When marketing is executed properly, cannibalization is minimized.
When marketing is executed like we execute it, cannibalization is a daily reality. So if we're going to have one advertising channel cannibalize another, we may as well put ourselves in a position where long-term customer value increases as a result of the cannibalization.
Take e-mail marketing. Of all the marketing disciplines I study, e-mail marketing is the least well understood. E-mail practitioners focus almost exclusively on short-term metrics (open rate, click-through rate, conversion rate) that give a highly incomplete picture of the value of the advertising channel. This isn't the fault of most e-mail practitioners --- they simply haven't been given the tools necessary to analyze the medium properly.
In a recent Multichannel Forensics project, I was able to illustrate the following:
- E-Mail customers were the most likely to shop other advertising channels.
- E-Mail customers had an average annual spend, at a customer level, but spent more than the average online shopper. Migrating a customer from an online shopper to an e-mail shopper caused an incremental increase spend in the short term, even if the sale cannibalized an existing online purchase.
- Because e-mail customers were the most likely to shop other advertising channels, there was a gain in long-term customer value associated with e-mail marketing. Each dollar a customer spent because of e-mail marketing generated $0.33 of incremental long-term spend across all other channels (catalog, search, affiliates, television, radio, newspaper), over the course of the next five years.
Can your e-mail vendor community provide this type of information for you? Or your Business Intelligence team? Or your Web Analytics team? Or your existing E-Mail Marketing team? It is important to accurately measure how e-mail marketing interacts with your existing customers, advertising, products, brands, and channels.