Is Gap Truly Executing A Multichannel Marketing Campaign?

From the good folks at DMNews, we learn that Gap is running a multichannel marketing campaign for their new retail concept.

My question for you: Is this truly a multichannel marketing campaign? If it is, please define why. If it isn't, what is your perception of a true multichannel marketing campaign?

This Database Marketer Likes Pepsi Products

The hotel I am staying at is a Coke hotel. All Coke products, all the time.

A Database Marketer can make mistakes analyzing data, based on biases in the database. By being forced to drink Coke, I had a couple of cans today. If Pepsi products were served, I would have enjoyed a half-dozen cans.

According to the hotel database, Coke appears to sell well. As a result, the hotel is encouraged to maintain their relationship with Coke. But as a customer, I am disappointed with both the hotel, and with Coke products.

As long as these biases exist in the data we analyze, there isn't hope that Database Marketers can facilitate a true one-to-one, or a one-to-segment relationship with a customer.

Now if the hotel left free Oreos in the room, I would be willing to forgive the Coke decision!

David Raab Has A New Blog

You enjoyed his "Four Questions" segment. Now, you can enjoy his new blog. Just click here to take a peek.

How Much Do You Really Pay To Watch Football On Television?

Sometimes numbers are presented in a way that makes you pause, and marvel at the gross misallocation of funds known as Capitalism. On Tuesday, Greg Easterbrook reported that ESPN pays $65,000,000 for each of the 17 NFL games they will broadcast this year, a total of $1,100,000,000. They paid $1.1 billion dollars for the right to televise fifty-one hours of sports, $65,000,000 to broadcast a three hour contest.

The real amount of revenue the NFL generates from television rights is actually $3,700,000,000, about ten percent more than the $3,400,000,000 it pays its players. Ticket revenue, which can easily be between $40,000,000 and $50,000,000 per year per team (the average ticket price is $62 in 2006), parking, concessions, radio and other revenue streams usually offset overhead, yielding profit for the owners, according to Easterbrook.

From this point forward, I use data for illustrative purposes.

Let's assume that advertisers will reimburse the networks with ad dollars that exceed the $3,700,000,000 the networks paid the NFL for the right to broadcast football games. In order for advertisers to obtain a suitable return on investment, they need consumers (that's us) to purchase enough products and services to generate enough profit to offset the $3,700,000,000 expense they incur. This means that between $8,000,000,000 and $16,000,000,000 of merchandise must be sold to generate enough profit to cover the $3,700,000,000 expense.

The theory is that by targeting the audience watching football, the football viewers will buy the products and services advertised. Consumers will purchase between $8,000,000,000 and $16,000,000,000 of merchandise, enough to cover the cost of advertising.

If we assume that 50,000,000 Americans regularly watch football, roughly three times the audience that watched an average Monday Night Football game in 2005, then the math becomes clear. The average NFL fan has to purchase between $160 and $320 of products and services each year from the advertisers running commercials on NFL football games, in order for the advertising to pay for itself. This allows the networks to break-even or make a profit from televising football.

It is possible that the advertising does not pay for itself. If that is the case, then a portion of the $3,700,000,000 spent on advertising is simply an expense that competes with other expenses on the corporate profit and loss statement. This means that your average company may need to send jobs overseas, or cut corners on quality, or borrow money, in order to fund the advertising.

Think of it this way. If the advertising does not drive any revenue, then the $3,700,000,000 of advertising expense is roughly equal to 92,500 jobs that pay an annual salary of $30,000 per year, including benefits.

The National Football League has a brilliant business model. They have fostered unimaginable brand loyalty for the thirty-two teams they represent, and a level of civic pride seldom equaled elsewhere. Every twenty years, they convince taxpayers to fund $500,000,000 stadiums. This year, they convinced television networks to pay $3,700,000,000 to pay their employees, the 2,000 players in the National Football League. They convinced advertisers to pay at least $3,700,000,000.

These advertisers must convince the football fan to spend between $160 and $320 per person on their products and services, in order to get a suitable return on investment. And if the sports fan is unwilling to spend money on these products and services, the advertisers must trim a portion of the $3,700,000,000 of expense from the profit and loss statement. Guess who gets hurt by that? Lastly, the NFL generates another $1.0 billion dollars or more in ticket revenue, annually, and who knows how much in radio broadcast rights, concessions, parking, merchandise, and however else they monetize their business??

Holy honking cow! The rest of us battle our brains out running businesses with the hopes of generating a five percent profit margin. The NFL is a brand that has really figured out how to monetize their product, relying upon advertisers and taxpayers to fuel their ever-increasing revenue machine.

Business Blogging

This is an entertaining read, courtesy of Stephen Denny.

Four Questions With David Raab, President, Client X Client

This week, I am pleased to have David Raab take part in our "Four Questions" segment on MineThatData.

David is President of Client X Client, a company that provides technology, analytics and services designed to achieve optimum yield per customer. David is one of the leading minds in the Database Marketing field, with nearly one hundred contributions to DMNews.

Let's begin the interview.


Question #1: You are one of the most respected analytical minds in the field of Database Marketing, having consulted with many great brands. Now you are President of Client X Client. What are some of the new challenges you now experience?

The industry has changed greatly since Database Marketing first became identified as a discipline fifteen or twenty years ago. Back then, we spent a lot of time explaining the basic concepts of how to build and use a marketing database, particularly when talking to people outside of traditional direct marketing. Today, the basic premise--that assembling information about individual customers lets you build more profitable relationships--is conventional wisdom across many industries. Similarly, in the early days, people were just starting to develop software to implement Database Marketing principles, so much of my work involved examining the different products and helping people to understand which capabilities were truly important. Today, the core functions of a good customer management system are widely understood and many marketers have hands-on experience with them. So, although I still spend a great deal of time looking at software and talking to vendors, the real challenge is helping clients make the best use of system capabilities. This means dealing more with marketing and business management issues, and less with technical concerns.


Question #2: Your company links the customer experience to actual business results via something called "The Customer Experience Matrix". Can you explain how this product helps businesses understand how customers behave?

The key point about the Customer Experience Matrix is that it gives companies a comprehensive overview of how they are treating their customers, across all channels and all stages of the customer life cycle. That's much harder than it sounds, because most companies are organized into functional groups responsible for a particular type of activity--say acquisition or customer service--and often further divide responsibility by having separate groups for each channel such as Web or direct mail. Each group does the best job it can, but without understanding its overall impact on the customer, all it can measure are internal metrics like response rate or cost per call handled. The Customer Experience Matrix uses all the database technology we've built in the past two decades to finally tie together all the interactions so companies can see how a change in one activity in one channel has an impact on later activities in other channels. The concrete example I always use is how a change in customer service levels has an impact on future sales--something that Dell Computer has recently illustrated in real life. What the Matrix does specifically is to measure the change in each customer's future value after a given type of interaction, so the company can assess whether the net impact of the interaction is positive or negative. But, to tell the truth, we're finding that companies get excited about the Matrix even without the detailed financial analysis because it lets them see, for the first time in a single place, the messages and business rules they're delivering across all their different interaction points. This lets them spot inconsistencies and opportunities that would otherwise remain buried.


Question #3: Put on your "consumer" hat. Are there companies that you believe do a really good job of building a relationship with you, personally, and why do you believe they do a good job?

Interesting question. Marketing is all about segmentation, and I happen to fall into the segment of consumers who are extremely utilitarian in most business relationships. This means I have almost no interest in building a "relationship" with most companies, at least in the conventional sense of an emotional commitment that would lead me to go out of my way to use one company's products over another's. There have been particular companies I have been very enthusiastic about at particular times--I can think of specific airlines, telephone companies and auto manufacturers--but only because they had products that happened to meet my needs very well at a particular moment. There are other companies in those same industries that have treated me so poorly I will never do business with them again unless I have no choice. But in both kinds of situations what drove my "loyalty" was the products themselves, not any type of personalized relationship. It's theoretically possible that I could enter into a "learning relationship" with a company that would know enough about me to make them eaiser to do business with than a competitor, but in practice I haven't seen anyone offer service that's customized enough to make much of a difference. In other words, for me at least, a company is only as good as its last interaction: while I'll cut an incumbent vendor some slack just to avoid the effort of making a change, there is very little else to hold me in place.


Question #4: In what ways would you say that consumers have benefited from advances in analytics and CRM software?

Notwithstanding my previous answer, there are consumers unlike me who do value personalized business relationships, and they have benefited from the analytic and CRM software that lets companies develop and maintain such relationships with them. But I think the more common value is the ability of companies to use such software to predict consumer actions and needs, and to make offers that are tailored to them. I have certainly appreciated and responded to product offers that reached me at appropriate moments, and many studies have shown the value of targeting based on detailed analysis of customer activities. Yet the biggest benefit of all, I think, is one that has become so common we almost take it for granted: we expect companies to have CRM systems in place that make our transaction history and account information instantly accessible should we need them for some form of service such as tracking a package or changing a reservation. Perhaps the best evidence for that expectation is the annoyance we feel when a company fails to meet it. The fact that we actually feel annoyed--instead of just surprised--shows it's a real consumer benefit. Again, this comes down to the point that value is based on operational performance, not better marketing or emotional relationships.

And that concludes our interview with David Raab. Thanks, David, for providing us with great comments and insights!

Carnival of Marketing: September 10, 2006

Welcome to this week's edition of the Carnival of Marketing. My name is Kevin Hillstrom, host of MineThatData, a leading Database Marketing and Customer Dynamics blog.

Many of my loyal readers may not be familiar with the Carnival of Marketing. The Carnival was the brainchild of Noah Kagan. Each week, a different blogger volunteers to host the carnival. Bloggers submit recent, relevant marketing articles that offer the reader actionable solutions. The seven best submissions, as determined by the host, are selected for that week's Carnival.

Given the mission of this Carnival, I attempted to give credit to the posts that met the criteria outlined by Noah. Ranked from Number Seven to Number One, I present you with this week's Carnival of Marketing!

Number 7: Radical Hop and Peter Kua bring us “Three Personalities Critical to Explosive Business”. Peter hypothesizes that there are three types of people that need to be hired to promote a new business, a new product.

Number 6: Jeff Larche at Digital Solid discusses why “Boomers Aren't Immune to the Branding Power of User-Generated Content”. The topic relates to problems that I deal with on my own blog. My target audience doesn't always align with the people who read my blog. Jeff discusses a situation where the planets align, and a person who does not read blogs indirectly leveraged blogs to make an important purchase decision.

Number 5: David Maister at DavidMaister.com shares with us “Why Reporters Have PR People”. David writes about the comments of journalist Tommy Fernandez, and his opinion of Public Relations individuals at law firms.

Number 4: Nedra Kline Weinreich, President of Weinreich Communications and the Spare Change blog, brings us a comparison of “Social Marketing verses Social Media Marketing”. Her dissection of these topics created a lively discussion.

Number 3: At NoahBrier.com, Noah submits “Boring: The Story of YouTube's New Sponsorship Model”. Sometimes, people get caught up in the hype of new media opportunities. Noah presents a different point of view, and received more than a dozen comments because of his point of view.

Number 2: Brian Kim at BrianKim.net submitted “How To Get 105,934 Unique Visitors to Your New Blog Along With 2 Million Page Views in 45 Days”. Maybe more important than the meteoric rise in visitors that Brian experienced is his “open book” approach to discussing the marketing of his site. In business, I respect those who openly, humbly and selflessly share actionable knowledge so that others will benefit. Brian accomplished this with his submission.

Number 1: At the Business and Technology Reinvention Blog, David Daniels submits “The Crunch of the Turnaround – Part 1”. David published information from John Scheel, a noted business turnaround expert. The quality of this post is exceptional.

Other good contributions include “Why Have 24 Hour Specials”, “Make Your Contact Information Readily Available On Your Blog”, “Securing The Home Buyer's Place at the Table”, and “The Four P's of Marketing”.

That wrap's up this week's version of the Carnival of Marketing. Next week, please visit MyMoneyForest for another great selection of marketing discussions from the past week. Submit your blog article to the next edition of Carnival of Marketing using the carnival submission form. Past posts and future hosts can be found here.