Looking Glass Brings DM Segmentation Online

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Looking Glass Inc. is just completing a research project involving the online spending habits of individuals. This information will be used to better develop the 27 market segments that Looking Glass has developed to target online consumers.

"We come from the offline direct marketing genre. Our approach is the more you know about consumers and prospects, the better job you can do marketing," said Scott Schroeder, chief operating officer at Looking Glass Inc., Denver. "We're bringing consumer, demographic and lifestyle information and using it to create homogenous segments of households."

These segments are dubbed cohorts. They range from affluent groupings such as "Alec and Elyse," who are empty nesters with an average age of 53 and a combined income of more than $100,000, to "Jason," who represents male students and graduates with an average age of 22 and income of less than $20,000.

Alec and Elyse are further described as dual-income, older couples who use their high discretionary income to enjoy the good life. Jason represents physically active, technologically inclined young men finishing school or embarking on their first job.

"For an e-commerce company that has customers in its database, [it would] have the ability to tell people who they are by their cohort segment," said Schroeder. "It gives you the foundation you need for personalization."

Looking Glass isn't alone in this space. Cogit.com has been targeting consumers through segmentation for three years and has brought its targeting tactics online exclusively over the past 18 months.

Using offline data from Equifax Inc., Atlanta, Cogit has created four sets of 40 to 50 segments. The Cogit model differs from Looking Glass, according to Ralph Wiggins, chief scientist at Cogit, San Francisco.

"They're characterizing the segments and then looking into their buying patterns. We have not taken that route. We haven't spent a lot of time thinking of cute names for our segments. We're using four sets of segments to do real-time ad targeting and personalization of the Web site."

While the models are somewhat dissimilar, both companies agree that traditional direct marketing methods are weaving themselves into the fabric of Internet marketing.

"Finally the online marketers are maturing and realizing the need for offline tactics," said Schroeder.

The old-school ways will serve marketers better than new-fangled collaborative filtering software, said Schroeder.

"Internet behavior does vary by segment. Knowing the cohort group allows you to talk to them in a more relevant, personalized way," Schroeder said. "On the other end of the spectrum is the so-called collaborative filtering. All it's doing is looking at transactional data. It's not saying anything about who the consumer is to the marketer. Therefore, you can't really vary the message. You can vary the offer, but you can't talk to them."

Looking Glass' cohorts are rounded out with detailed information, including extensive research that was conducted for the company during the first half of this year by Scarborough Research, New York.

For example, the study asked which Internet service providers the different segments use. "Jules and Roz," representing affluent couples with kids, used America Online 1.86 times more than any other segment. "Kelvin," the upwardly techie guys, preferred AT&T WorldNet.

Users of online financial services and information ranged from Alec and Elyse to Jules and Roz to Kelvin. The single-male segments outscored the other segments in chat room usage.

Clients of Looking Glass include AT&T Broadband, Cablevision and Dillard's.

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