Sunday, October 16, 2005

Interactive Marketing Traction -- Agency view from Dave Smith of Mediasmith

The boon/bane of the Interactive Marketing industry is the constant flow of new technologies/tools that have the potential to be a great benefit to marketers or a big waste of time. A couple of the latest new tools are podcasting and blogs/RSS feeds. I thought it would be interesting to get the perspective from all sides of the equation (marketers, agencies, publishers, technology providers, etc.) for a few of the technologies that are at different stages of development. For example, "Rich Media" advertising is mainstream while Search Marketing is just becoming mainstream despite the phenomenal revenue growth. In contrast, Behavioral Targeting is still in the relatively early stages of market adoption. With the "buyers" that the technology companies are selling to, I asked one thought leader and industry veteran questions about how he went through the various stages of the adoption process (awareness, consideration, trial, purchase, repeat purchase). In particular, I was looking for the repeatable themes that would assist both sides of the equation for emerging new technologies to both accelerate adoption from the "sellers" perspective but also avoid wasting the buyers time.

I thought a great place to start would be with Dave Smith who has been in the industry 38 years and is relied on many throughout the industry for his thought leadership. He's quoted all over the place such as here and here.

We chatted about the early days of Rich Media (RM) when Intel was promoting it as a way to generate demand for faster processors back in '97 which is how he first became Aware of RM. The purveyors of RM were focused on site-side implementations (e.g., helping with shopping cart conversion, doing more interesting things on their websites than straight text, etc.) but were getting limited traction. He said companies would come in and show "interesting" stuff but there wasn't demand from creatives for this stuff. In his view, they had sales people out too early when they should have had people work on media research validating their tools as worth the premium (e.g., with click/view through rates 5-10x of traditional banner ads it wouldn't have been perceived as "expensive" when they understood how well they performed). Even today, he still feels the RM vendors are missing datapoints on most effective ad types, etc. that would help further accelerate its adoption. This continues through the Consideration phase where lots of time salespeople are out ahead of research that backs up the tool. In addition, they need to also create pull (help clients understand there's a need).

Lesson learned: While Dave was commenting on RM, the desire for Ad Effectiveness research spans virtually any technology area. While it can be very expensive from a small companies perspective, it's a classic case of you have to spend money to make money.

One of the key barriers during Trial was the RM tried to convince clients to trial but it was difficult to track because they hadn't coordinated with DoubleClick & Atlas (ad serving platforms) to figure out if it worked. From the agency and brand perspective, the byproduct was that there were hidden costs to execute that further exacerbated the "it's expensive and unproven" theme. Furthermore, there was a high degree of coordination required to get the Client, media and creative all had to be lined up together. In Smith's view, they are still not there yet.

Lesson learned: One of the key areas newly launched businesses usually underestimate is the Product Suitability which is a key element of the Sales Learning Curve. That is, what does the technology have to integrate with in the customer's ecosystem.

The driver for why more Purchasing started happening were results and buzz around results -- this was both an internal and external phenomena where generating internal buzz at clients or agencies was as important externally.

Lesson learned: Focus marketing efforts on PR. See my previous post on this topic.

Dave had some other nuggets worth sharing.
  • He described the agency dynamic using Search as an example though it could be applied anywhere. He believes the search people have done it wrong by bypassing the agencies since agencies give them distribution (early Yahoo! recognized how they screwed up by missing big disti vehicle. One example of where Google is shooting themselves in the foot is that Google is setup where it's a new billing entity (transfer from client to agency for example) and thus drop client's positioning drops in ranking after a transition from a client-managed to an agency-managed search campaign.
  • He also highlighted all the various decision-makers and influencers within an agency. The agency has media planners, account people, agency creatives, client (central media operation + product people) -- different story for each of those audiences. He gave the example of Carol Walker at Kraft (part of the centralized media buying team) who would say that it's OK to talk with product people but understand their products as well as the fact that their "budget" isn't purely media. It's critical that a seller also identify who can block within the aforementioned people. A blocking issue might be "we don't have creative resources to do that in your timeframe" or "I think those are like popups" and the buy is killed or delayed even though a bunch of other people were already bought in.

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