“On demand” as a catchphrase is everywhere. IBM has used it as the centerpiece of a global marketing campaign about consulting services and server capacity; video “on demand” is the hot topic of the cable/interactive TV marketplace where users can order thousands of programs any time they choose; and companies like Scion are marketing and enabling personalization of car purchases upfront.
Marketers ignore this paradigm shift at their own risk.
The concept is not new – marketing responds to consumer needs. The promise to the marketer has always been that more relevant marketing will deliver higher customer conversion rates and a better overall brand experience to the consumer.
On-demand marketing as a concept takes responding to the consumer a step further, adding the element of a real-time marketplace that synchs a consumer’s needs with an appropriate offer. The initiative comes from consumers, not marketers. This new marketing paradigm is the model behind the phenomenal and ground-breaking success of search engine marketing.
A short, incomplete history. Marketers are just the latest to feel the effect of the “on-demand” change. In recent years, with the mainstreaming of the Internet, on demand as a consumer phenomenon has changed business models across numerous industries.
Dell responded in the computer space, letting customers design the computer they desire, and has since become the leading computer company. Entertainment is being revolutionized by products like TiVo and iTunes, which enable on-demand TV program viewing and song download purchases. The travel services industry has been radically transformed by “on-demand” price comparison and consumer price bidding.
The on-demand world arms consumers with real-time intelligence. They can get information about anything they want, whenever they want, and they are taking advantage of this.
Mike George, Dell’s chief marketing officer, says customer buying patterns on Dell’s site change within minutes of price changes – highlighting the real-time responsiveness of the marketplace and the sophistication of the Internet-enabled customer.
Another example is the auto industry, where most purchasers now enter showrooms with the make, model and price for the car they want. According to Ford, more than 80 percent of its customers conducted research about their potential purchase before visiting the dealership.
Broad-scale implementation of on-demand marketing. Search is an extension of this paradigm – a real-time marketplace driven by the consumer, where the consumer controls the dialogue. For marketers, search has become the leading indicator of how on-demand marketing will be delivered effectively.
Search engines provide relevant marketing offers and messages based upon consumer-initiated searches, a fundamental shift from the broadcasting of messages to a wide audience that has dominated marketing for decades. The consumer-driven on-demand phenomenon is requiring a shift from targeting messages to the masses to targeting messages to an individual’s request.
What is revolutionary about search is the scale and rapid success of the space in delivering an on-demand marketing solution that appeals to consumers and marketers. That impact is borne out by predictions, as reported in Advertising Age, that the combined earnings of Yahoo and Google will rival that of the three big networks this year. Publishers and marketers are deriving financial returns with this model. For marketers, on-demand marketing is often more effective on a cost-per-acquisition basis, delivering increased efficiency and accountability.
rching for the perfect solution. Search engine marketing is merely the first broad-scale implementation of on-demand marketing, the success of which is already driving the advent of other channels. Google, Yahoo and MSN are pushing their on-demand models into contextual marketing, local search, mobile phones and even TV offerings. These models seek to respond to customer inquiries and behaviors and likely will be based on marketplace supply and demand pricing.
The trend is appearing in advertising spend as well – with TV ad revenue expected to peak in 2006 and begin declining in 2007, while radio already has flattened out. Gary Fries, president/CEO of the Radio Advertising Bureau, recently said, “Radio revenue is leveling out as the industry adapts and evolves to the new consumer-centric marketplace.”
On demand will not provide the complete solution in the near future for marketers, but leveraging it will separate winners from losers. Once consumers have the option of control, it is unlikely they will want to relinquish this. The good news for marketers is that new opportunities can be leveraged.
Search today provides marketers with branding and direct response success. At a recent Kelsey Group conference on local search, a panel discussed the branding value of search marketing. Based on the panel and audience feedback, it became clear that the notion of branding versus direct marketing is shifting: Marketers are realizing that the distinction between these two tactics is blurring, and on-demand marketing accomplishes the goal of reaching the right audience and enabling direct contact.
The search communication medium today is largely limited to text and images, with the latter coming on strong. In the future, this trend will evolve toward greater interaction, thus increasing consumer control and success for smart marketers willing to embrace the change.