Thoughts on Direct Marketing
I was recently asked to share some thoughts regarding the impact of emerging technologies in the direct arena.
Direct marketing is going through exciting times, with new technologies for getting close to customers emerging on an almost daily basis. But what are the real impacts of these developments (RSS, blogging, social networking, radio frequency Identification (RFID), and internet protocol technologies (voice over IP and IPTV, and can they ever be direct channels?
Let’s start with a few numbers:
Forty-eight million American adults have contributed some form of user-generated content on the internet, according to the "Home Broadband Adoption 2006," a report published by the Pew Internet & American Life Project. That's 35 percent of US internet users, and as broadband penetration continues to rise in Europe, Asia and elsewhere, the same trends are emerging across the globe.
Comscore/Media Metrix says that Wikipedia was the 18th most popular destination website on the web in March 2006, with some 25 million visitors that month alone.
As of June 2006, there are over 1,300 free IPTV channels available.
The Interactive Advertising Bureau (IAB) and PricewaterhouseCoopers (PwC) have reported that Internet advertising revenues reached a new record of $3.9 billion for the first quarter of 2006. The 2006 first quarter revenues represent a 38 percent increase over Q1 2005 at $2.8 billion and a 6 percent increase over Q4 2005 total at $3.6 billion.
Internet ad revenue is set to overtake UK national newspaper ad revenue by the end of 2007, according to a report by WPP's pooled buying operation Group M.
Conversations vs. one-directional marketing
Blogs, wikis and other “web 2.0” tools are allowing marketers to enter into conversations with their customers rather than marketing at them. This is happening on a number of levels. It has been said that the internet has transformed consumers into a group which would be better referred to as “the people formerly known as the audience.”
One-directional broadcasting is giving way to multidirectional communications. The internet has drastically lowered the cost of generating messages and participating in global conversations, and new technology and communication platforms are disintermediating traditional top-down marketing channels.
People who only used to receive messages are now creating them. Consumers who once could only watch, listen or read are now creating “citizen’s media” - their own video, audio and written messages which thanks to global networks have the opportunity to be seen, heard and read by millions.
New communication channels
Radio is losing market share to podcasting. Five million radio listeners listened to a Podcast in 2005, and that number is forecast to double in ’06 and ’07. Several million people have downloaded 'The Ricky Gervais Show' podcast, helping to prove the commercial viability of the channel.
TV is losing market share to online video platforms such as YouTube which had 12.6 million visitors in May 2006, a 100% increase from the previous month. Rocketboom, a popular online video news magazine, has over 300K daily viewers, more than most cable news shows.
IPTV provides two-way interaction capabilities lacked by traditional TV distribution technologies and is proving, along with the growing popularity of DVRs and PVRs, that the “audience” wants more control.
Traditional news editing and reporting is losing market share to blogs, social news networks (like Digg), and a plethora of personalized news services using RSS feeds and other data to aggregate global news and information on an individual level.
These changes represent a fundamental shift in control in terms of the way messages are delivered, and marketers who which to remain part of the conversation should pay close attention, lest they be sidelined. This is not to suggest that traditional media channels will cease to exist. Rather, it implies that these emerging channels should be part of the mix as they offer unique and unprecedented ways to converse with consumers.
One recent example: Ford Bold Moves
Ford’s “Bold Moves” campaign is just one example of a major brand deciding to talk with their consumers. Rather than stick to traditional top-down re-branding campaigns including the use of TV, print, PR and other traditional channels, Ford has added a truly interactive platform to campaign’s media mix.
Ford has invited a film crew into the company and has granted them access to document the changes going on inside the organization. The results of their filming are being shown on a new web site called Ford Bold Moves.
This level of corporate transparency allows people to watch the company’s attempted turnaround and gives them the opportunity to enter into the conversation via comments, blogs, and tools which allow the easy distribution of Ford’s messages into the rest of the blogosphere.
The emergence of contextual-based advertising models such as Google AdSense which generated $2.7 billion in revenue last year, and new networks like Federated Media, Feedburner Ad Network (FAN), Blogads, and others are allowing marketers to get closer to consumers and their conversations than has been possible.
Most marketers know that word-of-mouth has long been considered the most effective form of connecting people to products, but, until now, nobody has really captured its essence and power. The internet has made it possible for conversations that were once distributed to be captured and managed in a meaningful way. Companies like P&G’s Tremor, BzzAgent and the VW Alpha Drivers campaign are great examples.
"In many ways, the art-form of self-expression has become the “new media”, and social networks are their distribution channels," writes Robert Young on the popular GigOm blog. The phenomenal growth of social networks is providing marketers with the opportunity to reach younger consumers where they “hang out.”
Given their propensity to publish information about themselves, marketers should also be aware of the tremendous data-gathering and mining potential of these networks. The numbers speak for themselves:
• MySpace has over 75M users, 30B impressions/month, $1M/day homepage revenue, and was bought for over $500M by Rupert Murdoch’s Fox Interactive.
• 88% of 18-34 year-olds have a Bebo account in IRE. The site has 25M users and generates 100M impressions/day.
The trend is global:
• Cyworld has 20M daily users ... in South Korea.
• Hi5: 40M users, India, the subcontinent and beyond
Vertical networks are emerging, allowing marketers to target their conversations to specific segments.
• Gusto (travel) : $4M VC, emerging "editorially enhanced" vertical network.
• Boompa (autos): $30K to build, 2 guys, 2 months
• Xuoa (gamers): 1M users, "gamer" interface for social interaction
I think we should be asking how big these emerging channels will become, not if they will be channels.
Technorati Tags: blogosphere, direct.marketing, research
Tuesday, July 11, 2006