May 31, 2007

More On Abacus, Google, And Customer Biodiversity

Please click on the image to enlarge it.

One of the most popular pieces I've written this year was Tuesday's discussion about Abacus, Google, and Brand Implosion.


Almost nobody chose to leave a comment. But you're reading this article, you're forwarding this article to friends and co-worker. When you come to the site to read it, you're interacting with the site much more than usual.

Interest in the article made yesterday the busiest day on the blog in the past eight weeks.

Why is this article interesting to you, and why is the topic so divisive among the catalog marketing community?

Why is this topic of interest to me? To me, it all boils down to "customer biodiversity".

Online marketers excel at using customer biodiversity to their advantage. They drive traffic through a massive network of affiliates, often numbering in the thousands or more. Online marketers utilize portal advertising to reach larger audiences. Brilliant online marketers cultivate traffic through natural search, at close to no incremental cost. Most online marketers use paid search across hundreds, thousands or more keywords. All of this guarantees a diverse audience of potential and existing customers. Some strategies work, some fail. The marketer manages a complex ecosystem of marketing strategies and customers.

Retail marketing is all about a complex interaction between "who you hang out with" and "target customer demographics". Nothing happens when you put a physical presence in front of the wrong target demographic. The right demographics and the wrong shopping center or wrong set of competitors cause problems. Combine the right demographics, competitive biodiversity, and a modern shopping environment, and cash registers sing.

Catalog marketing, however, is being threatened by a lack of customer biodiversity. The entire left side of the diagram represents potential customer biodiversity for catalog marketers. In the past, the list broker was the gatekeeper of biodiversity. S/he managed hundreds of outside lists, s/he even fueled the growth of compiled lists because s/he wanted to do "what is right for the client". In the process of doing that, s/he ceded market share to the compiled lists. This hastened the decline of the list broker, and accelerated the rise of the compiled list vendor. In 1990, one list broker ensured customer biodiversity by simultaneously managing a hundred relationships with competitors. Today, the same service can be provided by one statistician creating a statistical model at a compiled list vendor.

There was a lot of discussion about postal rate increases at last week's catalog conference. Obviously, this is an important topic in the short term.

Long term, there must be a significantly increased focus on customer biodiversity. The success of a multichannel business is predicated on the ability of the retailer to align with the target customer across a wide variety of potential sources.

My experiences tell me I want to spread my marketing efforts across a thousand affiliates, several large portals, natural search, paid search focusing on several hundred or more keywords, e-mail marketing, RSS and applicable Web 2.0 marketing, several compiled lists, several dozen or more rented/exchanged catalog lists, catalog requests, and other prospect lists. This gives me a portfolio of opportunities to manage.

I do not want one statistician who knows nothing about my brand culling prospects out of a compiled list as my primary source of new customers. I'd love for this statistician to be a piece of the puzzle, not be the entire puzzle.

Your turn, what do you think?

6 comments:

  1. Anonymous1:30 PM

    Kevin,
    The articles of the past 2 weeks have been by far you most in depth--lack of response is probably due to your readers taking time to dive into all the detail.
    I am from segment of industry not directly involved in using Google/Abacus/Experian, and read your blog for the posts on brand marketing trends in general.
    Speaking generally, the trends in today's world require new way of thinking about getting marketing out to the potential customers. You are right that someone(Google, Abacus, etc) dictating our best prospects for marketing may be leaving out substantial numbers of customers. On the otherhand, how do you effectively target catalogs when costs for marketing are so high?
    Two points to note:
    2. Article on DM conference and postal increases mentions Tribune publishing offering paper carriers as alternate means of distributing catalogs than USPS. To some degree that makes sense--depending on how catalog is bundled. If inside newspaper, it becomes just another circular. If outside the newspaper(bundle or separate delivery), then perhaps you can target the neighborhoods(i.e. homes in the $800k-$1million range).
    Either way, definitely creative thinking for a struggling medium.

    2. MacDonald the marketing exec at Macy's that caused a small bubble of resentment when she spoke to newspaper conference last month, is out. However, her point that newspapers need a way to more cost effectively support a national campaign is on the money if newspapers want to compete against online and tv advertising. Even TV advertisers have to come up with something as they are getting Tivo'd out---leading to more expensive product placements. And following up your excellent B&H catalog post, online is great for research of specific items, but they haven't quite equaled the experience of browsing a catalog which most women do during their lunch hour or coffee breaks.
    As always, keep up the great work, Kevin.
    K

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  2. Here's the thing, Kevin: In your diagram, those sources of biodiversity on the left are actually NOT truly disparate sources.

    If you consider that the co-ops are using transactions that come from a direct list source, you reduce the biodiversity even further. It's a weird redundancy that doesn't have much of a parallel in the other marketing disciplines. (Not that I can think of, anyway).

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  3. Fatemeh, well said, good observation of a subtlety in catalog customer acquisition.

    K --- we're talking about things over the past two weeks that people are telling me. If there are two comments that I continually get, they are:

    (1) I have this nagging feeling that my matchback analyses aren't correct. Why?

    (2) Response continues to decline. Is it healthy for me to participate heavily in co-op databases (the answer, obviously, is yes, but with balance), and am I causing my housefile performance to suffer by diving into the co-ops?

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  4. K --- and as of yesterday, Ms. MacDonald is no longer running marketing at Macy's. Interesting.

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  5. Kevin, great set of articles. By extension, it's a reminder that no single marketing channel can do it all for a product. I tried to expand on this a bit here - www.integratingdigital.com - let me know what you think.

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  6. You can give keywordspy a try.

    KeywordSpy.com is a Keyword Research Tool that helps identify what keywords competitors use, with results actually reflecting what advertisers are using at the current time. - http://www.keywordspy.com

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