Interactive DM Vs. Advertising: Telling the Difference

Reading the trade press, it’s easy to conclude Web sites exist purely to deliver banner advertising. That it’s only a matter of time before banner ads outperform print and television. That all that’s left is to figure out how to get consumers to accept this form of advertising. The advertising industry is convinced the Web is all about mass advertising and just another form of television.

The problem is none of this is true.

Consumers are voting with their mice. They are not clicking through. Banner advertising effectiveness – as the industry would have you measure it via click through rates or eyeballs – continues to decline precipitously. So-called rich media techniques clunk and clog through the system. As a mass advertiser, you’d be better off handing out hundred dollar bills on the street than trying to attract Web eyeballs.

On a pure cost-per-eyeball basis, with the average cost per thousand running $30 for the Web compared to $10 for television, it’s pretty clear the Web isn’t going to replace television for the advertiser any time soon.

This mass-advertising focus on the Internet is simply wrongheaded. It denies the very nature of the Internet with its promise of personalized relevance for the user. It ignores the phenomenon of e-commerce, which demands newer, hard-core metrics. And it hangs on to an outmoded view of communications media, a throwback to the days when nothing could be measured.

Far from being the panacea everyone was hoping for, the Internet is the mass advertiser’s (and the mass advertising agency’s) nightmare. But the flip side is that it is the direct marketer’s dream come true. And there is a huge difference between interactive advertising and interactive direct marketing.

The direct marketer is less focused on number of eyeballs than on the nature of the eyeballs, and less on cost per thousand than on cost per outcome. The direct marketer has always been OK with paying more for the right customer, provided the customer performed a measurable transaction with a demonstrable impact on the business at an appropriate return on investment. Unlike the mass marketer, the direct marketer doesn’t care about the number of eyeballs, but is interested in return on investment for one customer at a time.

How does this work on the Internet? The interactive mass advertising view focuses on raw clicks and click throughs, usually with mass messaging and little to no segmentation, sending those clicks to generic Web sites. Interactive advertising pundits measure success based on the sheer volume of eyeballs, not on what happens later.

By contrast, the interactive direct marketing approach targets specific segments or individuals with specific messages and offers designed to get a specific behavior. The eyeballs acquired are directed to customized Web experiences which reinforce the segment-specific messaging.

The direct marketer also measures clicks and click throughs, but links these metrics back to specific transactions that occur on the Web sites or through traditional channels. The primary metric is not cost per inquiry, but cost per outcome. And the tactics are less likely to be creatively focused rather than offer focused. Interactive direct marketers build elaborate test matrices, testing everything from message to specific offer to editorial adjacency to specific landing points on the site itself. Everything is evaluated with respect to its contribution to a measurable customer behavior.

Dell Computer Corp. doesn’t want to know how many click-throughs resulted from a campaign, but how many computers were sold and at what cost per computer. LL Bean looks to lifetime value of customers acquired. And General Motors looks to cost per lead and ultimately cost per sale.

In each case, optimum approaches are determined through a disciplined test-and-learn approach, executed in painstaking detail. This type of effort is not glamorous, and is unlikely to get center stage the way a java applet banner would at @d:tech. But the truth is, it works. And as far as we can tell, it’s the only thing that does.

With these new metrics, the Web does very nicely. So it is somewhat sad to see the interactive advertising industry cling to its outmoded views.

The days of undisciplined media spending are over in the terrestrial world, and they are not likely to reach resurgence in this brave new world of the Web. We are, like it or not, in the age of accountable media where every dollar spent needs to count.

Of course, direct marketers have lived with this burden for years. And they’ve evolved the techniques and the stomach linings to deal with it. We can only hope our so-called “interactive advertising experts” – and the media who encourage them – get the message before this nascent Web advertising business is killed by the hype that created it.

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