Welcome back to the third and final installment of The Future of Marketing series. I believe the greatest marketing challenge (and opportunity) for the future is mastering “channel strategy.” What’s channel strategy? It’s the strategic deployment of a marketing budget into media channels that will most effectively attract the largest number of customers.
Today’s marketing options can seem innumerable and the number of choices in the future will only increase. Marketers have to choose not only which channel to utilize, but how much to invest in each channel to achieve success. The diagram below shows an example of some of the choices available to attract customers today:
Looking at this diagram reminds me of playing darts. Darts may be a more effective method of allocating budgets because multi-channel measurement is still in its infancy. Even when we have data from all the individual channels, we still don’t know how the combined formula impacts the bottom line. It’s alchemy and it can blow up!
According to an InfoTrends study on Multi-Channel Communications Measurement and Benchmarking, multi-channel campaigns using email, customized landing pages and print yielded a 35% higher response rate than print-only campaigns: http://www.outputlinks.com/html/columnists/Barb_Pellow/infotrends_Multi-Channel_Communications_042009.aspx)
Multi-channel campaigns are simply more effective. How can we know the efficiency of each individual channel and what the ratio of investment should be in each? Investment in one channel naturally takes money away from other channels so every decision either approaches or detracts from the optimal formula.
Currently there is no standard CPM to measure channel mix, although several companies have proprietary solutions that attempt to attribute cross-channel results. Companies like Alterian (www.alterian.com ), Radian6 (www.radian6.com ), Nielsen Business Media (www.nielsen ) and Mobilestorm (www.mobilestorm.com) are a few. These software solutions are a great step toward ROI transparency, and their sophistication will improve as time advances.
Most companies aren’t aware or can’t afford these software solutions so Marketers need a disciplined planning process with clear steps to help you increase your chance of success. To be clear, let’s revisit Jessica, our 25-year-old professional working in the year 2020. We’ll use a day in her life to explain how you might make better channel marketing decisions for your business.
Here’s how to evaluate the right channel strategy:
6:20 A.M. – After snoozing through one alarm, Jessica grabs her Cloud Acquisition Device (CAD) and drops it in the cradle in the bathroom where she’ll listen to news, weather and sports while she gets ready for work
Step 1. Segment your audience according to profitability. Understand the financial impact of adding X percent of new customers within each segment. Jessica is a high-end digital consumer who buys the maximum data plans to support her voracious information-access needs. Analyzing your customer segments will help you focus on the channels that will deliver the highest ROI. If you don’t fully understand your target segments, drop everything you’re doing and get this data. It will change everything you do. When I worked at Ameritech Cellular, we knew 15% of our customers delivered 80% of the company profit. While it was tempting to put the majority of our budget and resources into the retail consumer promotions (only 20% of the profits), that decision would have had terrible financial consequences. Instead, we invested in high-end business packages that sold our best customers more services, driving up EBIDA.
There are several businesses today that tier their content offerings, charging consumers for content that’s free of ads. Check out Pandora and Uber Twitter: http://bit.ly/cyC8fa (Pandora). http://bit.ly/bexZT2 (Uber Twitter). We’ll see more of this as everyday, basic content changes as time progresses, so start organizing your product or service offerings now.
Step 2. Make sure your data supports threshold levels of investment based on your targets use of that channel before you add that particular channel into the mix. “Innovation” (otherwise known as cutting edge media with no proven performance) should be kept below 10% of the budget.
7:15 A.M. – Jessica grabs her CAD from her bedroom CAP and brings it into the kitchen where it wirelessly connects to the Cloud Acquisition Portal (CAP). Her mother calls her to remind her about her father’s upcoming birthday, and the CAD seamlessly transitions between news and the video chat session with her mother. Since all video is now web-enabled, Jessica will use the top online gift store to search a variety of gift options for her Dad. More about this when Jessica comes home tonight.
Each channel will be much more segmented, persuasive and effective. B2B channels will even be fully integrated with search engine optimization (SEO), video, email, promotions, ads (banner and PPC), mobile, print, direct, PoP and social. Support for this trend can be found in the study by EConsultancy: http://bit.ly/9oyo5V
7:45 A.M. – Jessica jumps into her electric car and drives to work. Electric cars, and all the cottage industries that support them, will grow exponentially in the next decade. Popularity will increase electric car market penetration to 50% by 2020.
- Major, mass market product launches are happening this year http://nyti.ms/9H2ffm
9:30 A.M. – While doing research for a 10:00 A.M. client meeting, Jessica reads a news update regarding one of her supplier’s new contracts. She clicks on a link and receives an un-branded case study that can be used in any presentation. Packaging case studies for viral distribution, with links back to the source, will become a rich source of lead generation in the future.
- The future of contextual search: http://bit.ly/aCUjBZ
Noon – On her lunch break, Jessica scrolls through mobile ads she’s cached for future use. She’s opted into certain ads so she can save money on the things she likes. The cache app allows her to save ads she wants to save and retrieve when she is near the store.
- Mobile, location-based marketing will improve targeting for marketers and convenience for consumers: http://bit.ly/blNt2B
2:30 P.M. Throughout the day, Jessica receives alerts about a variety of information according to her pre-approved preferences. These alerts represent highly targeted opportunities to reach consumers.
- Daily mobile text alerts: http://bit.ly/iu1kP
5:30 P.M. - A good friend calls Jessica and invites her to a business association meet-up that night where business celebrities talk live and interact with attendees from far-off locations – using sophisticated streaming technology. Branding and social media opportunities abound.
- Streaming from live events: http://bit.ly/bsMjAs
6:30 P.M. - Jessica uses her CAD to buy admission and dinner while at the event.
- Read about the first barcode scanner on smart phones: http://bit.ly/eakYM
8:00 P.M. - Once home, Jessica plugs in her CAD and selects from a list of high quality resources that will deliver relevant news, cases and data to her business account in the morning. This information will make her more informed and articulate when the discussions and debates occur throughout her business day. If content is King, Jessica will have a crown by noon.
- Read about the future of local news by the Wall Street Journal: http://bit.ly/cSdZTi
11 P.M. - Once in bed, Jessica voice-enables her alarm and reads from her wireless reader, which drifts to sleep-mode after Jessica.
- Voice Controlled Talking Alarm Clock: http://amzn.to/dq7BnL
The only way to ensure you’re maximizing your marketing investment, knowing that it isn’t perfect, is to measure every channel. Start with individual measurement tools and add software that integrates channel metrics. Analyze the data and you’ll find valuable insights that will grow your business – guaranteed. Too often we shrug our shoulders and believe its too complicated and there aren’t accurate resources to measure effectively. This attitude leads to complacency and sloth. It’s possible today to dramatically increase your marketing ROI. Get granular and you’ll make a mountain out of a molehill.
I hope you’ve been motivated by this series and make the effort to rise above the standards of this day to lead the future of marketing. I looked ten years into the future but I believe we don’t have to wait to achieve the kind of effectiveness that technology and strategy will surely bring. I’m excited about the future and can’t wait to see what YOU will contribute.