SiteTuner’s Tim Ash on How to Achieve Double- Digit Conversion Gains The Portfolio
ossu09_Cover.qxp:Layout 1 7/7/09 12:00 PM Page 1 ™ The Portfolio Approach A New PPC Strategy Customer Satisfaction The Key Performance Metric Innovative Marketing Tools That Don’t Cost a Dime SiteTuner’s Tim Ash on How to Achieve DoubleDigit Conversion Gains Permission_FP_su09.qxp:Layout 1 6/26/09 12:03 PM Page 2 I I I ~! 510 l!lJ INTERACTIVE C.II Bob Greenstone at 618 708-7.56 email: [email protected] # www.FreeVRandWe.co www.Permlsslonnterscllve.com Magazooms_FP_os09su.qxp:Layout 1 6/29/09 1:56 PM Page 993 Hydra_FP_0309.qxp:Layout 1 2/24/09 6:25 PM Page 41 tap into a neW stream of customers with online P J. Lool<.ing to acquire neW customers online? Hydra delivered over 19 million last year tor companies trom AARP, Gevalia, and Citibanl<. to pedipaws, ShamWow, and cash4Gold. Let uS put our expertise in online DR and access to hundreds ot millions ot consumers to worl<. tor you. You'll pay only tor results! try it free! Go to hydranetworl<..com/advertisers Or Call: 310-659-5755 Ext 2118 or m E-mail: into@hydranetworl<..co ro 2007-08 'JYdra (I ppco placed pg 51 5/24/05 3:25 PM Page 1 os09su_toc-ts.qxp:Layout 1 6/26/09 3:19 PM Page 2 Online Strategies Summer 2009 tableof CONTENTS FEATURES 24 The Third Pillar of Digital Direct Marketing 6 Proud of his Ignorance Anything but uneducated, Tim Ash’s talent isn’t in telling you what will move your customers to convert. It’s in letting your customers tell you themselves. By Tom Dellner The waiting game is over. Mobile marketing is not just a viable marketing channel—it’s well on its way to becoming an essential one. The time to embrace mobile is now and these six tactics are both proven and easy to implement. By Brian Deagan 12 An Ounce of Prevention A thorough review of any e-commerce website is essential to avoid a potentially nightmarish legal quagmire down the road. Here are the key issues your legal team should examine. By D. John Hendrickson, Esq. and Philip Rebentisch, CP. COLUMNS 3 Editor’s Perspective A Few Sterne Words By Tom Dellner 4 Speaker Spotlight Ken Burke By Kelli Tejada 16 Search Marketing: A Portfolio Approach ONLINE INSIGHTS Borrow a proven investment technique to help maintain your PPC campaign’s ROI in an increasingly competitive environment. By Allen Hammock 28 Innovation Drive Your Business With Innovative—And Low Cost— Marketing Tools By Adam Boyden 20 30 Data Security Tokenization Gains Traction By Gary Palgon The Ultimate Performance Metric A misunderstood and undervalued business measure, customer satisfaction can be used to predict customers’ likelihood to shop again, buy more or to remain loyal to your company in the future. By Larry Freed 32 E-mail Integrating Social Media By Jeanniey Mullen 34 Performance Measurement A Map for the New Frontier By Jascha Kaykas-Wolff 36 Viewpoint Is Search Retargeting for You? By Mark Simon 2 ONLINEstrategies | Summer 2009 Online Strategies | Summer 2009 Online Strategies magazine West Coast Office 1001 Avenida Pico, Suite #C 606 San Clemente, CA 92673 Phone: 949-489-5501 ERA BUSINESS OPERATIONS Executive Vice President of Media - Education Gina Mullins-Cohen [email protected] | Phone: 949-489-5501 Vice President of Creative Services Kim Lewis [email protected] | Phone: 951-277-8259 Director of Content Tom Dellner [email protected] | Phone: 949-240-1429 EDITORIAL Editorial Director Gina Mullins-Cohen [email protected] | Phone: 949-489-5501 Editor Tom Dellner [email protected] | Phone: 949-240-1429 Vice President of Creative Services Kim Lewis [email protected] | Phone: 951-277-8259 eMedia Editor Patrick Cauley [email protected] | Phone: 703-908-1030 Editor of Government Affairs Bill McClellan [email protected] | Phone: 703-908-1032 Editorial Intern Heather Fishel Contributing Writers Brian Deagan, Larry Freed, Allen Hammock, D. John Hendrickson, Esq., Philip Rebentisch, CP. Contributing Columnists Adam Boyden, Jascha KaykasWolff, Jeanniey Mullen, Gary Palgon, Mark Simon, Kelli Tejada ADVERTISING Publisher Gina Mullins-Cohen [email protected] | Phone: 949-489-5501 Associate Publisher/Operations Debbie Duhn [email protected] | Phone: 541-952-0300 Director of New Business Technologies Ruth Wheeler [email protected] | Phone: 949-459-0495 Advertising Sales & Sponsorship Manager Debbie Skerly [email protected] | Phone: 949-743-0319 ELECTRONIC RETAILING ASSOCIATION EXECUTIVE STAFF ERA President & Chief Executive Officer Julie J. Coons Executive Director, ERA Europe Marcel Avargues Executive Vice President Gina Mullins-Cohen Vice President of Finance & Administration Kevin L. Kelly Vice President of Creative Services Kim Lewis Vice President of Government Affairs Bill McClellan Vice President of Marketing David Martin Vice President of Membership Robin Greenspan EDITORIAL SUBMISSIONS Send press releases and other information to the editor. SUBSCRIPTIONS E-mail Ashley Cavell at [email protected] os09su_EdNote-td.qxp:Layout 1 6/26/09 1:39 PM Page 3 editor’s PERSPECTIVE TOM DELLNER A Few Sterne Words i I recently attended the eMetrics Marketing Optimization Summit in San Jose, Calif. The eMetrics events are perennially among my favorites of the many online marketing conferences. The topic areas are always fresh and thought-provoking, and the speakers are consistently industry leaders in their respective fields. I also get a kick out of the host of these events, Jim Sterne. Granted, that’s in large part because I enjoy his sense of humor and delivery, which is dry as a West Texas wind. But it’s also because of the perspective he brings to his presentations and to his conferences as a whole. Believe it or not, Sterne has been educating online marketers in events like these since 1995. He’s seen businesses—entire industries—rise and fall and heavily hyped new technologies gain traction or vanish without a trace. Perhaps as a result, he’s a realist— intellectually curious enough to be interested by any truly promising trend or technology, but pragmatic enough to see past the shine and gloss to discern whether a viable business application lies at the core. You’ll be sure to leave a Jim Sterne presentation with a few nuggets jotted down on the ubiquitous, conference center-supplied notepad. Here’s one I scribbled down in San Jose, regarding the application of analytics. “You don’t need to be precise; you need to be compelling.” In other words, if the numbers suggest an obvious business decision, don’t waste time figuring out the “why” to a scientific certainty—have the guts to be a change agent. Go to the decision maker and present your case passionately. (Sterne used an example of a retailer who noticed a hotbed of online shopping in a region where no brick-andmortar store existed and where there was little brand presence. They were essentially clueless as to why this phenomenon was occurring. But they did have the business sense to place a store [now, a very successful one] in the middle of this hot spot.) Here’s another one that’ll get you thinking: “In five years, your business will be utterly dependent on technology that doesn’t exist yet.” With that remark, Sterne introduced Rene Dechamps Otamendi. Otamendi, the Belgian CEO of NextStage Analytics, then described his company’s Evolution Technology. According to Otamendi, all humans have a sort-of “map” and subconscious rules they apply when making any decision. Evolution Technology identifies and reads our maps and rules as we navigate a website. This infor- He’s a realist—intellectually curious enough to be interested by any truly promising trend or technology, but pragmatic enough to see past the shine and gloss to discern whether a viable business application lies at the core. mation can then be used to dynamically rearrange the elements of an e-commerce site to conform to the individual, making navigation easier and presenting purchasing decisions in the way most likely to promote the desired outcome. Sound far-fetched? The technology has been proven to predict age and gender to 99 percent accuracy. The realist Sterne is a believer in the technology’s validity. So are executives from The World Bank, Mitre Corp., Bristol-Myers Squibb and HP. Stay tuned. We’ll take a harder look at the technology and its applications in the next issue of Online Strategies. Summer 2009 | ONLINEstrategies 3 os09su_SpeakerSpotlight-td.qxp:Layout 1 6/26/09 3:40 PM Page 4 SPEAKER SPOTLIGHT Integrated Marketing Campaigns and Online Selling: The One-Two Punch BY KELLI TEJADA t the Electronic Retailing Association’s 2009 D2C Convention at The Paris Hotel in Las Vegas, September 1315, Ken Burke, the chairman of MarketLive and author of “Intelligent Selling: The Art & Science of Selling Online,” will speak about effective strategies for out-maneuvering the economy with the one-two punch of effective marketing strategies and an intelligent e-commerce site that works hand in hand for retail success. Ken observes that retailers face the double-edge challenge of finding innovative ways to drive growth while holding the line on expenses, and asserts that merchants who continue to invest in their online channel will stay competitive now and in the future—without breaking the bank. MarketLive research shows that retailers who continue to innovate their online campaigns and storefronts are building more customer loyalty, driving revenue and weathering the economic storm more effectively. Investment in the online channel is key to success now and in the future. Shoppers are increasingly experienced—more than 30 percent have been shopping A Ken Burke Retailers that continue to innovate their online campaigns and storefronts are building loyalty, driving more revenue and weathering the economic storm more effectively. online for more than seven years—and their expectations for relevant, helpful shopping experiences continue to grow. This is especially true as they thoughtfully select products and brands and consider each purchase more carefully. Additionally, online sales continue to drive overall retail growth. Smart new strategies, technologies and marketing tools will help retailers win. The key to success is twofold. First, retailers must hone their marketing tactics with search strategies and effective campaigns that attract new shoppers and bring existing customers back again and again. Second, e-commerce sites must effectively merchandise products and lead the shopper through the path to purchase. In his speaking engagement, Ken will outline marketing tactics and simple onsite changes that will achieve this one-two punch. FIRST: ATTRACT NEW CUSTOMERS AND STRENGTHEN EXISTING RELATIONSHIPS Merchants are watching every campaign dollar they invest to ensure maximum ROI. E-mail marketing remains one of the most efficient tools available. Segmented, personalized e-mail has proven to increase sales as shoppers are presented with relevant offers that consider their preferences and buying behaviors. Any seg4 ONLINEstrategies | Summer 2009 os09su_SpeakerSpotlight-td.qxp:Layout 1 6/26/09 3:44 PM mentation is better than a “batch-and-blast” approach. MarketLive research shows that 78 percent of marketers use some sort of segmentation to deliver personalized offers—although it often still falls short because it lacks sophisticated targeting and messaging. Merchants that understand shopper behavior at a deeper level, and that can segment and target shoppers accordingly, achieve as much as 30 percent better returns than standard e-mail campaigns. Ken will explore tactics for personalizing the content and promotions in e-mail and tools that leverage customer profiles and purchase histories to dynamically serve appropriate offers. SECOND: POLISH THE SITE FOR INTELLIGENT SELLING Today, more than ever, retailers must prioritize site effectiveness and address known home- and product page weaknesses. Using proven on-site best practices, retailers can create shopping experiences that serve appropriate content, satisfy customers and start the customer down the path to purchase. Ken will explain how to leverage user feedback and analytics data to prioritize improvements and create “personalized” shopping experiences that drive sales. The product page is a crucial waypoint on the path to purchase; it’s where browsers become shoppers and commit to adding items to the cart. While many merchants leverage rich imaging, cross sells and “recently viewed” functionality, they often neglect the text on this critical page by failing to enhance it beyond printed catalog copy or manufacturers’ product descriptions. Application of best practices on the site, and content that bridges the shopper from the campaign to the product they’re interested in on the site can accelerate sales. Cart abandonment rates continue to hover above 50 percent—and shoppers are increasingly relentless in their search for bargains online. It’s more important than ever to be transparent about the total order cost. Ken will discuss the ideal, transparent shopping cart. For more detail on all these topics and the latest Intelligent Selling best practices and research from MarketLive, join Ken at the session: “Small Steps, Big Gains: Cost-Effective Steps for Big Revenue Gains,” at 10:00 on Sunday, September 13. For more information or to register for the ERA’s D2C Convention, visit www.d2cshow.org. Page 5 Online Strategies Goes Monthly! Online Strategies magazine will now be published 12 times each year. Each issue will deliver features and columns that outline the latest trends and best practices in all aspects of digital marketing, from SEM to mobile, social media, analytics and much more—all written by industry thought leaders. Go to www. online strategiesmag.com now to register for your FREE subscription. Don’t miss a single issue! SUNDAY, SEPTEMBER 13, 2009 10:00 a.m. - 11:00 a.m. Small Steps, Big Gains: CostEffective Steps for Big Revenue Gains Summer 2009 | ONLINEstrategies 5 6/25/09 5:17 PM Page 6 PHOTOS BY KIM LEWIS os09su_CoverStory-td2.qxp:Layout 1 os09su_CoverStory-td2.qxp:Layout 1 6/25/09 5:17 PM Page 7 Proud of His Ignorance Having earned an advanced degree studying neural networks and artificial intelligence, Tim Ash is anything but uneducated. Yet he speaks of being proud of what he doesn’t know about e-commerce. In fact, he’s often surprised at what moves consumers to action. But his talent isn’t explaining what your customers might respond to. It’s allowing your customers to tell you themselves. BY TOM DELLNER Chances are, if you’ve attended your fair share of online marketing conferences, you’ve seen a presentation by Tim Ash, president of SiteTuners, a leading testing and optimization company based in San Diego. And if you have, we bet you remember it well. The personable Ash isn’t you’re typical conference speaker. He’s engaging, blunt, funny and often controversial. He’s not afraid to bust a salsa-dancing move if it helps reinforce a point. He’s also perhaps the industry’s foremost authority on testing and optimization—a rapidly developing and absolutely crucial discipline. We sat down with Ash for a wide-ranging and fascinating conversation which covered the early days of online marketing, to tweaking sites to the tune of $48 million in added revenue—in a month!—and common e-commerce mistakes which might surprise you. Summer 2009 | ONLINEstrategies 7 os09su_CoverStory-td2.qxp:Layout 1 6/25/09 5:18 PM Page 8 coverSTORY Online Strategies: When did your interest in e-commerce develop? Tim Ash: Back in the early to mid’90s, when companies first thought about getting on the web, they talked about a web “presence” and a web “page.” Basically, they borrowed the copy used in their print communications, thinking of it as a passive representation or “calling card” on the web. I was always interested in trying to do more on the Internet. Together with my business partner Robyn Benonsohn, we launched a company called Future Focus (this was in 1995). It was a dotcom incubator. We helped companies raise money and were an acting CTO on their management team. But from the very start, our focus was always on function— on doing something, whether it was selling product or building some sort of web database application. We’ve always had a focus on e-commerce, on an actionable Internet strategy. least to the degree they should. There’s still a revolution that needs to occur with respect to how functional, useful and intuitive web interfaces are. OS: When did your interests turn to testing and optimization? Ash: As an undergraduate, I studied cognitive science and computer engineering. As a graduate student, I studied neural networks and artificial intelligence. So I’ve always had experimentation and scientific methodology in my blood. As far as the corporate odyssey, we did a lot of large-scale campaign management in the early days of pay per click. Again and again, we saw that the quality of the landing page was “gating” the OS: How difficult was it to get companies to appreciate the value of testing and optimization? OS: You were something of an ecommerce pioneer. Back then, did you and your peers anticipate the evolution of online marketing as it occurred? Which developments came as a surprise? Ash: The production quality improvements you could see coming—they are so immediately obvious and striking when you view a screen capture from the early days of e-commerce. The standard in 1995 was a plain page with text links. Then people started throwing in graphics. Next came animated images and we had those flashing smiley faces all over the place. It didn’t take too much imagination to foresee a day when rich media, video and the like would be commonplace. Unfortunately, what I had hoped to come to pass really hasn’t, and that’s a dramatic improvement in usability. Basically, we see people designing more for dramatic impact. Very few are taking the user into account, at 8 ONLINEstrategies | Summer 2009 results. Again, the scale of our programs was determined by the quality of the publishers’ landing pages. It was a painful lesson to learn, because it was money out of our pockets, but we saw that the bigger, more systemic problem—and business opportunity—lay in being able to improve the landing page. We did a quick state-of-the-state analysis and found that the testing tools being used were very rudimentary—allowing only for very small scale tests—and assumed that everything on the page was independent of everything else (which is patently absurd because we know that the elements on the page work together synergistically to affect conversion rates). So we went back to the drawing board and—over the course of several years—developed our tuning engine, which is at the core of what we now do today at SiteTuners. We have the attention span of a lit match and usually hit the back button when we are confronted by too much copy. size of the campaign. In other words, the efficiency of the landing page determined to a great extent how much money could be devoted to the search campaign (and how much money we earned). We eventually became a superaffiliate and started sending the traffic directly to clients and were paid on Ash: It was quite difficult at first. It’s easier to get your head around something more tactical, like controlling your traffic sources. Even something as complicated as pay per click is an understood field—you do your keyword research, you write your copy and you adjust your bids. Testing and optimization, by contrast, requires a lot of skill sets. Because people didn’t have all of the skill sets necessary, the field kind of languished. It’s always been something of an evangelistic sell. We’ll go out there and sort of cry in the wilderness. People hear us out and say, “Wow, that’s interesting. In theory,” and then go back to their offices and do nothing about it. OS: Today, are people beginning to appreciate the importance landing page optimization? Ash: Even now, the penetration of landing page testing is very low. A os09su_OIinnovate-td3.qxp:Layout 1 6/26/09 lengthy updates or coding. With just a couple of mouse clicks, MLB is able to update any element of the toolbar, which gets the word out about new products and offerings immediately. LET YOUR COMMUNITY SPEAK FOR YOU People trust other people. They trust their peers, and they also trust personal relationships. You want to encourage that dialogue instead of getting in the way. Some of the most successful online selling campaigns have spread virally, through word of mouth alone. Two examples of companies that let their communities speak for them are Craig’s List and Dell Computers. Craig Newmark, founder of Craig’s List, likens online reviewing and rating on his site as a civic act, not dissimilar to public service. You want your community to approach your business with this intent, as it generates goodwill and can lead to better customer service and better customer experiences. Consider a discussion forum, online community or blog where customers can speak not only to you, but also to each other. Dell is a good example of a company that once had a major image problem—it was known throughout the blogosphere as “Dell Hell.” The company learned—the hard way— that customers should be in control, and the best thing to do is to work with them and learn from them. By answering issues directly through forums and blogs (and, for Dell, Twitter has proven to be an effective platform), as well as working to improve the company based on feedback, Dell was able to regain control of its image. Today, the company has a number of blogs that allow for dialogue and feedback. THE CUSTOMER IS NUMBER ONE Your existing customers are your most 2:54 PM Page 29 precious assets. They are the easiest to market to and the most likely to buy. Your competitors can buy their way into your market by matching your pricing, copying your product and even imitating the look and feel of your brand. What they can’t buy are your relationships. Placing your customer above all else should be of para- their relationship marketing efforts. An example of successful relationship marketing is seen at Babystrology.com, which created a baby countdown widget. The pregnancy ticker is an addictive, constant reminder of the brand, and features special offers, new products and more. There have been nearly You shouldn’t have to spend an inordinate amount of time updating your marketing tools. They should be working for you. mount importance at all times. An excellent example in this regard is Travelocity and their newly launched custom toolbar for Firefox and Internet Explorer. This new toolbar allows customers to book flights, hotels and vacations at any time. This is aimed at current Travelocity customers. The toolbar is extremely convenient and opens a direct selling channel—right in the customer’s browser—for Travelocity. The special offers encourage travelers to interact more frequently with the Travelocity brand and to hopefully increase their travel arrangements with the company. RELATIONSHIP MARKETING Today’s customers are different than those you encountered in the past— even those from just a year ago. They expect more: more information, more choices and more convenience. Relationship marketing is the new approach, and there are a variety of methods available to increase your value to, and interaction with, customers. Make coupons and special products available exclusively on your websites, blogs or toolbars, host customer forums, syndicate your best content, offer “how-to” videos, deploy surveys and provide a direct link to customer service, among many other activities. Large and small organizations can learn to hone 630,000 installs of the widget, which links customers and users to the Babystrology online store. MAKE YOUR TOOLS REFLECT YOUR BRAND Every tool should look and function as an integrated element of your online marketing presence if you want it to help with conversion and retention. Without consistency, you run the risk of appearing disjointed, or worse, unrecognizable. Tools such as WidgetBox’s Blidget (www.widgetbox.com/make _blidget.jsp) allow you to do just that by giving users the opportunity to easily brand and control updates. Pioneered by WidgetBox, Blidgets are widgets built from a company’s own content (a “blog feed” plus a “widget” equals a “blidget”). Today, companies are able to turn all their content—from blogs, YouTube, Flickr, Twitter, Vimeo and more— into dynamic, customizable widgets. With some strategic planning, smart thinking and solid execution, small businesses can realize positive results throughout the coming year with only minimal investment. Adam Boyden is president of Conduit, a leading provider of website syndication solutions for web publishers. He can be reached at [email protected]. Summer 2009 | ONLINEstrategies 29 onlineINSIGHTS eros09s_OI_data_security-td2.qxp:Layout 1 6/26/09 2:44 PM Page 30 data security Tokenization Gains Traction BY GARY PALGON 30 ONLINEstrategies | Summer 2009 Protecting confidential customer information from theft and accidental loss is a critical business challenge for retailers, whether you sell your products in stores, online, via mail order, from a call center, or a combination thereof. Wherever payment card information is collected and stored, it is at risk. This applies equally to personally identifiable information (PII), whether it is customer loyalty information or employee data. No one in this industry needs to be reminded of the many highprofile, reputation-damaging and costly data breaches that retailers have suffered in just the past few years. We’ve seen state breach notification laws and international privacy laws enacted, as well as industry mandates such as the Payment Card Industry’s Data Security Standard (PCI DSS). Most large retailers and many smaller ones have adopted some form of data encryption to protect the payment card numbers entrusted to them. While there is no question that data encryption—when combined with data security best practices—is effective for protecting sensitive data and for complying with PCI DSS, the encrypted data remains in the applications and databases. Any system that contains this encrypted data is a point of risk and, therefore, considered “in scope” for PCI DSS compliance and annual audits. Moreover, as retailers seek security for more diverse types of confidential information such as social security numbers for employees, commercial driver’s license numbers for company driv- ers, as well as passwords and other sensitive data, data encryption becomes more complex and resource intensive. Another challenge is that encrypted data takes up more space than unencrypted data. Many forms of PII contain many more characters than a 16-digit credit card number—all of which can pose a “square peg into a round hole” storage problem with consequences that ripple through the business applications that use the data. Retailers must often contract for costly modifications to existing applications and databases. To reduce the points of risk as well as the scope of PCI DSS audits and to provide another level of security, a new data security model—tokenization—is gaining traction with retailers. WHAT IS TOKENIZATION? Tokenization is an alternative data protection architecture that is ideal for some retailers’ requirements. It reduces the number of points where sensitive data is stored within an enterprise, making it easier to manage and more secure. The newest form creates a token—or surrogate value—that represents and fits precisely in place of the original data (instead of the larger amount of storage required by encrypted data). Additionally, to maintain some of the business context of the original value, certain portions of the credit card can be retained within the token. The encrypted data the token represents is then locked in a central data vault and protected by encryption keys. Because tokens are not mathematically derived from the original data, they are arguably safer than encrypted values. A token can be passed around the network between applications, databases and business processes safely, all while leaving the encrypted data it represents securely stored in a central repository. Authorized applications that need access to encrypt- eros09s_OI_data_security-td2.qxp:Layout 1 ed data can only retrieve it using a token issued from a token server, providing an extra layer of protection and preserving storage space. One large retailer recently performed an internal audit and discovered credit card information stored in more than 200 places. Even with a strong encryption and key management solution and excellent internal procedures, this was unmanageable and an unacceptable level of risk. The company first deleted credit card information from places where it wasn’t truly needed. The next step was to reduce the number of instances of the information to four encrypted “data silos” and substitute tokens for the credit card information in the remaining locations. This created a highly manageable architecture and reduced the risk of breach dramatically. DATA ANALYSIS: BUSINESS AS USUAL Referential integrity can introduce problems where various applications (e.g., loss prevention, merchandise returns, data warehouses) and databases use the sensitive data values as foreign keys for joining tables to run queries and perform data analysis. When the sensitive fields are encrypted, they often impede these operations since, by definition, encryption algorithms generate random encrypted values. While there are methods to remove the “randomization,” there are risks involved. A consistent, format-sensitive token eliminates this issue. It also reduces the number of employees who can access sensitive data to minimize internal data theft risk. Under the tokenization model, only highly authorized employees have access to encrypted customer information—and even fewer have access to the unencrypted data. REDUCING AUDIT SCOPE When you undergo a PCI DSS audit, 6/26/09 2:45 PM Page 31 all of the systems, applications and processes that maintain or have access to credit card information are considered “in scope.” However, if you substitute tokens for the credit card information and the systems, applications and processes never require access to the token’s underlying value, they are taken “out of scope” and do not need to comply with the PCI DSS requirements. IS TOKENIZATION FOR YOU? Tokenization, for all its benefits, is not a silver bullet for every retailer. Is it right for your company? For many, the best solution is a hybrid approach: a combination of localized encryption, centralized tokenization and data security best practices. Tokenization is worth considering if your company: • Wants to avoid costly modifications to applications and databases to store encrypted data. • Conducts trans-border business. Retailers who do business in Europe must obey European privacy laws, which prohibit certain employee and consumer information such as social insurance numbers from being electronically transferred across international borders without express written consent. Because tokens can be transmitted in place of confidential information and referential integrity is preserved, application development, testing and data analysis can be conducted on information collected in other countries while complying with international law. Tokenization reduces the scope Tokenization reduces the scope both of risk and data storage requirements, while maintaining referential integrity and streamlining the auditing process for regulatory compliance. • Collects and stores large volumes of structured data (e.g., credit card numbers and PII such as social security numbers, customer buying habit information, salary records, etc.). • Has a fully interconnected IT environment, whereby systems with confidential information are connected to a central application and data vault. Centralized tokenization doesn’t work in a disconnected environment; localized encryption or “in-place tokenization” works well in those systems. • Wants to reduce points of risk and make compliance with PCI DSS easier and less costly. Tokenization reduces the points of risk by removing encrypted data from applications and databases throughout the enterprise, thereby taking those systems out of scope for compliance and audits. both of risk and data storage requirements, while maintaining referential integrity and streamlining the auditing process for regulatory compliance. The higher the volume of data and the more types of sensitive data you collect, the more valuable tokenization becomes. Fortunately, incorporating tokenization requires little more than adding a token server and central data vault. For retailers with a combination of disconnected and interconnected data entry systems, incorporating local encryption and tokenization with centralized encryption key management will provide the best protection. Gary Palgon is vice president of product management for data protection software vendor nuBridges, Inc. He can be reached at gpalgon@ nubridges.com. Summer 2009 | ONLINEstrategies 31 onlineINSIGHTS eros09s_OI_email_mktg-td2.qxp:Layout 1 6/26/09 10:05 AM Page 32 e-mail marketing Integrating E-Mail and Social Media BY JEANNIEY MULLEN 32 ONLINEstrategies | Summer 2009 In 2009, e-mail marketing entails much more than sending a message out to a list. From mastering the art of deliverability, the science of creative imagery and design and the basic strategy for messaging frequency, e-mail marketing is anything but simple. In addition to the tactical elements that each successful e-mail marketer is required to master, we are now challenged with merging consumers’ increasingly “on demand” daily media consumption habits into our strategic approaches. Less than 60 percent of people read their e-mail messages exclusively on a laptop or PC. Digital devices like the BlackBerry, iPhone and other wifi-enabled products provide consumers immediate access 24/7. Scanning, accessing and taking action on e-mail marketing messages has never been easier, faster and more convenient. This means that the conversation surrounding electronic messages we receive has increased. With social networking tools like Facebook and Twitter, consumers can simply and quickly share offers and insights, conversing about brands they love or hate. A NEW CHALLENGE With the ease and increase in conversation comes a new challenge related to capturing the focus and attention of the reader. Instead of being able to present your company’s story, offer or information to a per- Today, your message must stand out and be successfully processed within milliseconds of viewership. son who is focused on nothing else expect your message, mobility often means that emails are scanned and processed with less than 35 percent of the full attention they deserve. This means your message must stand out and be successfully processed within milliseconds of viewership. It also means that your e-mail marketing efforts must evolve. No longer can you rely on your email message to carry your product offering the entire way. The effectiveness of a single e-mail as a sales vehicle, lead generator and interest driver are reducing. They are giving way to other forms of mass influence. The interesting thing about e-mail’s loss of influence is that it is not giving way to one other single channel, such as a social eros09s_OI_email_mktg-td2.qxp:Layout 1 site or search, but instead it is becoming part of an array of influencing factors a digital consumer will rely on to make a purchase or take an action. BEST PRACTICES In 2009, we see four critical areas inside e-mail marketing that you can adapt, adopt and employ to ensure you are on the right track. These four areas of influence include: Identifying social influencers on your e-mail marketing list; Designing e-mails that work; 1 2 3 4 Creating integrated messages to maximize response; and Preparing for the increasing mobility of e-mail access. Social influencers have comprised an area that has seen extremely rapid growth, even within the last 90 days. If you haven’t started thinking about putting Twitter and Facebook links in your e-mails or integrating your efforts, you could be missing out. Most company lists are divided into segments such as best customers (high purchasers, high-dollar buyers or even long-time consumers), worst customers (people on the verge of being removed from the list due to non-response), new customers (who often went through a 60- to 90-day on-boarding process to determine what other categories they would fall into) and unsubscribes (people who used to be on your list, but aren’t anymore). Across these categories, many subcategories and variations of messaging are being sent out. Best customers often receive exclusive pre-sale notices or are asked to “refer a friend.” New customers are often sent surveys and other educational messages to help increase brand strength. Understanding the impact of social media on our targeted e-mail campaigns opens up an entirely new set of segments to leverage. Consider how you can split your list, not 6/26/09 10:05 AM Page 33 according to dollars customers individually spend, but rather to the collective dollars they influence others social efforts perform, you’ll be excited to try more. You might even get addicted to it! Integrating social Consider how you can split your list, not according to dollars consumers individually spend, but rather to the amount they influence others to spend on top of their own. to spend on top of their own. In the past, those people who responded marginally or not at all to your messaging were typically the people you would consider removing from your list. Today, though, those people may not individually respond, but might tell others about your offer, news or sale. These people could very well become your best ambassadors and drive sales. Once you start seeing how your media and e-mail will ultimately help improve the strength of your company’s brand, and drive revenue and your social buzz on the web. Jeanniey Mullen is an accomplished digital marketer and the executive director of the E-Mail Experience Council. She is advocates for and drives change that redefines various marketing channels. She can be reached at [email protected]. Summer 2009 | ONLINEstrategies 33 onlineINSIGHTS os09su_oi_measurement-td2.qxp:Layout 1 6/29/09 11:38 AM Page 34 performance measurement A Map for the New Frontier BY JASCHA KAYKAS-WOLFF We are currently on the edge of a new frontier that holds the promise of entirely new data sets. This data is ripe for analyzing, but as with many expeditions that venture into uncharted territory, inexperience and lack of preparation can lead to costly failures. One thing is certain—a successful expedition, like a successful corporate marketing program, requires an understanding of where you are now and where you ultimately want to be, and a roadmap outlining the best possible way to get there. Pioneer analogies aside, 2009 may well go down in history as the year that digital supplanted offline media as the driving force behind corporate marketing programs and business media. A recent study by the Chief Marketing Officer Council found that spending on online and on Web 2.0 initiatives aimed at demand generation and advertising The creation of the DM3 introduces a benchmark for an organization’s digital marketing measurement and optimization capabilities that goes far beyond mere web analytics. will exceed traditional media by almost 50 percent in 2009. These findings are not surprising given the extraordinary growth rate that social networks and online communities are experiencing. So what does all this mean for the marketing community? Online marketing continues to grow and mature, and organizations need a structured approach to build and maintain mature measurement programs across all types of digital marketing activities. This structured approach has been non-existent in the web analytics industry, which fueled the Webtrends’ Digital Marketing Optimization team to develop a model, based on more than a decade of experience working with leading companies and brands such as Microsoft, Coca Cola, Disney and General Mills to build successful measurement programs. ENTER THE DM3 The creation of the Digital Marketing Maturity Model (DM3) introduces a benchmark for an organization’s digital marketing measurement and optimization capabilities that goes beyond mere web analytics. DM3 provides a framework and objective criteria for assessing the strategies, skills, tools and best practices that support the successful measurement of all digital marketing activities. Until now, other web analytics 34 ONLINEstrategies | Summer 2009 os09su_oi_measurement-td2.qxp:Layout 1 models have focused exclusively on website measurement, whereas the goal behind the DM3 is to help build consensus around the essential ingredients of effective digital marketing measurement, which include the new online communities that incorporate the entire “social” web. If online marketing is to continue to grow and mature, the web analytics industry needs a standardized, structured approach like what has been proposed with DM3. In order to have assurance that an organization is getting the most return on its digital marketing dollars, a model needs to be put in place to objectively assess current capabilities and map out future growth. With DM3, organizations are given a standardized approach to help gauge their capabilities to execute and measure the effectiveness of their digital marketing campaigns. The benefits of DM3 are threefold, allowing a company to: Measure the maturity of an organization’s ability to execute and measure digital marketing programs across six core areas (below you will find more detail regarding the six core areas); Gain organizational consensus and support for measurement practices; and Pinpoint the skills, staffing and other investments needed to advance within the model’s four maturity levels. Going back to the six core area mentioned above, DM3 provides a framework that includes four levels of maturity within each of the six core areas that works to assess a company’s digital marketing maturity, referred to as “Six Pillars of Digital Measurement.” The core areas help to define the level of maturity on a ranking of 1 to 4, given the various profiles outlined in each level that describe the measurement practices common to each. The six core areas include: • Measurement strategy; • Analytics resources and domain expertise; 6/29/09 11:39 AM Page 35 • Data integration and visualization; • Data analysis and insight; • Adoption and governance; and • Ongoing optimization The first pillar, measurement strategy, should be considered the most important. In order to ensure that all digital marketing activities contribute to the organization’s bottom line, there needs to be a formal measurement strategy in place that aligns properly to the overall business objectives. Given the current micro-economic environment that marketing departments are dealing with, alignment of the measurement strategy can work to demonstrate the value of digital measurement to executive management, while justifying budget and resources to decision makers, as well. Analytics resources and domain expertise stress the importance of having a team in place to help effectively run a digital marketing campaign. It’s people that will determine the success of a digital marketing analytics program, and the number of people and resources dedicated to that effort will ultimately affect the results. Data integration and visualization also play an important role, as the ability to marry multiple sources of data will create a more complete picture of an organization’s customers and busi- tion that organizations can use to drive smarter marketing and business decisions. Finally, there is a need for adoption and governance. Without set rules in place to ensure consistency and quality over time, digital marketing data has little value. Training is essential, and having the right people aligned to sift through the organization structure will create a more defined process for managing various aspects of digital marketing programs. Ultimately, even with the most sophisticated or automated tools, effective digital marketing measurement is anything but a plug-and-play task. It requires significant planning and organizational coordination. Additionally, different types of vertical industries use digital marketing in a variety of ways to achieve different business goals. Having said this, it’s important to keep in mind that digital marketing maturity looks different for different types of organizations, and is rarely achieved overnight. The more knowledge and understanding you have of your goals and the journey you’re embarking upon with your digital marketing campaign, the better prepared and more prosperous you will be when venturing into that new frontier. A successful expedition, like a successful corporate marketing program, requires an understanding of where you are now and where you ultimately want to be. ness. Combined with a visualized approach to organizing this data, your digital marketing will be able to better meet the needs of different groups throughout your organization with a more universal form of presentation. Because different types of data require different types of analysis skills, focus on data analysis and insight is essential for turning webbased data into actionable informa- For more information, and to provide feedback on the beta version of DM3, visit www.webtrends.com/ Services/Digital-MarketingMaturity -Model.aspx. Jascha Kaykas-Wolff is vice president of marketing for Webtrends, a web analytics company headquartered in Portland, Ore. He can be reached at [email protected]. Summer 2009 | ONLINEstrategies 35 ossu09_OIviewpoint-td2.qxp:Layout 1 viewpoint BY MARK SIMON 36 6/26/09 3:33 PM Page 36 Is Search Retargeting For You? Paid search marketing is now the benchmark for efficiency and effectiveness in online marketing. Even in a poor economy, search spend hasn’t dramatically declined (although bullish growth projections have been moderated). However, it has one fundamental flaw. Put simply, the unit for which advertisers pay (the click) isn’t what advertisers really want to buy (which is, of course, the conversion). Furthermore, no two clicks have the same value. Some may have great value, but the majority of clicks don’t result in conversions. This waste is something we’ve all learned to live with; we devote much of our day-to-day efforts to keep it within reasonable ranges. Search engines have given us tools to minimize this waste: geo-targeting, dayparting, and—to a limited extent—demo- The gap between clickers and buyers is narrowing, and one great way to close this gap is search retargeting. graphic targeting. Correct use of such technologies does reduce e-tailers’ exposure to clicks with little conversion potential. Additionally, SEM agencies have developed proprietary software that couples ROI (or other meaningful success metrics) to spend levels, continuously adjusting campaign parameters to optimize conversion rates. But determining—in advance—which clicks are worth bidding high for is still a maddeningly difficult task. We lack the “holy grail” enjoyed by offline marketers who target their DM campaigns to lists of ONLINEstrategies | Summer 2009 qualified purchasers. The good news is that the gap between clickers and buyers in the online world is narrowing, and one great way to close this gap is search retargeting. Search retargeting uses search query data to establish a user profile against which to target customized ads, which run across third-party (non-search) sites. This allows advertisers to apply the technology against much larger traffic streams. The real payoff for advertisers comes with the increased conversion rates associated with such retargeting, making their non-search ad targeting far more efficient than contextual targeting, and (according to early anecdotal tests), as cost-efficient as search itself. Of the “big three” search engines, Yahoo has been the most aggressive in terms of offering search retargeting, and recently announced a major new service called Yahoo Search Retargeting, which uses search query data to retarget display ads through sites in the Yahoo network. Because of search retargeting’s upside potential, third-party agencies and ad networks have also entered the search retargeting game, and you should familiarize yourselves with solutions from companies like Advertising.com and Audience Science (formerly Revenue Science). My own firm, Didit, has recently rolled out a product called Blizzard which incorporates retargeting. These new solutions go a long way toward reducing—and hopefully someday eliminating—the divides separating clickers, searchers (who you may or may not want to reach, depending on the price) and buyers (who you almost always want to reach, even if you must pay handsomely for the privilege). Mark Simon is VP, industry relations at Didit, a digital advertising agency specializing in paid search. He can be reached at [email protected]. os09su_CoverStory-td2.qxp:Layout 1 6/25/09 recent study I came across showed that for every $80 spent in driving traffic, one dollar is spent on optimizing the pages on which that traffic lands. However, there was a real gamechanging moment a few years ago when Google launched their free optimization tool, Google Website Optimizer (GWO). It allows people to do both A/B split and multivariate testing. It’s been a huge boon, having Google’s momentum and stamp of approval behind it. It’s a fantastic tool and it’s raised awareness in addition to giving companies the means to do testing. OS: Does the existence of a free tool from a company as powerful as Google help or hurt your business? Ash: It absolutely helps. The problem was that people weren’t doing testing. The free tool has removed the biggest impediment keeping companies from doing it. In addition to being free, it’s very easy to get up and running, unlike some other tools. But just having the tool doesn’t mean you can make effective use of it; if I give you a hammer, it doesn’t mean you can build a house. You still need someone with extensive testing experience, with proven ideas about what to test, how to set up the test and avoid some of the practical “gotchas” regarding the type of traffic sources you’re driving to it and other real-world factors that can impact the accuracy of the results. That’s where we come in. OS: And you also have your own tuning engine. How does it differ from other testing tools? Ash: We created it, not because we like building software, but because of a variety of needs. There are several limitations that exit with the first-generation tools out there. The first is test size. Because of the math they’re using, you’re forced to use fewer of your ideas in the test. For example, you can only run, say, three headlines, 5:18 PM Page 9 More About Tim Ash im Ash was born in Russia, immigrating to the U.S. with his family in the early 1970s when he was seven years old. He lived in Albany, N.Y., Ann Arbor, Mich., and Cherry Hill, N.J., before moving to California to attend the University of California at San Diego on a regent scholarship. At UCSD, Ash studied cognitive science and computer engineering. As a graduate student (also at UCSD) he studied neural networks and artificial intelligence. Upon graduation, he worked in a number of high-tech roles, all related to programming and machine learning, until he was bitten by the entrepreneurial bug. He started his own company—Future Focus—15 years ago, and is still riding the entrepreneurial roller coaster today. Future Focus was an Internet business incubator, helping to launch early-stage dotcom companies and developing some of the first database-enabled web applications with clients such as CompUSA and American Express. Future Focus went up—and down—with the dotcom wave. As Ash surveyed the wreckage of the company after the dotcom crash, he decided the next venture had to focus on something accountable. He then started Epic Sky eight years ago (now the parent company of SiteTuners) which managed (and still manages) large-scale PPC campaigns. But this discipline has become largely commoditized, in Ash’s view. To remain relevant in a fast-moving business such as e-commerce, he believes vendors need to keep swimming upstream to the more difficult stuff that is less commonly understood. He now sees the battleground as landing page testing, and started SiteTuners five years ago. His career has come full circle, though. Ash has finally found a place where he can match his personal skills—being an entrepreneur, leader and visionary—with the subject matter that he loves: math, statistics and the psychology of human decision-making. T so you are forced to self-censor and leave what might be winning ideas out of the test. (If you knew which headlines to leave out, you wouldn’t need to be doing testing in the first place.) Also, context and juxtaposition are important. For example, certain pictures next to certain copy might produce a poor result, but if they were assembled in the right combination, they might have spectacular results. Our tool permits large-scale tests, considers context and juxtaposition and is fully automated—you push a button and get an answer. You aren’t required to apply statistics or make any judgment calls; you simply get the bestperforming version and how it performs statistically against the original. OS: There are so many areas on a site you could test. When working with a client, how do you know where to start? Ash: Let’s take the common example of a retailer who sells a catalog of products. Typically, these sites have a homepage, a category page, a search results page, product detail, the shopping cart and the various steps in check-out. So it’s really only a few different page templates. We’ll assess which are the most flawed and which have the most value. For instance, you might have some people landing on your homepage, but because of your direct-linking efforts, most of your traffic is actually hitting your product detail page. So we would focus our efforts there: from the product detail all the way on down through check-out, because almost all of the traffic has to go through that route. (We find that most check-out pages are dramatically sub-optimal, by the way.) And we will usually start by making local changes on a single page versus global changes to a page shell Summer 2009 | ONLINEstrategies 9 os09su_CoverStory-td2.qxp:Layout 1 6/29/09 11:22 AM Page 10 coverSTORY and layout—that would be a pretty major undertaking as an initial test. OS: What are some common mistakes that you see? Ash: Clutter and overload of information—we see this all the time. Too much text on a page. We don’t read on the web; we have the attention span of a lit match and usually hit the back button when we are confronted by too much copy. Inappropriate use of eyecatching graphics is another common mistake, graphics that don’t support the conversion goal. If the goal is to have someone click on a button and you have an animation or a picture of a person on another part of the page, I guarantee that the customer’s attention is not going to be on the button. Ultimately, we often find that the versions that perform best are relatively stripped-down. It’s a page where the eye can rest, where there’s a clear set of decisions with a limited number of choices that can be made and where people are guided naturally (not by something shouting above the rest of the visual din) to focus on the right parts of the page. OS: Any other common mistakes? Ash: Giving the customer too many choices on a page. Copy in paragraph form rather than in bullet points with a clear call to action. While there’s strong evidence that certain features like walkon video spokespeople can be very powerful, as a general rule, rich media with motion should be used with caution. Long forms can be a huge hurdle, too; never ask for more information than necessary to complete a transaction. And finally, you need to tie the content to what happened upstream, what drove the traffic in the first place. You need to meet their expectations and keep the promises you made upstream. But usually, we find that there’s not We had a recent test that ran for three or four weeks and resulted in $48 million in additional revenue to the client. results clients can expect, in terms of conversion improvement and bottom-line results? Ash: Let’s put it this way. The three main activities of an e-commerce operation are acquisition (through search or display advertising), conversion and retention or maximizing a customer’s lifetime value (through email). The first and last activities are pretty well understood and the best practices are fairly mature. You would be hard-pressed to increase cost-effective traffic by 50 percent or increase the average customer’s lifetime value by 50 percent. But we consistently get double- and even triple-digit increases in conversion, from 20 percent on the low end to well over 100 percent. It’s easy to calculate the financial impact of a test, as well. You take the percentage by which conversion is improved and apply it to the revenue value that runs through the page. Single tests can have a value of hundreds of thousands or millions of dollars. We had a recent test that ran for three or four weeks and resulted in $48 million in additional revenue to the client. OS: Is there a risk of losing brand image with such a plain page? OS: How do you see testing and optimization evolving over the next few years? Ash: It’s about business objectives. Do you want the visual impression or do you want the conversion? Of course, it doesn’t have to be so cut and dried. You can have multiple goals. We’ll weigh each goal and place our emphasis accordingly. You may want certain content on one part of the page specifically designed with more of a branding goal in mind— and we can measure its success—and have the rest of the page furthering a conversion goal. Also, one must not confuse simplicity with cheapness. A page can be optimized, very uncluttered, but with outstanding production quality that enhances the brand image. Ash: First, I see it becoming a dedicated practice area within companies, just as SEM is today. People will learn that testing is not optional. If you put up content that has value running through it and you haven’t optimized it, you will be shut out of the game by people that do. Also, the tools will become more sophisticated. There will be more and more automation until we get to a point where there is no start or end point to a test. You’ll be able to throw in ideas on the fly, which will be implemented—or not—in the way that maximizes conversion. The optimization tool will simply be built in to your platform and run constantly and automatically. 10 ONLINEstrategies | Summer 2009 one mistake that is the source of the problem. Landing pages are often death by a thousand cuts. It’s tweaking numerous elements in the same direction to achieve a more integrated design that produces significant results. OS: How significant are the eros09s_mobile-td2.qxp:Layout 1 6/26/09 stores and an online presence have myriad mobile tactics available that are more tailored to their business model. Some effective mobile programs for these hybrid retailers are targeted at a segment of the mobile consumer market that prefers to shop online and buy in store. Rather than executing digital marketing programs and tactics designed to circumvent customer shopping preferences, effective mobile marketing takes advantage of current shopping habits. Here are some examples. SENDING THE SHOPPING CART TO A MOBILE DEVICE M-commerce (making an actual purchase from a mobile device) has not reached mass consumer adoption yet. In fact, a significant segment of consumers still shy away from making purchases online, even though they spend a great deal of time researching their purchase before going to a store to “kick the tires” and buy. Marketers have long been seeking a way to measure this elusive segment of consumers, and allowing online browsers to build a shopping cart and send it to their mobile device is one way to connect the dots. Clothing retailers are in an especially advantageous position here. A shopper can go online and choose color, style and size for the clothes they want, place them in their shopping cart, then send that cart to their mobile device. Once in-store, a clerk can easily help the shopper find the clothes they picked out because the shopping cart includes important information like SKUs. SENDING COUPONS TO A MOBILE DEVICE Many consumers research big-ticket items, like appliances, online before purchasing in store. Rather than providing these consumers with aggressive offers to entice them to purchase exclusively online, it’s easy to use the mobile channel to give 2:30 PM Page 27 them a coupon offer they can use in the store. Present the coupon online during the research process and allow the shopper to forward the coupon to their mobile device. The coupon can include a quick response code for easy scan and redemption, or it can include a personalized coupon number to track redemption. Both redemption methods are effective and help you create more enticing future offers for a specific segment of buyer. STORE-FOCUSED MOBILE ALERTS The previous hybrid retailer mobile tactics are examples of companies giving control over the timing of a purchase to the consumer. While It is easier to get these tactical mobile programs started now than it was 12 or 18 months ago. However, there is a time investment required to get mobile marketing programs up and running. In addition to the time needed to provision a short code, every mobile program must be approved by the mobile carriers before it can be executed on their respective networks. E-commerce or hybrid retailers seeking to expand their direct digital marketing strategy to include mobile marketing must find a good partner who has solid relationships with the U.S. Common Short Code Administration (CSCA) and a carrier aggregator to ensure a program is approved as rapidly as the system allows. Effective mobile programs for hybrid retailers are targeted at a segment of the mobile consumer market that prefers to shop online and buy in store. Rather than circumventing customer shopping preferences, effective mobile marketing takes advantage of current shopping habits. effective, there are times when store traffic is unexpectedly light or when monthly forecasts are bleak. A mobile alert sent by a store manager to a segment of local customers is a useful method for creating foot traffic that moves inventory within a tight time-frame. The corporate entity can tightly control content and frequency by giving store managers the option of choosing from several pre-approved campaigns, or store managers can devise their own campaign and tailor it to their specific markets with light corporate governance. The right mobile marketing partner is able to execute either program type and provide measurable results that continually improve sales. Mobile marketing is sensible because the investment in creative, overhead and technology infrastructure is relatively low while the benefit of increased measurable sales and enhanced consumer loyalty are substantial. Though getting a program in market does initially take time, the benefit and value of opening an additional communications channel with willing consumers is important, and the business value is being realized more quickly than ever before. Brian Deagan is the co-founder and CEO of Knotice, a direct digital marketing solutions company. You can reach Deagan at [email protected]. Summer 2009 | ONLINEstrategies 27 onlineINSIGHTS os09su_OIinnovate-td3.qxp:Layout 1 6/29/09 11:39 AM Page 28 innovation Drive Revenue With Innovative, Low Cost Marketing Tools BY ADAM BOYDEN Despite reports of the continued recession, small business innovation, along with smart thinking and entrepreneurial spirit, can continue to drive business forward. In fact, small businesses can take advantage of this economic climate by using it as an opportunity to assess the effectiveness of their marketing campaigns, and to adopt new strategies as needed. Many small businesses and would-be entrepreneurs know this, but aren’t sure how to begin. Here are six tips to adapt your business to the new reality and to continue to thrive, not just survive. DON’T PAY FOR YOUR MARKETING TOOLS Developing custom applications for your business can be expensive, time consuming and redundant. Often, a tool that will meet your needs is already available. Whether it is for customizable landing pages, toolbars, ad campaigns or other applications, most are available for a low cost or are free and on-demand. The best offerings will have a point-and-click wizard that guides you through the installation and development process. With a little research, you can find tools that are well-suited for your business. Three popular examples are Facebook, 28 ONLINEstrategies | Summer 2009 Twitter and Ping.fm. By setting up a Facebook group or fanpage, you can promote brand presence while sharing news and events with the group members and offering a place for discussion. Mashable has a great resource to help you determine whether a fanpage or group is right for you (www.mashable.com/2009/05/ 27/facebook-page-vs-group). Twitter has to be included in any mention of free marketing tools these days. For some organizations, Twitter is a great opportunity to have one-to-one conversations with followers that might be interested in what the company is offering. It’s also a means to publicize specials or promotions and drive people to a company website, blog or another online presence. Companies like Comcast (twitter.com/comcastcares) and Constant Contact (twitter.com/ctcthelp) are getting great results from it. Ping.fm is an excellent tool for managing the updates on more than 40 social networks simultaneously. Working with sites such as Facebook, Mashable, Flickr, Tumblr and others, Ping.fm saves you time and energy. And, best of all, it’s free. FIND TOOLS THAT ARE EASY TO USE You shouldn’t have to spend an inordinate amount of time updating your marketing tools. They should be working for you, not the other way around. Particularly useful if you are offering a promotion, coupons, discounts or other incentives, these tools can get the word out quickly and painlessly. For example, Major League Baseball (www.mlb.com) has a community toolbar from which it sells seats and promotional items. MLB’s promotions update in real time, so that an administrator is not bogged down in os09su_CoverStory-td2.qxp:Layout 1 6/25/09 5:19 PM Page 11 Rich Media and Conversion igger data pipes into our homes and businesses have made highbandwidth video, animation and interactive applications possible within our web browser. Video producers, animators and game designers are rushing in to take advantage of this seemingly enormous and profitable opportunity. More is better—right? Not necessarily. Undoubtedly, rich media will lead to better, more immersive experiences for some entertainment-related online activities. But is it right for online marketing? Just as the supersizing of our fast-food meals can lead to all sorts of health problems, excess in online marketing can often have deleterious effects, as well. Several factors need to be considered: Expense – Although authoring tools are improving and becoming less expensive, finding the right people to create and modify your rich media content can still be a challenge. There is a high bar in place in terms of people’s expectations of quality. Plan on spending substantially more money to create and future-proof your rich media assets against the emergence of higher-quality standards. Attention diversion – In the landing page optimization testing that we’ve conducted, we carefully try to balance all of the visual elements of the landing page in order to focus awareness and attention on the critical conversion ele- B ments. Often, this requires a toning down of visual clutter on the page so the call to action naturally and organically arises out of the relative stillness. Unfortunately, many uses of rich media do not consider this. In fact, they often go in the opposite direction, figuratively and literally screaming for attention, trying to out-compete the rest of the page elements. Motion, contrast, audio and prominent page placement can easily conspire to steal precious attention away from the call to action. Particular care needs to be paid to the auto-playing of video or audio. The use of walk-on video spokespeople tends to have either an extremely positive or negative effect on conversion often requires the latest versions of specialized browser plug-ins, and results in an extremely unfriendly and bewildering experience for those who do not have them installed. Immature design sensibilities – Much of the rich media being created today is similar to the early days of other new media. Think back to some of the synthesizer-heavy rock music of the 1970s or the tacky animated icon smiley faces that were the bane of early web pages. Each new technology was enthusiastically adopted, but it was often used at first in a gleeful “gee, look at what I can do now” method. The often-unasked question with rich media needs to be the following: does this presentation Many uses of rich media figuratively and literally scream for attention, trying to out-compete the rest of the page elements. Motion, contrast, audio and prominent page placement can easily conspire to steal precious attention away from the call to action. rate because of its unexpected nature and the use of moving and talking people. It all depends on execution and how it is tied to the conversion goal. Browser and hardware differences – It is notoriously difficult to make even basic standards-compliant HTML code look the same across different browsers and browser versions. All kinds of hacks are required, and still some compromises remain. This problem is multiplied when rich media taxes the bandwidth, CPU, memory and operating system of the computer to a much greater degree. Rich media method provide clear and compelling advantages over the use of traditional web design? You may find the answer is no. If so, save yourself the trouble and expense of creating it. Difficulty of tracking and testing – Although there are well-defined standards for measuring and tracking traditional web content, the same is not true of rich media. Different metrics exist to measure engagement and the effect of the rich media. It is also difficult to track events embedded in the Flash or other rich media files, making it problematic to set up landing page tests. The bottom line is that rich media is not a panacea. Much care must be taken when using these powerful new tools. You can be pretty certain that they will have a strong effect on conversion. But the devil is in the details, and you may not know whether the effect will be positive or negative. —Tim Ash Summer 2009 | ONLINEstrategies 11 os09su_legal_review-td2.qxp:Layout 1 12 ONLINEstrategies | Summer 2009 6/25/09 4:24 PM Page 12 os09su_legal_review-td2.qxp:Layout 1 6/25/09 4:25 PM Page 13 An Ounce Prevention… of A thorough review of any e-commerce website is essential to avoid a potentially nightmarish legal quagmire down the road. Here are the key issues your legal team should examine. BY D. JOHN HENDRICKSON, ESQ. AND PHILIP REBENTISCH, CP. A commercial website that is highly functional, conveys an effective sales pitch and is easy to use can result in a successful revenue source for a company’s products or services. However, if the website does not abide by state-based advertising statutes as well as federal regulations, this highly-prized revenue source can become an expensive, nightmarish problem. For this reason, a thorough legal review of a commercial website is essential to avoid potential legal entanglements with federal or state authorities. So what type of red-flag issues do attorneys and paralegals look for when evaluating a site? To simplify, we examine advertising claims, no matter where they are found in the site; the content, placement and use of disclosures; testimonials; usergenerated content; copyright or trademark infringement issues; the site’s terms of use and privacy policy (or lack thereof); the structure and content of any sweepstakes or contests on the site; and the use of appropriate notices of designation of trademark and copyright ownership. FTC REQUIREMENTS In addition to state laws and regulations, a website is subject to Federal Trade Commission jurisdiction. As a result, it is imperative that the site conform to the FTC’s requirements regarding advertising claims and related disclosures, especially if the product category has been historically subject to FTC scrutiny. Claims must be reasonably substantiated, inherently truthful (expressly and impliedly) and cannot otherwise misrepresent the product or service. If sales transactions involve club buying or negative-option features, have these terms been adequately disclosed? In short, as with all other advertising mediums, any and all claims must be factual and transac- Summer 2009 | ONLINEstrategies 13 os09su_legal_review-td2.qxp:Layout 1 6/25/09 4:26 PM Page 14 legalREVIEW tional items cannot be deceptive. To do otherwise runs the risk of FTC enforcement activity or action by a state Attorney General. Advertisers can take heart because the FTC publishes a very useful document titled “Dot.com Disclosures,” which can be found on the FTC’s website at www.ftc.gov. At a bare minimum, the FTC requires the following for clear and conspicuous disclosures: • Place disclosures near, and whenever possible, on the same screen as the triggering claim; • Use text or visual cues to encourage consumers to scroll down a webpage when it is necessary to view a disclosure; • When using hyperlinks to lead to disclosures, make the link obvious; • Label the hyperlink appropriately to convey the importance, nature and relevance of the information it leads to; • Use hyperlink styles consistently so that consumers know when a link is available; • Place the hyperlink near relevant information and make it noticeable; • Take consumers directly to the disclosure on the click-through page; and • Assess the effectiveness of the hyperlink by monitoring click-through rates and make changes accordingly. 14 ONLINEstrategies | Summer 2009 If the legal team and the client are on the same page throughout the design process, this may eliminate wholesale changes prior to, or worse, after the website’s launch. Legal professionals take these requirements into account when reviewing the site. If a potential issue is discovered, a simple remedy may be to change the color or font size of an HTML link, or perhaps to move the disclosure link closer to the claim itself. Effective counsel strives to be aware of creative design elements when suggesting changes, but if a red flag is raised, it’s best to minimize the risk in some manner. Testimonials are another area where caution is warranted. The FTC requires the same standards for online testimonials as it does for all other mediums. If testimonials are used, the website must contain any required disclosures. Keep in mind that text-based testimonials are no different than video or film testimonials; all are held to the same FTC requirements. Briefly, endorsements must always reflect the honest opinions, findings, beliefs, or experience of the endorser. Furthermore, they may not contain any representations which would be deceptive, or could not be substantiated if made directly by the advertiser. The legal team will want to ensure that the client obtained appropriate testimonialist affidavits—and requisite substantiation—that support any and all statements. UGC AND COPYRIGHT LAW If the site incorporates user-generated content or an interactive community section, there should be affirmative opt-in mechanisms relating to the use of such content. This may include a statement that the user has read the site’s terms of use or other “rules” associated with this type of content. Counsel will also examine potential risks relating to UGC as well as community sections, and develop strategies to mitigate the risk. A U.S.-based commercial website is generally protected under U.S. copyright and trademarks laws. If a client utilizes trademarks or copyrighted material (including graphics, copy, music or “look and feel”) from another website without permission, there is a risk of trademark or copyright infringement. If a client has incorporated an entity’s intellectual property (or a similar version thereof) into the website, an attorney will want to evaluate whether it falls within the “fair use” doctrine, or if it does not, whether the client has obtained permission to use such material. os09su_legal_review-td2.qxp:Layout 1 6/25/09 TERMS OF USE AND PRIVACY POLICIES A website’s terms of use (you know, the thing no one ever reads) is invaluable to the client. In reality, the TOU is a legal contract between the site owner and the site user which quite literally spells out the terms of use for the website. The legal team will first determine if the site has a link to the TOU, then review the terms as last updated and assess whether the TOU are still applicable to current company practices. While most TOUs may appear to be exactly the same, it is important that the terms match the content of the site in order to protect the client. For example, if user-generated content or community sections are utilized, the TOU must clarify the rights granted to use such material; establish rules for submission and participation; indemnify the client from any intellectual property infringement actions; and use language required under the federal Digital Millennium Copyright Act. Other TOU examples include language for e-commerce (and applicable warranty and liability language), promotional or interactive elements, third-party linking and how an individual may (or may not) use content within the site. In short, a simple TOU template is not one size fits all; rather, it needs to accurately reflect 4:26 PM Page 15 Act of 1998. If the site encompasses user-generated content, does the privacy policy affect such use? Lastly, does the policy address general FTC concerns regarding protection of personally identifiable information? If the site is used by California residents, under California’s Business & Professional Code: An operator of a commercial website…that collects personally identifiable information through the Internet about individual consumers residing in California who use or visit its commercial website…shall conspicuously post its privacy policy on its website….” The statute lists the requirements that the policy must disclose. If applicable, legal professionals will review (or draft) a client’s privacy policy to ensure it meets California’s requirements. Further, California law sets forth company disclosure requirements regarding the use of its customers’ personal information. The legal team will also review any sweepstakes or contests that may be part of the website or are an entirely separate entity. Sweepstakes laws vary from state to state, but it is essential that a few basic guidelines are incorporated. For instance, it’s important that adequate short-form rules are displayed prominently. Also, the complete official rules must be prop- An easily overlooked—but vital—website component is the protection of intellectual property rights through proper notice of ownership. the site’s actual content and purpose. Like the TOU, a privacy policy is also essential. The legal team will want to confirm when it was last updated, whether it accurately reflects current company practices or whether those practices have changed since the last update. Another important element is whether the site collects information from children under the age of 13. If so, the site must conform to the federal Children’s Online Privacy Protection erly drafted and readily accessible prior to entry. Finally, attorneys must assess whether the structure and entry mechanism of the promotion complies with applicable FTC policy and state laws regarding sweepstakes or contest promotions. An easily overlooked—but vital— website component is the protection of intellectual property rights through proper notice of ownership. The first time a trademarked term is used within the website, it is impor- tant that the appropriate ™ or ® symbol is seen. In addition, it’s also important that the owner utilizes the copyright symbol © and the relevant year or years for which it applies. This also serves notice to users that the website, the content and the design are protected intellectual property. From a design perspective, we generally recommend the © is seen on the footer of each webpage. While each topic discussed herein could easily constitute an entire article, they represent the primary elements of a thorough website review. As mentioned above, legal professionals strive to maintain a website’s creative elements and will work with the client to maintain the site’s creative vision. Many times, needed changes are minor in nature. However, even minor issues can lead to major problems if they are not corrected. We recommend that clients contact their counsel early in the design phase to help them stay on track throughout the process. This is also a more cost-effective method for ensuring regulatory and statutory compliance. If the legal team and the client are on the same page throughout the design process, this may eliminate wholesale changes prior to, or worse, after the website’s launch. As the site evolves over time, it is also a good idea to have the legal team review the changes. Of course, the expression “better late than never” is also applicable; as long as problems are addressed before the FTC or an Attorney General comes calling, then you’re still ahead of the game. D. John Hendrickson is a principal at Manhattan Advertising & Media Law. Philip Rebentisch is a nationally certified media paralegal and a former digital media producer. The contents of this article do not constitute legal advice or the establishment of an attorney-client relationship. Should you need legal advice, please consult a qualified attorney. Summer 2009 | ONLINEstrategies 15 eros09s_portfolio-td2.qxp:Layout 1 6/25/09 4:50 PM Page 16 Search Marketing: A Portfolio Approach Borrow a proven investment technique to help maintain your PPC campaign’s ROI in an increasingly competitive environment BY ALLEN HAMMOCK Over the last decade, paid search marketing has grown from a fledgling, experimental advertising medium with a multitude of providers and players into one of the largest budget considerations for advertisers, offering unparalleled measurability. As we all know, it’s also a marketplace with one large player overshadowing everyone else. As the paid search marketplace continues to evolve and grow, the strategies advertisers employ must also evolve. A recent U.S. Search Engine Performance Report by Efficient Frontier shows that between Q4 2008 and Q1 2009, advertisers increased their ROI by 10 percent while spending 3.3 percent less. They have found ways to achieve their ROI more efficiently by identifying less costly sources of traffic. While some ad managers may be finding efficiencies within their current ad campaigns, ultimately they will still be held accountable for driving growth from advertising efforts. How can an advertiser continue to meet their growth goals while maintaining an efficient ROI? I suggest a portfolio approach. 16 ONLINEstrategies | Summer 2009 WHAT IS A PORTFOLIO APPROACH AND WHY IS IT IMPORTANT? The idea behind a portfolio approach to paid search marketing is similar to the approach used in the stock market: instead of concentrating your budget in one place, distribute that budget over several different sources of paid search marketing to help you maintain your ROI goals by incorporating less-competitive sources of traffic at lower costs. Diversification of a search-marketing portfolio can contribute positively to an advertiser’s bottom line. These sources of traffic are abundant, but the challenge is to find the right traffic providers that meet your goals. eros09s_portfolio-td2.qxp:Layout 1 6/25/09 4:51 PM Page 17 eros09s_portfolio-td2.qxp:Layout 1 6/25/09 4:51 PM Page 18 portfolioAPPROACH PRICING AND QUALITY Advertisers must identify sources of incremental traffic that provide the right mix of traffic quality and price. On Google and Yahoo, you probably assume a certain uniformity of traffic quality, but when considering alternative sources, it’s necessary to balance the mix of quality and cost. You have to measure your ROI separately for each source, and price accordingly. You must identify sources of incremental traffic that provide sufficient sources of volume—enough to justify the time spent. As the number of traffic sources increases, the time you spend managing budgets and optimizing for conversion targets can climb disproportionately. Therefore, it is paramount that sources meet volume, price and performance goals combined. Your own time spent in creating value has to be considered as part of the total equation—some providers will recognize this and help you diversify without requiring you to increase your staff or take valuable time from the management of other sources. IN PURSUIT OF A PORTFOLIO APPROACH Advertisers who take a portfolio approach to paid search marketing diversify their efforts by replicating works aggregate traffic from low-volume sources like meta-search engines, domains and smaller sites to offer lower CPCs on traffic not monetized by Google and other entities. EVALUATING ALTERNATIVE SOURCES: FIND THE FEATURES THE MATTER Once advertisers begin to explore their options outside of Google and Yahoo, they quickly find that there are dozens of networks to choose from. One of the first questions you should be asking yourself is whether or not the networks you are evaluating have platforms that accommodate the essential features necessary to support your campaigns. Here are some factors and issues to consider: One of the first questions you should be asking yourself is whether or not the networks you are evaluating have platforms that accommodate the essential features necessary to support your campaigns. existing campaigns on alternate sources of traffic with less-competitive CPCs. In my opinion, the best alternate sources of traffic are searchadvertising networks: Ask Sponsored Listings, Miva, AdKnowledge, Advertise.com, ValidClick and LookSmart are just a few. These net18 ONLINEstrategies | Summer 2009 • Does the network support geo-targeting? Do you need granular controls in order to target your audience? • Can you focus your campaigns to target budget dollars to certain times of day or days of the week when conversions are highest? • How complex are your current Google or Yahoo campaigns? Do you have millions of keywords under management? Do you use ad groups and automatic optimization through ad rotation? Not every ad network platform supports these features and some may not scale to meet your particular needs. Of course, you won’t require every feature an ad network platform provides for each ad campaign. However, you need to make sure the particular combinations of features are available to meet your minimum requirements. By choosing ad networks with platforms offering a wide range of features, significant changes will not be needed in order to transplant campaigns from one ad network platform to the next. A recent internal study of LookSmart’s biggest Managed Service clients revealed that they spend, on average, 23 hours per person each week managing Google campaigns. Advertisers that may already be interested in expanding their campaigns via a portfolio approach may be concerned—and rightfully so—that there simply aren’t enough hours in the day or week to add additional sources of traffic. Maintaining Google campaigns is itself a barrier to many of you interested in implementing a portfolio approach. Fortunately, some ad networks offer products and services to ease the time and resource burden, or neutral- eros09s_portfolio-td2.qxp:Layout 1 6/25/09 ize it almost completely: managed services, robust targeting features and platforms that are compatible with bid management software can make a portfolio approach easier to implement. As you evaluate ad networks in terms of the resources you’ll need for campaign management, keep a few questions in mind: • How easy is it for you to keep your bids up to date? Can you make sweeping changes with a few clicks? • Can you automate changes through scripts or make bulk changes with a spreadsheet? • Does the provider have an open API and do automated bid management solutions support it? • Can you get support from the ad network to assist in campaign optimization? What additional services does the provider supply in order to minimize your total time commitment? • Additionally, what kind of coverage does your chosen ad network provide? Do you need to shop around for multiple providers or does the ad network aggregate publisher networks into a single meta network or exchange? Many ad networks assume their customers are comfortable with the self-service model, but some provide valueadded services and consultation that leverage advertisers’ existing campaign assets and resources. JUMP-STARTING YOUR DIVERSIFIED PORTFOLIO Ultimately, advertisers need to prove to themselves that they can diversify their PPC portfolios without overextending their resources to the detriment of their overall ROI. This can be challenging, especially as the performance demands on campaign managers increase and costs continue to rise. Fortunately, the competition for your business is increasing and viable solutions exist in the market to achieve these goals. A few simple tips will get you started: 4:52 PM Page 19 Compatibility – Find the ad networks that meet the minimum requirements needed to port your Google campaigns. Service - Call the ad networks and ask them if they can convert your campaigns for you. What additional services do they provide to help you maintain your ROI goals? Scale - Can they provide the scale and quality you need to increase your productivity and reduce your costs at the same time? Some networks will test your keywords and work with you to find the right scale at the right price. a portion of your budget to test out potential “portfolio traffic sources.” Communicate Often – For those ad networks that have customer and managed services, communicate your goals clearly to them, so that they can help you create the best campaigns possible for their network. Since each network has different offerings, some may be better suited to accommodate your campaigns. Solve for the Bottom Line – When evaluating new sources of traffic, advertisers should re-evaluate success metrics. If a traffic source offers significantly lower CPCs than Google in addition to managed services, it stands to reason The idea behind a portfolio approach to paid search marketing is similar to the approach used in the stock market: instead of concentrating your budget in one place, distribute that budget over several different sources of paid search marketing to maintain your ROI goals by incorporating less-competitive sources of traffic at lower costs. There are providers out there that can augment your existing plan and provide you with incremental scale at a reasonable price. The key is to set aside a small amount of your time to evaluate the alternatives in the marketplace and to find those providers who will work with you to make your time worthwhile. ACQUIRING VOLUMES OF TRAFFIC AT APPROPRIATE PRICES - THE HEART OF A PORTFOLIO APPROACH A portfolio approach to search marketing isn’t meant to turn your world upside down, but rather to slightly change your current approach for improved results. Here are a few guidelines to ensure your success: Invest in Testing – Advertisers aren’t going to know what traffic sources work until you try them out. Set aside that conversion rates can vary and still meet ROI or CPA goals. It is understood that the main source of PPC traffic for most advertisers is Google. The reality of the marketplace is that the majority of searchers use Google, so focusing on Google is understandable. However, focusing on a single provider to the exclusion of all other PPC opportunities could be a serious tactical error. There is a lot of opportunity out there for any advertiser willing to expand the scope of their search campaign to alternate sources of search advertising traffic from networks. Allen Hammock is senior product technologist and director of emerging markets at LookSmart. He is a 14-year veteran in online advertising. You can reach Allen via e-mail at [email protected] Summer 2009 | ONLINEstrategies 19 ossu09_CustomerSat-td2.qxp:Layout 1 6/26/09 1:32 PM Page 20 The Ultimate Performance Metric A misunderstood and undervalued business measure, customer satisfaction can be used to predict customers’ likelihood to shop again, buy more or to remain loyal to your company in the future. BY LARRY FREED From Wall Street to Main Street, looking at the connection between revenue and the bottom line is the norm. Revenue is an excellent indicator of past and current performance, but e-retailers are struggling in an economic downturn to identify key indicators of future success. In a landmark ongoing study, researchers at the University of Michigan have conclusively established a crucial—and very strong— connection between customer satisfaction and a company’s financial 20 ONLINEstrategies | Summer 2009 future, whether the markets are up or down. Companies that perform well on the University of Michigan’s American Customer Satisfaction Index (ACSI) enjoy better revenues, profits, loyalty, word-of-mouth recommendations and return visits. They even achieve higher stock prices. The University of Michigan’s findings have been corroborated by other universities, and the findings are consistent: high customer satisfaction, when measured accurately, predicts success. WHY CUSTOMER SATISFACTION? Most e-retailers know the importance of online metrics in managing their business. Online marketers tend to know a lot about their shoppers’ basic behaviors: where they came from, which pages they clicked on, how much they spent and what they abandoned in their cart. There is no question that all of these metrics—clicks, hits and revenue—reveal a great deal about the state of the industry and of an individual company, as does reviewing the rate and trajectory of growth or decline. However, there have typically been severe limitations to understanding what is fueling the growth or decline, the conversions or cart abandonments and the changes in traffic. That’s where understanding customer satisfaction of online shop- pers comes in. It’s the difference between behavioral and attitudinal data. You need both to succeed online—and you can’t fully understand one without the other. A world-renowned economics professor at the University of Michigan was the first to create a methodology that measures customer satisfaction in such a way to predict customers’ likelihood to shop again, buy more or to be loyal to the company in question. Used as a leading macro- and micro-economic indicator by governments around the world, the ACSI methodology has been proven again and again in extensive, academic, peer-reviewed research to be a predictive indicator of customers’ future behaviors. A January 2006 article in The Journal of Marketing even highlighted the connection between the ACSI and future stock prices: an ACSI-based portfolio substantially beat the market and has for more than eight years in a row, in both up and down markets. In other words, the higher your online customer satisfaction, the more likely your customers are to buy from you, recommend you and be loyal to you. In fact, the stakes are very high: in a recent study of the Top-100 online retailers (as determined by sales volume), a single-point increase in customer satisfaction predicted an aver- ossu09_CustomerSat-td2.qxp:Layout 1 6/26/09 1:32 PM Page 21 Summer 2009 | ONLINEstrategies 21 ossu09_CustomerSat-td2.qxp:Layout 1 6/26/09 1:33 PM Page 22 performanceMETRIC age increase of nearly 9 percent in online sales year-over-year (according to the Top-100 E-Retail Index, May 2009). Moreover, our research shows that a highly satisfied online shopper is 71 percent more likely to purchase online from the retailer than a dissatisfied online shopper. It has traditionally been difficult, if not virtually impossible, for a multichannel retailer to quantify the value of the online shopping experience at the store level, but we find that a highly satisfied online visitor is 44 percent more likely to purchase offline and 72 percent more likely to recommend the website. These figures help to quantify the multichannel value of the website. There can be no doubt that when measured correctly, customer satisfaction tells you what customers will do and why they will do it, allowing companies to have a powerful tool at their disposal to predict the future. METRICS THAT WORK What do I mean when I say, “when measured correctly”? There is no shortage of ways to track online customer satisfaction, but you need online metrics that track it in a way that is credible, reliable, accurate, helps companies know how to predict and shape customer behavior in the future. Any measure worth tracking should meet all of the following criteria: Credible - How widely accepted is the measure? Does it have a good track record of results? Is it based on a scientifically and academically rigorous methodology? Will management trust it? Reliable - Is it a consistent standard that can be applied across the ACSI methodology has been proven again and again in extensive, academic, peerreviewed research to be a predictive indicator of customers’ future behaviors. precise, actionable and predictive. These online metrics also need to be continuously gathered and dealt with promptly. If any of these qualities are missing from a metric or suite of metrics, a company cannot expect to be able to positively impact the bottom line. It’s never been easier to collect voice-of-customer feedback, but the challenge is putting that feedback into a scientific context that 22 ONLINEstrategies | Summer 2009 customer lifecycle and across multiple channels? When all remains the same, do we get the same results with every measurement? (If my watch is correct today, but isn’t tomorrow, it isn’t reliable.) Precise - Is it specific enough to provide insight? Does it use multiple related questions to deliver greater accuracy and insight? (A watch without a minute hand may be accurate, but without the precision of the minute hand, it does us little good.) Accurate - Is the measurement correct? Is it representative of the entire customer base, or just an outspoken minority? Do the questions capture self-reported importance or can they derive importance based on what customers say? Does it have an acceptable margin of error and realistic sample sizes? (Most customers will report that a lower price is important to them, but lowering the price may not induce them to buy.) Actionable - Does it provide any insight into what can be done to encourage customers to return to the site, buy again or recommend it? Does it prioritize improvements according to biggest impacts? (A methodology without actionable insight helps us keep score, but it doesn’t help us improve results.) Predictive - Can it project future customer behaviors based on their satisfaction with the site visit? (The goal is to invest our efforts in those things that will yield value. Without predictive capability we are left to shoot at our targets in the dark.) Metrics that don’t have the abovelisted qualities can do more harm then good. They will provide you with a false sense of security that will ossu09_CustomerSat-td2.qxp:Layout 1 6/26/09 lead you to make bad decisions based on bad data—if you put garbage in, you get garbage out. YOU CAN’T MANAGE WHAT YOU CAN’T MEASURE In many cases, customer satisfaction data has taken a back seat to other kinds of metrics. But if metrics don’t provide a complete picture, a business is hamstrung: it can’t manage what it can’t measure. A good customer satisfaction methodology can help address all of the following common problems faced by online retailers: Companies have reams of customer data but no idea what to do with it – Computers and the Internet make it easy to collect all kinds of customer behavioral data, but the result is often piles of numbers and yardsticks without any insight into what they mean or how they can help move the needle. Customer satisfaction can help businesses prioritize what will most influence customer behavior. The metrics show what the customer is doing, but not why he or she is doing it – Many measurement systems reveal nothing about the driving factor behind behaviors. Following site visitor paths throughout a web session will show where a customer has been and what he or she bought, but it provides no information about the customer’s website experience, satisfaction or loyalty. Did they visit 15 pages because they were incredibly engaged or because they couldn’t find what they were looking for? Tracking sales data is absolutely essential, but it doesn’t grant insight into what they didn’t buy, why they didn’t buy it or what it will take to get them to buy it next time. Customer satisfaction metrics answer those crucial “why” questions and allow managers to make decisions accordingly. If there are satisfaction metrics in place, they are not consistent and scientific – Medical diagnostic tools stand up to the rigors of science and acade- 1:34 PM Page 23 mia. The health of a business deserves the same sort of scrutiny. A scientific approach helps create consistency and predictability as managers determine the cause-and-effect relationship between customer satisfaction and future behaviors. A consistent metric allows for benchmarking over time and against others that are competitors or best in class. The value of a website is measured only by its sales or its ability to generate leads – The website should be integrated with the rest of your business’s channels. Even if a consumer doesn’t execute a purchase on your site or submit a request for more information, their experience will shape their future buying decisions and their ties. Sound investments are based not only on what the customer has done in the past, but on what she will do in the future. You need a metric that is linked to future behaviors (such as likelihood to return to the site, recommend it or buy again) and future financial performance. Driving a car forward while looking only in the rear-view mirror invites disaster; similarly, businesses cannot only rely on making decisions based on the past. A BUSINESS-WIDE PRIORITY In the current hyper-competitive environment, customer satisfaction monitoring is the single most important tool for separating companies that will succeed from those that will It’s never been easier to collect voice-of-customer feedback, but the challenge is putting that feedback into a scientific context that helps companies know how to predict and shape customer behavior in the future. overall impression of your company. Customer satisfaction metrics will allow a business to understand what needs to be done to ensure that those decisions and impressions are favorable, and to maximize the value of the online channel to their organization overall. Most metrics provide only an instant snapshot of customer behavior without long-term implications – Just as it’s important to measure website traffic on a continuous basis, companies should be measuring customer satisfaction continuously to observe the impact of seasonality, competitive activity and other changes in the market that affect the demand for their products and services (e.g., high gas prices, legislative changes, seasons or holidays). Most metrics look at the past, but reveal nothing about the future – Most web metrics have no predictive quali- fail. The pace of evolution in the Internet age necessitates immediate action because the customer will not wait. They’ll just find a more satisfying experience elsewhere on the web after being frustrated by your site. A satisfied customer is a customer that will return, buy again and tell people about a company. A dissatisfied customer has the power to tell millions of people about their bad experience and prevent hundreds of thousands of people from interacting with a given business in the future. This kind of power is reason enough to make customer satisfaction a business-wide priority. Larry Freed is an expert on online customer satisfaction. He is also president and CEO of ForeSee Results, a market leader in customer satisfaction measurement. He can be reached at [email protected]. Summer 2009 | ONLINEstrategies 23 eros09s_mobile-td2.qxp:Layout 1 6/26/09 2:28 PM Page 24 The Third Pillar of Direct Digital Marketing 24 ONLINEstrategies | Summer 2009 eros09s_mobile-td2.qxp:Layout 1 6/26/09 2:29 PM Page 25 The waiting game is over. Mobile marketing is not just a viable marketing channel—it’s well on its way to becoming an essential one. The time to embrace mobile is now and these six tactics are both proven and easy to implement. BY BRIAN DEAGAN As one of the three pillars of direct digital marketing, mobile marketing is no longer an emerging channel worth only a casual glance from marketers. In fact, today—according to Nielsen—the average mobile subscriber sends and receives more text messages than phone calls. Fortunately, many effective mobile marketing tactics are readily available to capitalize on these existing consumer behaviors, further engaging customers while driving revenue. SOME GROUND RULES Before you can realize the full benefit and value of successful mobile programs, it is important to grasp some helpful guidelines for mobile marketing. First, the success of a mobile program is determined in part by participation. Choosing a widely adopted consumer use for the mobile device, like SMS text messages, is fundamental for the shortand long-term success of a mobile program. A text-centric strategy is particularly relevant for opening up all of the opportunities within the mobile channel, from reminder messages to more complex mobile dialogues. Second, it is important to avoid generic messages that hold little value for the recipient, because they can be mistaken for mobile spam, a label that can derail a good mobile marketing concept before it gains momentum. Third, mobile marketing is like e-mail marketing in that good data is required. The better the data is, the more effective the mobile tactics are. Of the three aspects to direct digital marketing— e-mail, web and mobile—mobile is the most personal. Therefore, an impersonal batchand-blast strategy is both obvious and intrusive to the recip- Summer 2009 | ONLINEstrategies 25 eros09s_mobile-td2.qxp:Layout 1 6/26/09 2:30 PM Page 26 mobileSTRATEGIES ient—a sure-fire way to turn off potentially loyal consumers. Mobile programs need an extra touch of personalization and message relevance to engage the consumer. Pure-play e-commerce companies have a variety of effective mobile marketing programs to choose from. Here are three widely applicable tactics that have been proven to enhance the consumer experience, reinforce brand and drive revenue for companies with an exclusively online presence. IN-STOCK ALERTS One effective way to leverage the mobile communications channel is to give consumers information they would not customarily receive through other channels. The best example of this type of mobile program is an in-stock alert. The ideal mobile marketing partner has software capable of integrating with existing inventory management systems. When a website visitor tries to order a product that is currently out of stock, allowing that visitor to sign 26 ONLINEstrategies | Summer 2009 Today, according to Nielsen, the average mobile subscriber sends and receives more text messages than phone calls. up to receive a mobile alert when that product is back in stock is a valuable service. Additionally, prompting that visitor to specify size, color or other preferences for the in-stock mobile alert provides key information to entice the purchase. Having mobile marketing software that captures key preference data and then uses that data for personalized, triggered messages is crucial for executing effective tactics like mobile alerts. SALES ALERTS In today’s economic climate, alerting cost-conscious shoppers to special, limited-time-only sales events is a good way to boost sales in a short time-frame. While the sales alert is traditionally an e-mail tactic, extending the e-mail experience to mobile affords the mar- keter more options, such as timeoriented (“Sale ends in 10-minutes”) and inventory-sensitive (“Only 10 items remain”) incentives. Because consumers carry their mobile devices everywhere, they are better equipped to take advantage of limited-time offers. A good mobile marketing partner is able to store mobile data in the same database with the website activity history. Drawing on both data sources to build powerful segments enables mobile communications to be more personalized and relevant to an individual consumer. MOBILE NOTIFICATIONS Mobile notification programs are used for a variety of reasons—they can provide consumers with vital information about recent purchases, or provide the necessary push to make a previously delayed purchase. A mobile marketing partner with software capable of storing both website activity history and mobile data is crucial for this tactic. Specific programs include sending a free-shipping notification to a consumer who has recently abandoned their shopping cart, or sending a notification about a new product offering from a preferred brand. Providing ample opportunities on the website for consumers to opt-in to these types of useful mobile communications creates the right conditions for quickly building up a mobile database and offering a brand experience web-only consumers will jump at the chance to explore. While e-commerce companies stand to gain a great deal by successfully incorporating the mobile channel into their overall direct digital marketing strategy, hybrid retailers with both brick-and-mortar
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