September 2010 – Channel Crossing: Social Media

Social Media Marketing: Keeping Your ROI in Check

Is it possible to quantify the true value of social media marketing (SMM)? Advertising and marketing firms across the globe are scrambling to answer this million-dollar question. Yet without knowing the answer to this question, we continue to see companies invest tens of thousands of dollars in social media campaigns, apparently throwing caution to the wind.

Marketing spent on social networking sites in 2009 reached $2.4 billion, according to a report by Mintel. The social media revolution is relentless in its expansion. Most businesses fighting for survival in today’s economy refuse to be left behind–even if they don’t understand how SMM efforts conducted by a hired firm actually affected their return on investment (ROI). Pack mentality is driving the market and may actually be its greatest proponent.

If only radio, television and online marketing firms had it this easy. Wouldn’t they all love it; forget audience analysis…forget cost per lead (CPL)…forget proving to clients that any and all marketing efforts are worth the investment. It’s as if the phenomenon of social media took off too quickly for people to question its validity. Yet, we all know that effective networking–whether through social media or other means–generally leads to business growth. So the value must be there, but how will we ever monetize it? In short, through technology.

Putting the “Buzz” in Social Media Marketing
Most will say revenue growth through SMM is difficult to track; the rest will say it’s impossible. Do not be deceived. Without an industry-accepted formula to calculate social media, here’s what you need to know: Social media firms know the buzzwords. They will “strategize, engage, listen and influence online consumers,” while encouraging others to “connect with, trust and recommend” your brand.

Through them, you will gain “direct contact with consumers,” “real-time customer feedback,” “reach untapped markets,” “gather valuable customer data,” “achieve branding recognition” at its best, and even “gain influence over consumers.” The buzzwords continue. Your chosen firm will report to you on the number of new “backlinks,” “friends,” “followers,” “likes,” “online articles,” “blogs,” “bookmarks,” “newsletter opt-ins,” “comment sentiment,” etc. Yet, they can’t tell you how any of this actually affects bottom-line revenue. Business growth spawns from innovation and it seems the horses (social media firms) left the cart (your business) in the dust before anyone knew the race had started.

So forget all that. What can we really track with even the most basic, often free, technology? How about increased web traffic, number of new leads, leads converted to sales and overall revenue growth achieved through SMM efforts? It seems a simple request. If your social media firm is unable to deliver these fundamental figures and if its business model is obscure like most, then you’ll never truly understand objective ROI when it comes to marketing through social media.

However, there is a solution. Find a firm that grows as you grow: a firm whose interests are your own. I’m, of course, referring to revenue sharing, which is simply a way to grow a business in a manner outside existing portals. Can your firm offer a concrete social media CPL prior to campaign launch? Not likely. They’ll need a new business model for that.

Also, lead generation is imperative. People who “like” your Twitter business page are not leads. Their “like” does not give you their e-mail address or phone number. Social media sites are merely a collection of consumers versus a purchased list of leads falling within your target demographic. The social media leads are useless if not given specific instructions designed to get them to hand over lead information to you and you only. Micro-sites now enter the equation.

Find a firm that’s willing and technically able to set up a top-notch micro-site. As they drive traffic to this site (at no out-of-pocket cost to you), let them climb the social media mountain with you rather than for you. Then just sit back and monitor online traffic, new leads, conversions and revenue growth. This is how results get achieved. This is how technological innovation has finally caught up with the wild brute we call the social media revolution.

Ed Elliott is chief financial officer at Media Worldwide Partners in Long Beach, Calif. Contact Elliott at (562) 439-3900, or via e-mail at eelliott@ mediapartnersworldwide.com.

September 2010 – Feature: Engaging the U.S. Hispanic Consumer

The U.S. Hispanic Marketplace Breaks Records in Growth, Buying Power and Success in DRTV.

BY JACQUELINE RENFROW

U.S. Hispanic consumers are rapidly becoming one of the most important segments in direct marketing. In fact, with Hispanics constituting 15.4 percent of the total population in the United States–more than 46 million people–the industry can hardly afford to ignore them. This second largest ethnic group not only continues to grow, but so does its spending power. Despite myths, credit card use in this population is high–90 percent of U.S. Hispanics who purchase through DRTV have access to credit cards, and 46 percent use credit and 26 percent use debit when making a purchase. The collective buying power of the segment is expected to reach $1.2 trillion in 2010, up from $862 million in 2007.

“Our client case studies have shown that we experience an average of three times the call conversions when comparing the Spanish to the English version of a show,” says Eitan Cohen, president of Media Stream Direct, a Sherman Oaks, Calif.-based media buying company with more than a decade of experience in the U.S. Hispanic marketplace.

Beyond growth and spending power, marketers are finding renewed success in categories such as beauty, ingestibles, hardware, financial services and kitchenware thanks to U.S. Hispanics. And with Spanish-language advertisements drawing strength from DRTV, marketers are expanding campaigns across growing channels such as mobile and online social communities.

Growing Market, Growing Power
The most important reasons to be in the U.S. Hispanic market space are twofold: the size and the spending power.

“It is the demographic growth of the market that is driving the growth of DRTV,” says Marcelino Miyares, director of Mercury en Espanol, a division of Mercury Media in Santa Monica, Calif. “In fact, it is the population growth of the Hispanic market that is driving the population growth of much of the country. It is not necessarily that Hispanics are spending more, but rather that more Hispanics are spending.”

Along with population increase, there is a new comfort with using credit cards. In turn, marketers have seen an increase in direct-response sales via long-form television commercials. Not to mention, the demographic is more likely to purchase via direct response. An estimated 11 percent of U.S. consumers will make a purchase through DR, but that number is as high as 15 percent among the Hispanic population.

Purchasing Trends
According to Cohen, products that tend to sell the best in DRTV correlate with the interests of the Hispanic demographic such as beauty, fitness, health and housewares.

“We have been able to take English infomercials in these categories that are either successful or, in some cases, only marginally successful, and create tremendous hits with a Spanish creative,” says Cohen. Media Stream Direct recently brought the Ab Rocket infomercial to the U.S. Hispanic market. Although the product was successful over the past three years in the English version, the introduction of the Spanish version created a resurgence in response.

Miyares agrees that ingestibles, housewares and beauty products are the workhorses of U.S. Hispanic DRTV, along with music and video, diet and exercise, hardware, and financial services. In addition, language learning services and telecommunications continue to be stronger in the U.S. Hispanic marketplace versus the general market.

Miyares also believes that U.S. Hispanic DRTV has followed the general DRTV trend to push to retail. “What makes this convergent with Hispanic marketing is that Hispanic shoppers over-index at these types of retailers–Walmart, Kmart, Bed Bath and Beyond, Anna’s Linens, etc.,” says Miyares.

“I forecast that over the next 18 months, we will see a proliferation of products in the two extremes–$19.95 and $200-$400 range. The lower-priced products have been difficult to make work given the costs of limited media inventory. This problem is solving itself with the addition of more cable channels. And the higher priced products have simply been inaccessible to cash-oriented customers, but credit card penetration has reached a critical mass,” Miyares adds.

Today’s Challenges in a Unique Space

Though very lucrative, experts agree that marketers, media buyers and call centers all need to be aware of the nuances of the U.S. Hispanic market and brace for a learning curve when starting a campaign. One of the biggest challenges when marketing a product to Hispanics in the U.S. is translation into Spanish. The key, says Cohen, is not to translate but to “transcreate.” “When speaking to the Hispanic market, it is essential to understand that there are different expressions and nuances in the phrasing that simple voice dub-over cannot communicate,” says Cohen. “Taking the time to properly re-phrase the intention of each statement into appropriate Spanish dialect immediately ingratiates the viewer to the brand and the show. We’ve had several marketers come to us after working with other agencies, who simply had the show hastily dubbed over and could not explain why the campaign did not work.”

Another challenge to the U.S. Hispanic market is client patience. “The problem is that few clients truly commit,” says Miyares. “While in the general market they may test offers, media mixes and telemarketing scripts until a campaign works, the Hispanic market is more like one or two strikes and you are out.” He advises clients–who can eventually imagine their product on the shelves of a Walmart–to stick with a campaign.

Yet another challenge marketers face is properly budgeting Hispanic campaigns versus general market campaigns. In markets that are predominantly Hispanic, Spanish-language media can substantially lift retail sales and increase overall campaign performance. Interestingly, Denira Borrero, vice president of operations for Omni Direct Inc. in Miami Beach, Fla., says that English-language sales lift when running a Spanish-language campaign simultaneously. This is mostly due to the fact that U.S. Hispanics consume media and use the Internet in both languages. So the message is reinforced in their native language, but in many cases, orders are processed through English-language channels. Omni Direct was established in 1999 as a company focused on the potential of Hispanics as a U.S., not foreign, market.

Kathi Moore, CEO and president of Engagem3nt in Newport Beach, Calif., believes the biggest challenge in this market is breaking down the myths that surround it. One myth is a belief that the demographic doesn’t have credit cards, when 84 percent of Hispanic DR purchases are made via credit. Also, that the market is too small to be worthwhile. And finally, the myth that marketers don’t need to advertise in Spanish because Hispanics will catch the English campaign. However, 30 percent of the market watches only Spanish-language television and even those who watch both respect advertisements in their native language.

Callzilla, a Miami-based call center specializing in the U.S. Hispanic space, deals with the same issues as a call center for the general market–converting calls to sales and now, more than ever, third-party upsells. What’s different about a Hispanic-focused call center is how the sales agents are trained. It’s about “training, educating, retraining and monitoring ">the agents and making sure they adhere to best practices that the industry mandates,” says Neal Topf, president of Callzilla. He says there are three main challenges for call centers. First, reaching the expanding demographic. Second, call centers must be ready for an increase in credit and debit transactions. And finally, the economy has put pressure on marketers to capitalize on a new segment.

Channel Changing
DRTV continues to be the strongest media channel for both general and U.S. Hispanic DR. Cable and satellite televisions have increased in popularity over the past two years, both in channel options and distribution, even though broadcast television has taken a hit. And interactive and digital TV activity among the U.S. Hispanic market will increase over the next 18 to 24 months, according to Miyares.

One of Omni Direct’s recent successes was with the campaign for “Sobre de Oro,” marketed in non-Hispanic markets as “My Gold Envelope,” by Money 4 Gold. The campaign ran on TV, radio, online and print channels and has expanded internationally. Money 4 Gold believed its product was under-tapped in the U.S. Hispanic market and so it worked with Omni Direct to develop creative production and identify Hispanic celebrity endorsements. The campaign built a trusted name through a customized Hispanic message. Even when the category suffered bad press due to other industry players, “Sobre de Oro” withstood the hit because of its brand recognition among Hispanics.

While the buying principles for time in the U.S. Hispanic market are the same as with the general market, the universe is limited. There are far fewer cable networks, particularly in the long-form space, and even fewer in broadcast networks. This creates a high-demand, low-supply situation, according to Miyares. As more marketers begin focusing on the Hispanic market, demand for long-form media time will rise and subsequently, so will rates.

Online is increasing faster than any other channel. Since 2008, the U.S. Hispanic online population has grown faster than the non-Hispanic population in terms of visitors and time spent and pages consumed. Just two years ago, most Hispanic campaigns did not have an e-commerce website. Now, about 25 percent of U.S. Hispanic campaign orders come through the Internet. “Based on our own research and national statistics, we expect Internet usage to continue to grow in this direction,” says Borrero. “Also, because Hispanics are significantly over-indexed when it comes to the use of mobile technology, we expect to see growth in marketing through the mobile channel, even within the very short term.”

Moore says that mobile is definitely a growing segment of the demographic. Everyone is trying to monetize the channel’s value and it’s already an effective means to get outbound messages, special offers, reminders, etc., to customers. And U.S. Hispanics are conducting more business transactions via mobile than the general market.

Moore also says that grassroots event marketing is a strong channel in the U.S. Hispanic demographic. The group tends to have more family oriented outdoor events and attend large festivals in population-dense cities such as New York, Miami, San Diego and Los Angeles. It benefits a marketer to spend money and have a booth at these events.

According to Topf, there is an emerging trend in using online social media in the direct-to-customer acquisition space. Although at the moment it’s not being used much in this way, users of social media and other web applications (either on the computer or by phone) will start to see a correlation between purchases and this channel.

No matter what the channel, more and more marketers are going to arrive in the U.S. Hispanic space in the coming year. The question, according to Topf, is not “Do I have to be there [the U.S. Hispanic market], but how do I get there?”

Jacqueline Renfrow is a freelance writer, who has been writing about the direct marketing industry for the past few years.

September 2010 – Cover Story: The Father of Multichannel Retail

GVG Capital Group Chairman and CEO Love Goel Is Renowned For His Ability To Turn Consumer Brands and Retailers Into Thriving Businesses.

BY VITISIA PAYNICH

It’s no secret that general advertisers and brand marketers have throughout the years looked sideways at the direct response industry. Yet while those on Madison Avenue began tightening their belts during the recession by slashing advertising budgets, direct marketers forged ahead by delivering solid, accountable advertising via television, radio and the Internet. Love Goel, chairman and CEO of GVG Capital Group in Minnetonka, Minn., is among those who believe that direct marketers know how to effectively reach consumers using multiple channels.

Lauded as “the Father of Multichannel Retail,” Goel built Macy’s and Fingerhut into two of the top three multichannel retailers during his tenure, acquired more multichannel companies than any other private equity investor, created $30 billion in shareholder value, and advised 50 of the top 100 multichannel retailers. On Sept. 22, he will deliver the keynote address at ERA’s D2C Convention in Las Vegas.

“I am honored to talk to the leaders in the direct response and electronic retailing industry. It is a group that I have admired for a long time,” says Goel. “Today, when we literally have seconds to ‘hook’ a customer before they tune us out of their extremely busy lives, the leaders in this retail channel excel at figuring out the hook, constructing the right message and delivering it effectively. Retail leaders from all channels would benefit from learning those skills that are core to this industry.”

Electronic Retailer spoke one-on-one with Goel to learn about the things that have inspired him throughout his career and what he believes are the key elements to creating a true multichannel business.

Electronic Retailer: You achieved more during your 20s than most people do throughout their entire careers. What do you believe has been the driving force behind your early successes?

Love Goel: There are three key factors that are behind any business success, which were true for me. We had fantastic teams, pursuing a compelling vision buffeted by powerful macro trends, and we were lucky more often than not. Personally, for me, beyond those three factors was the active coaching and guidance of mentors who gave me the opportunity to take on big challenges, to fail, to learn and to grow. I cannot speak highly enough about the mentors who took chances on me.

When I coach emerging leaders, there are two key pieces of advice that I give them. First, find good mentors. Second, do not worry about the money; do something you are passionate about. If you are passionate about it, you are more likely to give it the effort it will take to excel. Once you are the best at what you do, the money will take care of itself.

ER: Did you see yourself as a visionary and if so, what challenges did you encounter when you shared that vision with others?

Goel: It is a key part of the role of any leader to define “victory” or the long-term success, and the “path” or how we get there. The biggest challenge is that you have to communicate it continuously and consistently so that all your constituents get it, and often enough that as you bring new people on board–employees, vendors, consultants–they have a chance to understand and embrace what it is you are trying to build.

ER: You played a key role in transforming two iconic American retailers: Sears and Macy’s. Given that they both had long and well-established histories as traditional bricks-and-mortar businesses, what obstacles did you face in trying to turn them around and make their brands more relevant to today’s consumers?

Goel: I was fortunate to be on great teams that had a positive impact on these companies through their evolution. As in any established and successful culture, I think it is important to celebrate key elements of your brand and heritage that resonate in the marketplace while updating the way you do certain things. In the case of Sears, we really moved into soft-lines in a big way, which made us much more relevant to the female customer and dramatically improved our sales, gross margins and profitability. At Federated (or Macy’s as it is now known), we moved to a much more multichannel approach of being available to the customer 24/7–whenever she was ready to shop. In both cases and other transformations that I have been involved in, the most challenging part is not about figuring out what needs to be done, but rather getting people on board. You do that by sequencing activities in a way that allows the team to earn small victories, inspires confidence in them about the path forward, and then hope that the momentum will take everyone all the way there.

ER: You were the only person to build three e-commerce start-ups into $1 billion+ businesses before you were 30. Tell us about those ventures.

Goel: The first two businesses were created inside the crucible of a large Fortune company (Fingerhut and then Macy’s), and the last one was a venture capital funded Silicon Valley business. The first one was the nation’s largest third-party e-commerce services company at the time, FBS, offering fulfillment, call center, marketing and merchandising services, which helped put dozens of clients like Walmart, Levi’s, Pier 1, 1-800 Flowers, USSB/DirecTV and several other companies on the Internet. The second one, Federated Direct, was the world’s largest bricks-and-clicks retailer at the time, which included over 20 e-commerce properties that comprise three of the top 100 Internet retailers–including the world’s largest retail closeout site, the first custom jewelry site, the first online flower site, the first bricks-and-clicks wedding registry, the largest birthday club and the largest general merchandise site. The last business, Personify, was the world’s largest customer profiling platform (500,000+ data points for over 100 million customers) and leading analytics provider of clickstream data to dozens of top retailers like William Sonoma, J. Crew and LL Bean.

ER: What’s more satisfying: building a company from the ground up or going into an existing company and completely turning it around?

Goel: I think they can both be equally satisfying and rewarding. The best part about any such experience is when you accomplish something that exceeds the expectations of everyone on the team and outside. It is a testament to the power of what you are trying to accomplish and the quality of teamwork that made it possible. The interesting thing is it is also the most fun–when you are in the midst of one of these missions, you can feel the palpable excitement and enthusiasm that everyone on the team has.

ER: Can you tell us more about GVG Capital Group?

Goel: At GVG Capital Group, we are passionately committed to building market leaders in the multichannel retail and consumer sector. We bring deep operating experience, industry insights, a powerful network and capital to help management teams grow their companies.

We are unique in the private equity sector for three reasons. First, we are the only firm focused exclusively on the multichannel retail and consumer sector. Second, we are led by seasoned operating executives who helped build best-in-class companies like Macy’s, Home Depot, Levi’s and Apple–so we see our role as helping companies win in the marketplace, not financial engineering. Third, because of our commitment to helping leaders and companies in our sector, we advise and serve on the boards of companies beyond our investment portfolio.

ER: Of course, you’re no stranger to direct marketing or live shopping. In fact, you’ve advised QVC, ShopNBC and a number of our members. Based on that experience, what can brand marketers and traditional retailers learn from this industry?

Goel: There are three core strengths that all retailers and brand marketers can learn from this industry. First, as I said at the outset, this industry is probably the most skilled at distilling and communicating the “hook” to customers. Second, it is an extremely data-driven business, which leads to real-time adjustments in message, price and offer. Third, losses are minimized by a culture of testing in the marketplace with real paying customers, not just focus groups. If we could all bring those disciplines to our respective retail channels and formats, we would be a lot more effective and profitable.

ER: What does it mean to be truly multichannel?

Goel: This answer requires some context because being multichannel is about more than just having a website, store, catalog, TV or mobile presence. For the first time in human history, consumers have better information about products, prices and promotions–and consequently more power–than purveyors of goods and services; especially at the point and time of sale. This dynamic has created a whole new set of consumer behaviors, which retailers ignore at their own peril. But one of the key shifts in consumer behavior is that more than two out of three customers research things online before buying offline and vice versa.

The two key elements of being truly multichannel are: first, to offer customers a seamless shopping experience whether it is research, buying or service across all channels; and second, to leverage the structural and economic advantages of a channel to enhance both the customer experience and profitability. For example, in SKU-intensive categories like apparel, footwear and domestics, it could mean placing Internet kiosks in the aisles to offer customers many more styles, colors and sizes to complement the in-store offering–which can improve same-store sales dramatically. Or, for TV and catalog marketing programs, it could mean taking orders online rather than over the phone, reducing order processing costs dramatically.

ER: Many direct marketers are successfully utilizing multiple channels such as television, radio and the Internet, while other direct marketers might be hesitant to engage in other channels like social media and mobile. How can marketers take their business to the next level by integrating these other emerging channels?

Goel: I think it all starts with the customer. How do customers prefer to shop the products and services you sell? That should serve as a guide to the level of investment and capabilities that you add across all the channels. I have seen too many companies waste a lot of money by chasing the latest fad–whether it be mobile or social media–without thinking it through, or other companies like Blockbuster and Sam Goody not do enough when it was clear that their business models were outdated.

ER: Do you believe technology has changed the profile of the average consumer?

Goel: Absolutely. It has enabled consumers with easy/free availability of information (prices, promotions) and easy access to other vendors (one click away) that has dramatically changed the way they buy. This means that the average retailer has to be that much better–it is much more difficult to get away with a shoddy retail concept like you could 10-15 years ago. You better have a clear “hook,” something compelling to offer–unique product, lower prices, better services–you get the idea.

ER: Today, marketers, retailers and e-tailers are armed with web tools (such as web analytics and behavioral analysis) to understand consumer-buying habits and really get into their minds. Do you believe most companies are utilizing that information to its full potential?

Goel: You have stumbled upon a key gap in the capability of most companies today. This is a historical challenge and opportunity. For example, when I was at Fingerhut, we had 3,000 data points on 32 million customers, and 1,500 data points on 100 million households–the availability of this data and our direct marketing capabilities made us the most profitable in our industry. We were able to do amazing things like customize each and every one of our 600 million customer interactions (mailings) each year, or perform 5-10 percent better upsell than anyone else in the industry. But, even at that time, it always surprised me that as a small $2 billion player we had the nation’s largest customer profile database. Retailers have been slow to embrace this thinking. Most of them use web tools to track basic things like conversion rate. Very few, almost none, of them really excel at utilizing the vast quantities of behavioral data available to them in tailoring their merchandising, marketing and customer service programs either for competitive advantage or greater profitability. Also, most retailers really do not know how their various channels are performing–their matchback strategies and rule of thumb cost allocations typically driven by political infighting or legacy thinking obfuscate the true efficacy of their marketing dollars. This is probably the area most rife for improvement, apart from leadership development, in the multichannel retail world.

ER: Why do you believe some direct marketers are hesitant to try mobile? Will there eventually be a sea change in this area?

Goel: I think it is challenging to offer a full, rich offering like you do on the Internet on a mobile form factor. It sounds similar to what people said about the Internet 15 years ago compared to the store or catalog. That said, direct marketers will have to figure out for their respective categories and price the right business model(s) and customer experience that works–is mobile a price discovery and promotion channel, is it an edited assortment channel, is it a social media channel or some combination of all of the above?

ER: What changes do you see occurring in the social media space?

Goel: Social media, in my mind, has two primary roles: first, to help you manage your social relationships in an easier and more meaningful way; and second, to use your social relationships to make your life better from finding a date to a job to a car, to the hottest little black dress. I think we are in the very early days where there is a lot of noise and confusion. As the dust settles over the next few years, real businesses will emerge that make the world a better place.

ER: What other trends in technology do you believe will have a dramatic impact on retailers and marketers in the long run?

Goel: I believe we are at the intersection of four powerful trends that will dramatically alter the ways people live their lives and how retailers and marketers will have to sell: 1) cloud-based data and services (think mobile apps); 2) ubiquitous, high-speed, broadband wireless connectivity; 3) always on, always connected smart devices (think smart phones, tablets, etc.); and 4) products, services and information on the Internet.

ER: What’s the best piece of advice you could offer marketers and retailers when it comes to succeeding in today’s multichannel world?

Goel: Pay attention to your customer. Deep, meaningful customer relationships are likely to be the sustainable competitive advantage in a world of channel fatigue, product and brand commoditization, advertising overload and attention fragmentation.

September 2010 – Columns: Rick Petry

You, the Network

Facebook users understand that its influence can sneak up on you. Once it wraps its tentacles around virtually every part of your consciousness, it becomes a sort of umbilical cord to the sphere of influence that you’ve built there and a vital (and viral) part of one’s daily existence. On the other hand, those refusing to join the party frequently characterize it, with emotional vehemence, as trivial and an enormous waste of time. But if recent trends are any indication, Facebook isn’t just about monkey business; it is rapidly displacing LinkedIn as the preferred social networking site for conducting real, tangible business.

There are two types of users of Facebook for business: those who create an identity that is clearly devoted exclusively to their company and often named after it, and those who blend the personal and the professional into one. My own mix of Facebook “friends” includes people I went to high school with, business colleagues who I also consider friends and some who are passing acquaintances. But amid the parental bragging and vacation photos, some unexpected things are emerging:

• Business leads are coming in through Facebook.
• Instant messaging related to business is coming through Facebook. In fact, one learns pretty quickly who uses the site habitually and can reach them there more easily than through e-mail or a telephone call.
• Inquiries about business topics are starting to surface on Facebook.

Perhaps this behavior is a byproduct of Facebook CEO Mark Zuckerberg’s assertion that, rather than maintaining two separate identities—one for business and one for personal—that social networkers are destined to maintain but a single identity. If you believe that each individual is a brand, then Facebook becomes the ultimate expression of that brand with its ability to narrowcast one’s stream-of-consciousness with effortless will.

In a recent conversation with the head of an ERA supplier member, he remarked, “Oh, I can’t be bothered with that stuff.” I conveyed who some of my Facebook friends were, which includes the head of a very well-known direct marketing company. “I can’t get him to return my calls,” he bemoaned. “Well,” I explained, “when he posts one of his videos on Facebook, you can comment on it. It’s like leaving a little deposit of goodwill. If you do it frequently enough, by the time you get to the next industry gathering, you’ll know 10 things about this person you can use to strike up a conversation.”

Given that industry professionals depend on networking to drive business, it should come as no surprise that their presence is being felt with increasing pervasiveness on the likes of Facebook. As Dr. Robert Cialdini points out in his seminal book “Influence: The Psychology of Persuasion,” people buy from people they like. Facebook is like one giant cocktail party that never ends, filled with everything from insipid chatter to the occasionally profound and, increasingly, the business at hand. In this case, that hand happens to be holding a computer mouse where you’re potentially one click away from making your next business connection.

Rick Petry is a freelance writer and is a past chairman of ERA. He can be reached at (503) 740-9065 or online at rickpetry.com. On Twitter at http://twitter.com/thepetrydish.

September 2010 – Online Strategies: Online Insights: Social Media

Measuring ROI of Search and Social

The burgeoning social media landscape is studded with success stories. Take Dell, for example. By the end of last year, the company had racked up $6.5 million in sales—direct from its Twitter accounts.

You can bet Dell can calculate the ROI of this effort. It knows exactly what it’s investing in the initiative: 100 employees are tweeting in 35 different channels to customers in over 12 countries. Brazil alone brought in an average $100,000 in sales per month in 2009.

Calculating the ROI of direct sales from social media is easy, but only so long as you remember that while many social media tools, such as Facebook and Twitter are free, time is money regardless of channel. Yet, many marketers have social media goals that are far softer than moving product. These can include increasing traffic, awareness, PR, customer relations and support, lead-building, conversions, SEO and even product development. In fact, most marketers admit to having no real defined social media goals.

How do you measure the ROI of that? A recent Econsultancy study, “The Value of Social Media,” asked marketers how well their organizations are at measuring ROI from social media activity. Over half (51 percent) admit to being “poor” or “very poor” at measuring social media ROI. A scant 15 percent rate themselves as “good” or “excellent.” Nearly all of them—94 percent—would like to know their social media ROI. They just don’t know how to get a handle on it. Despite that, 90 percent say social media activity will consume more of their time next year.

ROI Calculations Made Easier
Thanks to improved tracking technology, other digital marketing channels such as SEO are much easier to assign ROI to, as well as to compare to other marketing channels. Social media, still very much in its infancy, still lacks those technological and cross-channel underpinnings.

The ROI of search advertising campaigns is relatively easy to calculate. Almost by definition, search ad bids must be calculated on a break-even or cost-positive basis. Otherwise, why advertise?

Social media campaign ROI is more analogous to organic search engine optimization. Goals must be defined and measured against concrete benchmarks, e.g., cost per lead, average customer lifetime value, the conversion rate of a desired action, organic traffic and conversion sources.

Unless your social media campaign is based on direct sales—and many good ones aren’t—establishing and valuing key performance indicators (KPIs) is the first step toward calculating ROI, and determine where to go from here.

Bear in mind that the old saw, “everything online can be measured,” is true. Except when it isn’t. Just as every direct conversion from SEO will never be precisely measured, the same holds true for social media, even when the tools do improve. That’s still no excuse for not setting goals and constantly measuring and monitoring efforts against those benchmarks.

Rebecca Lieb is vice president of Econsultancy’s U.S. operations. Contact Lieb at rebecca.lieb@econsultancy.com.

August 2010 – Cover Story: Leading the Charge

Photograph by Roger Hagadone

As the Electronic Retailing Self-Regulation Program marks its sixth anniversary, ERSP Director Peter Marinello talks about the program’s success and why other industries are taking notice.

BY VITISIA PAYNICH

In 2000, the direct response industry was experiencing a bit of deja vu: a slew of bad actors tarnishing its reputation by making egregious product claims in their DRTV campaigns and threatening the very principles for which the Electronic Retailing Association (ERA) was founded back in 1991.

The association sought support from its membership and those within the direct response community by launching an ambitious plan to preserve the industry’s image, to maintain control and to fend off government intervention. The answer, of course, came in the form of self-regulation. Yet in order to get a full-fledged self-regulation program off the ground, ERA realized it needed to partner with a third party, the National Advertising Review Council (NARC). And on July 1, 2004, ERA and the NARC launched the Electronic Retailing Self-Regulation Program (ERSP).

Peter Marinello, director of ERSP, says the program’s success has piqued the interest of other industries that look at ERSP as a model for their own self-regulation guidelines.

Electronic Retailer caught up with Marinello for an update on ERSP’s caseload, to discuss the process for filing a case and to learn why he believes the program has set a precedent for other industries.

Electronic Retailer: Can you provide a brief history about ERSP?

Peter Marinello: We opened our doors back in July 2004 and the program really began at the behest of the Electronic Retailing Association (ERA), which–because of some nudging from the Federal Trade Commission–became very concerned about egregious advertising claims that were permeating the airwaves in early 2000. These were really weight-loss claims. The FTC essentially went to ERA and said, “Listen, if you guys don’t get your house in order, we’re going to do it for you.” So, ERA did the very responsible thing and went to an outside third party, the National Advertising Review Council, and asked them to set up a self-regulatory program designed specifically for the direct response industry. So, that’s how it really began. This is a very unique collaboration between ERA and the National Advertising Review Council, particularly the Council of Better Business Bureaus, which administers the program.

Three of the primary objectives of ERSP are to improve consumer confidence in electronic retailing; provide an expeditious forum for getting blatantly egregious advertising claims off the airwaves and out of publication; and lastly, to demonstrate to the regulatory agencies, the direct response industry’s commitment to meaningful self-regulation.

ER: How many cases have been submitted to the program, to date?

Marinello: To date, we have closed 255 cases, which did not include several compliance follow-up cases that we’ve handled. It also doesn’t include the yearly live shopping analysis that we do for the industry.

ER: What percentage of cases do consumers file versus marketers?

Marinello: I would say that the breakdown of cases is about 40 percent by the marketers, 40 percent is monitoring by ERSP itself and then I would say the other 20 percent is consumer-generated.

ER: Can you provide some other statistics on the program?

Marinello: As I mentioned, we closed 255 cases. The average length of a case is just about 65 days. The published decisions are 243 cases, so there’s actually a little lag time between when we close a case, when we get the press release going, and when we actually post the case on the website. So, that’s why there’s about a 12-case lag there. We’ve probably monitored over 5,000 pieces of direct response advertising, 300 hours of live shopping, 5,000 pieces of e-mailed spam and we’ve pursued about 170 consumer complaints. And, that does not include seven non-English-speaking infomercials that we’ve handled. As you can see, we really try to run the full gamut of the direct response industry.

ER: What is a “competitor challenge” and how does it protect people’s anonymity?

Marinello: We have this great niche in the ERSP policy and procedure that allows companies to challenge competitive advertising anonymously. There are two important advantages for having this nice procedural niche. It allows companies to bring advertising to our attention without worrying about retaliatory challenges and without being publicly perceived as a whistle blower. Those are two key competitive pieces for a challenge. Now if you bring a challenge anonymously, it does not allow you to see a marketer’s responsive submission. All it really does is it allows you to bring an advertising campaign to our attention anonymously and then at the very end of the case, you’ll be informed as to the outcome of the case. So on one side, it offers a discreet mechanism for bringing a case without disclosing your identity, while it also enables the marketer to participate in the process without worrying about a non-disclosed competitor seeing some proprietary information that may be necessary in substantiating their claims.

ER: Once a case is filed with ERSP, what’s the process?

Marinello: Once a case is filed, a marketer will have 15 calendar days to submit their substantiating information. After we receive that marketer’s initial response, ERSP or a challenger will then have 10 days to offer rebuttal information. After we receive the rebuttal information, we’ll pass that on to the marketer for almost the second bite of the apple, where they will have another opportunity to reply to the challenger’s information. And then from there, ERSP has 15 days to write its decision and come to its conclusion. After that, the marketer has 10 days to provide what we call a “Marketer’s Statement,” which is a statement indicating whether or not the marketer will abide by the recommendations of ERSP. They’re also able to give their comments on the usefulness of the process. That whole sequence of events generally falls within 60 to 65 days. And I also should note, within that period, there is an opportunity for both the marketer and the challenger to come and meet with us–either personally or via a telephone conference.

ER: Are most of the cases brought before ERSP legitimate cases?

Marinello: Yes. As a matter of fact, we do have a weeding out process before we officially commit to the case, where if we feel that a challenge is bringing a frivolous complaint, we won’t proceed with the complaints.

ER: What’s the most difficult case that you’ve come across?

Marinello: Maybe some of the most difficult cases collectively are homeopathic cases. The reason being that homeopathic has its own historical reference point that has to be followed and it gets very tricky because it’s based on the traditional use of certain ingredients and the mixture of these ingredients. And, I would say that the regulatory landscape for homeopathic products isn’t as clearly defined as it is with traditional-use products. When I say “traditional-use” products, I’m referring to the types of products we see on an everyday basis–such as exercise equipment, dietary supplements, etc.–that have a clearly defined regulatory road to follow.

ER: How can people find out more information about cases that have been filed with the program?

Marinello: There are two main vehicles of information for ERSP. One is the National Advertising Review Council website at www.narc.org, which includes a specific section on the Electronic Retailing Self-Regulation Program. The other vehicle is the ERA site at www.retailing.org, which also has a very neat section for ERSP. All of the cases that we complete are posted on both of those websites along with the press releases that accompany the cases. There’s also information on how a company or consumer can go about filing a challenge. The posting of case reports on the NARC and ERA websites is a significant element in reinforcing the transparency of our self-regulatory work and the integrity of the process.

ER: The FTC has been very supportive of ERA and ERSP. Do you consult with the Commission on every case?

Marinello: Absolutely not. The cases that are brought to us are treated very confidentially. The only time any outside third party will see the cases is at the conclusion of the case. With that being said, one of the reasons for the success of the program has been the FTC’s support of the program. A lot of times, we’ll refer cases. For example, if a company declines to participate, we’ll refer a case to the Federal Trade Commission. The FTC always makes it a point to put that referral case on the top of its priority list.

ER: Does the industry share the FTC’s sentiment about ERSP?

Marinello: I think it does. We’ve had an uptick in terms of competitive filings in the six years that we’ve been around now. When we started out, it was a monitor-heavy type of caseload; and subsequently, we’ve seen a great increase in competitor challenges–particularly, with the anonymous challenges that we talked about. There are five appending anonymous challenges that are going on right now. So I think a lot of companies and marketers out there see this as a very useful mechanism for bringing egregious advertising to our attention.

ER: What type of precedent has this program created for this industry and for other industries?

Marinello: It’s been an enormous precedent in not just the advertising industry but in other categories of advertising as well. It’s a terrific example of how self-regulation can work. Let’s take green marketing, for example. If there is a concern in one particular discipline of advertising, such as green marketing, those in that industry feel that they can come to the National Advertising Review Council and set up their own self-regulatory process based on that concern. We saw that happen in the Children’s Food and Beverage initiative a few years ago, where there was this vast industry concern about childhood obesity. There was a great self-regulatory opportunity there, and the NARC and the Council of Better Business Bureaus administered a terrific program about three years ago. We’re seeing the same thing occurring in the behavioral advertising world right now, and I believe the industry is looking to the NARC for self-regulatory response to the issues it’s currently facing. I think a lot of that is due to the success of the direct response industry’s self-regulatory program.

ER: What trends are you seeing occurring in the marketplace right now?

Marinello: I think there are a couple of things going on right now. One thing that we’re looking very closely at is the affiliate advertising space and seeing how, with a self-regulatory program, we can offer help to the direct response community in terms of providing some guidance. It’s also interesting that one of the new trends is actually an old trend–we’re seeing an uptick now in weight-loss advertising. So, we have to keep a close eye on some of the claims now being made in weight-loss advertising again. It’s funny how this is cyclical, sometimes. Ten years ago, there was this big issue with the egregious claims being made in the weight-loss industry and now all of a sudden, we’re seeing some companies becoming a little bit more aggressive with the claims they’re making and I think the same holds true for some of the exercise equipment manufacturers out there.

ER: What changes or developments can we expect from ERSP in the near future?

Marinello: I think it’s really important that ERSP makes a concerted effort to evolve with the direct response landscape. That means monitoring the advertising in all these new and different areas of social networking–Facebook and Twitter–and in the affiliate advertising area. I believe we also need to keep an eye on what’s going on in the behavioral advertising world. In addition, I would like to see ERSP going beyond just looking at claim substantiation and truthfulness and accuracy; maybe getting into some of these very topical issues like negative options and things like that. It’s very important for this program to grow with the industry, because it’s evolving at warp speed and ERSP needs to keep pace with it.

ER: Any final thoughts?

Marinello: Any success that this self-regulation program has earned is really predicated on the voluntary cooperation of the marketers and direct response community. ERSP doesn’t work at all without it. The marketers and those in DR have been so supportive over the past six years of what we’ve done, and that’s really helped this program create a nice self-regulatory niche out there.

July 2010 – Column: Rick Petry

Facebook’s Free Lunch with Trimmings

We’ve all heard the expression, “There’s no such thing as a free lunch,” but do you know where it originated? During the mid-19th century, saloonkeepers would offer free food for the price of a drink, based on the gamble that folks wouldn’t stop at one. Today’s watering hole lies at the intersection of curiosity and compulsion. It’s a destination called Facebook, and its patrons will soon number half a billion–legions with an insatiable thirst for triple shots of creative expression, kinship and validation. But just like yesterday’s barkeep, the man behind Facebook’s counter, CEO Mark Zuckerberg, wants something in return for access to his social networking smorgasbord: the ability to use another kind of counter–one that adds up your likes and dislikes to serve up targeted ads.

Zuckerberg’s definition of quid pro quo has gotten the company into hot water with privacy advocates, one of the many topics explored in the fascinating new book “The Facebook Effect: The Inside Story of the Company That Is Connecting the World” by David Kirkpatrick. As Kirkpatrick points out, Zuckerberg’s vision has been to relentlessly pursue growth through dominance and worry about profitability later.

The proof of Facebook’s success lies in a cursory review of some of its astonishing statistics: users spend 500 billion minutes per month using the site with the average user posting 70 pieces of content. They add up to 25 billion per month. And while Nielsen reports that 125 million Americans spend roughly seven hours a month sharing the likes of political rants on Zuckerberg’s brainchild, over 70 percent of its users are outside the U.S. The Private Equity Data Center speculates that the breadth and depth of such devotion may be worth as much as a staggering $35 billion.

Clearly, the future profitability of Facebook lies in its ability to navigate the delicate balance between personal expression and the lifeblood of marketers’ commercial interests. Although Facebook execs admit that past efforts to alter privacy settings have created confusion and consternation, they vow to do better. In a June interview in The New York Times, Eliot Schrage, vice president for public policy at Facebook, admitted that the privacy implications of their ads are widely misunderstood, “People assume we’re sharing or even selling data to advertisers. We’re not. We have no intention of doing so. If an advertiser targets someone interested in boats, we’ll serve ad impressions to people with ‘boats’ on their profile somewhere.” Schrage explains that the site relies on “anonymized demographically targeted ads.” Specific names and personal information of users aren’t disclosed to advertisers.

What Facebook is doing is no different than what television broadcasters have done for decades: pushing ads aimed at appealing to the targeted demography of a show. The key difference is that with Facebook, the content is user generated and personal. But with statistics suggesting that the average consumer is bombarded by thousands of ads a day, it’s not too cynical to suggest that such relevancy is one more positive aspect of Facebook. And with its user base, regulators and management working in concert, perhaps such wry wish fulfillment can take an optimistic turn; one that will benefit the marketers who pick up the lunch tab for this ultimate soapbox, as well as those who shout atop it.

Rick Petry is a freelance writer who specializes in direct marketing. Contact Petry at (503) 740-9065, at rickpetry.com, or on Twitter at http://twitter.com/thepetrydish.

July 2010 – Online Strategies: Online Insights

Social Media and SEM: Friends or Foes?

The explosion of social media and the steep growth trajectories of sites such as Twitter, Facebook and, more recently, FourSquare, have created huge opportunities and challenges for marketers in equal measure. According to the SEMPO “State of Search Report 2010,” based on a global survey of nearly 1,500 digital marketers, 59 percent of client-side respondents said social media budgets will increase over the next year compared to only 4 percent who said budgets will be less. Agencies are even more bullish, with 85 percent saying they expect increased client-spend this year.

Although social media marketing budgets are still modest compared to those for search engine optimization and paid search, many companies are starting to take this relatively new channel very seriously.

Social Media’s Impact
Effective social media marketing can help drive website visitors by giving companies and brands more visibility on search engines and social media sites. A good social media strategy can have SEOs licking their lips at the prospect of new links and opportunities for visibility on social media-friendly search engines. Three quarters of agencies surveyed (74 percent) for the SEMPO survey, carried out by Econsultancy, say the rise of social media has had an impact on their clients’ search engine marketing activity.

It should be noted that while social media marketing can help search efforts, the main objectives of social media marketing, and the skill-sets required, are often very different from search.

Although the research found that the primary objectives for search marketing are most likely to be “selling products” (for paid search – see Figure 1) and “generating leads” (for SEO – see Figure 2), the primary objective for social media marketing is most commonly increasing brand awareness and enhancing reputation (see Figure 3).

The skills required for social media marketing, where creativity is paramount, are not the same for paid search marketing, which generally speaking, requires deeper analysis and left-brain thinking. Similarly, the metrics used to measure success are very different.

The primary skills required for a staff member managing SEM, search advertising campaigns include: the ability to stay on top of the latest campaign management and analytics tools, the ability to convert campaign performance data into action plans and the ability to execute exact and different campaign best practices based on the advertising channel.

By contrast, the core skills required for a new staff member to develop and execute effective social media campaigns include: be adept at listening and understanding what your target audience is saying about your company’s product; be able to work with the appropriate social media tracking tools to effectively monitor dialogue and answer questions; know how to drive community conversation; and recognize that successful social media marketing takes time as you work to expand your customer base.

Where SEO and paid search success can be worked out on a more tangible return-on-investment basis, measuring the success of social media campaigns often requires more intricate analysis. The metrics will likely vary based on the objectives.

These differences don’t mean that the same agencies and same people cannot be well equipped to help a company with both search engine and social media marketing. But what should be clear is that social media marketing should be seen as something more than just a search-marketing tactic.

Linus Gregoriadis is research director at Econsultancy, which carried out and published the SEMPO “State of Search Report 2010.” Contact Gregoriadis at linus.gregoriadis@econsultancy.com.

June 2010 – Column: Rick Petry

Blah, Blah, Blog!

Blog, that portmanteau of web + log, has evolved into a powerful marketing tool, yet it is often misunderstood or even dismissed. Maintaining a blog with solid, original content is hard work and let’s face it, a lot of folks would rather take a number at the DMV than stare down a blank page on their computer screen. That’s why more direct marketers need to take advantage of the Electronic Retailer (ER) blog, (www.electronicretailerblog.com), a valuable–yet grossly underutilized–blogging platform available to the entire community. The ER blog is a single-destination site where the totality of the industry’s thought leadership can be aggregated to create an authoritative body of content that will benefit product inventors, marketers, supply chain partners and students of direct marketing.

However, since the beginning of the year, the ER blog has averaged about one contribution per week when, frankly, someone should be weighing in every day. For that reason, it’s probably worthwhile to review some of the key reasons why blogging is so important to the overall marketing mix. First and foremost is the fact that blogging–especially guest blogging on a site such as the ER one–helps with search engine optimization (SEO) in significant ways:

Blogging increases long-tail exposure. In January, Scott Richards, CEO of Dial800, posted a video-log on the site discussing the relative effectiveness of repeater toll-free numbers versus random ones. Now, if someone Googles “repeater toll free numbers,” that blog entry as Dial800’s site ranks very high for unpaid search. So just by posting one blog entry, a slew of phrases have been picked up that searchers can then easily find and link to, what are known as “long tails.”

Link building creates credibility. Once you’ve posted content on a topic that readers are interested in, others may link to your original blog post, a phenomenon known as “link baiting.” Every additional link tells Google that the community has found your content valuable and imbues it with credibility that then translates into link authority. As a result, the rank of your original post rises and the ER blog enjoys strong ranking authority. That linking authority then funnels into your site.

Instant links. Guest blogging on the ER blog can provide direct links back to your website. Therefore, instead of writing a blog on your own site and hoping you get linked, you get connected to the posting from the outset with content that is relevant to your business. This tells Google that you are a thought leader on the given topic.

The ER blog allows the industry to enjoy the benefits of blogging without the attendant pressure for continually generating fresh content being borne by one individual. But in order for it to maximize its potential dividends, it needs us all to step up and leverage our substantial wealth of knowledge.

Rick Petry is a freelance writer who specializes in direct marketing and is a past chairman of ERA. He can be reached at (503) 740-9065 or online at rickpetry.com. On Twitter at http://twitter.com/thepetrydish.

May 2010 – Column: Rick Petry

iPad: The Shape of Things to Come

Apple’s ability to create yummy objects of affection is unparalleled, which explains why I found myself standing in line one recent Saturday morning before dawn in near-freezing conditions so that I could be among the first to get an iPad. You know…for my wife. Though some initially dismissed it as an oversized iPod Touch, the iPad is really so much more: call it the ultimate boogie board for surfing the Internet. Its content engine is fueled by three major e-commerce stores: iTunes, with its digital music marketshare now solidly ensconced at 90 percent, the result of over 10 billion downloads; a bookstore with ready access to Project Gutenberg’s 30,000 free titles that will soon offer every release of magnitude; and an app store with tens of thousands of gizmos that allow you to do cool things like browse more than 28,000 recipes that can be effortlessly translated into virtual shopping lists with the press of an index finger (epicurious).

While the iPad can be oriented horizontally to take advantage of its letterbox shape for watching downloaded movies, flicks streamed from Netflix or YouTube videos, it is really the tablet-like orientation that many sites are now being optimized for that makes the iPad the breakthrough that e-tailers should take notice of. At 9.7 inches, the iPad is like having access to one endless, environmental impact-friendly catalog with unlimited variety and choice. It renders the weekly barrage of direct mail from Frontgate, L.L. Bean, Nordstrom, et al obsolete. Call it green meets ka-ching.

While one might observe that the Internet has failed to realize its supposed catalog-killing potential, I have noticed a fundamental change that has occurred in the focus group of one who lies next to me at night. The sundry clothing catalogs she used to persistently peruse while some hapless couple on cable television vacillated on a real estate purchase decision have been thrown over for the iPad. She can’t keep her hands off it.

Given my wife’s persistent complaints about my iPhone texting/television watching/web surfing multi-tasking, there’s a certain delicious irony in this. Since I can’t get my hands on the darn thing, I’ve rationalized that alone has made the icy temperatures I endured that first morning well worth it. For those few who still cling to the notion that Apple’s computers are for cultish and pretentious beret-wearing intelligentsia, I have a humble suggestion: Get over it. Apple has succeeded unlike its competitors for perhaps the most basic of reasons–its stuff works. It works intuitively and elegantly and explains why–on most days when I wander into one of Apple’s retail stores to be greeted by one of the cheery help who hasn’t seen a comb or razor in a while, I find myself surrounded by customers with hair as stark white as the décor.

Add it all up and you get the feeling that there’s something happening out there: something that could change the face of computing as we know it, something that could revolutionize the assimilation of content–and shopping–yet again. Call it the Mac Daddy of e-tailing opportunities. The iPad may be from Apple, but it’s a peach.

Rick Petry is a freelance writer who specializes in direct marketing and is a past chairman of ERA. Contact Petry at (503) 740-9065 or online at rickpetry.com or www.twitter.com/thepetrydish.