Category Archives: Zappos

Why 1to1 personalization hasn’t arrived (hint: media loses money)


The concept of 1to1 customer relationships, in which a marketer learns your needs and later gives you an offer tailored exactly to your whim, is tantalizing. Don Peppers espoused it back in the 1993 book “The One to One Future,” and brands as wide-ranging as Levi Strauss, Amazon.com, Zappos, PaineWebber, IBM and General Mills toyed with it. The idea was a clever counterpoint to the “Positioning” mass-communication strategies of the 1970s, and agencies and software companies, always ready to drink the Kool-Aid of customer focus, embraced 1to1 in the 1990s as much as they love social media hyperbole today.

Trouble is, the personalization idea never took off. No brand prepares your grocery list, picks out your clothing, or foresees what you’ll want for dinner at the restaurant Saturday night. The major impediment was not technology — true personalization requires vast inventories, efficient mass-customization of production assets, and brilliant algorithms, difficult but possible as Netflix has demonstrated with DVDs — but market incentives. Waste against the masses is usually a source of profit, and this is especially true in the media landscape.

Personalization kills media profits
Case in point: Cable television. With boxes in every home, you’d think advertising could be customized easily to every household based on your demographics, personal viewing history, even past shopping habits. It doesn’t seem hard to tie your cable box into an Experian data set to give dads with kids hitting mid-life 30-second spots for red convertibles (ahem), yet we’re not there yet. Experimenters such as Eyeview are beginning to combine audience data, advertiser assets and marketer products to personalize online video ads — in real time, showing snow or rain in the car spot based on your local weather. But that’s just a start. Personalization has become the Great Pumpkin of the ad universe, always almost here, and when it someday arrives it will be really, really big.

Personalization is a huge threat to old media empires. Truly targeting ads means you need fewer messages to get to your audience, and that efficiency is counter to what gives publishers and media giants money. Consider cable: The typical U.S. consumer watches 5 hours and 9 minutes of TV each day, enough to receive 166 30-second TV spots … and most of those are wildly off base. If advertising were truly targeted, you could receive only 10 ads a day for products you really want, and you might respond to 2 of them — enormous marketing success. But all the ad revenue from the 156 off-base spots would disappear. Online publishers, where personalization is much easier thanks to cookies that tag user computers, face similar threats as DSPs and ad exchanges begin allowing media buys that circumvent their high prices and audience control.

Most media is never seen. But advertisers still pay.
Put another way, the typical American subscribes to 130 television channels and yet “tunes” to only 18 of them (consumers no longer “surf” through channels and instead typically punch in 33 for CNN on their remote, “tuning” in to the channels they prefer). That 18 of 130 options means 86% of all programming, and its associated advertising, is never seen by each individual. The bloated waste of advertising is good for the media producers and transmitters, but not so good for advertisers who pay their bills.

Of course, consumers and advertisers want targeting. Media planners, direct marketers, and CMOs spend their careers trying to make their brands relevant; consumers rush to the malls each Black Friday looking for just the deal they crave. From the market efficiency view, personalization really is the Holy Grail — to spend production resources only against those consumers likely to respond. But it is worth noting that goal is diametrically opposed to what drives profits for the media intermediaries. Good luck, Eyeview, with those clever customized video ads; but don’t expect the marketplace forces to get behind your efficiency anytime soon.

(Bonus points: Don’t miss the 2000 press release for General Mills’ customized cereal.)

Ben Kunz is vice president of strategic planning at Mediassociates, an advertising media planning and buying agency, and co-founder of its digital trading desk eEffective.


The doctor placebo effect


A new study finds nearly half of doctors in the United States regularly prescribe placebos — pills that do nothing but make you psychologically feel better. It’s kicked off an ethics debate over whether the mental health benefits outweigh the nuance of a doc outright lying to a patient.

Which makes us think of most product and service marketing. People tend to buy things (or, this fall, vote for candidates) that they believe will please them — and consumers use preconceptions to judge the value of their choices. The vast majority of advertising is designed to create a placebo-type artificial reality around a product. Is a Lexus with leather seats really better than a Toyota with leather seats, if 90% of the parts in the vehicles are the same? Somehow the brand badge on front makes people feel better about the purchase.

Bottled water, vitamins, gas stations, coffee, supermarkets, leather jackets, men’s suits, toothpaste, personal computers, non-smart cell phones, consulting groups, hospitals — the list of commodities differentiated only by our expectations is long.

Setting expectations is more important in marketing than meeting them. You can order shoes from Zappos.com after reading about their incredible customer service — which is true — but you’ll probably end up with a shipping box containing shoes. The reality of true service or product differentiation is almost non-existent … but if you believe it exists, you’ll feel better.

Photo: Brendan Adkins

How transparent are you?


An Australian blogger we know under the nom de plume Kelpenhagen wrote a great bit recently on transparency — asking how much personal information she or anyone should reveal online. Anonymity has its merits; it can intrigue (think Joe Klein as Anonymous writing about Bill Clinton) and protect (think about who you really are, where you live, and whether the world should track your personal dating habits).

Personally, we’ve almost given up on hiding anything. If you work in any supply chain — as a manager or marketing executive or ad agency director — you must balance the fear of upsetting your clients or suppliers or employees with your opinions vs. not being “real” and never making a connection. The most nimble modern communicators, such as Scott Monty of Ford or Tony Hsieh of Zappos, use blogs and Twitter to connect with thousands as real people. There are idiocies emerging, too. Many use social media to broadcast all about themselves, like that accountant you met at the holiday party who just won’t shut up about a tax-savings scheme. If you do expose your real identity, try to listen more than you talk. If you publish a book, drop a hint but for god’s sake don’t write 30 blog posts about it.

The most terrifying trap of social media is for people to get caught up in self-monitoring, tracking how many “followers” they have on Twitter or the number of daily readers of their blog. If you reveal yourself, and if you speak for an organization, the meaning of what you say will go further than the number of links you create to the world.

Our own recommendation is to be real, be open, and let the chips fall where they may. In this new age of the internet, people will find you if they want anyway. We just started a professional relationship with Segway and yesterday sent them a clip of a monkey falling off the two-wheeled gyro-scooter. For a second, we feared they might be offended. But what the hell. Laughing is part of who we are.

Photo by Phil H.

Zappos: Why marketing to your employees is most important


Branding guy Bill Green had a chance to meet Zappos chief exec Tony Hsieh on the recent Plaid van tour and discovered the inner workings of the online shoe/clothing company revolve around employee brand culture.

Zappos is thinking big, targeting $1 billion in sales in 2008, more product expansions, potentially an airlines in the future. And it has grown by pushing brand values more to employees on the inside than to customers on the outside.

– Many new employees must take four weeks of customer loyalty training
– New employees are given $1,000 cash incentives to quit — to weed out slackers
– The company communicates constantly with employees, including a blog by the CEO and a Zappos company culture book
– Result: 75% of sales are from prior customers

It reminds us of a client we served recently who was focused on driving down marketing costs per acquisition. We pointed out the people at the call center could create a huge lift in performance, if only better training and incentives were provided. Why spend so much on advertising media and ignore the people who actually sign up, and grow, the customers?

Read Bill’s complete inside take here.

Update: The current Zappos web site is a bit cluttered and confusing, one weak point in the sales armor. Zappos has a new, improved web site coming soon, you can see the beta here.

Photo: MicheKerr