The Power of Online Data Analysis

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When television became widely available to the public in the '50s, radio advertisers repackaged their content and brought it to television. As time went by, it became clear that the medium merited an entirely new approach which would take advantage of the unique qualities of television.


Fifty years later, the same holds true for the Internet. During its infancy, publishers and advertisers held fast to the belief that banners and buttons were the best ways to tap the unique qualities of the Internet.


As we have discovered, the Internet is at its best when advertisers take an approach that builds on the traditional strengths of direct marketing while leveraging the unique opportunity to develop a one-to-one relationship with consumers.


I-marketing takes unique advantage of the Internet to target, track response and personalize communication in real time. I-marketing is the next natural step in the evolution of direct marketing.


There are three important principles for marketing on the Internet. The foundation for any i-marketing effort must include an ironclad privacy policy, explicit consumer permission and offer personalization. These guidelines apply when marketing to a customer database as well as for prospecting.


Provided that these principles are followed, there are several tested strategies that every smart i-marketer can then employ to increase the effectiveness of e-mail marketing efforts.


Organic and Synthetic Databases


An organic database is one in which the consumer has directly given permission to the company sending it e-mail. The consumers trusts and understands the service offered, and receives personalized offers based on its actions over time. Customer permission cannot be borrowed, it must be earned.


Synthetic databases are built by renting the names from other Internet sites that have earned the trust of the consumer. Today, many e-mail lists are obtained through purchased third-party lists or check-box opt-in programs where consumers sign up to receive e-mail notices from participating marketers in the affiliate program. Consumers check a box on a participating Web site and give their permission to receive e-mail notices from similar advertisers.


Unfortunately, the consumer often has no idea that his profile has been rented or sold to a third party. Additionally, e-mails are not sent to the consumer based on his demographics or shopping interests. In fact, often the consumer can't recall signing up to receive the e-mail notices in the first place, and it is difficult for him to unsubscribe.


Internet marketers constantly talk about their ability to perform true one-to-one marketing, yet very few have learned how to deliver on its promise. As marketers learn about consumers' household demographics, shopping habits and preferences, their e-mail campaigns will become more successful.


Through ongoing consumer data mining and behavioral pattern analysis, marketers will be able to track consumer activity at the shopper level and then re-target a consumer based on previous activity. The process can continue to be granular. Each successive e-mail program can be continuously focused to yield higher results.


The Internet creates the perfect forum to acquire self-reported consumer information, such as age, gender, ZIP code, income and children in real time, and to target consumers based on their profiles and shopping interests.


Collect Usage and Behavioral Patterns


Building a consumer profile is only the first step, however. It's crucial to take targeting a step further by capturing information on the usage and behavioral patterns of consumers as they use your site and respond to e-mail. Every offer consumers view, every e-mail that they respond to, every trigger page that they visit should be registered in their individual household profile.


This approach will allow your company to create predictive models that find important correlations in the data and will enable smarter marketing in the future. If a consumer clips a baby diaper coupon, it's evident that he has an infant in the household. With this information, a marketer can target other baby-related products and services to the consumer with the knowledge that he has an increased propensity to buy. Consumers can be clustered into very specific demographic segments based on the correlation of their demographic and behavioral data.


It is critically important that the consumer continues to maintain total control over his profile and that the company collecting this data not sell or rent any personal profile data to any third party.


Perhaps one of the most important factors affecting your marketing effort is the mind-set of customers at the time you target them. Are they checking the weather, making travel plans or updating their stock portfolio? If so, they may not even be thinking about making a purchase. If you can direct an offer to them when they are researching a purchase or looking for a special offer, however, you have an opportunity to target an incentive to them at just the right time. Look for opportunities to communicate with potential customers in an environment that takes this into account and you will realize significant efficiencies in your marketing efforts.


In the early stages of Internet marketing, the key metrics every marketer closely watched were impressions and clickthroughs. As banner click-through rates fell and sales did not materialize, many marketers realized that conversion rates were an important metric that would help link marketing dollars more closely to revenue. Cost per click and cost per impression are much less important than cost per sale.


As business models evolve and patterns are established, marketers will need to evolve even further to analyze lifetime value to help establish benchmarks for customer acquisition and retention budgets.
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