One of the real benefits of working in an agency environment is the constant exposure to new and different marketing challenges across a range of industries.  And while each industry is fundamentally different, the commonalities are what I am most drawn to.

Recently, I have spent time actively seeking those parallels…and given more thought to how I might use these insights to benefit our clients.

So think about this.  What do pet owners have in common with those who opt to have their oil changed on a regular basis?  How has the economy influenced these two apparently distinct consumer groups in common ways?  Sure enough, we see that spending during these tough times…on vehicle maintenance and on pet care…has been under pressure, though consumers are spending relatively less in so many other areas.

But the pressure is still there…and marketers have to drive repeat purchase activity and aggressively reinforce benefits, especially when it comes to premium products.  Based on our proprietary research in the pet arena, that means tapping into consumers’ emotions about giving pets the very best, given all of the emotional support that pets provide during these tough economic times.  In the oil change arena, the message is about the increased importance of maintaining your vehicle when cash flow is low…in an effort to avoid more costly repairs.

And I continue to believe that, when the economy tanks, the need to maintain relationships with customers is more critical than ever.  Rather than slowing down on messaging, marketers must acknowledge the situations that their customers face and showcase how continued engagement with their brand will help them weather the storm.

So once again, while the industries seem to be completely different, those who market to pet owners and oil change customers have more in common than at first blush.

Ever since the first banner ad appeared and asked the question “Have you ever clicked your mouse right here?” (AT&T ad on HotWired in 1994), agencies and marketers have tracked and talked about the click…but is that really a valuable measurement?

Now, before I raise too many hackles, I do believe that clicks are an important metric, but it’s a relative measurement and doesn’t necessarily equate to business success. I recognize as an agency, we really only have one goal—helping our clients’ businesses be more successful. If you lose sight of that, you might as well get into a new line of work.

So what should we be measuring? Business impact, of course. As digital marketers, we need to expand our range of metrics. We can’t just stay in our safety zone by focusing on impressions, clicks and engagement (try to tie that to a business goal). Spend a little more time with your analytics team, you’d be surprised at how much more you can learn by taking your metrics to the next step. Changing your mindset from clicks to conversions is the first step, but don’t stop there; there are  lots of other things you can track.

According to a recent study, 66% of Americans do not want marketers to tailor advertisements to their interests. Reading this statement made me wonder: Is that a true feeling, or perhaps was the question worded in the wrong manner? For years, studies have shown that when asked, consumers adamantly believe that advertising doesn’t affect their purchase decisions, but clearly we know that this isn’t true.  So rather than focusing on the negative perception of targeted ads, I wanted to point out some key benefits targeting provides to consumers.

1 – Less advertising
In the ideal world, advertisers truly only want to reach prospects who have interest in their products and services. Any other spending is wasted. Advertisers don’t want to be everywhere; they want to be where their prospects are. So if we can reach better prospects in fewer places, the amount of advertising consumers are exposed to is going to decline.

2 – More relevant advertising
Given my age and gender, I often fall into the “sports loving” demographic profile and, thus, frequently see ads related to sports. But to be honest, I don’t follow sports at all. When I see these types of ads, I usually ignore them, but if I see ads related to things I do like, I pay more attention. While it may be subtle, my consumer experience is better when appropriate ads are immersed in relevant content.

3 – Lower prices
This point may not seem so obvious, but if it’s true that “half of the money spent on advertising is wasted” (J. Wanamaker), more efficient advertising lowers a marketer’s overall costs, which in turn, down the line would result in shifts in pricing strategy. An interesting related side note about this consumer benefit can be found in the the same study, less than 50% of respondents were opposed to receiving discounts tailored to their interests. For those of you who are counting – that’s a 35% shift in attitude compared with tailored advertising.

Given these three points, how do you think consumers would respond to this question: Would you like to see fewer, more relevant ads for products that cost less? I believe you’d see a much different result. There are some very real concerns about consumer privacy that need to be addressed and will be critical to successful behavioral targeting…but there are also significant consumer benefits. So let’s make sure we’re not throwing out the baby with the bath water.

I attended the Advertising 2.0 conference in NYC on Wednesday. The keynote was Susan Decker, President of Yahoo. She talked about the state of online display advertising and compared it a bit to search.

Search is King

For the last five years, search advertising has worked well because it’s exceedingly simple to translate a search query into the ultimate intentions, goals, and desires of the user.

Since search-intentions are clear, investments and technologies have been focused on improving the serving and delivery of the search ads themselves (e.g. Adwords, Panama, and bid management systems like Omniture’s). Nowadays, very sophisticated platforms exist to drive search campaigns and the efficiencies are staggering.

Unfortunately… The Kingdom is Tiny

The problem? Ninety percent of all online advertising inventory isn’t search based. And this enormous display ad (e.g. banner) inventory is fragmented and inefficient. Susan is predicting a renaissance in display advertising. I think instead it’s facing a revolution.

The online display-advertising inventory is fragmented because it is structured largely on the ancient ideas of content ownership and subscriber profile. That is, online display ads are sold in nearly identical fashion to offline display advertising – a system that was established literally a hundred years ago or more. Revolution is needed.

It’s important to note here that even though these online ads are inefficient, they are so much cheaper than offline ads that the vast inefficiencies involved are easily hidden by agency or media planner or even by clients themselves. (These ads essentially get “fewer miles-per-gallon,” but each gallon is cheaper to buy.) A little better, certainly easier, but not the permanent solution. Frequency works after all, and online ad frequency keeps getting cheaper all the time.

Two Variables! Lowering Cost Per Acquisition (CPA)

The real problem is not how much less you could be paying for the same impressions (lowering the “C”), it’s how much targeting and reach and response you’re missing out on (increasing the “A”). As a rule, “old fashioned” marketers will be excited by the ever-shrinking-C in CPA. Direct marketers will instead be excited by the ever-increasing-A. Why? Because as direct marketers, we look beyond campaign metrics like CPA to look at lifetime customer value; each missed acquisition represents enormous opportunity losses.

Susan Decker also cited statistics that suggest that in 2012 Internet advertising will be second only to direct marketing and will exceed all print and TV. She spoke with enthusiasm about the vision of Yahoo’s freshly minted display advertising platform – hoping it will deliver on the idea of writing an ad once and publishing it to 500 million users.

Again, I agree with her sentiment, but her choice of words belies an “old fashioned” approach. First, by separating “Internet Advertising” from “Direct Marketing” I think that Sue is participating in the propping up of out-of-date mass-market-mentality about marketing and advertising – the very attitude that created the fragmentation she’s trying to solve! Revolution is needed.

The long tail – of both products and the markets they target – is the single most important concept to understand in this new media landscape. As targeting efficiencies improve (the ultimate promise of improved display ad platforms like those from X+1, Tacoda, and RevenueScience), marketers will find greater opportunities and lower costs through increased segmentation. (That would be the complete opposite of sending the same ad to 500 million people). Products, being sold directly to niche markets of consumers, through one to one marketing methods, will define the display advertising landscape… and that’s direct marketing.

As Seth Godin put it so well almost 10 years ago: “the Internet is the ultimate direct marketing medium.”

Copywriting is copywriting, right? Not exactly. As the Web assumes greater dominance over how we gather and obtain information, it’s had a significant impact on how read content in print mail, as well. It’s part of what makes up DM 2.0.

I started out as a direct marketing copywriter in the early ‘80s. Long copy was king and a two-page letter was considered short. Tightly structured letters with intriguing introductory sentences, benefit stacked on top of benefit and a heavy use of bullets and subheads. And of course, the call to action was always tucked away at the bottom of the letter.And it worked for a long time. Until the Internet.People don’t read the same way online as they do in print. It’s all about scanning information. Yet, some things have remained the same, or have taken on even greater importance. For example, David Ogilvy wrote in his famous book “Ogilvy on Advertising” that “The headline is the ticket on the meat. Use it to flag down readers who are prospects for the kind of product you are advertising.”

This is especially true when writing for the Web. The headline is key because people don’t read every word. The headline has to communicate a lot of information. They don’t have to be as clever in the advertising sense, but they have to communicate the offer/benefit, because you can’t bet that your reader is going to hang on every word of your sparkling copy.

Web usability expert, Jakob Nielsen (someone I love to hate, except when he’s right — which is more often than I care to admit) claims that according to their eyetracking studies, people’s dominant reading patterns look sort of like an “F.”They usually read horizontally across the upper part of the page (the top bar of the “F”), then they move down a little bit and look at a shorter horizontal bar of information (the second bar of the “F”), then readers scan vertically down the left side of the page.Subheads have to be clear and direct, not clever. I learned this the hard way, through focus group and usability testing. Subheads are purely about information.Another point that is the same but different: the call to action. In traditional DM the call to action is always at the bottom of the page. The idea was to make them move their eyes down the page and hope that something else snags their interest. The Web has changed this. Whether it’s a site page or an email, the call to action has to be at or near the top of the page. And people are now trained to look for their key information right at the top. If it’s not seen right away, you can’t be sure that it ever will be.The interesting part is that it appears Web reading patterns are affecting print reading patterns. While longer letters still work with some products and some audiences, we’ve had very interesting results with what we call “billboard letters” that communicate the offer, benefits and call to action in a very short, scanable format.

Dell may have lost its top spot in PC sales, but Sunday it took a $4.5 billion step to lead its industry into integrated marketing. The Texas-based computer company announced a partnership with WPP “to create a new global integrated marketing and communications agency” with both “the creative horsepower and ability to measure the business impact” of its work. Vice President of Global Marketing, Casey Jones, said the new venture, dubbed “Project Da Vinci,” will allow the agency to “spend 100% of their time thinking about our customers.”

The press release on the Dell Web site outlines many “key observations” that motivated the move. Here are a few from their release that Catalyst Direct has also been evangelizing as part of DM 2.0:

• The rationale for one partner – a “partner” is someone who works with you, not for you.
• The Internet revolution – when you have one billion people online and another one billion joining them over the next four years, it becomes very important to have the right analytics, the right team and the ability to build campaigns in days, rather than months.
• The importance of analytics – improving shareholder value is the ultimate award for all of us to win. …We don’t mind winning industry awards, but our customers and our shareholders are our focus, not what we can win in Cannes. A combination of great analytics and creative is key.
• The investment in our future – the agency will invest in our relationship as much as we do in them. It’s mutual from day one.

Commenting on Dell’s decision to create an agency, Sam Hart at Charles Stanley told Forbes.com he isn’t sure this unusual move makes sense for all companies. Clearly not everyone has $4.5 billion to spend. But this is just more proof that DM 2.0 is here to stay.

Time and again, general advertising and marketing communications agencies have invested, purchased, persuaded, cajoled their way into Web work – without ever really understanding it.

I remember one such example vividly: an agency director muscled his way into a meeting about a Web platform redesign and commandeered the first twenty minutes to highlight the many faults and problems with the client’s existing site. We sat patiently. At the end, the agency bigwig posed the killer question: “Who built this for you anyway? It’s horrible!” To which the client replied: “You did.”To be fair, that general agency exec was setup for a fall. After all, the birth of brands was in the late 1800s, and the birth of the agency came coincidentally with wider distribution of broadcast technologies such as print, radio, and television. It was a “setup” because the Internet is a narrowcast technology—not a broadcast one. While the birth of marketing came in broadcast form, the future clearly lies in new “narrow” ways of reaching customers.

Narrow markets demand narrow marketing

Concepts like the endless aisle, the long tail, the sudden and dramatic line extensions in even our oldest and most revered brands, and the general success of niche marketing on the Web, all tacitly suggest that a narrower approach to marketing will be more successful in this “more narrow” brand and product landscape.

Over the last 30 years or so, only one marketing discipline has been increasing focused on technologies that capture the power of narrowcasting: direct marketing. And while DM agencies have long focused on print/mail, telephone, and television, the rules they apply to their work are a strangely appropriate launching point for Internet success. They get it. They narrowcast. Auragen’s 12 years of experience confirm the best Web applications are built by …

• … matching customer information (e.g., Mary likes apples)
• … with the right content (…so we’ll show her apple recipes first…)
• … in the right display format (… in a format that fits her iPhone).

It’s the knowledge of Mary that helps us tune the offer appropriately and deliver the proper creative execution. You will immediately see how this approach echoes the most basic of rules in direct marketing:

1. focus first on the right list of prospects
2. ensure that you have the right offer for them and…
3. deliver it in a creative package that breaks through the clutter.

The approaches are the same, but for a long time we’ve worked on separate projects for separate objectives, with separate corporate clients.

No longer.

Direct marketing replaces general advertising

The promise of DM 2.0 is the promise of narrowcasting, for sure. But it’s also the promise of true and final integration of Internet initiatives into the marketing mix. But instead of waiting for general advertising to accept new media and direct into their fold, we realize now that the general advertising is an old approach with waning utility and reach. Instead, the promise of truly integrated direct marketing initiatives—spanning and leveraging all media types and formats—is the big opportunity for smart marketers.

Traditional direct marketing has finally merged with interactive services and the Internet. Expect to see integrated approaches and models that result in dramatically more targeted and more effective campaigns. Expect to see brands take on a far more personal and direct relationship with their prospects, members, and evangelists. Expect the brand experience to literally be delivered to customers on an individual basis. And expect this approach to define marketing communications for the next 50 years.