May 03, 2010

Mobile Marketing: Incrementality

Many of you are now peppering me with questions about mobile marketing.

No, not questions about whether it works or not, or how to create an app. Instead, you are asking whether any demand attributed to a mobile app is "incremental".

The concept of "incrementality" is an old one. Back in the early 1990s, catalogers raced to maximize demand by mailing as many catalogs as possible. The goal, of course, was to find the number of catalogs that generated the most incremental profit. Some catalogs generated no incremental demand, if you didn't mail the catalog, the customer spent just as much.

An entire generation of direct marketers, now age 40-55, earned their stripes in this area of expertise. I count myself in this camp. This camp thinks very differently than other generations of direct marketers.

The online generation, folks who earned their stripes between 1995 and 2005, do not think in terms of incrementality. These folks never had to think in these terms, because their craft cannibalized sales from existing channels. They fought the "catalog generation", the folks who were being cannibalized, the folks who spent way too much time measuring the incremental value of the internet.

The online generation is about to care, to really care, about incrementality.

Tablet devices (iPad) will spawn micro-sites that are directionally linked to an e-commerce website, but are technically different ... just like the 18th catalog offering targeted merchandise was fundamentally different from the core catalogs mailed by a brand in 1992.

Mobile devices change purchase patterns. You walk into a Talbots store to buy a dress, but they only offer core sizes ... so you punch up your Talbots app to buy the extended size. This behavior makes you fundamentally different than the average customer, for at least two reasons.
  1. You are a technology shopper, vs. the non-app shopper.
  2. You buy extended sizes not available in stores, making you different than the core size shopper.
Is this purchase incremental? Maybe. Are future behaviors, now changed because of this shift from a store purchase to an app purchase, worth more? Maybe. Will the customer visit the e-commerce website, given the app purchase? Maybe.

None of these questions are answered by allocation models. They can be answered via Online Marketing Simulations and Multichannel Forensics.

We are going to spend time in May talking about the incremental value of a mobile channel. It seems that this is worth discussing, given your feedback. And almost nobody addresses the topic, so it is worth considering.