Presented by Peter Watson at the Tech Alliance Breakfast Club, February 10, 2010

The old advertisings adage is the glass half full or half empty covered the past 30 years of advertising and marketing.

Which is precisely why when I started my self-employed career, I ran to direct marketing. Everything you do in DM is measurable. Mail 10,000, get 300 replies. Call 5,000, connect with 100. In B2B, this form of marketing is called lead generation and it works. Several benchmarks formulas are critical to measuring effectiveness:

What is a customer worth?
What was the cost per order?

But when the Fournaise Marketing Group warned that 60% of all advertising spending it tracked around the world in 2008 failed to deliver the results expected by their marketers, and can therefore be considered wasted, the marketing equation is heading in the wrong direction. Granted, business to business is higher at 47%. The B2C marketers tend to rely heavily on the old and traditional model of brand building: by mainly going after awareness and recall through expensive and impact-driven media buys. They hope to deliver more sales and/or store traffic down the line – a fundamental mistake given the high levels of advertising clutter, which leads to high levels of wastage.

“I’m cool like that” = Tide

And, from your favourite source of Listeriosis, “The Republic of Bacon” = MLF

Fournaise identified the 3 most effective media campaigns to tracked in 2008. The media with the lowest Marketing Wastage Rate (MRW) were:

Text emails and eDMs (online category)

1. Direct mailers (direct mailing category)
2. Newspapers (print category)

In the past 30 years we have witnessed the fragmentation of broadcast television giving way to 500 channels of specialty and movie networks.

Radio has morphed away from AM to become specialty FM networks leaving AM to news and talk radio. Then satellite radio completely eliminated commercials.

And print is losing ground to consolidated ownership with very little local content, against rival free community newspapers that fill the void left by the struggling dailies. Advertising rates are rising and circulation is plummeting. Advertisers are seeking alternative media. Magazines are unable to survive free distribution strategies and more and more the public consults the web as a convenient replacement for news, weather and sports, and lifestyle magazines which now publish online.

Then the market crash took place in September 2008 plunging the world into the worst recession since the Great Depression of ’29. Small business retreated, cutting all marketing spending. Then the media began printing messages of recovery in the first quarter of 2010. Oddly, the metamorphosis of the media continued during the recession. Now, supposedly on the other side, the world has changed and social media has take up the role of primary media. In 18 short months, the way we communicate has changed forever.

Whether the glass was half full or half empty, we are now deep into the digital age. You’ve witnessed this during your emergence as a generation of web people.

Why is all this social media stuff so popular and addictive?

Both make you feel good. But social media also make you feel important.

It gives you a voice that your friends know and the whole world hears.

It lets you share your experiences and discoveries with everyone

It’s not socially embarrassing to be caught doing.

Think about it. 5 billion minutes on Facebook. 142,857,142 items of content shared on Facebook. 3 million tweets on Twitter.

28,800 hours of video uploaded on YouTube. That’s every day, seven days a week 365 days a year, or about 1, 878, 248, 368, 830 (quadrillion) ideas and conversations being shared annually. That’s a lot of conversations. And business should care.

Why?

For starters, word of mouth. The rings of traditional word of mouth used to work in multiples of 16. Today, an unhappy customer can sway hundreds and possibly thousands of friends. Everyone knows about it at once – it’s part of the millions and billions of tweets content sharing and other social media activities going on 24-7, 365.

Word of mouth is powerful because it comes from people we know. We tend to believe information from familiar sources.

Its travels fast and far through social media. The threat and potential for business is clear.

Don’t think your business is a part of social media already?

Do your employees use it?

Do your customers use it?

Do your competitors use it?

Do your suppliers use it?

A reminder: 3 out of 4 Americans use Social Media
70% of Canadians say they use social media
12,482,660 (37.5%) of Canadians are on Facebook
47% of Canadians use Twitter – majority are 19 – 25 years of age

But the online community that is with us now is only the beginning. The pivot point according to Seth Godin, occurred with the introduction of the iPhone in 2007.

Coming out of the other side of the recession, penetration of mobile and Internet enable phones is rising sharply. Perhaps its time to get to know the Mobile Population

Mobile users are inseparable from their devices. Whether they have a smartphone or a traditional feature phone, it goes with them at all times. And as these devices become more capable, they are evolving into extensions of user’s desktops and home communications and entertainment systems.

Penetration will approach near 100% by 2013, reflected in a modest 2.7% compound annual growth rate (CARG) in the number of subscribers between 2008 and 2013.

Usage continues to center around various forms of communication, and text messaging has superseded voice calling as the pre-eminent means of communication on mobile devices. Figures from Nielsen show that in Q1 2009, the average US mobile subscriber sent or received 486 text messages per month but made just 182 calls.

The Future of Marketing; the Convergence of Media.

Strong statement? Not when you consider the marketing channels that routinely appear on that small, hand-held device most of us carry every day - Web, Email, SMS, RSS, Social Media, Video, Radio, TV and Voice. In addition, your phone is fast becoming your e-Wallet and a Point of Sale terminal.

Most marketers are ready to market to mobile devices; they just haven’t thought about it or taken full advantage. Most have Web sites, but few optimize them for the small screen. Many send Email campaigns, but seldom test to see how they’re performing on handhelds. As ubiquitous as mobile devices are, they often remain a mystery as a marketing channel.

Coming full circle, how do you Measure marketing effectiveness?

Marketing can make a dramatic contribution to your success, yet many businesses fail to measure how effective their marketing is. Marketing research can help you assess the effectiveness of your marketing strategy and measure the performance of individual campaigns. You can use market research to help plan your marketing strategy and methods. Very often it’s the combination of marketing activities that produces results.

Measuring marketing performance

It can be very difficult to predict marketing effectiveness in advance, or even to accurately measure marketing performance afterwards. A campaign you have invested in heavily can produce disappointing results. Apparent success can be difficult to interpret - how much did your marketing really contribute to the increase in sales and which marketing activities were the most effective?

Marketing research can make a big difference, helping you measure your marketing ROI (return on investment). For example, advertising research can use simple tracking mechanisms such as coded advertising coupons that let you identify which publications are generating the best enquiries. Web analytics on your website can generate statistics showing how visitors behave and which pages are encouraging purchases. And, the best part is they are free using Google analytics.

Marketing analysis like this doesn’t only help you measure marketing performance - but also predict and improve it. For example, techniques like list splitting allow you to test different versions of a mailing to find out which one will work best. Knowing which marketing messages and media work best helps you spend your marketing budget more effectively in the future.

Strategic marketing analysis

Market research can also be used to assess overall marketing effectiveness at a strategic level. For example, you might want to research whether you are charging the right prices or compare different distribution channels. You can also use brand research to analyze the cumulative impact of your marketing campaigns in terms of brand recognition and reputation. Or you might want to carry out a benchmarking exercise, comparing how you market and how much you spend against competitors and industry norms.

Successful strategic marketing analysis starts with a clear idea of where you’re starting from and what you are trying to achieve. You can then identify key marketing metrics that help indicate marketing performance. For example, if your strategy focuses on product innovation, one key metric might be the percentage of your sales coming from new products.

Other common marketing metrics include measures of customer satisfaction, sales per customer, response per campaign and dollars invested, loyalty levels, percentage of market share and new customer acquisition, as well as the volume and type of customers that leave. All this should be measured against what you and your competitors are doing, to see how they tie together.

Marketing research like this can help you identify what changes you should make. For example, brand research may reveal negative impressions that you need to correct, perhaps by changing your marketing messages. It can also help you identify where your competitive edge lies and how you can capitalize on it.

Why should business care about social media?

Because it is happening right now. While we’re sitting in this room.

In a matter of days, the 2010 Winter Olympic Games will begin. NBC Universal has launched several new mobile initiatives and rebranded its other wireless properties to promote the sporting event. The entertainment giant’s coverage of the Olympic Games spans its various television networks and content channels to bring as much programming and interaction to consumers. NBC has an Olympic mobile website that features breaking news, live results, schedules, TV and online content listings. Medal Counts, Team profiles, slideshows and Vancouver spectator information at http://m.NBCOlympics.com. The age of convergence is now.

Co-sponsor Coca-Cola will also spread mobile cheer with applications that feature noises such as cowbells and air horns. The Coke campaign is anchored by a group of high-profile US Olympians and champions known as the Coca-Cola Six Pack.

And the interesting thing about these mega campaigns, they are totally measurable. Instant user profiles can be compiled for sponsors. And, reversing the popular Facebook formula to profile like users is available to every business. The mandate now becomes a battle to engage mobile or online users.

And the glass is now full of digital ginger ale.