Monthly Archives: April 2008

Drinking in the stimulus response


What prior experiences were Nestea and Coke referring to in these ads?

B.F. Skinner wrote that motivation has three requirements: A preceding thing or event that will provoke a reaction; the reaction itself; and a reinforcing or punishing consequence. People’s likelihood to respond is tied to a formula that includes the magnitude of the stimulus — say, someone waves chocolate in front of your nose — the context of the stimulus — say, are you really hungry? — and the rate of prior reinforcement — say, you’ve eaten chocolate before and you LOVE it. Because people, like dogs, associate the stimulus with the prior pleasure they received from a similar, earlier interaction, we salivate when we smell food.

This is important for marketers, because consumers have stimuli other than your own message. You can’t just build a concept by looking internally; you have to consider the exterior factors hitting your prospects as well. For example, a gasoline station with great customer service could focus ads on friendly staff, but consumers facing $4.00-a-gallon gas today just may not care. You provide service; they’re worried about price. Understanding all stimuli can help you refine the message.

In advertising, messages that reinforce prior rewards and mitigate past pain are most likely to stimulate response.

Photo via New Shelton.

NYTimes and InformationWeek, why are you shouting?


Clutter diminishes response.

We thought of this recently reading InformationWeek.com, where an errant mouse scroll causes annoying ads to pop up for things we are NOT interested in. Alas, this week The New York Times also began running those damn interstitial ads on its main home page — meaning you had to see a full-page ad before you get to the news.

The trouble is responses, or click-through rates, decline when consumers see clutter. This is true across media — direct mail postcard response rates slide in November, when mailboxes are stuffed with catalogs; newspaper costs per inquiry shoot up the week of Thanksgiving, when papers are overstuffed with mall ads; and iVillage.com, a popular women’s web site, has given clients we know some of the lowest-possible click-through rates.

One of the reasons ad networks (collections of web sites) are attracting advertisers is their results, in terms of click-through rates, are often better than single major content sites. Many people think it’s because behavioral targeting allows you to track people of a certain description across thousands of sites.

Could be. Or maybe those smaller sites just have cleaner layouts, so the ads get noticed.

Take a closer look at customer value


What type of customer is your advertising attracting?

Different customers have different values. This basic thought was driven home yesterday when we met with a leading businessman, who posited that of course he was interested in sophisticated media planning to hit sales goals — but would the campaign attract the right type of customer?

For example, imagine you needed to acquire 1,000 cameras for a large photography school. You wouldn’t rush out and buy 1,000 cameras and say, great, we’re hitting our numbers. Cameras have wildly different attributes and values. You would want to make certain you brought in exactly the right types of photography equipment to meet the business need.

Yet many marketers are like that, focused on simple acquisition targets, and not the composition of the customers within it. Will your new customers be profitable? Loyal? Make future purchases? Attract others? Imagine if you could choose between these two new customers for your business:

Customer A. Spends $50 in the first year, then leaves and never returns.
Customer B. Spends $300 in the first year, and $300 annually for the next 10 years, plus tells all of her friends how great your product is.

Obviously you want more Customer Bs. So your offer, messaging, media mix, and measurement need to manage your ad system to bring them aboard.

It’s nice that you have an ad schedule filled with CPMs and GRPs. Are you forecasting customer value, too?

Jared Goralnick deserves to be popular


Occasionally we read something so brilliant we have to digest it twice. Jared over at Technotherapy just dissected the current ratings arm race that pits bloggers and web sites against each other. His point, to do it severe injustice, is that using social media to chase numbers — a Top 150 Ad Blog ranking, or massive site traffic — is the wrong objective.

Perhaps it’s more important to connect with people in meaningful ways. We mean, just think of the irony; we all now have amazing tools to text thoughts, share photos, post comments, author essays, and send video … and yet many internet users are so obsessed with fame that they spend more time trying to game the system to be perceived as popular than they do actually connecting socially with other minds.

The current ratings race also creates huge problems for marketers. It’s a bit of the tragedy of the commons; if your web site isn’t frantically trying to game the system with SEO content stuffing and link farming, you better believe your competitors are. This eats into the common good of quality sites, as consumers have more difficulty finding relevant content — and your poor brand gets lost in all the clutter.

The best solution we’ve seen, and frankly try to practice, is to set up a blog or two related to your brand category — but to make the content truly meaningful. Rather than tout your services, analyze trends in your industry. Provide helpful tips. Readership and interest will build more slowly, but in social media, it’s not about hunting, it’s about helping. Right, Jared?

Lawsuit: Google bids to take more of your ad budget

Yikes. A new lawsuit claims that Google is misleading advertisers by making its second-tier ad program, the content network, an “opt out.” The suit suggests this allows Google to suck up your remaining ad budget, if not enough web searchers click on your ads.

The tricky part, according to the suit, is some advertisers don’t realize Google runs two types of ad programs. The one most people recognize, Google AdWords, has paid text ads, or “sponsored links,” that appear after a computer user searches for a phrase at www.google.com. But Google also runs these same text ads on a vast AdSense “content network” of web sites if they have articles with vaguely related content.

So if you sell shoes, your ad for shoes might
1. appear in front of consumers actively searching and shopping for shoes at www.google.com, or
2. appear next to a fashion article and draw a few errant clicks.

How do you now opt out of this second “content network” program? The lawsuit contends Google requires advertisers to type a zero into a certain field, rather than just leaving it blank, and if the advertiser is not hip to this requirement they’re automatically enrolled in the second-tier content network program.

Look, we’re sure we have this wrong. Google wouldn’t obscure its advertising registration process to try to lure advertisers into a lackluster ad program just to boost revenues.

Right, Google?

James Surowiecki and the selective slaughter of social media


We were just reading a book — you know, that handy, high-resolution content-sharing device with unlimited battery life — and found an answer to all the hyperbole today over new communications tools.

If you look at the histories of most new industries in America, from the railroads to television to personal computers to, most recently, the Internet, you’ll see a similar pattern. In all these cases, the early days of the business are characterized by a profusion of alternatives, many of them dramatically different from each other in design and technology.

As time passes, the market winnows out the winners and losers, effectively choosing which technologies will flourish and which will disappear. Most of the companies fail, going bankrupt or getting acquired by other firms. At the end of the day, a few players are left standing and in control of most of the market.

That’s James Surowiecki, the brilliant business commentator for The New Yorker, recounting the standardization of automobile design from the many early choices of gas and steam and electric. But he could have meant today’s selection of silly social media: Badoo, Bebo, Blogger, Facebook, Flickr, Flixster, Mixx, MySpace, Nexopia (see, Canada, we’re paying attention!), Orkut, Plaxo, Pownce, Reddit, Twitter, Vox, Xanga and YouTube. We get a call a week from some new social site/email/video thing launching and often can’t understand the basic business plan. We sent a friend an email inside Facebook tonight and thought, wow, this is as easy to use as email.

Today’s minor e-revolutions boil down to text and pictures, audio and video. Eventually one or two formats will win. If you don’t believe us, go into your living room and look at all the books.

(Photo by Gualtiero.)

How MySpace smacked News Corp. stock


Bad social media. Bad.

Bloomberg reports that MySpace is turning parent News Corp. into a toxic stock, after the MySpace division said it would miss revenue targets and Wall Street analysts, in technical terms, immediately threw up. Bernstein quants downgraded News Corp. price targets 13% last week, sending a shiver through Rupert Murdoch.

Why? Bloomberg blames advertisers worried about brand control. The theory goes that advertisers fret their brand may appear on MySpace next to crazed user-generated content (drunken college students, racist language, photos of cats), which creates a horrible cascade of advertisers shying away, declining revenue, and investors who avoid the stock.

But we think the real reason is social media ads don’t work.

This isn’t rocket science, folks. Internet advertisers track results at incredible detail — and what really grates on advertisers is when ads fail to perform. Social media ads, such as vertical banners on Facebook, have notoriously low click-through rates — lower than the U.S. average response on banner ads of 0.14%, and much lower than the 0.75%+ click-through rates advertisers get on ad networks and behavioral targeting. Ad responses are lower because the consumers using social media are busy chatting, typing, uploading videos, and playing games with each other. You don’t respond to an ad if you’re playing with your profile.

Advertisers need to watch and understand this trend because U.S. consumers are rapidly migrating to social media sites. In September 2006, 30% of U.S. internet users had created a profile on a social media page such as MySpace or Facebook. Last month, that number was up to 60%. With 24 hours in the day, every hour on social media is an hour not spent clicking on Google results or traditional banner ads.

The solution? We don’t have one. We think Americans are dramatically changing their internet behavior from “hunting” to “doing,” and that will put a squeeze on the entire ad industry. Watch BusinessWeek in the next few days for our take.

(Photo credit Simply Milo.)