1: The Big Picture

Simply stated: the Web is a huge and powerful channel for interacting with people, which is a strong motive for business to exploit the channel. However, it is a new and largely unfamiliar phenomenon whose nature and capabilities are largely unexplored, and to which traditional approaches are not entirely suited.

New Marketing Trends

The fundamental function of marketing remains the same: it is communicating to customers and prospect the value offered by the firm, in such a way that the customer recognizes the value and desires to engage with the firm to obtain it. (EN: This notion, while fundamentally true, is based on a unilateral approach to marketing, which I believe to overlook a much-neglected function of marketing: not only to push messages to the customer, but to receive input from the customer, and to utilize that information to evolve the firm.)

In the present day, the marketer faces unprecedented challenges and opportunities. Technology has closed the distance between the firm and the customer, increased the speed of interaction, and increased the power of observation.

The tools and tactics for this task are also far more sophisticated and powerful as well - but ultimately, it is strategy that "wins the war." Focus on tool-and-tactic can become a distraction from the overarching business goals, and a focus on measurable phenomena that are of little importance to the long-term performance of the firm. The act of "counting clicks" becomes an end in itself, consuming resources while contributing no value.

It's also noted that there has been an evolution in marketing: companies have shifted from being driven solely from internal motives (the will of the executive) to being driven by external motives (reacting to the motions of competitors), and only recently to choosing a stimulus that has a greater impact (reacting to the demands of the customer) - largely because the latter was for many years difficult to measure or monitor with any degree of accuracy.

On the topic of data: technology provides mountains of data, to the point at which data is a treat to progress. The volume of data behind a decision compels decision-makers to act, often without questioning whether the data is relevant, and the action is strategic. Simply stated: the existence of so many numbers confuses firms into to chase the wrong ones.

The author considers some of the trends and phenomena, with an eye toward getting a better handle on what is of significant..

The Consumer Revolution

The author considers e-commerce to be a "consumer revolution" in that it has the potential to have just as great an impact on our lives as consumers as the Industrial Revolution had on the operations of manufacturers. In effect, the consumer is liberated from the constraints of a physical marketplace: they can get whatever product they want, from any vendor they want, at any time they want.

As an aside, the "when" is often overlooked, and the author presents a number of interesting changes resulting from the 24/7 availability of the Web. That customers have largely accepted a delay in obtaining a good, but have gained in exchange greater convenience in timing the purchasing of a good - and marketers are finding that shopping takes place with greater frequency, and at unexpected hours.

Ultimately, technology has turned the tables on the retailer who had power by their ability to control product and price and present the customer with a take-it-or-leave-it proposition in which the customer was disempowered to negotiate.

It also shifts another form of control - control of the information available to a customer - out of the hands of the marketer, who benefitted from the consumer's lack of access to information (television, newspapers, magazines, etc. provided few options, each very slow-moving and all driven by advertisers). Customers now have access to a wide array of information from a broader range of sources, all within seconds. Technology also enables customers to contribute to the information: to add their voice to the conversation and dispute what is being said.

As such, marketers are struggling to deal with the radical shift in consumer behavior, the loss of their power, and the obsolescence of the tools and tactics of their profession. This is not to suggest marketers have been rendered utterly helpless - the new channel counterbalances the loss of traditional methods with the invention of the new - but it does require a significant change in strategy.

The Shift from Offline to Online Marketing

As the percentage of household purchases made online (or researched online) grows, the money is shifting from the traditional advertising vehicles to the online ones. (Various statistics are provided to underscore the shift in ad-spend, but this is no longer an assertion that meets with disbelief.)

It's also noted that marketing in the online medium is far more measurable for the advertiser. For a television ad, there was no way of knowing how many individuals were watching at the precise moment the advertisement aired, or how many of them later decided to purchase as a result of seeing that message. A reasonable guess could be made, but it was still far from precise. With the Internet, customers can be tracked as individuals - to know when an individual saw an message and what actions they undertook afterward (even if there is a gap in time) - and to aggregate that data to demonstrate, with a high degree of precision, the effectiveness of the message in soliciting the desired behavior.

It's also noted that the Internet is a channel that has several vehicles of advertising: placing banner ads, sending e-mails, buying search engine rankings, seeding messages in social media, etc. Each of these "work" differently for different products and messages, and their success can be directly measured.

There is also the increasing notion of personalization in marketing, to break from the notion of delivering a single message to a mass audience to considering the customer as an individual, and tailoring promotions to him, and to measuring success on the granular level rather than a mere aggregated percentage of a vaguely-defined group.

The Winning Site

The contemporary notion "advertising" does not begin with the bait that lures the mark to the store: the expectations are higher, and disappointment greater, for a person who follows-through on a promotional message only to be dumped on the home page of a site where he must then hunt for the item, or may find it out of stock. Customers tolerated this better in traditional advertising and physical stores.

In this sense, your Web site is a significant tool, arguably the most powerful one, in the marketer's arsenal. For many companies, it represents a significant investment of capital in an online presence they expect to be productive in generating revenue for a long period of time (as opposed to a cheaper, more short-lived promotional message or campaign) and there is, or should be, considerable interest in getting your Web site "right," such that the customers who are lured there do what the business wants of them (invariably, to make a purchase).

This is the reason that many site operators regard, with a degree of horror, the evidence that indicates a tiny fraction of individuals who visit a Web site purchase immediately, and are constantly scrabbling to improve their conversion ration to recover these lost sales. And the data collected from site visitors is often the evidence used to plan and assess their efforts.

(EN: The author does not address the question of whether these expectations are reasonable: can we realistically expect every visitor to purchase? If we attempt to force them though the sales funnel, are we doing more harm to long-term value for the sake of an immediate sale? These are significant question that should be considered.)

Especially because there is a lack of history, marketers are learning by trial-and-error to use the tools and tactics of marketing in the online channel - and the data collected from Web site visitors is the only evidence they have by which to assess the success of their performance by means more subtle and meaningful than gross revenues resulting from nebulous causes.

Instant Brand Building (and Destruction)

"Branding" is central to marketing strategy and garners the greatest attention from the executive level. An advertising campaign is a small and short-lived event, but "the brand" is big, important, and permanent. And in all fairness, brand is important, and critically so to marketing, as it represents the character of the firm to many audiences (customers, investors, prospective employees, competitors, etc.)

Determining what the brand ought to be is fairly simple, but measuring the success of efforts to establish and maintain the perception of brand by the audiences is much more difficult. Especially in the current age of information, where messages initiated by the company are only one voice in the crowd (and one that is among the least likely to be deemed credible), brandk-building is harder than it once was.

When companies build a site to promote their brand, they often have no idea whether the attempt was effective. A head-count of visitors does not indicate the impression they formed as a result of the site, of if that impression represents a positive change. Moreover, since brand-building efforts are more long-term, and do not necessarily result in a short-term increase in sold, user behavior in response to brand marketing is more difficult to observe.

At yet, "brand is often the intangible element that can separate the great online businesses from the mediocre," so it remains a concern of great importance that will be addressed recursively in this book.

Attempts to build an online brand can be difficult. The example is given of a tire company with a reputation for safety and reliability, whose web site features a lot of swishy gadgets (including a racing game) - the site had a high bounce rate, and it was assumed that people who knew the company's brand image were put off by the image communicated by the techno-chic "cool" trappings, or assumed they had arrived at the wrong site.

(EN: this was, and still is, a serious problem when companies approach new technology. They realize that things that are new and trendy have a certain cache and they want to use that to draw attention to themselves, but end up looking foolish, and perhaps damaging their reputation. It's like the old man in a dance club - the mawkish attempt to seem trendy is just pathetic. This is not the kind of attention a company wants.)

It's also reiterated that the internet differs from preceding media in that the audience controls the message. If it seems disingenuous, not only will they reject it, but they will warn others away. So while bands can be built and enhanced very rapidly in this channel, they can just as quickly be destroyed.

It's some concession that you can monitor your brand online: you should be able to track what is being said about you by others (e.g., how many blog posts mention your latest promotional campaign) and whether it is being accepted or rejected by the audience. If you fail to monitor your brand, you will be unaware what is becoming of it. If you do not defend your brand, you are easy prey to those who would attack it.

Rich Media and Infinite Variety

The figure that represents the number of hours consumers spend online (14 per week, as of the writing of this book) drew much attention, and desire by commercial interests to capitalize on the channel - without much consideration of what people are actually doing while they are online. It is not all shopping or browsing products, and there are activities into which it is inappropriate or even impossible for marketing to intrude (reading and composing personal e-mail).

It's noted that the addition of broadband has brought traditional formats (video, particularly) to the Internet. This enables marketers to leverage video's power as a messaging format, but may also cause the estimation of time "online" to be exaggerated (watching a movie over the Internet is included as being "online")

Meanwhile, Web analytics has progressed little from its origins: determining which files the user downloaded from the server, at what time, yields a notion of a "path" that the user has taken through a site, clicking from one page to load the next, unable to consider what actions were performed with the files that were downloaded.

As the internet becomes a richer medium, more interactions are done with a single file or page, which adds an additional layer of sophistication to the user experience, and additional difficulty to those who wish to monitor the actions of the users. A Flash applet or dynamic HTML Web page driven by JavaScript involves a lot of potential activity after the files are downloaded, and the mere indication that files were downloaded does not yield any useful information. Another layer of complexity is in "mash-able" media, in which assets from your site are delivered in the context of others, which is an increasing practice.

It's also noted that marketers are less interested in knowing what files were downloaded as they are in assessing the impact of user experience on purchasing behavior. That a person watched a video is one thing; that it led him to purchase is more important; and that it led him to purchase regularly over a length of time and grant your company greater share of wallet and more word-of-mouth is marketing gold. You must be able to make this determination to know whether the rich media you are offering (at considerable expense) are having a positive impact, or are just eye-candy, or are even a distraction/detraction from the experience.

And yet, much of what is done in the way of Web analytics seems to be stuck in the age of mass-media, such as Nielsen ratings that indicate which programs are watched in a household (hence, which advertisements are seen) and it was necessary to make guesses and assumptions based on aggregate data. Many rely on the Nielsen model because it is traditional, and the best that was offered in the old media - but it is no longer as applicable or relevant to the online channel.

The Analysis Mandate

Trends in the consumer market and technological advancement are environmental factors that cannot be controlled by a business. You cannot make the mobile channel go away, only choose not to engage with customers, and suffer the consequences when customers choose another firm that supports them in their channel of choice. And even firms that recognize the changes, and are motivated to react to them, can be overwhelmed or paralyzed by the degree and speed of changes.

Marketing, meanwhile, has always been about creating value by connecting customers to a seller. From the earliest word-of-mouth (a villager tells his neighbor about an experience with the blacksmith) to mass media to the present age, this focus has remained unchanged.

And yet, the way that this goal is pursued has changed. It's noted that some firms thrive while doing very little marketing, or even taking the dramatic step of doing none at all and allowing customer word-of-mouth to promote their business. In the early days of Starbucks, before it became ubiquitous, it managed to attract a sizable and stable market without advertising (businesses that cater to an 'exclusive" group often do) and even today does very little to grab attention or defend against ads from competitors.

As such, there arises the question of whether traditional market even works anymore. This is a separate question - but what is germane to the present book is the tools and techniques the modern era provides. The decision as to whether they are appropriate to a given business, or whether older approaches are to be altogether abandoned for the new, remains to the reader.

A quote from Winston Churchill: "However beautiful the strategy, you should occasionally look at the results."

The author suggests that marketers would do well to pay closer attention to ROI than they traditionally have: the return being the chief measurement of whether an effort was not merely successful at accomplishing its stated goals, but worthwhile for the business, as a profit-generating entity, to have undertaken in the first place.

Essentially, all performance indicators (called KPI - for "key" performance indicator) are an expression of the ability of any activity to generate profit, through increased revenues or decreased expenses to the business. It is increasingly important to a business to remain attentive to this.

From the perspective of Web analytics, it is possible to measure activities that have no bottom-line contribution - and it is largely a waste of time and money to do so, as they can create a false sense of security in suggesting that a process was successful in that it was efficient, but did not contribute to profit. Any metric must be translated to dollars in revenue or dollars in cost-savings in order to be meaningful.

(EN: While I'd agree that the point of all business activity is to improve profitability, traditional measurements of ROI tend to focus exclusively on short-term results that have the potential to do long-term damage. It is not a new problem of the Web, as this has long been the struggle between sales promotion and brand marketing - a cheap stunt can spike short-term revenues but damage the firm's relationship with its "regular" customers. In effect, ROI is important, but a business should consider "revenue" with a broader and more long-term perspective: a given action may not spike revenue, and it may even seem to entail cost without immediate return, but if it bolsters a customer relationship to gain or defend long-term revenue from loyalty and share of wallet, it is entirely worthwhile. However, what is new to the Web is the sense of immediacy: decision-makers can get data instantly, see results instantly, and this skews their perspective to give preference to that which provides immediate gratification.)

Analytics is best when used "with moderation and good judgment." Not everything that can be measured has meaning, and statistics are a poor substitute for common sense.