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Marketing Wu Shu: Mix… or Lose to Better Fighters

August 16th, 2012 Posted by Local SEO, Website Engineering 6,603 comments

There is no opposition between online marketing and offline marketing. Your marketing-fu [I prefer to say ‘marketing wu shu’] is as good as you are able to set up the right mix for your business and your clients. Research studies show why, and a few figures will help illustrate this.

In the early days of internet marketing, back in 1997-1998, we were all drooling at the new horizons the web just opened to small businesses. No more costly mailings, no more ruinous trade shows, no more ‘Forget national reach, we have no budget.”

Websites, paid search ads (e.g. Adwords), banner ads and e-mail marketing were sketching the new frontier and we were all pioneers. The US Post Office went deep into red ink, the FTC took drastic measures against telemarketing firms, and TiVo helped us weed out TV commercials from our favorite programs.

All in favor of online marketing raise their hands.

Inevitable backlash

The wild swing away from traditional marketing channels inevitably generated its own backlash.

Spam became the plague of the decade and the Can Spam Act of 2003 was voted into law. It did little to rein in the scourge —spammers just outsourced to Russia— but internet service providers [AOL, TimeWarner, Comcast, etc.] became better at filtering spam. Web users learned to identify suspicious e-mails and delete them. E-mail opening rates plummetted and the once ‘magic’ medium lost much of its initial luster as a cheap, efficient marketing channel.

Likewise, consumers learned to tune out on-site ad messages. Eye-tracking studiesdemonstrate how consumers successfully ignore ads: helped by the engineering of the human eye, they focus their line-of-sight on the non-advertising sections of a web page and the rest is blurred out.

To protect its advertising turf and its bottom line, Google regulated its Adwords andAdsense programs, weeding out tends of thousands of spammy affiliate marketers and imposing tougher linguistic rules on its advertisers [Gone the ‘Click here!’, gone the multiple exclamation marks, gone the all-capitalized words, gone the trademark hi-jacking practices.]  Today the advertising sidebar only draws 2-3% of visitors to a Google page, and the advertising claims are fairly tame.

Too much information kills information. Too much advertising kills advertising.

Return to equilibrium

Under the influence of gravity, a pendulum invariably comes at rest at the center of its motion range. We can draw a parallel to this law in the world of human affairs: the wild appeal of e-mail as a marketing medium has progressively receded.

A recent study published in December 2011 by marketing firm Epsilon found that 50% of US and Canadian consumers pay more attention to direct mail than to e-mail, and find the former ‘more trustworthy’ than the latter. A subset of these results highlights the trust issue: 36% of US consumers and 40% of Canadian consumers prefer direct mail to receive financial services information. [The notorious Nigerian letter isn’t as trustworthy as before.]

This following graph shows the ‘trust gap’ between postal mail and e-mail for a variety of product/service categories.

Trust gap between postal mail and e-mail in various product/service categories (% of consumers)

Trust gap between postal mail and e-mail
in various product/service categories (% of consumers)

The same study found that the appeal of TV as a source of consumer product information is down from 43% (2010) to 37% (2011) among US consumers, and that social media and blogs are trusted by only 6% of the US respondents.

One size does not fit all. Old school still works.

Other numbers

Other studies show it would be unhealthy for web marketing specialists and their clients to ignore or deride other marketing and advertising channels.

Over a six-month period ending in early 2005, Millward Brown and Information Resources, Inc. conducted a study on four pairs of radio and television campaigns led in four markets on a range of product categories including Grocery Food, Grocery Non-Food, and two very distinct Over-The-Counter Drug products.

The study results showed that radio lifted sales by an estimated 4.1% and TV by an estimated 7.5%.

Comparison of sales lift by Radio ads vs TV ads Source: Millward Brown + Information Resources, Inc.

Comparison of sales lift by Radio ads vs TV ads
Source: Millward Brown + Information Resources, Inc.

The same study showed however that radio being much cheaper than TV as an advertising medium (cost of production, and CPM), the average ROI of the radio campaigns came out higher than the average ROI of the TV campaigns.

Profit per Ad Dollar Index shows radio ads outpulling TV ads in terms of ROI

Profit per Ad Dollar Index shows radio ads
outpulling TV ads in terms of ROI

Note: The figures above are the expression of an index, not absolute ROI.

These figures address the crux of the matter: whichever advertising/marketing channel is selected, the channel with the highest ROI will, in the end, allow re-investing more dollars in marketing than the other channels. Affordability of the channel obviously dictates the channel selection.

The Direct Marketing Association [DMA] study —on which is based the infographics found at the bottom of this article— shows that telemarketing has the best response rate of all the channels studied. BUT… The cost of telemarketing campaign on a prospect list is almost 4x more expensive than the costs of any other channel!

That kills an ROI more surely than a Dr. Kevorkian working on his patients.

Cost Per Lead/Order of Direct Mail, E-Mail, Postcards and Telemarketing - DMA Report 2012

Cost Per Lead/Order of Direct Mail, E-Mail,
Postcards and Telemarketing – DMA Report 2012

Saving hotels tens of thousands of dollars

Back in 2000-2006 when I consulted for the hotel industry, my firm evolved a marketing model that lowered the average cost of a booking from a historical bracket of 25%-50% to a predictable bracket of 2%-12%. In other words, considering an average ticket of $450, our clients’ unit cost of sales went down from $112-$225 to $9-$54.

These very significant savings were achieved by combining appropriately both online and offline marketing actions. Prior to our intervention, most hotels already pursued an offline sales strategy consisting in selling room allotments to tour operators (TOs) and virtual tour operators (VTOs), and participating in trade shows where they would meet with consumers, travel agents and TOs.

Beyond the critical issues of credit risk [TOs were notorious for folding up without warning] andcash-flow strain [TOs and VTOs usually pay their allotments 60-90 days out], the hotels used to spend time canvassing their markets in ways which ultimately benefited the TOs and theExpedia™ of the world: when booking rooms over the internet or through a TO call center, consumers would search for the hotel name and invariably landed on websites and portals that didn’t belong to the hotels.

In other words, the hotels were feeding Expedia and the likes and paying them high commissions on traffic that should have landed on their own sites. Talk about sawing the branch you sit on….

Our job consisted therefore in building and branding the online presence of the hotels [website, SEO, presence on proprietary hotel portals] and making sure all our clients were branding their marketing collateral with their own URLs and e-mail addresses.

Hotels have since continued to participate in trade shows [B2B and B2C] but they now invest their effort in their own brands, channeling direct traffic to their own websites and indirect traffic[from commercial partners] to specific rates on their booking engine.

As a result of this hybrid sales strategy, a remarkable figure emerged from web traffic statistics: 24%-27% of all bookings resulted from the hotel’s own commercial strategy. A 3-star hotel in Paris has an average 50 rooms sold at an average €100 a night [2006 figure], 365 nights per year. You do the math.

The same effect will occur on any business that pursues a marketing strategy using various communication channels. Sooner or later, advertising and word-of-mouth will get their names out and people will start Googling their names directly without using keywords.

Better margins, better brand recognition, better ROI… All of this through a fine-tuned marketing mix.

Getting your message heard over the noise

Internet marketers can make the costly mistake of focusing exclusively on their client’s websites and paid search campaigns (Adwords) instead of balancing the marketing mix to achieve repeated exposure across multiple channels.

People do not express themselves through only a few words. Human beings like diversity. Likewise, they will not buy exclusively from telemarketing campaigns, but will be prompted to look at a product/service offer through a variety of messages and channels.

In the opening chapter of his seminal work ‘The New Positioning’, marketing expert Jack Troutdepicts in a few numbers the reality of information overload:

  • More than 4,000 books are published around the world every day
  • More information has been produced in the last 30 years than in the previous 5,000
  • In 1975, there were 300 databases available online. In 1992, some 7,900.
  • A British child has been exposed to 140,000 TV commercials by age 18

These figures dates back from the early ’90s.

 

A study on child obesity published in 2007 reveals that in the United States, children’s exposure to TV commercials increased from 20,000 per year in 1970s, to 30,000 per year in the ’80s, to approximately 40,000 per year in the ’90s. [Children’s Exposure to Television Advertising: Implications for Childhood Obesity – Debra M. Desrochers, Debra J. Holt]

Yet, Jack Trout writes that memory research tends to show that you will forget up to 80% of what you thought you have learned.

Repeating your message over multiple channels is not a luxury if you want it to be heard and memorized.

Advertising irritation and psychological rejection

From another angle, a study published in 2006 by university researchers Mariko Morimoto andSusan Chang could give us a clue as to why postal mail is regaining some love in the hearts of US consumers versus e-mail.

  • Ad intrusiveness negatively impacts consumer attitudes towards the advertising medium. Participants found spam more intrusive than postal direct mail.
  • Consumers are likely to experience a higher level of advertising irritation from spam than direct mail.
  • As advertising irritation grows, attitudes towards the advertising technique become less favorable (whether spam or direct mail).

Prior to this study, Chang-Morimoto and the Pew Research Center had separately published other papers showing that spam irritates people because of task interruption, volume, repetitive nature of content, time spent deleting the unwanted messages, obscenity of content.

Numerous other studies published between 1979 and 2002 identified several potential factors capable of triggering advertising irritation: over-dramatized and contrived content [fake blogs and fake review sites are good examples of this today], frequent ad placement [intrusive banner ads], targeting of the wrong audience [think junk mail addressed to ‘current resident’], manipulative messages [Publisher’s Clearing House Sweepstakes, pre-approved credit card offers], excessive repetition within a short amount of time [banner ad retargeting can become annoying] and forced exposures [forced sign-up on an allegedly free offer].

The results of these studies highlight that you can’t bet the farm on a single type of advertising/marketing. As your favorite advertising medium intrudes in your prospects’ lives, their attitude is likely to grow negative towards the message carried by the medium if only because a degree of irritation is attached to the medium itself.

The key to a good strategic marketing plan is to set up a well-balanced diversified channel mix with media that are likely to produce the best ROI.

That’s good marketing wu shu.

Infographics

To summarize these conclusions, I prepared a new infographics with some of the useful numbers quoted in this article, and rules derived from 23 years of doing business as a small business owner.

SEO specialists, web agencies and resellers of LocalRanker can reproduce the non-branded version of this infographics and give it to their clients. (Copyright mention may not be removed.)

If you are a business owner, this data will help to make more informed decisions in your selection of advertising channels.

Setting up the right marketing mix ensures the reach of your product/service offer

Setting up the right marketing mix ensures
the reach of your product/service offer

Note: As a courtesy to me, if you use this infographics on your website, please attribute the copyright to www.localranker.com with a link.

 

To your success!

Phil Chavanne
LocalRanker