March 07, 2011

Perception vs. Reality

Let's pretend that you are a $50,000,000 business.

Here's what the trade journals, bloggers, and the Twitterati tell us is happening:
  • Catalogs are dead, generating $10,000,000.
  • E-Mail has the best ROI, and is generating $20,000,000.
  • All other online and offline channels are generating $10,000,000.
  • Social Media and Mobile are burgeoning, generating $10,000,000.
  • Total business = $50,000,000.
We, of course, get to see how the sausage is actually made.
  • Catalogs generate $20,000,000 after matchback and incremental A/B testing.
  • E-Mail generates $5,000,000 after incremental A/B testing.
  • All other online and offline channels generate $24,500,000 after incremental A/B tests.
  • Social Media and Mobile generate $500,000, if that.
  • Total business = $50,000,000.
We frequently read comments about the power of e-mail marketing.  We're constantly bombarded by folks pummeling us with messages about the power of social media and mobile.  And yet, sales fail to validate the perception offered by the punditocracy.

When we read that somebody believes that social media drives just 12% of the volume of e-mail marketing, we might conclude that the metric sounds reasonable.  And I hate surveys and studies ... but the percentage aligns with what I see on a daily basis.

When we consider that e-mail drives so much less volume than the pundits tell us it drives, well, that tells us something about both e-mail and social, doesn't it?

Reality offers a different view of online channels, and burgeoning channels.  For some, yes, social media and mobile mean everything.  70% of my consulting revenue comes from this blog.  But in no way should an established business expect 70% of their volume to come from social media ... or 7%, or even 0.7% for that matter.  And eBay may generate a billion dollars of mobile volume (fully cannibalized from e-commerce, mind you).  But that doesn't mean you will generate half of your online volume via mobile.

We have to filter through a lot of psuedo-metrics and strongly worded opinions to get to reality.  The reality is that we have added a lot of channels in the past fifteen years, and yet, our sales are increasing at about the rate of inflation.  What does that say about all of these new channels?

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