Six years ago, as enthusiasm over a new thing called “social media” began to crest, Pepsi went big on social. In 2011 PepsiCo slashed outbound advertising on its Pepsi brand, and redirected communications budgets to Twitter, Facebook, and other inbound social community management. That didn’t go so well. By March of 2012, sales of Pepsi had slumped and for the first time in two decades Pepsi fell, embarrassingly, to the No. 3 soda brand behind both Coke and Diet Coke.
Inspired by Pepsi’s error, that year we conceived a framework called The Information Ecosystem — in essence, a strategic game board that explains how your brand should communicate to, or engage with, customers. It has two basic information systems — the “flow” of communications outbound or inbound from customers, and the “scale” of information being used by many or a few. All communication either goes out or in, and it’s either for a handful or huge crowds. Map communication strategies into each corner of that ecosystem, and we get four intuitive tactics:
- Broadcast — not just TV, but here defined as any mass medium “broadcasting” outbound to large groups of people.
- Personalization — another form of outbound messaging, but this time tailored to a few.
- Research — the inbound analysis of communications from groups.
- Engagement — the inbound communications from one person, or just a few.
The Information Ecosystem framework was a hit, because it showed that different communication strategies have different uses. Advertising strategist Faris Yakob was kind enough to publish our theory in his 2015 book “Paid Attention: Innovative Advertising for a Digital World,” commenting that “the important thing to remember is that each task requires the right approach or mix of approaches. Not every problem can be solved with the same solution set, which is a challenge for many agencies, who too often assume that their primary product is the optimal solution.”
But let’s revisit what this means. First, this ecosystem is not just about media tactics.
Yes, various media platforms can be plotted above in different ways. Some, such as Facebook’s social network, can be used in all four areas (for inbound research or organic engagement, and outbound personalization or mass-market communication). But the real value of this model comes from mapping where your customers fit in the ecosystem:
- C1: Customers in group “C1” have different needs and varying financial value to you. Strategy: Personalization. Why? Your customers need different things, and if you can personalize to the most valuable customer micro-segment, you’ll maximize profits. For this customer group, investments in personalization are required. Examples include real estate, financial investing, travel, fashion and luxury goods. There’s a reason why airlines have numerous loyalty schemes, boarding segments and seating assignments. That lady up front needs something special, and she’s worth a lot more than you.
- C2: These customers, group “C2,” have similar needs and rather static financial value. Pepsi drinkers go here. A casual Pepsi drinker might imbibe three sodas a month, and a heavy loyalist 30 Pepsis, but that 10:1 ratio really is not enough to justify the expense of personalization. And all these customers want the same thing — a sweet drink. So take out a TV ad or run an OOH campaign; your strategy is to Broadcast outbound messaging to a mass audience. The lower costs of mass media will simply get the job done.
- C3: For inbound communications, marketers who wish to understand what drives a common need use Research. Inbound inputs from masses are gathered and sliced, but the result is typically a product-centric view, collating the needs of a group around a given sales item or media goal. Nielsen ratings evaluate who watches show A or listens to radio station B; comScore ranks who watches website C; qualitative or quantitative research uncovers which customers will buy product D. Consumers’ financial values may vary greatly, but research is focused on understanding common needs.
- C4: Engagement is the wild card of the matrix, the area for inbound customers with very different needs — and best if your customers have a range of value. The temptation for marketers to rush into this quadrant is enormous; who would not want to provide individualized answers to any customer question, in an effort to both solve problems and sell products? But this Engagement strategy works best when your customer base wants many different, nuanced things, and provide enough profit to justify the expense. At this point, you can easily see where Pepsi’s rush into social went awry. One-on-one social engagement is not needed when all a customer wants is a sweet sip.
Which brings us to the final question: which inbound and outbound strategies go together?
Ah, sharp readers will have guessed — it all revolves around your customer base analysis. If your customer group varies in what they need, outbound personalization should be matched with inbound engagement (C1 and C4); our agency, for example, works with a fashion e-commerce brand that combines hyper-targeted, personalized outbound advertising with high-touch inbound human service. For customer groups where the needs are varied, and where some have extremely high value, this combination is powerful. The only caveat is to make certain one portion of your customer base provides enough financial value to your business to justify this micro-segmentation and personal service.
But if your customer group contains similar needs, outbound broadcast mass media can be matched with inbound research to great effect (C2 and C3). Traditional research segmentation studies can be used to direct cable television schedules. ComScore ratings will tell which websites have the greatest reach among the largest slice of your target. Analyzing what makes one large group tick is enough to push out messaging that reaches the same large group at the lowest media cost.
Of course, this is all just Step 1
There are of course many layers of nuance behind this Information Ecosystem strategy. Broadcast media are becoming more targeted; addressable TV, for instance, can reach households down to the PII level with personalized commercial breaks based on your past shopping behavior, and technical advances in some digital billboards can recognize the demographic composition of the audience viewing them. Social can be used for research, and research can be used to identify niche group needs. As media outlets advance to the future of Minority Report, communication lines will bleed across all channels.
Which is why this model is useful. As you plan your communications strategy, it’s worth starting with an analysis of just how unique, or common, your target audience is. That one question will help you model whether you should invest in personalization and engagement, or simply research how to go for mass communications scale.