Marketing has been under intense pressure to substantiate their large budgets. Marketing departments have become more analytical and more reliant on measurable tactics. Consequently, direct marketing and its enabling technologies such as data marts, campaign management and marketing resource management have seen an explosion of interest. The casualty has been advertising and other hard-to-measure marketing tactics. TiVo and other DVR technologies are killing the 30-second spot. The creation of more niche TV channels such as Style, Fine Living, the Travel Network, Home & Garden and a million others have thinly spread ad spending. Newspaper circulation is down. Magazine circulation is down.

Advertising is making a comeback. During the Internet spike, online ads were all the rage and then plummeted due to trivial amounts of revenue per click. However, online ads are starting to deliver on their promise. Online ads are measurable, and good ones are nonintrusive. Online ads are starting to attract more and more clickthroughs and, better yet, more conversions. Online ads are starting to become a portal to new experiences, and key sites such as Yahoo!, Google and Metromix are sold out. The online ad concept is permeating list rental/admail (co-branded email with a customer list provider and an advertiser), paid search, on-demand video, social sites such as MySpace, video games, podcasts and product placements.

To truly reap the benefits of measurable advertisements, organizations need to create a closed-loop process that mimics the direct marketing process. Marketing databases need to collect the following information:

  • Impressions or the number of times an advertisement is shown.
  • Who the advertisement was shown to.
  • The clickthrough, including what site the click was initiated from.
  • The conversion after the clickthrough. (Did the consumer perform the requested activity such as buy something, read something or register for something?)
  • The context of what the user was doing when the ad was triggered.

Capturing this type of information requires integration with new technology. Ad-serving software such as DoubleClick helps organizations understand what ads were displayed. Targeting software such as TACODA helps marketing organizations track browsing behavior and allows them to create business rules regarding when to show particular advertisements. Clickstream information helps us understand conversion rates and Web site behavior at even more granular levels.
The information explosion within data warehouses will continue as ever more marketing information needs to be captured. Understanding how to track who has seen what direct mail piece, which email and which advertisement will challenge campaign management systems and multichannel strategies.

More challenging will be the exchange of information with advertising partners. More pressure will be put on the advertising seller to release and share customer information, especially mutual customers. Like the relationship between retailers and consumer packaged goods organizations revolving around point of sales, for interactive ads to become big-time, organizations will need to share customer, clickthrough and clickstream information.

The technical challenge for ad sellers is how to expose information to advertisers in a self-service manner in order to charge a premium for their advertisers. Ad sellers must balance their privacy policy, not to mention their competitive advantage, against the requirements of their customers. Ad sellers need to ensure that their customers are receiving their ROI not only through basic ad response but that customers also have the ability to optimize and improve their marketing strategies based on ad response information.

The technical challenge for advertisers is to integrate external information from their ad suppliers as well as third-party suppliers. Lining up customer information or even aggregated information will be a challenge in order to evaluate marketing programs and continue to find the optimum message, placement and media. Creative advertisers will figure out how different ad media leverage each other like direct marketing channels. Customers that start on home improvement Web sites and then watch a Home & Garden video-on-demand program can be followed and tracked. Ad placements can be served to follow this type of customer trajectory.

Additionally, before we even completely have the hang of integrating online advertisements with traditional TV advertisements, we are challenged by several new advertising channels such as product placement, cell phones and video games. Many of these ad sellers are new to the game themselves.

As advertisers continue to decrease investment with the standard TV networks, they are challenged with finding the right mix of where to place their ads: niche cable channels, media and portal Web sites, video on demand, video games or cell phones. All of these channels are more measurable and targeted than they have been in the past. Advertising starts to look a lot like direct marketing, where the role of customer intelligence is to optimize response and conversion within and across channels and media.

It has been a long time since Reese's beat out M&M's for a primo spot in ET. But judging by the number of times we saw the Audi logo in I, Robot and Transporter 2, advertisers are not getting any less creative with their budgets. The death of advertising has obviously been exaggerated. It is just getting harder to tell the difference between advertising and direct marketing.  

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