Marketers have built a temple that needs to be torn down. Demographics have defined the target consumer for more than half a century — poorly. Now, with emerging interest graphs from social networks, behavioral data from search outlets and lifecycle forecasting, we have much better ways of targeting potential customers.
The rise of mass-produced consumer goods also brought the rise of mass-market advertising. In the 1950s and 1960s, the goal of television was to aggregate the most possible eyeballs for advertisers. In order to convince consumers that an advertising message was relevant to them, consumers had to buy the idea that they were just like everyone else.
Marketers created that buy-in by bucketing people into generations. When you lump 78 million people into one group called “Baby Boomers,” it’s much easier to sell them stuff, especially when consumers accepted their generational classification.
But now, that entire system has broken down. The year that someone was born will not tell you how likely he is to buy your product.
Fragmentation is now the norm because the pace of change is accelerating. Generations have been getting smaller because there are fewer unifying characteristics of young people today than ever before:
With the recent rise of the social web, people self-select into groups so small, so fragmented, and so temporal, that no overarching top-down approach could be successful at driving marketing performance.
Marketers have responded by adding more demographic information to the mix, but even that is a losing battle. I worked with one client who was introducing a technology product, and had identified a target market of “connected consumers.” Connected consumers were 34-55, had a household income over $120k, and read technology publications regularly. This target market represented 14 million consumers.
They were targeting 14 million consumers to sell 50,000 units — that means they were hoping for 3.5 sales for every 1,000 people with whom they connected through their marketing.
What if, instead, you could get 500 sales from every 1,000 people you marketed to?
It’s possible through psychographic profiling. Psychographics look at the mental model of the consumer in the context of a customer lifecycle. Amazon.com has long been a leader in this space, through innovations like “recommended products” and “users like me also bought.” Its algorithms have learned to predict its users, and what they are interested in. And now, there are a number of tools that any business can use to leverage psychographics.
Here’s how a psychographic profile might look different from a traditional marketing profile target for a childcare provider:
Psychographics provide much more useful information about users. There are multiple data sources making this possible today. Social profile data, behavioral data and customer lifecycle data can now finally be leveraged to contact people who are ready to buy.
Social Profile Data
Profile data from social networks consist of all the fields users grant permission for brands to use on their behalf. Most things that users track on social networks can be leveraged to create a closer relationship with a customer. Fields like relationship status, alma mater, interests and occupation can all be managed through social profile data management tools.
Social profile data is the critical cornerstone of psychographic insights. The level of nuance and insight provided by social data, when compared to standard demographics, is the difference between performing surgery with a scalpel or a butter knife. Previously unimaginable questions are now routine:
- Are customers who kayak more likely to buy water shoes than those who canoe?
- Who is more likely to spend over $100 on an order: Seattle Seahawks fans or Seattle Mariners fans?
- Are your customers more likely to purchase when they move across the state or across the country?
In addition, companies such as GraphEffect are measuring purchase intent by doing semantic analysis on Facebook status updates. This type of qualitative analysis can move users into specific marketing funnels from their very first online experience with your brand.
Retargeting advertising messages is gaining popularity among marketers, but its very success has jeopardized its effectiveness. Ads that follow users around the web have been implemented — usually poorly. Every ad network quickly incorporated the ability to place cookies in users’ browsers, and display specific ads to them any time they visit a site that’s part of their networks.
The next generation of ad targeting will focus more on telling the customer a story over time, based on specific behavior triggers. That means ad networks and clickstream data aggregators will work together to trigger when a customer moves forward in a mental model toward a purchase event.
Site content and product recommendations will also be informed by clickstream analysis. Companies such as RichRelevance, Certona, Baynote and Monetate all offer the ability to personalize information to specific visitors based on their behavior. Leveraging those alongside a payload of social profile data can turbocharge those services from the first moment a new user visits a site.
Customer Lifecycle Data
Social profile data can also be used to predict customer lifecycle. Imagine knowing not only if a customer has children, but the exact ages of those children. In addition, key indicator purchases, like buying diapers for the first time, indicate a customer entering a new lifecycle. Other key indicators, like shipping address changes, first purchases of furniture, or first purchases of substantially higher-value goods can all indicate the start of a new customer mentality and behavior pattern.
These patterns are predictable, so you know the future behavior of high school seniors by looking at the current behavior of college freshmen. By using demographics alone, all high school graduates would be marketed to identically. Using psychographics, we know who is likely to be interested in specific product or content recommendations at a specific time — such as when they actually start their first day of college.
This vision is starting to gain traction among serious marketers. At the 2009 Internet Strategy Forum, Xerox’s VP of Interactive Marketing, Duane Schulz, said that a 1% clickthrough rate was a huge failure — even though it is 10 times the industry average. In his mind, a successful campaign would never waste 99% of its impressions. Using psychographic data, you don’t have to waste any impressions.
We have seen a similar upheaval in marketing before. In the 1960s, marketers who embraced the power of television, broad-based insights into psychology and demographic data created world-class brands and billions of dollars in value. At that time, if you didn’t advertise on TV, you lost. Today’s new tools offer a similar choice: Build a deep understanding of your customer, or risk irrelevance.
Online advertising is a remarkably complex field. Terence Kawaja has a new way for potential investors to visualize it.
The market involves hundreds of small and large companies that help advertisers reach consumers and help website publishers, mobile-application developers, search engines and other digital destinations generate revenue through advertising.
Kawaja, who runs boutique investment firm LUMA Partners, spent months putting together six new graphics that show how 1,240 different companies fit into the following categories of online advertising: display, video, search engines, mobile, social, and commerce. (See slides below, or click here for the LUMA site.)
The graphics, Kawaja says, help “large strategic acquirers” such as Google, Yahoo and Adobe to identify possible targets of acquisition.
Kawaja, well-known in the online advertising industry, rose to greater prominence after publishing a graphic in 2009 that attempted to make sense of one particularly fragmented aspect of online advertising: the market for graphical, interactive and video ads, a category known as display, which generated $10 billion in U.S. spending last year, according to eMarketer. The graphic became an important tool used by online ad executives.
For instance, after the graphic was published Kawaja represented Invite Media in its acquisition by Google last year. (Invite allows advertisers to buy ads through digital exchanges that match websites with advertisers, known in the industry as a demand-side platform).
Kawaja’s 2011 graphic on the display-ad market includes newcomers such as TellApart, which helps advertisers do what’s called “retargeting,” or showing graphical ads to Internet users for products they previously expressed interest in. The new “social” graphic lists the companies such as Vurve and Efficient Frontier that help marketers advertise on Facebook, Twitter and other social-networking-type sites such as LinkedIn and Loopt.
The graphics, which Kawaja is branding as “LUMAscapes,” will evolve as he receives feedback about other companies that should make the cut. Some ad executives say the graphics will be a point of discussion during this week’s Digital Media Summit, a gathering of chief executives of private Internet companies as well as investors in New York.
Check below for the full list of new graphics, and click on the images for the larger version.
Urban Edge (urbanedgeny.com)
The frequently refreshed listings on this site, which are never more than 18 days old, come directly from owners, property managers and leasing managers—no broker postings allowed. Tired of filling out the same search form every morning? Sign up for Urban Edge’s tailored Twitter feed, covering new rentals in the nabe of your choice; listings will come to you.
Cascade allows for precise analysis of the structures which underly sharing activity on the web.
This first-of-its-kind tool links browsing behavior on a site to sharing activity to construct a detailed picture of how information propagates through the social media space. While initially applied to New York Times stories and information, the tool and its underlying logic may be applied to any publisher or brand interested in understanding how its messages are shared.via nytlabs.com
Are "happy hours" a sign of burgeoning nightlife, or just evidence of a glut of bars in the neighborhood, servicing a community that likes to start drinking in the afternoon? Probably both, but I'm sort of glad the lower east side doesn't win this category.
The Canadians always complain they don’t get things first. Well, this time they’re at the head of the line. The New York Times (NYSE: NYT) digital subscriptions kick in there today; March 28 for the rest of us, allowing the NYT to avoid April Fools’ jokes. (We reported this morning that the long-awaited announcement could come as early as today.)
Canada is the testing ground, giving the Times roughly 10 days to fine-tune the complicated product—and the message—before it goes global. Access is cut off after 20 article views in a month; the three plans for non-print subscribers start at $15 a month. Home delivery subscribers will get full access to the site and the full content of certain apps; the Times has been a long-time believer in the concept of adding value to its expensive print subscriptions through bundles. Access to TimesSelect was included, for instance, as were earlier efforts to create additional revenue digitally. But the all-access pass doesn’t include everything; the e-editon and premium crosswords are excluded. (Drat.)
As promised, the Times has tried to carve out as much space as possible for links to its stories. In a letter to NYTimes.com registered users that just went out, Publisher Arthur Sulzberger, Jr. explains:
Readers who come to Times articles through links from search, blogs and social media like Facebook and Twitter will be able to read those articles, even if they have reached their monthly reading limit. For some search engines, users will have a daily limit of free links to Times articles.
That should make access to far more than 20 articles a month possible—and should quiet some of the people who claim the Times is walling itself off or becoming irrelevant.
Access to some news stays open: The Times also has carved out spaces that will remain free. At NYTimes.com that includes the home page and all section fronts; for mobile apps, the “Top News” sections will be accessible.
Complying with Apple: The Times promises to add one-click access in iOS apps by June 30 , which gives it a head start to get as many users as possible converted to subscriptions before the 30 percent share with Apple (NSDQ: AAPL) kicks in.
Full press release below; more to come.
From the release:
The New York Times announced today that it is launching digital subscriptions, which will affect some users of its award-winning Web site, NYTimes.com, and its applications for smartphone and tablet. The subscription plan allows for free access to a set amount of content across digital platforms. When the monthly reading limit is reached, users who are not already home delivery subscribers will be asked to become digital subscribers.
Digital subscriptions will be available in the United States and globally on March 28, 2011. The Times is launching digital subscriptions in the Canadian market beginning today in order to fine-tune the customer experience prior to the global launch.
For non-home delivery subscribers, the basic package - NYTimes.com plus Smartphone App - will start at $15 every four weeks. The NYTimes.com plus Smartphone App package is currently available for purchase by users in Canada. On March 28, the global launch, The Times will offer three digital subscription packages, all of which include access to the Web site. Details are outlined below.
In making today’s announcement, Arthur Sulzberger, Jr., chairman of The New York Times Company and publisher of The New York Times, said, “Today marks a significant transition for The Times, an important day in our 159-year history of evolution and reinvention. Our decision to begin charging for digital access will result in another source of revenue, strengthening our ability to continue to invest in the journalism and digital innovation on which our readers have come to depend. This move will enhance The Times’s position as a source of trustworthy news, information and high-quality opinion for many years to come.”
Janet L. Robinson, president and chief executive officer of The New York Times Company, added, “As the market for and delivery of digital content evolves, we believe that supplementing advertising revenue with digital subscription revenue makes tremendous sense. The step we are taking today will further improve our ability to provide high-quality journalism to readers across the world on any platform, while maintaining the large and growing audience that supports our robust advertising business.”
Details about the digital subscription:
* All users of NYTimes.com are able to enjoy 20 articles at no charge each month (including slideshows, videos and other forms of content). Beyond 20 articles and for open access to the site, users will be asked to become digital subscribers.
* On The Times’s smartphone and tablet applications, the Top News section will remain free. To delve deeper into the apps’ other sections, users will be asked to become digital subscribers.
* The Times is offering three digital subscription packages that allow users to choose the devices on which they want to access Times content. NYTimes.com will be included as part of any subscription. Details and pricing for these plans is available at http://www.nytimes.com/access. Introductory offers will be available.
All New York Times home delivery newspaper subscribers receive free, unlimited access to NYTimes.com and the full content on all of The Times’s applications. Home delivery subscribers can go to http://homedelivery.nytimes.com to sign up for free access.
* Readers who come to Times articles through links from search, blogs and social media will be able to access those individual articles, even if they have reached their reading limit. For some search engines, users will have a daily limit of free links to Times articles.
* The homepage at NYTimes.com and all section fronts will remain free to browse for all users at all times.
In keeping with Apple’s new subscription service terms, The Times will make 1-click purchase available in the App Store by June 30 to ensure that readers can continue to access Times apps on Apple devices.
Subscribers to the print edition of the International Herald Tribune, the global edition of The New York Times, will receive free, unlimited access* to NYTimes.com.
*Mobile apps are not supported on all devices. Does not include e-reader editions, Premium Crosswords or The New York Times Crosswords apps. Other restrictions apply.