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Online Advertising Personalization (Part 7 of 9)

October 30, 2008

Getting to the correct, Inbox

Consumers know what spam is: unwanted or irrelevant messages, email from unknown senders, and excessive email from senders to whom they gave permission. Consumers, with the aid of software companies and email services, have developed two sophisticated strategies for tackling spam so that relevant mail from family, friends, and marketers gets through.

The first strategy uses built-in features of email or spam-blocking programs that handle junk mail or let users click a “this is spam” button (After these, most people just zap unwanted mail with the delete key.) Spam clicks sent to ISPs may flag legitimate senders as spammers and block their email from being delivered. Because the “this is spam” button is so easy to use, many in-box owners are using it instead of unsubscribing. This impacts deliverability and may degrade consumers’ perception of the affected brands.

Consumers know that spam filters are not foolproof and can catch wanted email. Over half of DoubleClick’s respondents check their junk or bulk mail folders regularly to spot any misclassified mail, and an equal number have found legitimate mail in them.

The second strategy for many internet users is multiple email addresses. Over half the respondents in DoubleClick’s study reported having at least three email addresses, typically a work address, home address, and free webmail address. Almost all consumers, 95%, designate one as their primary account, and 72% use one specifically for making purchases. Using accounts for specific purposes provides consumers with another way to control their email. Consumers using this strategy may pose problems for marketers, such as duplication of names on lists, mismatched targeting of the message to the recipient, or mailing to individual consumers too frequently. Any of these issues can negatively affect the brand-consumer relationship.

Email Influences Consumer Purchasing

Each relevant email sent by marketers can offer consumers links to brand information and websites that may lead to sales. In addition to product offers, emailed statements and bills or updates from travel rewards programs, for example, are largely untapped opportunities for most marketers to communicate with consumers and stimulate sales.

Email is a powerful purchase influencer. During the 2005 shopping season, email service provider ReturnPath found that 95% of the shoppers they surveyed used email to navigate to a retail website, read sites for gift ideas, and took advantage of the offers they contained. Email works double duty as a branding and direct response channel.

Emailed coupons are effective purchase incentives and drive sales. Three-quarters of online purchasers redeemed an online coupon, and almost 60% redeemed an online coupon at an offline retail outlet. Special offers can help email get read and acted upon.

After purchase, customers expect to see order confirmations and shipping notices in their in-boxes. And customers in a Double-Click study expressed interest in follow-up offers for related products, membership rewards programs, and sweepstakes .

Advertiser Spending on Email

Email is the most widely adopted electronic communications channel. Yet, compared with the major segments of measured online ad spend (search and display advertising, which combined for 75% of the $12.6 billion spent in 2005), commercial emailers’ spending was small—less than 10% of the total.

Much of email spending is not captured in widely reported sources. Thus, we expect that the spending on email is much higher because many companies handle their email functions in-house, usually spread across a number of departments, each of which is going about its business and not necessarily coordinating email sends or strategy.

Seems low, doesn’t it? Especially when you consider that more than half of B2C (business-to-customer) marketers use email to communicate with customers, and B2B marketers use email to reach 80% of their prospects. However, unlike search or display advertising, email advertisers don’t have to spend much on production, media, or vendor costs that push budgets up.

Jupiter Research expects advertisers to allocate half of their spend on email marketing in 2010 to customer retention programs.

Advertiser spending for customer retention reflects the value marketers place on email for managing customer relationships through time. This is noticeably different from the way marketers use online search and display advertising, for example, which are used more for finding new customers, generating qualified leads, or for building brand awareness.

Email for Relationship Building

“The fundamental purpose of email marketing,”  an analyst  writes, “is to enhance a company’s relationship with its customers and regain lost customers”. Marketers build and maintain the relationship through a variety of communications: newsletters, special offers and promotions, and customer services.

Let’s focus on the word relationship for a minute. Ethical email marketing is permission-based, meaning that brand customers explicitly allow marketers to engage with them. “Yes, I’ll accept your email, Mr. Marketer,” or “Thanks, but no,” or “I’m no longer interested— please stop emailing me”. Customers are choosy about what they want to hear from individual marketers and how often. Good email marketing is a two-way street: a feedback loop where customer and brand continually refine their understanding of one another, but the consumer is at the controls.

Email marketing is all about relevance from the consumer’s viewpoint. Campaigns that connect with subscribers at the levels they want them to get better results than those that interrupt the email activity without invitation.

Tips for Email Campaigns

Build your list internally, even if it takes time, so the quality of your recipient list remains at a high level.

Keep an accurate audit of how your company received permission to contact the subscribers to the lists—some people forget they signed up to receive information.

Make membership to your list valuable.

Provide recipients with a clear way to contact you for more information, including a staffed telephone number or email address.

Choose software that is capable of performing as your lists grow, scans outgoing messages for viruses, and can measure the effectiveness of your campaign.

Build Quality Opt-in Lists

Dell builds its opt-in list is by offering customers and prospects an exclusive sneak preview of the new season’s farm equipment lineup. Dell runs a separate communications program, named “First-to-Know,” that allows customers to sign up for a single email (with confirmation) that will be delivered on a specific date and time. An email link sends them to a branded microsite just minutes after the last of the resellers emerges from the annual meeting but 13 hours before the press embargo is lifted. Thousands click their mouses within seconds of receiving the email. With one suspense-building program, dell acquires highly qualified customers for its lists and educates its most interested customers. dell builds other lists by promoting cross-registration on the confirmation pages it sends.

Improve Segmentation Criteria for Email Lists: Cisco

Cisco wanted to increase its sales of routers. Analyzing its opt-in list, the company determined that while it had permission to send email, many subscribers did not indicate equipment needs on their profiles. To find out, Cisco, through its vendor, sent a real-time query to all subscribers who had clicked on any routers item in the prior three months. The query “produced a segment that was nearly twice as large as the number of subscribers who had self-identified themselves as purchasers.

Establish a Loyalty Progression: Hotels.com and Petco.com

Experian, perhaps best known for its credit bureau services, is also one of the major email service providers. The company makes the convincing point that marketers should aim to move one-time buyers into potential loyalists, and potential loyalists into core loyalists. Why this progression? Core loyalists are the 10% to 15% of customers who generate at least 50% of profit.

Experian describes a best practice: “When a customer comes on the file, the well-devised new customer progression strategy takes every opportunity to make her feel like a valued, important customer. It is designed to find out who she is, what she likes, and why she bought, then to tie those insights into a series of promotions that improve the relevance and value of each subsequent communication with her”.

Web travel service Hotels.com uses “email marketing/transactional hybrid messages to send an email before and after a customer’s stay at a hotel. Messages include useful details (confirmation of booking #, preferences, hotel information) as well as marketing information (how to get more offers, items they can add to their trip, etc.). Many of these are banner ads, which link to up-sells and offers. Following the customer’s stay, an email includes a link to a survey to determine their satisfaction”

Forrester Research reports that “event-based emails are 17% more likely to be opened than newsletter or promotional emails, and customers are 20% more likely to click through on them. They are read multiple times and are the last to be deleted.” Conversions also run “well over the conversion average of other direct marketing programs.”

Add Value to Newsletters through Relevant Partnerships

Email newsletters morph into micromagazines, third-party ads for related products or promotions are making their way in. Upscale food retailer Wild Oats Natural Market, for example, sells about 15 ad spaces per quarter in “Wild Mail.” In order to maximize the brand’s value and maintain its high standards, the company carefully selects participants and exercises tight control. Only relevant products get the nod, and their creative executions must work hand in glove with Wild Oats’ standards and formats. The tactic is meeting with success. Consumers view the coupons favorably, and often print them out and redeem them at stores. (Vendors track redemptions and sales, which are “very strong”), providing performance insight into the partnerships. Another benefit: The ad space sold can fund, or defray certain costs of, email campaigns.

Rethink Email Strategy to Build Loyalty

To get the email program on track, Motorcycle Superstore’s team and vendor concentrated first on improving deliverability and understanding the factors that would stimulate subscribers to open their emails. Afterward, they shifted toward higher-order factors for driving web- and phone-based sales.

Step one focused on cleaning the list of undeliverable names. Names were removed after three undeliverable attempts, as recorded by the vendor. Eliminating the “dirty” names reduced the list size by only about 12%, but even this relatively small improvement would eventually prove to have salutary effects on delivery. How? By retaining white-list status with ISPs through fewer bounces, having fewer messages marked as spam, and otherwise becoming a trusted sender. The cleansing effort paid off; deliverability increased from 86% to over 99%.

With available information they knew that open rates held steady at about 30% for their monthly email. Testing showed that up-ping the frequency led to more revenue, but depressed open and click-through rates and raised unsubscribes. As we discussed, consumers usually greet extra email with a punch of the delete key or a hit to the “this is spam” button.

Motorcycle Superstore now sends emails to different segments on different schedules. Some receive weekly emails, others less often. Erick Barney, the chief marketer, states their aim pretty succinctly: “Ultimately the challenge is to define acceptable performance levels with regard to our overall email marketing strategy”

Reasoning that motorcyclists ride on weekends and therefore might be interested in replacing parts and buying new clothes or accessories on a Monday or Tuesday in order to get their packages in time for the next weekend’s ride, Motorcycle Superstore tested email sends twice, and measured delivery rates, open rates, unsubscribes, the number of orders, and order value. Differences in the days’ results were negligible, so they decided to go with Monday. Sometime later trade press buzz suggested that Thursday was a magic day for opens. That led the company to test Monday against Thursday. The results favored Monday; response to Thursday’s emails sharply decreased over the weekend. Why? The marketing director explained: “We attribute this to the ‘weekend warrior’ nature of motorcycle industry consumers, especially during peak riding seasons.” MotorcycleSuper-store.com stayed with Monday email sends. The company’s experience shows why it’s critical for brands to conduct their own testing and not rely solely on norms.

Amplified Word of Mouth

Amplified word-of-mouth campaigns are designed to raise brand awareness by getting people talking through techniques similar to marketing-support public relations. Some of the techniques used include creating communities, identifying and reaching out to influential individuals and communities, motivating advocates to actively promote products, giving advocates information they can share, using advertising or publicity that creates buzz, or making tools available that help people share their opinions . These campaigns typically come to mind when we think about word of mouth, and we concentrate on them in this chapter.

A majority of the BzzAgents, nearly 60%, fit into a group Keller Fay (2006b) calls “conversation catalysts.” (This is about four times their proportion in the general population.) These influentials shape the opinions of colleagues, friends, and family and, as such, provide real-world insight into factors that work and don’t work in word-of-mouth marketing. The study gives us two very key insights:

Word-of-mouth success is about communicating solutions—providing answers that consumers want to pass along to others.

The leading reasons for spreading the word are in-depth product knowledge and the enjoyment that comes from sharing that knowledge and their experiences with colleagues, friends, family, and brands.

Word of mouth is practical and commonsensical, a way for one person to help others navigate the world of brands and purchase those that best meet their needs.

Measuring Word of Mouth

Realizing that word-of-mouth campaigns generate positive and negative comments or actions, how should marketers evaluate their brands’ results? Experienced word-of-mouth marketer Sprint advises, “define specific success metrics before beginning a word-of-mouth campaign”. That’s especially good advice because there are so many ways to research, analyze, and gauge results. Personalize your brand campaign metrics to its specific marketing objectives.

Summary

  1. Email is the most frequent activity by people using the internet and is highly valued by marketers to reach customers and increasingly to attract customers. On the surface, email would seem identical to direct mail (or at least a close cousin). There are, however, a number of factors unique to email that can limit its effectiveness:
  2. It needs to be opt-in or permission-based, as consumers increasingly use spam blockers and quick delete buttons.
  3. Use of email in newsletters or offers not only must be relevant but should also optimize convenience and simplicity.
  4. In order for email to be highly effective, it must connect with action-shopping site, website, or information search.
  5. The personalization and dialogue potential of the internet is just beginning to be fully recognized by marketers. Email newsletters are the most popular tool used by marketers, but they must be integrated with other elements in the go-to-marketing strategy to be effective.
  6. The primary strategy for email (newsletters, offers, and others) should be to retain customers and build loyalty. Think of email as relationship building with the potential for continuous dialogue among invited guests rather than an interrupt-and-repeat model of the classic push mode of mass broadcast advertising.
  7. Done well, email marketing, integrated with shopping, buying, and dialogue, leads to additional word of mouth for the brand (which, in essence, is free). Research shows that word of mouth from friends or trusted experts is the most credible and potentially motivating advertising for a brand. Unfortunately, word of mouth is not controllable, and negative word of mouth can often disseminate quicker than positive word of mouth. It is critical therefore to integrate all email marketing with positive product usage experience and service experiences. In essence, total brand delivers.
  8. Decentralized and noncoordinated email strategies are inefficient and potentially (and probably) harmful to brand image. Without a clear connection to marketing strategy, brand personality, and contact management in place, brands risk sending mixed messages and, worse, irrelevant messages. That risks alienating customers, and weakens the brand’s in-box penetrating power and ultimately its performance.
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