Online marketing goes hand in hand with offline marketing. Your marketing is as good as you establish the right mix for your business and clients. Research studies show why, and a few statistics 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!
An inevitable swingback
The swing away from a conventional marketing mix inevitably generated a swingback.
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 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.
Today in 2018, our local clients report that their email opening rates hover around 15%-21% when they have a loyal following (entertainment, restaurant, hospitality, niche retail industries). Trades (HVAC, electricians, plumbers, painters) report much lower figures.
Likewise, consumers learned to tune out on-site ad messages. Eye-tracking studiesdemonstrate how consumers successfully ignore ads: they focus their line-of-sight on the non-advertising sections of a web page and the rest is blurred out.
We observed the same self-preservation mechanism on Facebook where right-side ads have almost disappeared due to their total inefficiency. Moreover, Faebook being primarily viewed on smart phones, right-side ads have a much smaller audience than ads showing in the feed.
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.] The right-side ads have all but disappeared in Google too, to be replaced by top-of-page and bottom-of-page ads, and where local search results are displayed, one Adwords spot at the top of the “3-pack”.
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 study published in 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 [bad news for Nigerian scammers.]
This following graph shows the ‘trust gap’ between postal mail and e-mail for a variety of product/service categories.
One size does not fit all. Old school still works.
A more recent (2015) study of marketing communication channels shows that email still remains a channel of choice for U.S. consumers to receive promotions from businesses they do business with. This supports the idea that there is a normalization in the U.S. consumers’s preferences in terms of communication channels.
Strikingly, text messages have not taken over as predicted as a favorite communication channel. Only a minority of consumers prefer to receive text messages and the age groups surveyed are showing very different attitudes in this regards: Millenials and GenYers DO NOT want to receive promotional text messages, whereas Baby Boomers adopted the channel more widely.
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%.
A more recent (2014) survey published by Nielsen Catalina Solutions showed that radio may generate better ROIs than social media. This study showed that for every dollar invested, the sales lift of radio campaigns run by 10 brands was ranging from $1.38 to $23.21.
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.
Closer to home, a Google Adwords campaign ran for a Tucson-based HVAC company by a digital media company proved to have cost the business $1,000 per sale, over 5 times the average sales ticket on a first transaction. This unsustainable cost of client acquisition got the digital media agency fired, and the Adwords budget was partly reallocated to digital remarketing and direct mail, the latter channel having proven to generate solid returns.
The Google Guaranteed program
The 2018 game changer in online advertising could prove to be the Google Guaranteed program. Rolled out progressively on a nationwide scale from 2017 onwards, this program gives local trade professionals a top spot in the Google search results page with a rectangular box showing the name of the business, its reviews/stars, the “Google Guaranteed” badge and the business phone number.
Anecdotal evidence collected so far show that the cost of leads and the cost per sale of this program beat ALL other forms of online advertising. These ads are displayed very prominently, people trust Google, and Google guarantees the quality of the work up to $2,000 per incident. Participating vendors/trade pros are thoroughly vetted: all their technicians receive a full background check by Pinkerton (paid by Google) and the service reliability of the business has to be demonstrated.
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] and cash-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.
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].
These studies probably explain why text messaging has not become the magic bullet of digital advertising, as pundits expected several years ago. Mobile phones are so intimately connected to our lives, that we want to prevent marketers to gain intrusive access to the communication channel that is closest to our family and personal life. “Don’t hack my life.”
The results of these studies highlight that you can’t bet the farm on a single type of advertising/marketing.
The key to a strong strategic marketing plan is setting up a well-balanced diversified channel mix with media that generate the best ROI. We may have expectations of ROI but we have to measure results to validate them. No channel is necessarily the best: it depends on what you sell, when you sell it, and how effectively you sell it.
The best marketing mix is determined after measuring results and measurements have to be done on an on-going basis.
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