• by Steve Smith , Staff Writer @popeyesm, August 24, 2006

Performance Marketing Learns a New Dance

In an age of fragmentation and user controlled media, even door-to-door salesmen have to adjust their pitches. Consumers are increasingly less willing to open the door or their

e-mail inboxes to even highly targeted and personalized pitches, say performance marketing experts. Marketers are chasing audiences across multiple media platforms, and even when they succeed in getting consumers' attention, it's getting harder to finesse a response. "People are saying, 'No more!'" says Michele Fitzpatrick, chief marketing officer, Harte-Hanks Direct. "They don't want to be bombarded with messages."

The discipline best known as "direct marketing" needs a new approach that takes into account a mediaverse of empowered consumers. "You can't think of them as a target," says Kathy Sharpe, CEO, Sharpe Partners. "If anything, we are the targets." In a world of increasingly personalized digital media, where consumers are accustomed to TiVo, RSS feeds, podcasts, wireless data on their cell phones, and customized home pages, people don't want to be pushed into anything.

Deploying the right online performance marketing tactics involves learning how and where to knock on virtual doors, obtain permission to enter the consumer's sphere, and establish a quick rapport. "It's more important than ever for direct marketers to create synergy between the offline and online channels and create a balance of push and pull," says John A. Greco, Jr., president and CEO, Direct Marketing Association.

"It's a whole new dance," Sharpe observes.

Despite worries about sagging response rates and "message fatigue" in a channel clogged with search ads, e-mail appeals, and offers in ad banners, the numbers remain fairly static, if uneven. "There is a bit of a myth that response rates are declining due to more resilient consumers," says Greco.

In fact, e-mail response rates increased slightly in 2005 to 2.48 percent, but the catalog and retail categories were as low as 1.5 percent, according to the DMA. Spending on business-to-consumer e-mail marketing has leveled off to a modest growth rate of 5 percent a year, according to JupiterResearch. While no one doubts the meteoric increase in spending on search advertising, overall results for direct-based search engine marketing campaigns are relatively low at 1.07 percent, the DMA has found.

And while some campaigns are experiencing declining response rates, Greco concedes, overall consumer "purchase rates" are steady or rising, he says. Online-based performance marketing strategies, including lead generation, co-registration, customer relationship management, database, and affiliate marketing, are fueling growth in the direct marketing sector. Greco says that 80 percent of DMA members deploy online-based campaigns.

Still, many marketers confuse going online with doing direct marketing, says Harte-Hanks' Fitzpatrick. Simply pushing people to a URL with general ads that never segment the audience or appeal to consumers in personal ways misses the point. "I see people trying to build complex relationships with natural visitors to a site. It's not a fully developed engagement program," she says.

Push, Pull...Push Again

Breaking through clutter and message fatigue involves getting closer to the consumer's thinking and behavior by leveraging an abundance of interactive data, Fitzpatrick says. If marketers leverage the data correctly, they can get past a simple sequence of timed outbound e-mail blasts and creatively address consumers' changing levels of receptivity to messages throughout the buying cycle.

"When I am in research mode I want anonymity, but when I am ready to buy, I want to be able to fluidly move across channels for information," Fitzpatrick explains. "It's going from purely push to push-plus-pull. We need to map out the customer experience and actively drive the channel at those key moments of truth when consumers are more receptive," she adds. Major retailers like Best Buy have established effective dialogues with consumers that engage them at various points in the purchase funnel, she says.

Retargeting, a behavioral tar geting tactic, has become a favorite practice because it lets the consumers open the door by initiating shopping sessions or just clicking through. The marketer can then dangle subsequent offers and enter into an ongoing dialogue with consumers.

For Sol Meliá resorts, ValueClick pulled consumers to the chain's site with a broad banner campaign, then tracked and retargeted them as they traversed other sites. The campaign resulted in a 1.8 percent conversion rate and 177 actual bookings. Conversions on retargeted consumers who demonstrated a previous interest "are phenomenally higher" than direct marketing that doesn't address usage patterns, says David Yovanno, general manager, ValueClick Media.

Tracking and responding to actual behaviors is the necessary dynamic in a fragmented environment where users pull media unpredictably from multiple places. "This is the big paradigm shift," says Yovanno. "The challenge is to track users rather than content. Companies need to know a hell of a lot more about user behavior."

Marketers are eager to find the right path to get in front of media-saturated consumers. Most performance marketing pros argue that while the explosion of new media channels is a hurdle for general advertising, the DMA's Greco calls it "an opportunity for the entire direct marketing process to expand its reach." Narrower channels provide more focused, engaged audiences, and a setting for marketers to customize offers.

Archana Deshmukh, partner, media director, MEC Interaction, sees niche cable TV and online channels like Discovery Science performing better than the larger parent networks. Niche audiences are more self-targeted and thus more involved and responsive. "From a direct marketing perspective, the fragmentation makes it more interesting. The more options we have, the more ways we can reach the consumer. People engage more with very specific sites and channels."

Tag Team Marketing

Integration is key in deploying performance marketing strategies and practices. Online direct tactics are often effective when they're combined with focused TV pushes (see related story above). "People live and breathe offline. It's fragmentation on the one hand, but it's also convergence," says Denis Glennon, cofounder, The Go Company, an agency that makes direct-response infomercials.

Integrated planning demands more seamless infrastructure, and agencies remain segregated by database, online, and general advertising silos. The only way to manage a push-and-pull direct response dynamic across media platforms is to calibrate the channels, balancing pushes for volume with targeted and relevant pulls. "There is a tradeoff of going deep and being relevant, against going broader and pounding away at larger audiences to get the volume up," Fitzpatrick notes.

Agencies offering integrated performance marketing services need to balance these needs, as well as manage escalating costs among emerging channels. "It's more of a sellers' market," says Jason Heller, managing director, Horizon Interactive. "Certain categories get sold out and costs are driven up." In an environment of rapid change, no one wants to miss out on a new channel, and even unproven ones attract dollars fairly quickly. "You do find that budgets are starting to shift in different directions," says Heller.

With marketers' laser-like focus on ROI, combined with the numbers-crunching data analysis intrinsic to the direct marketing disciplines, the biggest challenge in a multichannel world may be in tracking ROI across media platforms. "What is the impact of offline in online, and how does each channel work together?" wonders MEC's Deshmukh, whose agency handles digital and direct marketing efforts for L.L.Bean.

There are no easy answers to the issues raised by cross-platform and cross-discipline

marketing. Online purchasing is so minutely trackable that it makes older direct forms like catalog sales seem vague. "A lot of clients are trying to figure out what each medium is bringing to the table," Deshmukh says. "Finding the right metric to measure offline and online is difficult."

Keeping a Friendly Face

In the emerging context of pull media, it will be even more important for marketers to maintain an intimate connection with consumers. Relevancy and personalization are requirements in online marketing.

JupiterResearch projects that growth in online direct marketing will shift from list rentals to sponsorship and co-registration programs that work to target offers contextually. "It's not about making the consumer believe in the brand, but communicating that the brand believes in the consumer by connecting to them with relevance and responsibility," says Greco.

As everything goes granular, niche, and interactive, we will all learn to love the data. "The guys who get their arms around the databases are going to win," says Fitzpatrick. "If you don't learn how to embrace technology now, find another job."