Targeting a market of one

The world of online marketing and advertising has grown at phenomenal rates since the Internet`s viability as a marketing medium was first discovered. Nevertheless, its reach, expansion and capability for revenue generation is limited in much the same way as other technological innovations.

In regions such as North America, and much of Europe, stable infrastructure, deeper PC penetration into the home, increased numbers of online consumers and a deluge of new categories of products and service translate to a burgeoning online advertising market.

Closer to home, though inhibitors persist, online advertising is proving increasingly effective and worth the investment. The industry is in its infancy; its advancement has been hampered for the most part both by the relatively tiny initial target market, and by the confusion over electronic-enablement of business processes and techniques afflicting most decision-makers over the past two years.

The one-stop shop model is dying or dead. Most marketers are quite happy to deal with specialists within industry niche sectors, such as video, or online media agencies, and then project manage all those agencies.

Grant Shippey, CEO, Amorphous New Media

Although pure-play Internet companies rely on online advertising to pull in users, a substantial portion of this growth is being driven by the industry heavyweights realising the importance of both an online business initiative, and an online promotion of real world products and services. A number of consultancies and service providers have sprung up in response to traditional companies` need for direction in formulating online marketing strategies.

Amorphous New Media is a digital design and Internet services agency sporting a number of blue chip clients, including Standard Corporate Merchant Bank, American Express, AucorActive, Eskom, e.tv and SABC. It markets clients across digital channels - and that can include anything from developing a Web presence to compiling presentations on CD-ROM or DVD, to formulating initiatives making use of SMS and WAP technology.

Grant Shippey, MD, believes the current trend of convergence is a contributing factor in traditional business interest in digital medium. Shippey cites the example of British Airways` recent introduction of lie-down beds in the business class section of its fleet.

"For the first time, we as their digital agency received a good portion of the ad budget. We received something like 25% of the overall ad budget. We`re normally lucky if we can get between 1% and 2% of the ad spend from banks. We found it wonderful that a large airline in a fairly traditional industry can actually [spend that much money on an online campaign]."

Previously, the trend was for individual business units within large organisations to handle various pockets of marketing without taking cognisance of the overall plan. Now, says Shippey, marketers are submitting their overall plans to various types of agencies, and receiving feedback from them before proceeding with a campaign.

"The one-stop shop model is dying or dead. Most marketers are quite happy to deal with specialists within industry niche sectors, such as video, or online media agencies, and then project manage all those agencies."

[VIDEO]The Achilles heel of that model, he says, is getting all the agencies to talk to one another. Businesses run the risk of ending up with various advertisements for the same product, looking completely different.

Shippey believes that marketers haven`t yet realised the industry-wide goal of one-to-one marketing, mainly because when the idea germinated, no one realised the impact of such an endeavour on a business` collateral requirements.

"If previously you sent one piece of material to your hundred-thousand clients, and you take a gender and an age cut on your base, you`ve now got 25 sets of material to send out - let alone if you take gender, age, products they already have with us, and other products that we want to cross-sell or up-sell; you`re actually getting into a situation where you`re creating 100 to 200 sets of material. The marketers hadn`t budgeted for that sort of thing. So it`s more a situation of one-to-none marketing at the moment."

One-to-one marketing is underpinned by a key principle - permission. Digital Gear, a specialist online marketing and promotions company, concentrates on the online relationship marketing chain that introduces customers to a brand via banners and promotions. The company engages users in a relationship based on continued interaction, and the use of permission marketing.

That`s a very short-term view - to try and buy someone else`s database and make it your own is not going to work. The whole reason it works is because someone`s given us permission to send them mails.

Steve Morris, joint-MD, Digital Gear

Its clients include Ananzi.com, Daimler Chrysler, The Salvation Army and Bayer. Essentially, Digital Gear sells its clients a guaranteed number of visits to their Web sites.

Jacki Daniels, joint-MD, explains: "We sell our product on a traffic basis. You buy a block of traffic from us, and we ensure that you get the visitors to your site. We normally sell in blocks of 2 500 visits, and we guarantee that we`ll send those 2 500 people to you. In every campaign we`ve ever run, we`ve overshot that guarantee."

Daniels says the idea began with the extreme client dissatisfaction experienced at her previous company - an Internet service provider that offered Web development services as a value-added offering.

"We were seeing more clients who grew disillusioned with the Net after the very expensive Web sites they had built didn`t provide adequate returns. We tried to think of a solution to the problem, because there`s really no way that the medium didn`t work - it was just the way people were applying it," says Daniels.

Daniels and colleague Steve Morris founded Digital Gear, having scouted around international trends of the time, and found several business models which they then amalgamated.

That was two years ago. In that time, the company has designed and developed Engine, a proprietary software system that builds, runs and manages consumer competitions and promotions, as well as post-event communications and relationships.

Engine delivers real-time reports and tracks usage patterns, demographics and response rates - cross-referenced to highlight opportunities and trends.

Morris elaborates: "The main model that we adopted is the idea that you can use incentive-based competitions to drive people to Web sites. Our model is a lot more active than banner advertising. Banner advertising is very passive - it`s a medium that tries to entice you to do something.

"With our model, people are already actively involved in an event - Christmas, Super 12, Valentine`s Day - whatever it is, and we try and pass on that activity to our sponsors. So we`ll send somebody to a sponsor in the frame of mind where they don`t mind spending the time interacting and spending time on that specific site."

Protecting that database is top on Digital Gear`s list of priorities. As Morris notes, one of the first questions interested parties ask, is whether the company`s database is for sale.

"That`s a very short-term view - to try and buy someone else`s database and make it your own is not going to work. The whole reason it works is because someone`s given us permission to send them mails."

Online marketing presents its users with two principal benefits - the ability to track return on investment (ROI), and a keen insight of the demographics of the actual target market. Very often, businesses believe their product interests a very specific type of group, says Morris, when in fact it has a greater appeal than they might have expected.

[VIDEO]"We track the demographics of the users we send to a client, and match those against the demographics of the people that displayed an interest, and the client can use that to figure out who their target market is."

Digital Gear has found tracking to be probably the most effective process that any online marketer can implement. More often than not, clients that track their site activity are in a much stronger position than those that don`t.

The challenge at the moment is taking the potential return of such tracking systems further. For example, collaborative tracking between it and an e-commerce client could help determine the type of customer most likely to purchase as a result of a specific marketing campaign.

"Our biggest problem is that [clients are] not tracking what`s happening on their sites. Most of the people we deal with don`t know which of their advertising is working for them."

Digital media agencies focus on more than just the Internet in trying to get the message out. The mobile platform has attracted considerable interest, especially in a country like SA where the number of mobile users far outstrips that of fixed-line users.

But, as Morris notes, there is the need for caution. "We`re always monitoring what`s happening to find the next digital media application. For us, the application has to be interactive - it`s not just the matter of putting a message in front of someone - they`ve got to be able to interact with what we do."

While that interactivity is possible with WAP applications, the take-up has been insignificant. Users cite slow connectivity, lack of offerings and expensive connection rates as their primary complaints.

Most of the people we deal with don`t know which of their advertising is working for them.

Steve Morris, joint-MD, Digital Gear

The explosion of SMS usage among the country`s estimated eight billion mobile phone users has led to a number of initiatives in 'push` marketing. Ster-Kinekor, Nu Metro, Truworths and Fedsure Health are just some of the major corporates using SMS as a direct, yet unobtrusive, method of contacting their customers.

While it is adequate to maintain a level of communication with one`s customers, many industry observers believe there is no concrete way to leverage the technology in a revenue-generating business model.

A case in point is that of CellAds. The start-up developed an opt-in model where registered users were offered a percentage of cash deposited directly to their accounts, for reading messages sent via SMS promoting special retail and entertainment offers.

The product, under development since September last year, was officially launched in January, by which point it had attracted almost 2 500 registered users and several clients.

By the end of February, the company went under. A message on its Web site states: "CellAds will no longer be in operation as of [28 February]. This is due to the fact that they haven`t found enough companies interested in advertising on cellphones. CellAds apologises for not being able to make this service work, and takes full responsibility for not being able to fulfil its promises. CellAds would also like to apologise for all the hard work that has gone into referring people without reward. We would further like to state that CellAds will not be declared bankrupt, as all our debts will be paid in full. We will delete all accounts held with CellAds. No harm will come to bank accounts or other private information."

There are a number of ways to make the most of one`s online advertising campaign, say the experts.

"It goes back to good old solid media planning, which says just because you`re online, don`t take a shotgun approach. The technology gives you a laser-sight with which you can target a market of one. And people just aren`t prepared to take the time to do this," says Shippey.

[VIDEO]In addition, many corporates can use the information generated from an online campaign to augment its other communication channels, he says.

"There are so many corporates out there with huge call centres that they can leverage off, in a more consumer-focused way. All it takes is a bit of interpretation of the data to be able to predict what your customer will need - that`s the way to really touch people."

Financial incentives can also be a powerful tool in the effort to change customer behaviour and promote ROI on online ad spend. If a company saves money by drawing their customers online, they should allow those customers the benefit of that saving as well.

Morris advocates paying close attention to proactive, seasonal marketing. He believes it is critical for marketers to take advantage of peak traffic times on the Net, especially nearing holidays. According to NetRatings Internet Media Strategies, traffic at online toy retailing sites and apparel sites draw the largest numbers of female online shoppers during November. Knowing your online customers means that you can plan your strategy around them.

Old-fashioned PR doesn`t hurt either, says Daniels. A good public relations company can contribute to increased media profile, and save marketers from cold-selling door-to-door.

Shippey believes the most striking success in returns on online marketing can be seen in SA`s online banking industry. He quotes the Ernst & Young Global Online Retail Survey released earlier this year, which commends the South African banking industry for being among the vanguard of leaders in online banking transaction functionality.

"We handle a number of the banks, and if you look at the big international retail banks, our Web site functionality in online banking is three years ahead of where they are. And that`s an awesome kudo. Doing what one can traditionally do in a branch, online, is a big step."

[VIDEO]Digital ad agencies, media planners and other operators in the industry have begun the education process, while hardware and software developers have filled the gap for online ad and marketing campaign management tools. And while in this country, online advertising is nowhere near as lucrative, far-reaching or widespread as its traditional cousins - broadcast, outdoor, below the line and others - the market is established, and expanding.