Preview: iMedia Connection: Industry Issues
iMedia Connection: Industry Issues
Show Your Salespeople the Money
During our firm's presentation at ad:tech New York City, many of the questions we received were from hiring managers who are building their sales teams. Their concerns ranged from appropriate base salaries to commission structures to offering equity. The following are several recommendations we made that seemed to satisfy the audience.
Offering the right base salary
Most successful salespeople are quite interested about what they can make on the back end. However, in order to recruit and retain top talent, your base compensation needs to be competitive. For more junior positions, you might be okay offering a lower base as long as it's competitive. But to engage senior professionals, you often have to put more upfront because they may need to maintain a higher cost of living (such as mortgage payments, children's college tuition, et al).
Providing compelling commission
At plan, our clients pay 50 to 100 percent of the base on the back end. Certain companies start paying commission at dollar one while others require their salespeople to hit a specific target.
We recommend that our clients do not cap commission. It's also easier for them to recruit true hunters when it's known that a salesperson has no limits working for their company. Some of our clients offer a tiered structure where they pay higher commissions after a certain point
Our firm works with a number of start ups that give equity. Some of these companies offer equity as way to supplement the base salary if they can't afford a hefty front end, others do it because they are start-ups and are building their company. They might offer it on top of an impressive base and commission package in order to lure stellar talent from established brands.
Environment and expectations
Once a strong compensation plan is developed, it's up to you and your company to provide an environment where these salespeople can be successful. Based on how much they want to earn, you should show them a plan which details exactly how much business they need to develop and meet with them regularly to track and encourage their progress.
Any more questions?
If you would like typical salary requirements for directors to SVP of sales, or have any other questions about compensating your sales team, please feel free to email.
Brandon Gutman is director of marketing & business development, Stephen-Bradford Search. Read full bio.
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Profile of the Career Site Audience
The Conference Board Help Wanted Online Data Series counts the full universe of new online advertised job vacancies posted directly on job search sites or through newspaper online ads. Ads posted on employers' own websites are excluded from coverage. However, The Conference Board notes that since a number of job boards pull ads from these sites, these ads may also be counted. In October 2006 The Conference Board counted 2.53 million online help wanted ads, up 28 percent from a year earlier.
The Conference Board's top 10 list of occupations advertised online from January to September 2006 contains mostly white-collar jobs. Management vacancies (408,000) have a large lead over all other occupations for which ads were placed over this nine-month tracking period. The last three listed occupations -- production; transportation and material moving; and installation, maintenance and repair -- appear to be blue-collar occupations. Their average hourly wage rates are among the lowest of the top 10 positions advertised online.
It is no wonder that the preponderance of internet job ads are for white-collar positions. According to comScore, one in four (24 percent) visitors to career websites (including job hunting sites) have annual household incomes over $100,000 and over half (55 percent) have household incomes of at least $60,000.
Jeffrey Grau is a senior analyst at eMarketer. This article was drawn from his report, Career Planning and Job Hunting Online. Contact eMarketer directly.
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Major Online Job Hunting Sites
The top 20 most visited websites in Hitwise’s “Employment and Training” category represented 54 percent of total visits in this category for October 2006. The two largest job search engines, CareerBuilder and Monster, accounted for over a quarter (26 percent) of the visitor traffic. The influence of these two brands is even greater if the third-party job sites (eg, AOL and MSN) they power are added to their totals. Besides the general job search sites, there are a number of smaller, but popular, niche job search sites in the following categories: aggregator (Indeed), industry (Dice IT), geographic (Michigan Talent Bank and Work in Texas) and government (USAJOBS). Some large employer job sites rank high as well (Target and UPS).
eMarketer is the “first place to look” for market research information related to the internet, ebusiness, and online marketing. Contact eMarketer directly.
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Four Steps to Recruiting a Better Hire
When our search firm engages appropriate candidates for clients, we put the candidates through an intense interview process that drills far beyond what's found on the resume. The system we use is highly successful in vetting out who is the "real deal." Here are several things we do that should be easy to integrate into your existing interview process.
1. Question, question, question
Since "what" the candidate has done is already on their resume, we urge you to ask the "why's" and "how's." By asking these behavioral questions you're able to observe how the person thinks. You should understand why they chose certain schools, moved to different jobs and what their greatest learning was from each experience.
For example, when interviewing salespeople, ask them to describe how they engage prospective clients. Have them tell you about a situation when they didn't win the business and how they applied what they learned to the next opportunity. Find out how they like to be managed and like to manage and request an example of how they effectively work with others.
2. Have them put it in writing
Most of us are in the marketing communications business and it's essential to have impressive writing skills. Think about how often you receive an email where someone did not clearly express their thoughts or a vital piece of information was lost.
Send candidates a few questions that weren't asked during the oral interview and have them write up the answers. Not only will this test their written communication skills, it will measure a candidate's commitment to pursuing your opportunity. Good candidates who are truly passionate about joining your company should see this as a valuable exercise, not a waste of their time.
3. Involve your team
It's important that each of your colleagues who will have significant interaction with this position meet the candidates. Make sure that every team member is clear on what the group is looking for so that the candidates will be evaluated on the same basis. Have different people ask different sorts of questions, so the candidate is not repeatedly asked the same question.
After a candidate goes through the entire process, immediately meet with your team and compare notes. Encourage your colleagues to express any issues they might have and talk about them.
4. Request proper references
We typically ask candidates for a reference from a client, a former boss and someone who had reported to them (or a peer). In addition to providing different perspectives about the person, it also forces them to provide people they might not have offered on their own.
When you speak with their client, ask them why the candidate won their business and why they would like to continue working together. Ask the former boss if they would hire the candidate again if they had the opportunity. This goes back to tip number one-- the right questions will get you to what you're really looking for and hopefully to a hire level!
Brandon Gutman is director of marketing & business development, Stephen-Bradford Search. Read full bio.
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Marketing & IT-- A Winning Team
It's opening weekend of the new NFL season, and I spent Sunday as I have since I was a kid-- engrossed in the full spectacle of professional football's opening day. The only difference this year was that it was the first year I watched it in high definition with my broadband connected laptop checking out all the new rosters. Thankfully for my family, this day comes but once a year.
But as I sat and watched the opening game, I also thought about something else that's different from when I was a kid. In today's professional sports, especially football, it's much less about watching players grow from draft picks to dynasty players than it is to support your home team as the "skill" players travel from team to team, looking to help them fill gaps and become champions.
This got me to thinking about a familiar challenge in today's digital marketing landscape. When we try to implement a new technology solution to solve a marketing problem we are often not operating as a team, and often avoid looking at new talent to solve a business challenge.
Even for digital marketing efforts where the website has always been a big lead generator, giving the marketing and sales team an integrated view (much less action) between the site, the CRM system, email campaigns, web analytics and SEO/SEM is like that trip to the Super Bowl--something we always talk about but never find the time to actually do.
But in today's world, making the website work for marketing is no longer something we can just talk about. The website and digital marketing has become an imperative. This challenge is only getting bigger as we begin to integrate other web content and marketing strategies such as RSS, blogs, microsites, landing pages, customer FAQ help sites-- and myriad other web content-related needs.
So, in this new "game" it's more important than ever that the marketing teams responsible for accomplishing these goals, and the technology teams responsible for reviewing and sometimes implementing these solutions, work together toward a common goal.
First, let's define the problem. It's no secret that it's shared between both groups. Marketers tend to see IT as having no understanding of how technology can support their efforts. One customer I spoke with said, "we're a services company, and when our website is down, the IT group doesn't seem to understand how ugly a 404 error really is and how it affects our brand."
On the other hand, IT tends to view those of us in marketing as failing to understand the true complexity of how technology works together-- and our unrealistic expectations of what can be accomplished given the relative budget, capabilities and skill sets of the existing staff.
In short, as Strother Martin said in one of my all-time favorite movies, "Cool Hand Luke," "what we have here, is a failure to communicate." Most of this can be attributed to the fact that marketing and IT are typically rewarded on different financial metrics. Marketers are usually measured on revenue generation and the IT organization on cost. Marketing wants to blow the budget on the first class flight to Europe, and IT says it's just as functional in the baggage compartment. You still get there, right?
That's hyperbole of course. The reality is somewhere in the middle. So, let's throw it all out there. Let's look to integrate our website with content management, integrate it into our email campaign management system, feed our leads automatically into our CRM system and deliver dashboard reports for all the executives. Basically how will we, in the face of what seems like an overwhelmingly complex technology project, work together with our technology focused colleagues to get the job done?
1. It all about dedication. There's a great quote that I love that says "dedication is not what others expect of you, it's what you can give to others." The relationship between marketing and IT improves dramatically when you're on the same team. Dedicating a [...]
Check Out iMedia's New Look!
Websites are like homes: you're never really done making changes because you're never really done living in them. But occasionally you do some serious remodeling and want to invite people over to see how the place looks.
Today, we're excited to throw open the doors on a revamped and improved iMediaConnection.com.
For months we've been researching, reading your emails, talking and working hard to make this site a better tool for the interactive marketing industry.
The changes include:
- A cleaner layout
- Smoother and easier-to-use navigation
- Improved content organization-- in particular, see the new hub pages we've created for our In Focus cover stories and our podcasts
- Better site search
- A new and improved job board
- Redesigned minisites for our events
- An expanded right-hand column where we can let you know about all the terrific content throughout the site
Also, our news coverage has been improved with added context and more links.
We're eager to hear what you think about the changes-- what we've done well and what you think we should change in our next round of improvements. So, please take a look around and share your thoughts.
Aside from myself, here are the hard-working people behind these changes:
David Chin, Web Production, Project Lead
Ricardo Pratiwiharja, Web Developer
Patrick Vaillancourt, Web Designer
Josh Messinger, VP, Publishing
Margaret Martine is iMedia Connection's senior usability designer. Read full bio.
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Attract Superstar Talent in 4 Easy Steps
My last article addressed employee retention and prescribed ideas on how to keep your best people. Now let's discuss what needs to be done to entice stellar candidates-- the ones who are too busy being successful to spend time on job boards.
1. Have a compelling value proposition
One of the first questions we ask potential clients is "why should someone join your company?" Companies need to have a luring pitch that will hook successful candidates. Think about how you win business or simply book a meeting with a prospective client. You or your salesperson must trigger a buying motive by targeting a prospect's needs. We must do the same when hunting for top talent.
Be able to explain in 30 seconds why your opportunity is perfect for the right person. Remember that stellar candidates are looking for more than a competitive earnings package because they might already have one. Leverage the available learning possibilities and growth potential. If it does come down to money, perhaps you're able to provide equity or a more enticing bonus/commission structure.
2. Empower your network
Fabulous people know other fabulous people. Call up the most impressive contacts in your rolodex and pick their brain for potential candidates. If the person doesn't know you well enough to make appropriate referrals, invite them to lunch and cultivate a trusting relationship. Next time, bring them to your offices so they can absorb the vibe and get a sense of your culture. This should make them more comfortable about providing names and making introductions.
If you aren't close with the top people in your industry, make this a reason to change that. Reach out to gurus who speak at conferences or write for publications like this one. Tell them you're looking to hire people who are just as smart and impressive as they are. They might even become personally interested in your opportunity!
3. Turn up the volume
Companies today need to work just as hard to reach qualified candidates as they do when targeting potential clients. Here's the great news-- having the right buzz will attract both. If your company has an impressive image in your industry, it should be easier to attract impressive individuals. They might even knock on your door.
Leverage all accolades (new business wins, product innovation, et cetera) by publicizing them in the right places. This information needs to be reaching the eyes and ears of your most wanted candidate pools. You and your brand's positioning is so critical in winning top talent that you might want to hire a PR firm before an executive search firm.
4. Make first impressions last
Try to leave a positive mark on every single person you meet. This might just sound like good business sense but it does prove rewarding in recruiting. Someone you impress at a conference might immediately call their friend to sell them on your open position.
Be sure all candidates leave the interview process feeling good about you. Don't forget that each of them becomes a spokesperson for your company-- make sure what they're saying is working in your favor. Remember that a candidate who is not right for today's opening might be perfect for your next search.
Brandon Gutman is director of marketing and business development for Stephen-Bradford Search. Read full bio.
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5 Signs It's Time to Fire Your Client
Five signs, only five? But didn't I come up with 10 Signs It's Time to Fire Your Agency? Do the folks on the agency side get the short end of the stick?
Yes I did, and yes you do. Hey, that's the business.
Let's face it, there are many more than 10 there, and there are many more than five reasons to fire your client, but what is also true is that there are fewer reasons for agencies because each successive link in the service industry has to survive on the link above it. Don't feel bad: think how the vendors you use -- to do your ad serving, outsourced production, SEM and print work -- feel. (I'll probably only get to write about the two reasons they have to fire you.)
Here's the situation: You love your idea. In fact, it's brilliant. It hits on all the insights, will resonate with consumers and, better yet, it's ownable, differentiating and will make for memorable creative that will really move your client's brand.
Then you present to the client. A myopic middle-manager starts commenting, and the CMO (who really just wanted to get a job in advertising but wasn't talented enough) decides he knows what the advertising needs. As you stare in amazement you think to yourself: "I am sick of this. We will never do any decent work with this client. They are idiots. Why doesn't someone in our agency grow a pair and stand up for our work, or our strategy?"
Why don't you just fire them?Well, why not? What's happened to interactive agencies? When did they go from edgy to wimpy?
Let me explain. There were a number of reasons, chief of which was the economic internet implosion and subsequent downturn in ad spending. Online advertising was just getting its footing when it had its legs cut off. About a third of the people I knew were out of work. Agencies that had been the toast of Wall Street were now, well... toast.
What that catastrophe did, however, was clear out the also-rans, the opportunists and those who got into the business because it was hot rather than because they had a strong understanding of what moves brands. The people who left understood technology, but when they were asked about the consumer, they looked vapid. The deer wasn't just caught in the headlights-- it got hit by the truck.
Those agencies that made it through that trial-by-fire should be stronger and more resilient. Many are. Unfortunately, like a dog that has been beaten over a period of time, many agencies instinctively flinch when clients raises their hands. Now, most agencies -- good agencies -- are bursting at the seams with work, and can't find enough talented people to handle their current workload.
So it's time for agencies to have pride again! Pride in their work, their effort, their knowledge, their grit, survival and determination to make online work. It is still very rare for an agency to fire a client. In fact, I know of only a handful that have done so. Agencies are fundamentally in the service industry, and in the service industry the client is always right. That does not mean, however, that the client has free-reign to wreak havoc on your agency, be abusive to your people and hurt your ability to make money and retain talent.
Author Notes:Sean X. Cummings currently serves as director of marketing for Ask.com. Read full bio.
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The Quiet Crisis in Your Sales Force
Last week, Upstream Group released the surprising results of a survey showing that -- even though they are happy with their jobs -- more than 50 percent of ad sales reps are either actively looking or open to new jobs.
To make sense of this, and to see what sort of domino effect this might have on the rest of the industry, I reached out to Doug Weaver.
Brad Berens: What's the fortune cookie description of the survey you did and its results?
Doug Weaver: Business is booming for ad sellers today, so everyone seems pretty happy, right? Then why is there so much movement and successful poaching going on? Is it really just about money and stock, or is there something else going on? It's a big fortune cookie, but these are the answers we tried to get at in this study. We did a blind web-based survey and invited sellers from dozens of leading sites to take part.
Berens: Here at iMedia, we talk a lot about the "human capital" problem of there not being enough people in the digital side of the industry to hire, let alone enough talented digital people. You've spoken about this at our iMedia Summits. And Advertising Age had this issue as a cover story back in August. How does this survey plug into that ongoing issue? Are the sales reps canaries in the coal mine for the rest of the industry?
Weaver: You know I love a good metaphor as much as the next guy, but I'll deal with the canary question in a minute. I think the results of the survey get right to the heart of the human capital issue on three levels.
First, we get a picture that says that nearly 50 percent of sales reps are happy -- and arguably productive -- but are open to other offer. This is the quiet crisis for publishers. These are likely some of your best people and you don't even know they're flight risks. These are the resignations that surprise a lot of managers and can destroy the annual sales plan.
The second important fact is that money and stock weren't the big decision points for a lot of these people. Two out of three reps told us that being fairly compensated for doing fulfilling work was the most important driver in their careers. Only 10 percent cited the opportunity for wealth. What this tells us is that there are a lot of other underlying issues that a publisher can fix before they have to start matching huge increases. Your rep isn't leaving just for the money. He's leaving because of some underlying issues that you're allowing to fester.
Finally, there's the simple fact that for all the time and effort most publishers spend on recruitment and hiring, most haven't spent an hour developing a retention strategy. If your retention strategy is reactionary, then you don't have one.
Now, back to your canary question. I see the hiring and retention crisis among publishers having massive effect on the rest of the industry. As they lose people, publishers will continue to hire away some of the most talented people from the agency business. I've heard recently that between 30 and 40 percent of agency planning and buying jobs are unfilled at this point. It's not a pretty picture.
Berens: Let's stick with the agencies for a minute. The survey focused on sellers within publishing, but if you're an interactive agency are there details within the results that are particularly salient? How would an agency retention strategy differ from a publisher one? And should the brand marketers be worried as well? Weaver: I'm an outsider to the agency business, but I think their personnel problem is going to be a lot harder to fix. The middle management ranks have been severely depleted and the executional side of online agency work is incredibly labor intensive and not much fun. So you've got junior people who are either looking to get out or make a quick jump to management where the oxygen is better. I think the major theme from our study that also appli[...]
Three Reasons Employees Leave
We are currently experiencing a candidate's market where even B players have the luxury of juggling multiple offers. This causes every company to ask the same questions. How can we retain our best people? How do we keep our talent happy enough to ignore calls from executive recruiters?
Hiring managers take note: There are three primary reasons that cause employees to consider other opportunities. They are fun, learning and money. Allow me to explain.
Make it funIf the culture of your organization does not evoke fun experiences for your people, you're in for retention problems. This does not mean that your products or services need to be wildly exciting nor is it suggesting a lax work structure. Your people simply need to feel supported, appreciated and like a member of the family.
Does your company have retreats or conduct team building exercises? Do you celebrate good news such as new business wins and other significant milestones? Even providing perks that might appear petty like free snacks and office parties can offer substantial joy to your staff.
Provide learning opportunitiesThe most successful people are those who never stop learning and crave new challenges. Keep this in mind if you want your talent to remain engaged and passionate about your company and its services. Offering a dynamic workplace doesn't have to be difficult as long as you're aware of your team's goals, responsibilities and progress. Allow your salespeople to target new companies or verticals if they're tapping out current opportunities or hitting roadblocks. Move a bored account person onto another project to reenergize them and also elicit fresh ideas. Observe warning signs and provide stimulation before plateauing occurs.
Show me the moneySome may not believe this but money is the slightest cause of employee vulnerability. Sure, a person may end up earning more at their new position, but it's usually not why they started looking. Our search firm finds that executives who love their current jobs won't even consider another position despite an economic upside. This should not encourage companies to take advantage of passionate and devoted employees. Employers have to keep tabs on salary requirements within their industry and factor cost of living based on geography. In a candidate's market, you might want to pay your A players a bit more than the norm.
Be an employer of choiceCompanies with low turnover are already practicing this advice. They make their people feel cherished by listening, nurturing and rewarding. They invigorate top talent by providing them with new challenges and growth opportunities. They pay each member of their team what they deserve and maybe a little bit more. They realize that their human capital is the company's most valuable asset and their retention rate proves it.
You can implement this strategy right now because the tactics are so simple. Call your salespeople and ask if there are any resources they need or if there's a special conference they want to attend. Invite your marketing person to lunch so you can praise their success and listen to their new ideas. Take your team to a resort for a weekend and allow them to bring loved ones. Repeating these actions of praise, motivation and genuine caring will increase your employees' happiness and decrease their vulnerability to outer opportunities.
Brandon Gutman is director of marketing and business development for Stephen-Bradford Search. Read full bio.Add a comment[...]
Staffing Made Simple
Much has been made of late regarding the challenge of finding good, experienced interactive/digital media people. It's a consistent topic in just about every trade publication you pick up or trade website you peruse. It's even starting to get some play in some mainstream business publications, in print and online.
I have been relatively lucky in that I have a good, solid core of talent that has allowed for much organic growth as our clients' interactive / digital / new / emerging media budgets have grown (note to headhunters and my esteemed colleagues-- HANDS OFF); a great core of talent that has (more or less) willingly given up on the concept of "normal" work hours and work weeks as the workload has steadily increased.
I've become a bit exasperated of late, however, both in terms of my recent searches for outside talent, as well as with the trade buzz around this topic. I'm a firm believer in the idea that there is nothing new under the sun, and that the best way to get insight about the future is to examine the past. Since we live in the digital age that we do (I haven't done the math on this officially but I'm thinking there are about 15 digital years per every calendar year), all I had to do was take a quick look back to the not-so-distant past for some insight on this current event.
There was a trend some 10 years ago of media planners and buyers making a jump into this internet thing without a safety net, primarily driven by curiosity, to establish themselves in this space. Paraphrasing Willy Wonka, we were the music makers; we were the dreamers of dreams.
I have many fond memories of just trying to figure it out. Back when sock puppets sold dog food online, and someone thought there was a viable business plan in paying people to surf the internet, stock options fell like manna from heaven (even for companies using sock puppets to sell dog food online and companies paying people to surf the internet), and The Big Guys' main sales strategy was "We're big. Buy us." (See, 15 digital years per calendar year bring trends back a lot more quickly in our world.)
Nostalgia aside, the main reason I got into interactive / digital / new / emerging / title-of-the-week media was because I had a curiosity about media in which people were an active participant in the experience. There was the thrill of being able to see the loop close-- seeing the actual behaviors resultant from our advertising. What's more, the ability to use that data to make the plan better-- immediately. And there were many folks like me (many of you reading this now) in the previous decade having a similar epiphany.
Do you think such curious folk in this industry ceased to exist in 1995 or 1998 or 2001 when you came into the game? Is there not a strong safety net now in place to show the way for the next generation of digitally curious media planners and buyers, digitally experienced or not? Are we not the potential Jedi Masters to these potential Padawon Learners? OK, I'll stop now.
As lines blur between traditional and non-traditional, as most media move to digital and more measurable platforms, do we need to, in a media analogy, parse a finite universe of experienced digital planners and buyers until that audience is no longer efficient or stable to target? Or do we need to find an audience with a propensity for curiosity regardless of their demographic make up (traditional vs. digital) and show them the way?
Look, if we're going to walk the talk of convergence / cross-platform / integration, it CANNOT all be driven by interactive and digital media experts (weren't we the first ones in the recent past to extol the virtues of "media agnostic" approaches?). Likewise, in a world where medium is message and people use rather than consume media, all pertinent knowledge about a client's bus[...]
Marketing Online: A Guide
Marketing textbooks often describe the fundamental task of marketing as making decisions about the "4 Ps:" Product, Place, Price and Promotion. What product (or service) will I sell? Where will I sell it? What price will I charge for it? And how will I promote it to the consumer?
Neat, straightforward, linear in its logic, but the new digital world is neither neat nor linear. Consider how the 4Ps can begin to reflect this new complexity.
Choice 1: Product
The old question: What product will I sell?
The new question: How do I develop products that meet the diverse needs of demanding consumers?
What's changed? My wife and I went furniture shopping last week, and we saw a coffee table with a sleek design that we found unique and appealing. Yet it wasn't just right, nor were the other tables the retail store stocked from the same Italian company. So I went online and found that the company actually exported a wide range of tables, with various selections available from various retailers, including many who sold online. Like Goldilocks, we found one that fit our tastes just right. It didn't come from the original retailer.
The digital world lowers consumers' costs of searching for diverse products. It enables producers to find consumers online that were previously too costly to reach. My original furniture retailer faces inventory constraints, especially given the high costs of space in Manhattan. His offering of tables, from multiple sources, was impressive but incomplete. In contrast, online furniture stores, individually and collectively, can, with virtual inventory, accommodate a much wider range at lower costs.
The online model also affects product by opening the door to more personalization, or even mass customization. So I can find the precise design I want. Or another consumer can customize her own PC, or her own fragrance or cosmetics. Business models that offer customization are hardly a sure thing. Dell has been a success, but P&G's Reflect.com closed after failing to build a viable business in personally customized cosmetics.
Managing a response:Product diversity has always been constrained by costs. New digital capabilities lower these costs, and by so doing can revolutionize product decision making. Marketers can reach a more diverse set of consumers and can even use consumers' purchasing choices to help select the optimal product range. Marketers don't have to design or divine ahead of time the one ideal product; there could be many.
Choice 2: Place
The old question: Where should I sell my product?
The new question: How do I expose my product to the right consumers?
What's changed?A mid-size foods company celebrated when their product secured distribution in Wal-Mart. A "Prestige" fragrance executive shuddered when she saw her brand on sale at TJMaxx (a discount store).
Wider distribution is better-- sometimes. The more consumers the product can reach, the more it can sell. Yet, for many products selective distribution is central to the marketing strategy. "Prestige" products are defined by selective distribution. If they are widely available, they are not prestigious. Complex, service sensitive products, e.g., high-end audio components, may also benefit from selective distribution. By screening distributors, manufacturers can ensure that sellers offer quality advice and information to consumers, and in a setting that supports the product's image.
The internet adds a new channel of distribution. The channel has some special features. It is good at providing information in written, graphic, pictorial, even audio form. It can be a good forum for learning about diverse product features, e.g., the ranges and costs of car models or cameras. It can be managed at lower costs.
Consumers Still Don't Trust the Internet
It just keeps coming, doesn't it? Consumers are increasingly voicing their concerns about online commerce and marketing, and every month or two brings more data about how they are responding to security and privacy concerns. Recently, Consumer Reports WebWatch brought out a new study, "Leap of Faith: Using the Internet Despite the Dangers." The title is ominous enough -- and the report upholds some earlier pessimistic observations about internet behavior.
In July, the Pew Internet & American Life Project released a study showing that 48 percent of consumers had adjusted their online behavior because of the threat of spyware. In the WebWatch report, 53 percent of respondents said they had stopped giving out personal information online, 30 percent claimed to be using the web less in general, and 29 percent say they are curtailing online shopping, at least somewhat.
This seems in line with what we've heard in the past: consumers are getting warier and more willing to change their behavior because of real or perceived online threats. Also bolstering this claim is the fact that 88 percent of the survey's respondents said that it was very important to know if "the site will keep personal information I provide safe and secure" when deciding what websites to visit.
On the face of it, at least, the report seems like more depressing news.
The report -- fairly convincingly -- demonstrates that consumers are still unconvinced about their privacy and security online. It shows, moreover, that many are still unaware of how advertising works online. Although 69 percent of the survey's participants said that it was "very important" for advertising to be clearly labeled and distinguishable on websites dedicated to news, when it came to search engines, only 44 percent understood that search engines are paid to display some search results. But consumers suspect that things are actually worse than they are. Fifty-percent of online users describe search engines as "mostly show[ing] results for sites that pay to be listed prominently. This, combined with the 88 percent who strongly want to know about a site's privacy practices, should be yet another good reason for us in the marketing biz to make sure our procedures are well disclosed and in line with industry best practices.
More familiarity = more trust
We've heard some of this before. But within the results there are some interesting and even optimistic numbers that have gone largely unreported. Consumer Reports asked a question that hadn't been asked too often before: of those who trust online businesses, how many were users of the business in question?
For example: the report found that banking websites are trusted by 68 percent of all web users, but amongst those who actually do online banking, 93 percent say they trust such sites.
This pattern holds across the board -- from shopping sites to financial sites of all kinds and sites that offer consumer advice. Of those users who shop online, 89 percent report that they trust online stores, whereas only 36 percent of those who don't shop online say the same.
This appears to demonstrate a simple fact about online behavior - the more familiar a user is with a particular niche, the more comfortable and trusting they are of it. I suppose that this is intuitive, but it's also good news. It means that web users who do their banking online or shop for products aren't, by and large, disappointed by the experience. They have gained reason to trust the organizations they do business with.
There do remain those online users who don't trust online commerce and marketing -- and these are the people who we need to convince by boosting consumer security, disclosing the collection of private info[...]
ad:tech Report: My "Cost-Per" Rant
Like what appeared to be several thousand other people, I attended ad:tech in New York last week and was happy to see online marketing's "second coming" in full bloom. Spirits were high, optimism filled the air and deals were undoubtedly being made. Long story short: online marketing is growing up and reaping the rewards that come with maturity, like a teenager getting the keys to his first car.
I did come away with one rant however. Just as teenagers seem to have a language of their own, this industry does too. While it may be cool and hip for a young, emerging industry to have certain words or catch phrases that only those on the inside know and use, we need to remember that online marketing is a business. And as with most businesses we do not want to put up walls, we want to invite as many people inside as possible.
I found a rather glaring example of this pre-teen hangover in a very grown up part of online marking: pricing terminology. As I walked the crowded trade show floor, I heard so many different terms that are used to describe the payment methodology for online marketing that I decided to conduct an informal -- and incredibly unscientific -- experiment: as I made my way from one end of the exhibit hall to the other I would count as many different pricing terms as possible that I overheard from the dozens of pitches in progress.
In less than 30 minutes I heard no less than 7 unique terms (and I'm sure there were more). They were: "CPM," "CPA," "CLC," "CPL," "CPV," "CPI," and "CPT."
Now I know iMedia Connection's readers are particularly savvy about all things online, but I'm willing to bet most of you will find at least one new snippet contained in the definitions below. They aren't as cut-and dried as you might think:
CPM: (1) Cost Per Thousand; (2) Cost Per Impression
CPA: (1) Cost Per Acquisition; (2) Cost Per Action
CPC: Cost Per Click
CPL: Cost Per Lead
CPV: Cost Per Visit (I had to ask)
CPT: (1) Cost Per Transaction (had to ask, again); (2) Cost Per Thousand
In case anyone hasn't said it before, allow me: This is insane! Could we make it just a tad more confusing for new advertisers wanting to enter this space? What's worse is that many of these terms mean the same thing! Therefore, we seem to have different terms for the sake of being unique, creative or just plain cute. Hey, I know! Why not have all accounting sites charge "CPA" for space, all new mom sites charge "CPG" and all medical sites charge "CPR"? At least the initials would have a certain familiarity to the prospective advertiser!
Seriously, this industry is constantly crying out for more ad dollars to migrate online yet we couldn't possibly make it more difficult for an advertiser to do just that! Something as fundamental as the way we charge for our marketing services needs to be easy to understand so advertisers can make basic apple-to-apple comparisons and be successful here.
When you boil it all down there are not seven types of pricing models for online consumer marketing, there are only three. In the simplest of terms they can be described as follows:
Placing your brand/offer in front of the right audience.
Driving a segment of that audience to make an initial indication of interest in a product or service.
Refining that pool of interested consumers by qualifying, validating and then delivering them to the advertiser
Or to put it another way:
Key placement = size of audience = CPM
Initial interest segmentation = click = CPC
Delivery of qualified consumer = lead = CPL.
Let me go on record and say Cost-Per-Acquisition (where the advertiser is paying for the actual purchase) may be a widely used price model but it has more to do with contracting[...]
"Make Love Not Spam" Questioned
Does the end justify the means? That’s a question that’s been asked a million times throughout the ages. Shakespeare addressed it in Hamlet; Truman wrestled with it towards the end of World War II. And I can remember countless after school specials that addressed Machiavelli’s infamous theme.
Some argue that the end never justifies the means -- I’m not so sure. I had a philosophy professor back at Uconn who used to delight in these types of moral discussions. I was always game for a good chat, particularly when we held our discussions at the local watering hole. Anyway, at some point last week, Machiavelli made his way to the Internet space -- in the context of the great crusade, better known as the war against spam.
The question posed -- albeit indirectly -- was this: Would a company be justified in taking extreme measures in order to keep spam messages from polluting our inboxes? Whether they meant to or not, Lycos Europe has apparently given us their answer. The company recently released a screensaver that is designed to make spam a more expensive and less lucrative business. The screensaver, dubbed “Make Love Not Spam,” is designed to endlessly request data from the sites of known spammers. The basic premise is that if enough users download the software, the cumulative effect of many data requests will tax the spammer’s servers, costing them more money.
I must admit, the thought of giving the spammers an old fashioned butt whooping is pretty enticing. And Lycos has indicated that their user base has received “Make Love not Spam” very positively. According to company spokesperson Malte Pollmann, “We have been totally overwhelmed by the success of the program.” By last Wednesday, the software had been downloaded by more than 100,000 users.
The company has clearly tapped into user frustration with spam. Moreover, according to the company, their proactive approach to combating spam has already had an impact on the number of spam messages. “We already see a decline of spam messages directed towards the mail accounts of our user base,” says Pollman, in an email statement last week.
Very few people would criticize the general aim of Lycos’ new program. Just about all of us have felt the frustration of having to weed through all those messages, and everyone would like to see spam reduced. I’m not convinced that “Make Love Not Spam” would put a huge dent in the proliferation of spam. But even if I concede that it would, the question in my mind is – “at what cost?”
Denial of service?
I’ve read countless articles and blog entries that allege Lycos’ program utilizes a denial of service attack. For those of you who don’t know, a denial of service attack is designed to “bring the network to its knees by flooding it with useless traffic.” It’s typically used by hackers and other miscreants to wreak havoc on a site, and is usually designed to shut the site down.
Spokespersons for Lycos have repeatedly insisted that “Make Love Not Spam” does NOT employ any form of denial of service attacks. Their rational is that each individual request coming from “Make Love Not Spam” is so small (only a few bytes) that its impact upon the spammer’s servers is relatively insubstantial. The problem with that rational is that we aren’t talking about a single request -- we’re potentially talking about millions of requests. Lycos Europe boasts 7.7 million unique users, so if only a percentage of them were to download the screen saver, logic (as well as the law of large numbers) would dictate that the impact would be significant.
In any event, I don’t want to get into a technical argument rega[...]