Pareto Rules

Jim Brickman Plays the Music of Precision Marketing

I’m not a 35-year-old woman. And I don’t have a particularly strong affinity for romantic piano ballads. So, how did I come to write this article about recording artist Jim Brickman? Credit for the idea goes to a marketing executive at Disney Records. After reading an article I’d written about Chip Davis of Mannheim Steamroller fame, he suggested I give Jim a call.

As it turns out, Jim Brickman is more than “just” a Grammy-nominated songwriter and performer with several Top 40 radio hits, four gold records and a PBS special. He’s also an extremely savvy marketer and entrepreneur who recently launched a new company dedicated to helping artists extend their brands by establishing a compelling online presence.

These artist sites incorporate an impressive array of database technology (including a loyalty points program!) that in many ways are more sophisticated than what I’ve seen from some of the major consumer brands companies. For someone who spends his days writing songs and playing concerts (more than 125 per year), Jim has a firm grasp not only on the value proposition for his new company but on the new potentialities, in general, for capturing, analyzing and leveraging customer data. He speaks the language of precision marketing quite fluently.

It was fun to write about another smart musician in the context of precision marketing. Maybe I should try to land a regular column in Spin magazine or Rolling Stone.

Turning the TV into a drill

Mass marketing is a sledgehammer. Precision marketing is a drill. Personally, I think there should be a moratorium on print collateral that uses the darts-and-dartboard analogy. The bulls-eye is probably the most overused image in the annals of marketing history. Aren’t marketers supposed to be, like, creative?

Another pet peeve of mine concerns the fact that people tend to equate television advertising with mass marketing (e.g., the 30-second spot) and Internet advertising with precision marketing (e.g., Google Adwords), simply because one is “old media” and the other is “new media”. In reality, this delineation doesn’t totally make sense.

Consider the fact that major marketers are lining up around the block to pay half a million dollars per day for banner ads on the homepages of Yahoo and MSN. If that’s not mass marketing, I don’t know what is. Meanwhile, programming on some cable TV channels targets such narrow demographic and psychographic segments that certain marketers can be assured of reaching a sizable number of so-called prime prospects.

The simple truth is that all media vehicles are rapidly evolving in the same direction: toward providing ever-greater degrees of precision marketing effectiveness. The frontier is advancing so quickly that it’s hard to keep up with all the technological innovation. It’s even harder to discern the steady stream of misguided experiments from the initiatives that might truly catch fire and ultimately revolutionize how companies spend their marketing dollars and measure ROI.

When it comes to TV advertising (a $70 billion market that’s still 5 times larger than the Web business), we’re seeing a whole slew of new technologies designed to provide more accurate measures of advertising effectiveness. For their part, advertisers are desperate for metrics that quantify the value of their investments in a world of increasing media fragmentation. Just today, the Association of National Advertisers and Forrester Research released a study which found that 78% of advertisers believe that TV advertising is less effective than it was two years ago.

Among the new measurement technologies gaining ground are those from players like Nielsen, Rentrak and TiVo. I’m most intrigued by aQuantive, whose forthcoming Atlas on Demand service aims to exploit the proliferation of digital cable (25 million subscribers, to date) and video-on-demand (VOD). In a nutshell, it gathers data from set-top boxes to determine how many viewers watched a particular program--and when. Also, how many viewers played the ads as opposed to fast-forwarding through them. Eventually, Atlas plans to guide companies in determining which ads to put on which shows at a narrow viewer segment level (they're even talking about capturing individual viewer data on an opt-in basis).

Also of great interest are the various interactive VOD initiatives that aim to fulfill the promise of click-and-buy advertising. Download a coupon from your TV. Or order a product using your remote control and have it billed to your cable account. Suddenly, companies can price a TV advertisement based on the actual revenues it generates rather than how many people may happen to view it.

The ability to match ads to a particular viewer's past buying behavior, geographic location, viewing habits, stated interests, and when they watch the show--and possibly even track actual purchases--is a far cry from the sledgehammer approach (measured in Gross Rating Points) used today to determine advertising effectiveness. Seems that, in some respects, "old media" may soon overtake "new media" on the road to precision marketing.

A Myers-Briggs multi-channel assessment?

Is it any surprise that nearly half of all retailers today sell merchandise through three or more channels? Or that well-executed marketing programs across the different channels generally result in a 10 to 30 percent sales lift? Or that the average “multi-channel consumer” spends approximately 30 percent more per year than the average single-channel shopper?

It’s no surprise at all if you think about Isabel Briggs-Myers (1897-1979). In collaboration with her mother, Katherine Briggs, she adapted the theories of Carl Jung to produce the Myers-Briggs Type Indicator assessment. The basis for the assessment is the fact that people perceive and process information in a variety of ways.

Some people are “visual learners”. They learn best through pictures and other image-rich teaching tools. Other people are “auditory learners,” adept at listening to lectures and exploring material through discussions. “Reading and writing learners” learn preferentially through interaction with textual materials. Meanwhile, “kinesthetic learners” prefer learning experiences that emphasize physical involvement. They learn best by doing.

Distinct styles of learning. Yet what Isabel Briggs-Myers and other cognitive researchers discovered was that each of these different styles becomes a reinforcing component of the overall learning experience. One style may be dominant, but people ultimately benefit most by being exposed to some combination of the different styles.

By the same token, consumers have different channel preferences (and precision marketing serves to identify and then exploit those preferences). At the same time, most consumers naturally adopt a multi-channel approach. For example, they might read about a product in a print catalog, examine it in a physical store, and then order it online. The channels are synergistic and can be used in different combinations to suit individual shopping preferences.

So I was surprised by the recent announcement by Disney (which is known for thinking in terms of synergy) that the company will discontinue its print catalog operation and focus instead on the online channel. I’m a big proponent of saving trees. And Disney will also be saving $18 million in printing and mailing costs. Still, eliminating an entire channel would seem to run counter to the conventional wisdom that three channels work better than two.

When Lands’ End reduced its catalog circulation by only 9 percent, its revenues fell by nearly twice that percentage. But that was in 1999. It will be interesting to see how the strategy plays out in 2006. 

Another retailer, Saks, is apparently going the opposite route of Disney. Based in Birmingham, Alabama (where I happen to be going next week to give a talk), Saks ceased publication of its catalogs five years ago. But now the company has switched gears, sending an 88-page catalog to millions of customers and prospects. Two more editions are planned for the spring.

How do I know this? From a new magazine called MultiChannel Merchant. Maybe I should send a subscription to my friends at Disney.

Precision Marketing: It's the Real Thing

Pepsi recently surpassed Coke in terms of market capitalization. When I heard this news tidbit, I was reminded of the lesson Ted Levitt taught thirty years ago in his seminal Harvard Business Review article “Marketing Myopia”, in which he cautioned companies against defining their markets too narrowly. If you’re a ballpoint pen manufacturer, for example, does that mean you’re in the writing utensils business? The communications business? The luxury goods business?

Over the past five years, Pepsi’s stock has risen by over a third while Coke’s has declined by almost a third. Much of Pepsi’s success lies in the fact that it broadened the scope of its business--for example, embracing bottled water, sports drinks and other noncarbonated beverages ahead of its traditional rival. And its Frito-Lay division now controls 60 percent of the U.S. snack food market.

Turns out that Pepsi and Coke aren’t just in the carbonated beverages market but in the packaged foods market, each with a broad portfolio of products.   

But while Coke may have been late to the party in terms of responding to consumers’ changing tastes, the company is way ahead of the curve where precision marketing is concerned. In fact, this quintessential mass marketer--still considered by many to be number one in terms of economic brand value--is fast becoming one of the most innovative precision marketers in the world.

Consider iCoke, a global initiative recently launched in several countries, including Canada, that aims to connect young people via a mix of digital music and branded entertainment. Coke is also integrating sports, videogames and a host of other content, some of which is already showing up on MyCoke. And just last month, the company launched MyCokeRewards, a loyalty program where consumers can redeem points for $50 million worth of prizes.

All of these initiatives should help Coke further its marketing objectives, by enabling it to deliver personalized, relevant and timely messages to millions of consumers, and also keep closer tabs on their ever-changing tastes. To the extent that precision marketing provides an unparalleled "market sensing" mechanism, this latter benefit should prove invaluable as Coke further defines the scope of its business.

By way of full disclosure, I should mention that Fair Isaac partnered with Coke to develop some of the capabilities that power its precision marketing initiatives. In fact, Coke marketing execs are slated to discuss these initiatives at an upcoming event we’re hosting.

Come join us. It should be refreshing.