Category Archives: direct marketing

Why marketers know if you’ve been naughty or nice

santa watching

There is a story about a jolly old elf who tracks your behavioral data carefully, spies on you even when you’re sleeping, and runs algorithms to assess whether your actions are more positive or negative than social norms. Based on his calculation, the elf will reward you with financial gain in the form of material goods or will deduct from your status by tricking you with what looks like material goods but in reality turns out to be lumps of coal. The system is extensive, including a database of every youth in the world, and is updated annually. If you don’t like this surveillance, good luck: The elf’s privacy policy is unpublished, the observational data cannot be accessed by individuals, and your only recourse to correct misinformation is to send handwritten postal mail to the elf’s address at the North Pole.

Perhaps these childhood stories are why people often freak out about data. The legends of people recording others’ actions, especially those of children, as a form of behavioral modification have been with us for millennium. In Bavaria, the Santa myth is actually split into two figures, a Saint Nicholas who rewards good children with gifts and a devilish, horned Krampus who punishes bad children. Japan has a similar tradition, with an Namahage figure played by men wearing huge, ugly masks, who knock on doors and warn children not to misbehave. Religion is filled with data tracking, starting with God watching Adam and Eve’s naughty apple-biting in Eden, moving on to the widespread but vague idea that somehow all of your actions in your lifetime are being observed for a final post-death judgment. In our deepest beliefs, we perceive there is a connection between what we do, how others record it, and how we will be rewarded.

Which brings us to marketing surveillance 

If you collect enough data to form a baseline for comparing people, you end up with a “database” — and this idea has been around for at least 400 years.  In America in the 1600s, clergy tracked births, marriages and deaths; officials called “tythingmen” would also enter homes to inspect families for observed moral behavior. The first consumer database in the United States was set up in Massachusetts in 1629 to track property ownership. As data expanded, intrusions did too. In the early 1700s, U.S. postal mail was opened regularly to spy on message content.

And then marketers figured out they could make money from all of this information. Database marketing started in the 1940s, first driven by direct-mail marketers (who needed target lists of consumers to mail things to and then calculations to see what worked), later by credit-card companies and banks (who rapidly learned that not all consumers have the same credit risk), and then in the 1990s by Internet marketers who realized they could measure a treasure trove of consumers’ online behavior. While the basic approaches are the same — identify potential customers, differentiate by their value to you and what they need from you, continue to gather more information through interactions, and then customize your response — the cycle time of data marketing increased. Direct mail list updates used to take months; if you purchased a pair of boots at a store in December, it might be March before another company’s boot catalog showed up in your mail. But the Internet enabled a cycle time of identification, differentiation, interaction and customization within days, hours, and now even seconds. Visit zappos.com, look at shoes, don’t buy them, and you’ll see ads for similar shoes on other web sites within seconds. The prevalence of such digital “retargeting” has gotten so rapid that many consumers are beginning to freak out.

The systems are growing ever-more sophisticated. Digital media vendor Rocket Fuel has begun testing device fingerprinting to track consumers by their individual mobile phones; in a recent campaign for Brooks running shoes, it identified the mobile devices of everyone standing along the running route of the New York City marathon, and then later served ads to those devices for running equipment long after the crowds had dispersed to Baltimore, California or even foreign nations. Digital marketers can pick up the IP address of a home’s Wi-Fi connection, and then retarget multiple devices — based on a trigger of one person’s behavior — across the many iPhones, tablets and computers residing in a household. Creative-based retargeting is another digital approach in which banner ads or online videos can be retargeted based on a single ad appearing on any web page, whether or not a consumer clicks on it; for marketers, this provides the advantage of being able to “lift” a publisher’s audience, such as a reader of WSJ.com, and chase that individual around the web later with a pretty good idea of their demographic profile based on the original reading material.

Consumers are rebelling, so what is the balance?

Not everyone is happy about this. Early in 2014, a survey by Truste, a global data management company, found that 74% of Internet users had increasing worries about the use of online data. While only 38% expressed worry about government surveillance, 58% said they had concerns about business use of their personal information. Beyond simple consumer annoyance, the growing use of online data may actually be harming marketing results. 83% of survey respondents said they were less likely to click on an online ad due to privacy concerns. In a deeply ironic circle, the data collection sophistication used to make online marketing work better may actually be depressing response rates.

Smart marketers are recognizing this and beginning to tone down the creep-factor of retargeting, using tactics such as impression caps, dayparting, ad creative versioning, and opt-out options to allow Internet users more breathing room before they are inundated with braying offers.

Data tracking will not ago away, because it is how all of us assess the outside world to calibrate our actions. Marketing in particular is all about treating different customers differently, as the great Don Peppers once wrote — after all, if you have unique needs, you should receive messaging about products or ideas that appeal to your interests, and marketers who play this right will gain greater results from their advertising investments. Just as parents and Santa Claus watch over children to assess behavior, other people will always be watching you too. The practice isn’t creepy in and of itself; what has gotten scary is the instant cycle time it takes someone else to pass their judgment. For our clients, we recommend looking beyond just response and conversion rates to also assess the real end customer experience. You’re trying to share information that benefits the customer, so pace yourselves, people. Everyone likes an elf who brings presents, but we all get nervous if he’s watching us too much.

A conversation with Uncle Yield


In the incestuous world of advertising, most offspring have useful traits and yet, like in-laws seen years later at an unavoidable wedding party, also have grating flaws. You may find direct-response specialists focused on lead gen and costs per inquiry, all metrics, no vision. You encounter brand masters worried about identity and consistency and positioning, strategic geniuses who can’t spell results. You have creative types who ideate their way to castles in the clouds, visionaries who can’t count. You find young social media gurus, casting dispersion on traditional ad habits and talking about collaboration, communities and curation, all eloquence to little effect. And of course you know the New York City ivory-tower grandfathers, not really ad specialists but they’ve worked with Coke or Pepsi so they’ll skewer your ideas with a glare that says, where we come from, back in the day, we did everything so much better.

Yet, sometimes, rarely, you find the long-lost bearded-results mountain man, a crotchety oldster who legend has it once hiked the Appalachian Trail while making wine coolers hip in the 1980s. If he were an ad himself, he’d be Dos Equis’ Most Interesting Man in the World. We call him Uncle Yield. If you are lucky enough, you might ask Uncle Yield for real advice on how to make advertising work better.

He’d fix you in the eye, scratch off a heap of dandruff, stick a finger in his ear to adjust the wax, and say, inspecting the nail:

“Sonny, you’ve got to increase the yield.”

What the heck is “yield,” you ask? Why, you’ve just spent a million bucks on advertising with a sharp agency owned by an acronym in New York City, made the phones jump, captured 20% as leads and then sold a fraction of those respondents your product. The ads worked. You did your job. The arrogance of this old fart!

But your grumpy old uncle wouldn’t be satisfied with back-talk. He’d opine, “Laddie, when I was a child, we never threw anything out — especially your lost leads. Here’s what to do.

“Remember those people who called but you never caught as leads? Well, a lot of people get off the phone without giving you their contact information. But they called you, didn’t they? So they must be interested, right Sonny? So look up their originating phone number, append their address information, and put them in your prospect database. If you’ve only caught 20% of respondents as leads before, now you’ve increased your prospect pool by 5x!” Uncle Yield has been reading HBR, and he knows how to calculate a 400% lift in prospects. You blush.

“You with me lad? You’ve now identified a lot of people you didn’t sell! Now, get aggressive, Sonny! Do something! Call those unsold leads, and if you can’t get them on the phone, hit them with direct mail. And then hit them again. Because those unsold leads already told you they’re interested, like a girlie batting her eye at you in the downtown bar, so step up, you’ll reap double your regular conversion rate. You’ll be gaining many more customers for almost zero incremental cost. Why, a 10% increase in sales from your untouched, unsold leads equals hundreds of thousands you won’t have to spend on advertising next year!”

Well, damn, if he just didn’t teach you a trick about remarketing. You feel OK, it’s a good idea. Sure, there are risks. You bring up DNC requirements for remarketing, the need to get lawyers involved to make sure your contact approach is in line with the law, the fact that your direct mail budget may need some tweaking to free up funds from what until now had been an elegant intellectual exercise in targeting people who don’t know who you are. It won’t be easy, you say. Your uncle digs out more earwax, scoffs, and says, “For Pete’s sake, boy, turn up the office thermostat. Don’t you know cooling this operation costs money?”

Image: ToniVC

Cablevision throws switch on clickable TV ads


We noted a year ago that cable systems Brighthouse, Cablevision, Charter, Comcast, Cox and Time Warner were in talks to launch a new ad targeting system. “Project Canoe” would use details on viewer demos to customize TV ads; say, if you have a pet, you’d see dog food commercials, while if your neighbors have girls, they would be served ads for Barbie Dolls while watching exactly the same channel.

Those one-to-one ads aren’t here yet, but Cablevision is out of the gate with another form of interactive TV ads — where consumers can get more information by clicking on their remote. Benjamin Moore is the first advertiser aboard; during its commercials a pop-up screen will invite viewers to hit “select” on their remote to receive a coupon for a color sample. Cablevision hopes to eventually add e-commerce capabilities (imagine clicking for more pizza during the Super Bowl). Could be a healthy move for beleaguered television; 53% of ad spending in the United States flows through direct marketing budgets, and if cable TV can go direct, wouldn’t Cablevision love to click on that?

Image: Ben Sciciuna.

Adverse impact: Why Victoria’s Secret is covering up


It’s hard to believe but, yes, Victoria’s Secret had a shy beginning. Back in the 1970s, Stanford grad Roy Raymond went shopping for his wife and got embarrassed by racks of panties, so he borrowed $80,000 and founded a store. Subtle. Wood paneled. Where lacy things hung on the wall in frames. Raymond’s great insight was that men buy a lot of underwear for women, but these same men often cringe when seeing rows of empty bras.

The first VS catalogs even showed both men and women on the cover, usually a guy in a tux and the woman in a flowing robe. Sex tonight? No, hon, just dinner.


And then the 1990s and 2000s gave America bottomless Esquire covers and diamond-encrusted bras. VS pushed far into the red zone, the American Decency Council protested, and suddenly with sales down 6%, last week CEO Sharen Turney relented — VS is going to tone down the sex. Some like Brandflakes point out Victoria’s Secret brand slipped a demo, and is now more popular among college students than affluent homeowners.

We think VS fell into the trap of adverse impact.

Adverse impact is totally logical, but something most marketers fail to think about. It simply means that your marketing message may repulse a certain portion of prospective customers. Stop & Shop recently sent homes in Connecticut a mailer saying “thanks for being one of our best customers”; our first thought when seeing it was, damn, we’re spending too much on groceries. For every marketing action there is an equal and opposite reaction.


VS is a $5 billion business and has cataloging down to a science. Like most marketers, they probably focus on responses and not aversion. They know catalog response rates, that customer lifetime value is about $450 in future sales, that the optimal number of mailers is 7 to get you to react, and that the black lace on the cover with a red star burst drives a 2.8% response vs. the 2.3% last time they used white. (We’re guessing, but we’ll go with black.) But what VS and others fail to measure is the percentage of consumers who throw the catalog in the trash because they don’t like the message. The adverse impact is simple: Some women may be repulsed by overwrought sexuality, and if those women outnumber respondents, VS begins to have troubles.

There are three ways to avoid the adverse impact trap:

1. Anticipate it. This means setting up a qualitative study to monitor your entire prospect base — which typically includes respondents, “apathetics,” and the repulsed. While ideally your respondents grow, and most people fall in the apathetic middle, sometimes the anti-message repulsed folks begin to swell. VS could have seen this coming with the simple aging of Baby Boomers; as more women move further away from size 2, pencil-thin models may lose their relevance and become annoying.

2. Mass customize. If you are big and must appeal to masses — VS sells about half of all lacy things in the United States — then for Pete’s sake, don’t pitch everyone the same way. Victoria’s product line already provides the basis for customization; Pink for teens and 20somethings, Biofit for women in their 40s, thongs for (admit it) young married men. VS should migrate catalogs to a mass customized platform, using variable printing to put the right cover image in front of the right demo target.

3. Do both! Go crazy and ask your prospects how you could improve the message, and then respond with a customized solution. Have you ever asked customers for feedback on your direct mail, print ad, or web site? What about prospects? How cool would it be to launch a survey with every campaign flight asking unknown, non-customers what they think, what might offend them, and how the message could be made better.

Yes, Victoria, this is radical. But when asking people to consider sex, you must be prepared for different reactions.

(Nice profile of VS founder Roy Raymond here.)

SkyMall is the ticket for small inventors


We got a call today from an inventor with an incredible new sports product, but no marketing budget. Our recommendation? SkyMall. You’ve seen the gizmo catalogs on airlines, but what you may not know is SkyMall reaches 1.7 million passengers a day, or 155 million consumers per quarterly issue. And SkyMall seeks “merchandising partners.”

The captive audience is sweet. The demographic profile of passengers flying United Airlines, for example, is 91% college educated (vs. 52% U.S. average), 57% professional or managerial (vs. 23% average), and 77% with HHI greater than $75,000 (vs. 33% average). There are other, more visible ways aboard these planes. Pace Airline Media offers beautiful magazines on United, Delta and U.S. Airways, where advertisers can spend $50,000 to run 1-2 months for about 11 million impressions. But for the small guy starting out, SkyMall is the ticket.

SkyMall screens potential merchandising partners carefully, and offers numerous ways to get in to its web site or airline catalogs. The catch is you have to manage warehousing and fulfillment yourself; Skymall will only run the ad. If you’ve just invented a pop-up hotdog cooker and have limited marketing funds, give SkyMall a ring here.