Segment and target e-mail better. Most merchants are already running sophisticated outbound e-mail programs. An incremental data mining effort will yield a disproportionate result.

2. Buy better on-site search. More than half of shoppers immediately hit the search box when they land on your home page. The better the search function; the faster they find what they want and the faster they buy. Similarly the faster they find what they want; the happier they are and the more people they tell about your site. And while search tools are not necessarily cheap, there are many work arounds so that even a modest upgrade in on-site search will produce a sales spike.

3. Improve merchandising. Show more, enable shop-by-outfit, use video if you can afford it, allow shoppers to "view in a room" or store merchandise under consideration. And while the tactics will change based on the category you are in; this is about enhancing the experience and giving customers greater control over how they shop. At some point in the near future sharp search, video and even social shopping will become industry standards. The closer you can get today; the more productive your customers will be.

Interestingly, Lauren's advice jibes directly with a survey of 22,699 direct marketers done by Target Marketing Magazine in January 2009, that ranked e-mail, direct mail, natural and paid search and web advertising as the most popular tools for customer acquisition and the tactics that would draw the greatest added budget investments in 2009.

Other site features that can contribute to conversion and customer satisfaction are, says Lauren, more guided and sign-posted navigation and alternative payment forms. Customers too are looking for maximum purchasing power and satisfaction for minimum bucks. Anything you can do to show them the path to the goods, put together outfits for them and help them manage payments by using PayPal, billing it to their phone bills or their checking accounts or accepting debit or stored value cards helps move more merchandise out the door.

In a monkey-see; monkey-do business like retail, smart online merchants keep an eye on the EGEG (the E-tailing Group E-Commerce Gauge) sort of an EKG for e-tailing, which found that mass merchants seem to be doing the best job while drugstores don't. Toys and game sites made the biggest improivement in 2008 and department stores had the biggest fall. As merchants in all categories get preparations for Black Friday under way, leveraging these insights can make a significant difference.