By Tim Prunk, President, MatchLogic, Inc.
Whenever a new medium emerges, advertisers and marketers usually adopt a wait and see attitude toward it. Then, as the technology stabilizes, they embark on a ferocious learning program, and finally they get to work testing and proving how it works for advertising and marketing--that is, how useful it is for delivering messages to consumers and causing those consumers to buy something. It is amazing to see how patterns repeat themselves. When TV first arrived in the fifties, after a network of stations were established, advertisers started to learn quickly how it might work. They became completely focused on one use of the medium … the program sponsorship. Advertisers paid to have programs produced on their behalf and aired under their names.
The Kraft Playhouse, for example, was a pillar in the nation’s TV schedule. The payback was the huge branding awareness derived from naming the show after Kraft. Soon, however, advertisers learned that the most effective messaging was in the format of shorter programs, more frequently broadcast, like news and weather forecasts.
As the medium progressed, the 60- second TV commercial was born, then the 30 and finally the 15. Today TV advertisers use "infomercials", back-to-back 15’s or 30’s, and "roadblocking" with the same commercial on many channels at exactly the same time. They even tie the Internet into their TV ads. The point is that advertising applications in each new medium evolve, as they learn more about how the various ad formats affect consumers and how to measure that effect.
The Internet is following the same pattern. In 1996 when MatchLogic was born, the net was relatively young, but the technology was already stabilizing. The world’s largest advertisers, like General Motors and Procter and Gamble, had decided it was time to learn. GM in particular encouraged us to build a bulletproof process to distribute static web banner ads to a large number of different web sites at the same time, and to target those ads to the right person, at the right time. This was the obvious form of marketing for the net and we all thought that we had figured it out. In retrospect, basic banners looked to us like the early "sponsored programs" looked to Kraft.
For a couple of years, the world’s advertisers turned into intense students, absorbing every fragment of information that could help improve their knowledge of the medium. They wanted all the questions answered, especially how to measure what was really happening on the net, and how they could tie their web advertising expense to some sort of resulting revenue from the sale of products or services. Most advertisers, and now those of you who operate web sites, want and need to know as much as you can about the newest tools to manage, measure and optimize Internet performance, so here is a brief look at a few fundamental developments that might be useful to you.
First, let’s look at the new tool set for advertisers: those of you who advertise on a range of web sites to reach your customers. Then later we will concentrate on services that work for web site owners.
Centralized ad serving is the process of sending out ads from one central server to many sites across the net. Using this system, the serving company, like MatchLogic, can send ads in real time, target to specific audiences, and provide detailed reports to the advertiser within 24 hours. The reports allow the advertiser to identify which sites produce the most user responses (clicks or web site events) to the ad, and which of the ads produce the strongest responses. Furthermore, the advertiser can store this data in a proprietary database called a "Media Management Datamart" and quickly modify the selection of sites and the best performing creatives to maximize results. We call this optimization, although this is only one of many forms we apply.
Initially, we thought counting the ads viewed by web users would be a relatively easy matter. We would just count up the number of times an ad was served to a visitor, but this proved to be wrong.
First, we faced the challenge of eliminating the effect of robots and spiders on ad campaigns. As these automated searching programs visit web sites, they trigger ad deliveries, but in reality no person actually sees the ad. The visitor is just a computer search program. Within a few months, MatchLogic was the first to solve this problem with a filtering process that reported Actual Ad Views, for our advertisers. But this was an easy fix comparing to what we discovered in early 1997.
One Saturday morning while doing maintenance on our server network, our engineering team discovered a startling fact… that the number of times an ad was actually seen by Internet users was dramatically higher than the number of times the ads were actually served to visitors when they visited the site. Actually for every 100 ads that were reported by a web site, there were actually an average of 70 more ads that were seen but not counted, and that’s after the effect of spiders and robots is eliminated. How could this be?
The answer has a lot to do with what the industry calls proxy caches. These are basically computers that monitor traffic in and out of facilities containing many computers in a local network. The caches have large hard drive storage units that make copies of images, including ads that are sent back and forth to the local network users. When a user sees an ad the first time from a web site, it actually is sent from the site (or in our case from MatchLogic) to the user and is counted as an ad view. However, the second time the ad is scheduled to be shown to the same user, the proxy server intervenes and sends its copy of the ad to the user to save time and redundant traffic across the net. In that case, the web site never even knows that the viewer saw the ad, so the "view" goes unreported.
At MatchLogic, we were pressed by our major customers to solve this problem, so we invented a patented process we call "TrueCount"™ that provides our advertisers with a full count of all views of a particular ad. That means we report the combined web site counts with the cache counts. MatchLogic’s daily customer campaign reports provide total campaign viewing numbers from which accurate click-through percentages and ROI calculations can be based. Once this tool was in place, we moved on to provide advertisers with a way to track web users who click on ads, over to the destination web site, and analyze what they do on the site while they visit. This is called "closed-loop" reporting, which we brand our "TrueEffect" service.
TrueEffect is designed to provide the first form of ROI for Internet advertisers. First, we set up the advertiser’s e-commerce site to communicate back to MatchLogic when a user responding to the advertiser’s ad, lands there for a visit. Then, we do the same kind of thing to the ad itself so that a user who clicks on the ad and lands on the e-commerce site sends us data as he or she explores the site and takes part in various processes, such as ordering a brochure for a new car. Using the data you can gather with TrueEffect, you can quickly determine which ad creative is producing the most requests for brochures, and the peak times of day, week, or month for generating the best results. TrueEffect and other forms of "closed loop" are truly valuable measurement tools for advertisers.
Another highly measurable advertising process is e-mail marketing. Not only can you select demographics, but you can target geographically and combine these with numerous specific selects like "propensity to buy a new house within 6 months", or occupation, income group, education, or psychographics. Once the e-mails are sent, we provide instant tracking when they are opened, and when the recipient responds to the offer by clicking inside the e-mail. Yes, we can then add TrueEffect to the package and track the recipient’s visit to your e-commerce site. The measurement and analysis process helps instantly correct, improve, and increase the results of each campaign as it is extended to larger numbers of recipients.
As an advertiser you have several other very measurable marketing tools, including lead generation and CPA campaigns (cost per action). Lead gen, as it is called, has the advertiser only paying for each time you receive the contact information for a potential customer identified during the campaign. In effect, you only pay for leads, not for the advertising needed to attract them.
In recent months, advertisers are asking to experiment with a cost-per-action model where the marketing company, the marketing company gets paid when a visitor or ad viewer actually ends up buying something, or registering with the advertiser. These are totally measurable marketing methods that are approaching no risk for the advertiser.
Finally, on the advertiser side, there are many new formats of ads to work with. One is "rich media" which is a broad term to describe web ads that incorporate animation, interactivity, and e-commerce activity right inside the ad space. That is, the user interacts with the ad on the web page rather than clicking away to the advertiser’s web site. Rich media, such as the formats provided by Enliven, are highly measurable. For example, an ad for a new TV video game system might be a mini video game that the user plays. Once the game is solved or won, the ad would open up into a registration box and ask the player to register for more information about the full product offering. The lead is then used in an e-mail campaign for the advertiser. Each step of interaction is later reported in detail right down to the number of seconds the user interacted with each step of the process. Again, this is a highly measurable process.
Internet marketing has already come a long way from the initial static banners that we touted as the strength of the Internet in 1996. In fact, today, the majority of Internet marketing spending is on the types of services we just explored. Why? …because they perform. In fact, advanced forms of Internet e-mail, targeted ads, rich media, and lead generation produce response rates that reach into the 10 to 15 percent range. They provide a high level of accountability and in some cases a genuine ROI model.
Once the initial Internet advertising technology became stable, as in generations past, advertisers learned quickly and are now starting to maximize the potential of the medium, although there’s plenty more innovation yet to come. In fact, the Internet Advertising Bureau recently approved several new ad format standards for the Internet opening up even more widely used ways of tapping the net’s potential.
Now lets look at some opportunities for web sites.
The challenge for any web site is to attract the right number of the right visitors and to capitalize on the visit in some way. Getting the right visitors is the most valuable, so reaching them and convincing them to visit comes first. Everything is important at this stage. Word of mouth and any form of advertising will help, but only well targeted marketing will pay off. You must target your messages. Mass media are not effective for most narrowly focused sites. Use e-mail marketing, and targeted ads placed on the sites you know attract your kind of person.
The selection of the right sites is the single most powerful step you can take to improve your performance. Naturally, I suggest you use a firm like MatchLogic to help you execute effective interactive marketing. We partner with others like your ad agency, media buyer, or in-house media buyer to orchestrate the best results possible. Sites also can buy placements on larger web sites, like portals. These include sponsorship boxes, link placements in content pages about your specialty area, and other newer forms of content integration, although these are for the larger appetites.
E-mail lists are very effective. Sites find strong response from pushing e-mail campaigns to lists of consumers who are part of a defined group, like members of an association related to your industry. Results are highly measurable and you may find a perfectly defined list likely to include your kind of person. For example one customer, a California winery, launched an e-mail campaign to generate new members to its wine club. A list of e-mail recipients was drawn from our central database based on the target age of 45 plus, high-income group, post secondary education, and an expressed interest in wines and/or fine dining. The response to this "targeted" e-mail campaign was many times higher than what an untargeted campaign would produce. However, as the list gets more refined, the price also increases.
Another opportunity for web sites is in data gathering. Probably the most valuable asset you can gather at the site level is the identity of and profile information about your visitors. After several years of policy evolution, our industry has a fairly well-defined, and responsible method of asking for, and managing personal information. The registration process, if governed by accepted "opt-in" provisions for the user, provides you with the opportunity to build a current list and, driven by the stated wishes of the user through the "opt-ins", allows you to use this information for marketing purposes. This means your "names" will form your own private e-mail list for sending your messages and third party messages to them in the form of periodic e-mails. It also means that if your user gives you permission to use their information for third party advertising, you can probably make your list available to other companies on a per-use basis, and open a new revenue stream for your site. Remember, however, that an "opt-in" is voluntary trust between you and your user. If you abuse it, they will opt-out and your new revenue will disappear in a hurry.
Web sites struggle with how to manage ad inventory in a medium that has an undefined number of ad opportunities depending on the actual number and choice of page views from one hour to the other. The industry offers a few advanced systems of this type to web site publishers. They allow web sites to identify available inventory, reserve campaigns, optimize pricing based on the sell out levels, and manage the complete booking and reporting process. All of this produces a smooth sales process and very accurate measurement of what is going on from the perspective of advertising on your site. A sound management system will help any site optimize its business.
Finally, your e-commerce activity provides opportunities to gather transaction data, measure in-site activity, and gather opted-in registrations. There is a considerable value in a central database for all this information. The blending of this data into a central database, as long as you comply with sound privacy policy, driven by a suite of RM (relationship management) marketing programs, is the most valuable asset you can invest in, for any site. These Relationship Management Solutions, allow you to establish and build individual relationships with your consumers. You can express your appreciation for them, present them with opportunities, gather additional information and feedback, and bring them back to your business. It is a proven process that every sound business should invest in.
Although the advanced interactive marketing services available to advertisers on the Internet are impressive, they have the most impact when they are most impressive when they are used together as an integrated process. Registrations, databases, ad management, e-mail and lead generation, and full RM Solutions working together produce extraordinary results. This is the newest frontier for us … unlocking the potential of this amazing integration of effort.
It’s the same on the web site side. When the new tools are used like instruments in an orchestra the sum of the parts theory is undeniable.
Like Kraft in the early days of television, the pioneers of this medium are learning quickly that the first ad formats are only a start, and that the real hidden power of the Internet is still unfolding for all of us to master and enjoy.
TIM PRUNK
As President of MatchLogic, Tim Prunk brings over 28 years of database marketing and research experience to the company and focuses on the implementation of MatchLogic’s data driven, interactive marketing service strategy. Prior to joining MatchLogic, he was COO at ChoicePoint Direct, the fourth largest integrated database marketing company worldwide. Previously, he served as president and CEO for National Demographics and Lifestyles, the $50 million, multi-national database marketing firm. NDL’s lead product, The Lifestyle Selector was the preeminent publicly available marketing database in the U.S., Canada and United Kingdom. In 1987, Mr. Prunk founded Infobase, a joint venture between Young & Rubicam and ACXIOM. InfoBase is widely considered the industry standard for providing data enhancement to facilitate strategic database marketing. The Rocky Mountain Direct Marketing Association named Mr. Prunk "Direct Marketer of the Year" in 1996. The "Denver Advertising Federation" named Mr. Prunk "Advertising Professional of the Year" in 1998. He is a two-term trustee of the Direct Marketing Educational Foundation and is currently the Foundation’s Treasurer.
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