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How the Web Changes the Old Marketing Rules

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The Web is a great marketing tool, and the potential is beginning to be realized, perhaps by your own competitors. The Web brings big changes to marketing as we know it. Find out how it's affecting marketing communication, segmentation, and direct marketing.
  • "Why, a child of five would understand this. Quick, someone fetch a child of five."
  • Groucho Marx

Chapter Contents

  • The New Marketing Communication 6
  • The New Marketing Segmentation 11
  • The New Direct Marketing 15
  • Summary 19

My aunt, bless her heart, thought a cursor should have his dirty mouth washed out with soap. Any discussion about technology left her as confused as a sheepherder inside a Circuit City. So it was a challenge for her when I became a computer programmer—she felt compelled to ask me about my job, and I dutifully attempted to explain it. Those conversations always ended the same way, when Aunt Minnie quickly turned to the person next to her, exclaiming, "They're doing wonderful things with computers!"

Well, yes they are. But I can forgive you for thinking that the changes brought about by technological advances are not always so all-fired wonderful. As much as change provides new opportunities, it also poses new challenges. And nowhere are the challenges more obvious today than in the field of marketing.

But we're getting ahead of ourselves. (I have never understood how we could actually get ahead of ourselves, but cut me some slack here.) Let's start at the beginning.

In the beginning, there were no marketers. We had entrepreneurs, although they didn't call themselves entrepreneurs back then. I'm not sure they called themselves anything, but they were the smart guys (yes, back then they were guys) who thunk up the new stuff that people wanted. And they came up with some very cool stuff. And that was good.

Unfortunately, most entrepreneurs weren't very good at selling their stuff. They needed salesmen. Salesmen weren't so good at coming up with new products, but they sure knew how to sell them. Not only could an eloquent salesman persuade people to buy a vacuum cleaner after he spread the dirt on their carpets, but some seemed to be able to talk the dirt into jumping into the vacuum without turning it on.

Yes, salesmen could talk. They could look at a person, talk to him for a minute, and size him up on the spot. A good salesman could connect with people and figure out what they really wanted. And once he did, he'd use that to sell what was on the truck. Whatever the entrepreneur brought to market, the salesman could sell.

But then technology changed everything. Newspapers and magazines—and later radio and TV—created a new way to communicate. And while some used mass media to inform and entertain people, other people realized we had stumbled onto the greatest way to sell things ever invented. They discovered that media can drive demand for products. Those people were the first marketers.

Marketers discovered that advertising can deliver the message for your brand to your target market. (Just look at all those new italicized words that we marketers came up with just to explain what we do.) In fact, mass communication is what begat the need to have brand names at all.

Let's face it. Your customers don't need a name for what your salesperson is pressing into their palms. But without a brand name in your newspaper ad, your customers won't know what to ask for at the store—or have any way to connect the ad with what they now want to buy. The invention of advertising requires that products have brand names.

Now when all this branding stuff began, no one knew what they were doing—that's true at the start of just about anything. Whenever the world changes, there are no recipes for success, at least at first. In fact, when we consider how advertising evolved with the advent of newspapers, we can almost hear Ben Franklin's Aunt Minnie turning away from the young printer exclaiming, "They're doing wonderful things with printing presses!"

And so they were. They were experimenting like crazy because printing presses caused the invention of marketing—a big change. Any new world order forces experimentation, and the bigger the change, the more massive the scale of the experimentation. Gradually, over a long period of time, "best practices" were discovered by expert marketers and marketing consultants. (If you don't believe that best practices are discovered by consultants, just ask them.)

It's worth noting, however, that the best practices were discovered—everyone was forced to experiment precisely because no one knew what they were doing. Only as the world stabilized were successful experiments distilled into best practices so that people could be taught to follow them by rote. (I'm not really sure what rote means, but I tend to repeat that word a lot without thinking.)

The best practices of marketing evolved over just such a long period of time so that today we can scarcely think of a world without marketing (although some of our customers dare to dream). Marketers need to remember that marketing is all made up. It isn't chemistry, where laws of nature are discovered. Yes, market researchers do discover things about our customers, but the point is that marketing changes whenever people change—which is often.

Marketing is a set of ideas that people invented because they seemed to get other people to buy more of the stuff being hawked. The minute those things stop working, marketers will make something else up and call that marketing. Whatever works becomes the new best practice. Does that make marketing frivolous or unimportant? Certainly not. But it does make marketing as malleable as the customers it attempts to persuade.

Now then, this is all well and good, and this story about how marketing evolved is a necessary background for you to think about marketing in today's world. It has the one slight disadvantage of not being true. I mean, at least I don't know if it is true. I didn't research it, and I intended it to be an oversimplified history of marketing. But the story served my purpose as a way to get you to think about where marketing has been and where it is going.

And you'll likely remember it better than if I had painstakingly related the full history of marketing, replete with facts and dates and famous marketing thinkers and heroes. Why? That's just the way our minds work. We're all suckers for a good story, which marketers know better than anyone.

But my main purpose isn't to get you to remember the story. I want you to do something. I want you to change your thinking, change what you're doing, and get out there and become Millennium Marketers. Don't remain stuck in the old ways—start adapting to the huge changes that are right now remaking our profession. So I want you to remember what I said, but I also want you to take action.

That's what marketing is really all about, isn't it? That's why I told you a story, and that's why I am challenging you to change. Hey, I even branded you "Millennium Marketers," which might not go down in history like the "Pepsi Generation," but at least gives you a handle on what you are striving for. If you want to be in that select group of Millennium Marketers, then you've come to the right place.

And, come to think of it, if you don't have the slightest interest in all this new fangled marketing on the Internet, you've come to the right place too. That's because, although I hate to have to break it to you, you don't get any choice. The world is changing, and the old ways are not working the way they once did. When you're born into a time of change, you don't get to coast along.

This is one of those times.

The Internet (and the World Wide Web in particular) is a new world order of amazing magnitude—probably the biggest change any of us will see in our marketing lifetimes. And that means that no one really knows what they are doing right now. The things that consultants call "best practices" today might seem laughable a couple of years from now. Right now, the successful marketers are experimenting like crazy and producing new best practices every day. Some of them will define what your children learn when they study marketing. So even if we're sure that we understand the basics of marketing, the change wrought by the Web forces us to go back and reconnect with the basics. (And maybe forces us to figure out the future tense of the word wrought.)

And so with no further ado (because I have already provided the perfect amount of ado), what is really changing about marketing? Let's start with the changes the Web is forcing on marketing communications.

The New Marketing Communication

Traditional mass media is a critical piece of many marketing communications plans today, and that's not going to change anytime soon. Coca Cola needs TV ads and billboards, and your company might too. The problem is that mass media's effectiveness in conveying your marketing message is fading.

The rise of the Web has ushered in huge changes in usage of mass media. Internet usage is beginning to overtake TV viewing in some countries, especially among younger market segments. Newspaper circulation has seen a steady, continuous drop over the last 40 years. What explains these dramatic shifts? Simply, people have only so much time in the day. Every time you see a stat that says Internet usage is up, understand that something else must be down.

Or that multitasking is up. More and more, people seem to be consuming multiple media sources simultaneously, such as watching TV while using the Web. When they do so, the effectiveness of the TV commercial is lessened because you don't have the full attention of the viewer the way you once did.

What's more, advertising-supported media is steadily losing ground to commercial-free sources. Of the time customers spend consuming media, the fraction spent with media directly supported by advertising has steadily dropped in recent years—it is expected to fall below half in the next decade. Consumers already spend more of their own money on media than advertisers spend for ads on ad-supported media—and that trend will only accelerate. Premium cable channels steal audiences from commercial-supported channels, iPods and satellite radio cannibalize free radio, and subscription information services lure readers from ad-supported media.

Smart marketers are adjusting their marketing mixes. Microsoft says that it's shifting half a billion dollars from offline to interactive marketing by 2010. And just listen to Al Hurlebaus, Senior Director of e-commerce for U.S. computer retailer CompUSA:

  • We're not going to completely abandon broadcast—we're still going to put out a circular every week. {But some} customers only want specific notifications, such as {content about} "Apple" or "notebook." An element {of the marketing mix} will continue to be broadcast and a portion will be personalized.

Even the remaining time spent on ad-supported media is less effective than in years past because your customers are increasingly ignoring or blocking the commercial messages. Tivo and similar machines allow viewers to "fast forward" through TV commercials. Households without Tivos use remote controls to channel surf when the commercials come on. The Web's so-called "banner blindness" (people completely ignoring banner ads) should give us a clue as to how much impact billboards and print ads really have.

And what else should we expect? Most people are exposed to thousands of marketing messages per day—one every few seconds during their waking day. When people ignore or block these intrusive messages, that behavior seems like a sign of their mental health.

"So what?" you might ask. (Well, you probably are not so rude to ask it like that, but you might be wondering it anyway.) Well, it adds up to fewer opportunities for traditional marketers to reach their markets, compounded by each opportunity getting less attention. Old media has not completely lost its effectiveness by any stretch, but it is less effective than it once was.

It might seem safe to continue to rely on TV and other traditional media, but Joel Reimer, Director of Interactive Marketing at lawn care company Scotts Miracle-Gro, says that "you need to try everything except TV." He further jokes, "The ship is sinking; it's on its way down—how long are you going to wait?"

Certainly, in many countries (and in many industries), TV, radio, and print advertising are still king. But in Japan, in much of Western Europe, and in the United States, the tide is turning toward the Internet. In consumer electronics, books, music, movies, and other information-rich products, marketing is moving online. Now is the time for marketers to adapt to the new ways, while there's still time.

OK, everyone who didn't know these things raise your hands. Hmmm, no hands up, huh? Yeah, I think most marketers understand that things are changing and I promise not to bore you with a whole book about how TV is dying and the Web is the new thing. Because even though the Web is the new thing, TV isn't actually dying, any more than radio died when TV came on the scene. But old media is becoming less important than it once was as the Internet becomes more important.

Now, in the face of such changes in the past, marketers always knew what to do. When radio made newspapers less important, we bought ads on the radio. When TV pushed radio farther back in the line, we flocked to TV ads. So, now the Web is the next big thing. We'll just buy ads there, right?

Wrong.

Well, it's partially wrong at least. (But it sounded so much punchier to merely say "Wrong," didn't it?) Of course we will buy ads on the Web. If there's a place to plaster our message, we will do it. We buy video ads in elevators, at gas pumps, and even above men's urinals. Oh yeah, we'll buy ads on the Web all right.

Beyond ads, the Internet has spawned a dizzying array of strange new ways to reach your markets. If you think that a "podcast" is a horror movie from the '80s, or a "Web feed" means buying pizza for your HTML coders, you'll want to study Chapter 2, "New Wine in Old Bottles." Once you do, you're sure to use all these new geeky toys along with Web ads.

But something more fundamental is going on. The rise of the Web is not merely a shift of media, the way print shifted to radio to TV. The Web is creating a shift of control. Your customers have more control than ever over which messages to see, which to ignore, and which to outright block.

Telephone solicitation has been curbed in the U.S. by the "Do Not Call Registry." Some companies responded by cranking up the spam e-mail, but they don't get it. Pop-up windows and other intrusive ads are not the answer either. If you feel the need to offer a "Skip this Ad" button, then you aren't doing it right.

Unless you engage your customers in deciding to view your ads, and you can convince them to stick with your ads, they won't see them. And they won't get your message.

Time was that your marketing program was limited by your budget—you could reach anyone if you had enough cash. Today, entire market segments are tuning out TV and other traditional media. Advertising money is easier to come by than your customers' time. Customers choose where to focus their attention. How do you become their choice?

Author Seth Godin has framed this dilemma as the "interruption model" versus the "permission model," and he's right. Advertising has traditionally been about interrupting people, blaring your message when they wanted to be doing something else. ("I was sitting in my living room, minding my own business watching the ballgame, when all of a sudden they're telling me about erectile dysfunction.")

The Web can change that model. Instead of showing a zillion car commercials in the hopes that customers remember your brand when they actually want to buy a car, what would it be worth to be able to talk to customers at that moment of readiness? To know exactly when your customers want to hear everything about your car?

Another way of describing this shift is "push" (interruption by the marketer) versus "pull" (permission from the customer). Godin describes deeper permissions where customers subscribe to regular messages from you or even have standing replenishment orders (for supplies, for example). Essentially, they are pulling your push.

So the real challenge of the Web is not the mastery of a new way of interrupting people. It's a lot harder than that. How do you get people to actually want to listen to you? Why should anyone choose to hear what you have to say?

Well, they might listen if your message is relevant to their needs and if you sound like an authentic and reliable source of information. And they might listen if they thought you were listening to them, too.

Yeah, I know. We all drone on about how we listen to our customers and how we "appreciate your feedback," and blah, blah, blah. Customers can talk to salespeople or the complaint department. That's the way it's always been, right? Unfortunately, on the Web, customers can talk back to us. Yeah, us. The marketers. Directly.

Uh oh.

By now, you probably realize that you need to use podcasts, blogs, and other new media to send out your message, but you might not realize that your customers will use them to talk back to you. Not only will customers comment on your blogs, but they will talk about you on their own blogs with other customers. And you might not like what they say. You might even need to respond.

So we really have to listen to customers now. Marketing communication is shifting to marketing conversation. You might say MarCom becomes MarCon. (OK, OK, you probably have better judgment than to say that.) The point is that you no longer deliver a message—you start a conversation.

Some pundits are going to the other extreme—saying that customers are now grabbing control. (And they say it with the same tone of voice as "The barbarians are storming the gates!") What's really happening is that instead of marketers conducting an old-fashioned monologue, marketers and customers are now sharing control of a real conversation.

And it's not always a private conversation. Everything you say is just the starting point of where it will go in the new public discourse made possible by the Web. Sometimes the conversations are public; sometimes they are private. That used to delineate the difference between sales and marketing, but no more. The stark lines between sales and marketing disappear on the Web.

If you want a preview about how this new marketing conversation might evolve, check out one of the "rat-a-base" sites such as DontDateHimGirl.com, where you can see names and even pictures of men that women are warning other women about. In a world where alleged bad behavior in something as private as dating is plastered all over the Internet, you shouldn't have any expectations that your marketing message will go uncommented upon. Our customers are changing. They expect to comment on what companies say and do, and the Web lets them do it.

And you must be willing to adjust what you are doing at every moment. You need to be willing to change your message if it's not working. You must take responsibility for errors your company makes and ensure they are corrected. Your response to one customer might be seen by all your customers. So you must listen with new ears and take action if you want to appear responsive.

In the old days, public relations people handled these public discussions. Large companies needed to worry about negative publicity, but small companies were never interesting enough to be noticed by the media. With the Web, no company is so small that it can fly under the radar.

Your customers (or your competitors) can use the Web to give you whatever good or bad publicity they desire. So if your restaurant was cited for health violations or your products are assembled by child labor in a third-world country, you'll have to defend that. If someone took offense at one of your ads, you'll have to respond. Even if you are a very small company, someone will blog about the issue in front of your other customers, and you will be on the spot. Everything you say and do is public.

So if you prefer to control the marketing message, you might be in for some disappointment. No one can control a conversation—you can control what you say but not what your customers say. And honestly, when you have a dozen bloggers in your company, it's hard to impose traditional message control on even your part of the conversation. Can you strive to be relevant? Yes. Authentic? Definitely. Responsive? Absolutely. But can you exert control? Probably not.

Your marketing message is just the beginning of a conversation, which we'll discuss in depth in Chapter 3, "Marketing Is a Conversation."

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