Home Depot Exec Describes Confronting Changes in Technology, Media

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SAN FRANCISCO -- The success of technology in the future will depend on how it engages and interacts with other parts of the business, according to the head of merchandising and marketing at The Home Depot Inc., the nation's No. 2 retailer.


Addressing a packed room at ad:tech05 San Francisco, Home Depot executive vice president John Costello outlined the problems facing marketers as the balance of power shifts to the consumer.


"How do you blend the right technology with the right message?" he asked online ad executives gathered at the keynote session, titled "The Age of Engagement." He noted that:


· The changing environment makes engaging the customer even tougher.


· The mass market essentially is disappearing.


· Retail channels are blurring, and various retail formats are selling goods they previously didn't.


· Media are fragmenting.


· Multichannel retailing is becoming the norm.


· Technology is having a huge effect.


· "Me-too" products are proliferating.


A combination of these factors has empowered consumers like never before.


"He or she has decided when they want to buy, how they want to buy and where they want to buy," Costello said.


Born of that knowledge a year and a half ago were Home Depot's online do-it-yourself workshops. The retailer traditionally has over-marketed to men and under-marketed to women. Yet, half of Home Depot shoppers are women while couples make nearly two-thirds of shopping decisions.


To promote its workshops, Home Depot used e-mail and mail along with television to drive traffic to the DIY microsite. Consumers were asked to register and attend online sessions featuring content shaped by needs as designated by them.


The DIY clinics on Monday nights have generated more publicity than anything Home Depot did in the past five years, Costello said. And in-house research confirms that women want to learn how to spruce up their homes.


For example, 97 percent of women who signed up for the workshops said they would attend another. Ninety percent of the respondents rated the workshops as meeting or exceeding expectations. More than 200,000 women have registered for the workshops since the launch.


Costello gave similar examples of integrated marketing for NASCAR, of which Home Depot is a sponsor.


Home Depot also combined online, direct mail and catalogs -- "high-tech, high-touch," as he called it -- to push sales of appliances at www.homedepot.com. Sales of appliances rolled out online last year with 2,000 products selling on the site.


Turning control over to customers by integrating all aspects of their experience with the brand helps. Home Depot now is the No. 3 seller of appliances online.


Marketers and retailers have become programmers, Costello said. Changing media habits and converging marketing elements have propelled this evolution. Consider the Internet, Apple Computer's iPods, addressable TV, TiVo and personal video recorders that record content and skip TV commercials, satellite radio and other media. The question for all marketers is how do you navigate this convergence of technology?


Attendees got pointers regarding that concern: create differentiation and relevance with customers; embark on permission-based marketing; recognize that technology is the ultimate marketing tool; determine return on investment; adapt to convergence and integrate all retail channels with a 360-degree approach to marketing.


"I think one of the easiest things to do to predict the future is to create the future," Costello said. "I think that's what you're doing today."


He spelled out what ad:tech attendees knew only too well as the age-old dilemma: Mass marketing has great reach but not great accountability, while direct marketing has great accountability but not the mass reach.


Marketers must reach customers through all touch points, both offline and online as well as via customer service. Stores still play a crucial role in The Home Depot's customer's decision making.


Costello once was asked, "how many brand managers do we have? My answer was 325,000 brand managers," he said. That is the number of associates working at The Home Depot.


Mickey Alam Khan covers Internet marketing campaigns and e-commerce, agency news as well as circulation for DM News and DMNews.com. Mickey is reporting this week from the ad:tech show in San Francisco. To keep up with the latest developments in these areas, subscribe to our daily and weekly e-mail newsletters by visiting www.dmnews.com/newsletters


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