Dreaming ahead into the future, what can companies hope to achieve with this new breed of marketing software and services providers?

The end-to-end conversion optimization vision that still seemed far reaching to me back in February, looks much more limited now given the new outlook today.

Disclaimer: The following perspective reflects only my personal dreams and shouldn’t be taken to represent the positions, strategies or opinions of my employer.

Digital Enterprise Marketing++

It isn’t possible to do the coming future justice by calling it next generation analytics, campaign management, or marketing automation. The step up in caliber requires also a step up in language.

Might the following become every day terms in enterprise marketing technology in 2011 and beyond?

Marketing Mix Management (MMM)

Today’s discussion is at the level of point solutions such as search bid management tools (for PPC) and demand side platforms (for display advertising). In coming years, will we see all these combined into a single solution for MMM?

MMM would not only allocate advertising budgets towards marketing mix optimization. It would also automate the execution of these ad strategies, their testing, and the data collection into marketing performance management.

Marketing Performance Management (MPM)

Today’s discussion is at the level of web analytics, benchmarking, landing page and site optimization, social media monitoring, predictive analytics, BI, analytical CRM, social CRM, etc.

In coming years, will we see all these combined into a single MPM environment?

MPM would have to combine the aforementioned point solutions for analytics into one interoperable data environment. Users would want drag & drop flexibility to analyze across silos. Think Minority Report.

The data that flows into MPM would include in-house data marts with sensitive information. That means that we may see the pendulum swinging back to in-house software for things such as web analytics.

Interactive Marketing (IM)

IM is the successor to behavioral targeting and direct marketing. It is based on the accepted notion that marketing is more successful when it is timely and relevant. Therefore, interactions via websites, IVR, email, and any other addressable channel should take into account each user’s past and current behavior to personalize content and marketing offers.

Marketing – Fulfillment Synchronization (MFS)

The dream of automating marketing mix execution requires good synchronization with fulfillment. After all, you wouldn’t want to advertise on product XYZ if it is out of stock. And your ability to set a max PPC bid price for product ABC depends on its true margin, i.e. includes product costs and not just ROAS (ROAS=revenue/ad costs).

Companies such as Amazon have been working on creating ads programmatically for years based on inventory. MFS would take this capability to the enterprise software market.

Marketing Operations Management (MOM)

Already used by the largest marketing operations today, MOM is the successor to spreadsheets, notes on napkins, and the like. It is used e.g. at one famous furniture retailer to orchestrate the development of their catalogues. If any of the other ideas above are to become true, hordes of marketers in the organizations need to work together like a machine. Digital assets need to be created in support of personalized messaging. MOM provides project and workflow management on steroids to facilitate all that.

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One level down we may see practical applications that include software and services in support of specific steps in the customer lifecycle. These more confined solutions may help companies start small, prove value, and grow from there.

On-Boarding Concierge

Successful on-boarding is key for turning newly acquired customers into clients with a high lifetime value expectation (e.g. in banking). The automated concierge would connect to marketing performance management and interactive marketing in order to monitor and orchestrate what needs to be done.

Re-Marketing Optimizer

Re-marketing may be the oldest trick in the book. But it is still tricky to predict who needs just a reminder vs. who needs an incentive to come back. The re-marketing optimizer would provide that intelligence based on marketing performance management insights and connect to interactive marketing to get the message out.

Multichannel, Multi-touch Marketing Attribution

Point solutions for marketing attribution online vs. response attribution in direct marketing need to merge into one multichannel platform. Marketers should ask software vendors for more than just attribution reports. They should also ask for advice on which touch points deserve how much of the credit. Ideally, the marketing mix modeling function would also be covered by providing advertisers with a prediction as to what they can expect from placing their next ad dollar in each channel.

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And the list could go on and on.

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None of the above can replace good old fashioned, customer service with a smile.

But for companies that are already doing a good job at taking care of their customers and building products that delight, the next step can be to compete on Marketing.

Exciting times should be ahead for that.

For those about to rock & roll with marketing, I salute you.

However, when I was meeting with a number of experienced online bankers in Europe recently, the question that I received was more difficult to answer than just proving the ROI of targeting.

Namely, the question was whether one can expect greater ROI from testing or targeting? Whichever promises greater ROI, shouldn’t that be where you may want to start?

Thinking about it in terms of anecdotal results

Testing tends to be much more black and white in outcomes when you first begin to optimize a website. After all, no perfect website falls from the sky. At first you can get a big impact from making changes to messaging, calls-to-acton, layout, etc.

There are case studies, e.g. from Unica web analytics customers, where website conversions were improved by as much as 1900% over time with the help of continuous testing, measurement, and improvement.

Now, I have seen many great case studies of behavioral targeting online. But I haven’t seen one where a better targeted message (via email or website or ad network) drove a 1900% increase in conversions.

Should you count on a 1900% improvement from your testing efforts?

Most web marketers when they hear these great testing case studies can be very disappointed when their own testing efforts only yield a percentage point or two in improvment. That happens a lot too.

And depending on the size of your web business, a 1 percent improvement from testing can still be a highly profitable outcome.

But, it goes to show that a mere comparison of anecdotal results that other people achieved from testing vs. targeting is not going to be enough to help you decide whether you should start with one or the other.

A better way to think about it

Testing is a key competency for targeting. As the previous post suggested, you would probably have a hard time proving the value of targeting if your organization didn’t know how to do (hold-out) testing.

Likewise, reporting is a key competency for testing. If you didn’t know how to measure and report on key metrics, how could you prove which test candidate truly drove better results?

Growth path

That is why it does make sense to follow a maturity model where the organization grows from reporting to site optimization (with testing) and then targeting similar to the diagram below from one of Unica’s whitepapers.

Just don’t get stuck in the stage of reporting and testing but make sure you continue to climb up the maturity curve when the business value that you are generating in Stage 2 begins to level off.

Behavioral analysis and targeting (for interactive marketing) has helped companies who do it well push up business value beyond the plateau that they reached from testing alone (see previous post).

As a result, you can read independent industry analyst reports observing that some applications that can do testing and targeting (hint, hint) are a lot more frequently used for just testing rather than targeting today.

You can even hear from some of the best known and experienced consultants in the online optimization industry that they don’t feel convinced by the business case for (site-side) behavioral targeting because they feel it is less clear cut vs. testing.

This doesn’t need to stay this way.

The problem is that we have been asking the wrong question.

The question should not be “proving the business case for behavioral targeting”. But we need to make the question specific to the use case for targeting that the marketer wishes to pursue / prioritize.

That is to say, we need to seek the business case for using behavioral targeting technology to do one or multiple of the following things:

1. Improve conversion rates for acquiring new clients
2. Improve on-boarding of customers
3. Improve cross- / up-sell
4. Improve customer service case resolution times
5. Improve customer retention
6. Improve win-back of former customers
7. Improve satisfaction with the site’s usability, i.e. ease of finding what visitors are looking for.

When restated in this fashion the business case becomes much clearer. For example, if behavioral targeting allows you to improve customer retention by 1%, then you can calculate what that is worth to your business.

How do you prove it then?

How do you prove that behavioral targeting has been able to help you improve XYZ by some percentage though?

Simple

You do it through hold-out testing. You simply compare what happens to the hold-out group vs. the test group who are exposed to behaviorally targeted recommendations for the use case.

If you think that hold-out testing is complicated … then you have no business even thinking about behavioral targeting. Your organization needs to first learn how to do A/B testing.

Why has this been so hard for online marketing optimizers then?

My personal guess is because:

1. Despite the wonderful, 2001 emetrics paper by Jim Sterne and Matt Cutler, web analysts are – still – not thinking about the customer life cycle enough (i.e. acquire, convert, on-board, grow lifetime value, retain, etc.). Instead, analysts may be too busy optimizing ads and pages. We aren’t measuring customers but ads, pages, transactions. And frankly, web analytics tools were originally created for the latter and most do a horrible job when it comes to measuring customers.
2. We seem to have a blind spot for hold-out groups somehow. As a symptom, Jim Novo and Kevin Hillstrom have been frequently reminding their readers of this neglect. Strange though. After all, hold-out testing is just another name for A/B testing, which we supposedly master so well online.

Go figure

Download from Manoj’s site .

But something changed in the past 3-12 months.

Now, most articles seem to explain SEM as “search marketing” and equate it only with paid search. You read sentences such as “SEO is going like this and that, whereas SEM (search marketing) is going … (wherever Google and Facebook are going)”.

That seems wrong on so many levels

What? Organic search is not “marketing”?

If PPC is Search Marketing, then what is SEO? An IT function?

That’s baloney.

The effort of prioritizing what keywords (i.e. audiences, buyers, markets) your site should rank for is a strategic marketing function. It is in line with marketing best practices to consider SEO a marketing function and investment. For example, books such as Marketing Champions include great reminders that marketing is ultimately about “identifying sources of new cash and helping to rake these in.”

What? PPC advertising = Marketing = Advertising?

Since when is Marketing equal with just advertising? Is that something that Google and Facebook put in people’s heads, i.e. that if they want to do search marketing then they have to pony up the cash for every visitor that clicks? Or is it the Madmen TV show that is to blame?

If PPC advertising isn’t embedded in a broader strategy and coordinated with organic search it will be the 60% of the online marketing budget that is wasted.

What? Search marketing stops at organic rank optimization and advertising?

You often hear of paid search marketing as the art of advertising (with help of agencies or search bid management tools) and organic search marketing as the art of improving rankings. Yet, these are only some of the ingredients in what should be proper search marketing.

Search marketing optimization requires much more, e.g. audience research, landing page design, landing page optimization, funnel optimization, and re-targeting.

Digital marketers are surprisingly silo’d. There are separate teams (and agencies) for organic vs. paid. The teams for website optimization are separate and so are the teams for email marketing. This silo’d specialization is probably to blame for the lack of an end-to-end view on optimization.

So what is a better term to use then?

I wonder whether the current trend may have risen just because of the visual appeal of the acronyms: SEO vs. SEM. Visually, they may seem as if they were referring to the two categories of search when you look from a distance. In contrast, the PPC vs. organic terms don’t have a visual relationship.

But there is no need for this abuse.

We can just simply go back to saying “paid vs. organic search” which are both aspects of search marketing.

Read the full article published on the brilliant new online-behavior site. There you’ll also see uses of Venn diagrams for behavioral analytics that are more serious than the recent fun with the nerd vs. geeks Venn diagram post.

Kudos to Daniel Waisberg for launching online-behavior.com!

On that occasion, let me post the Q&A from our recent webinar with Radian6′s Lauren Vargas below. The replay of the webinar is available to Web Analytics Association members from the webcast archive.

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Which kind of organizations are ready for social CRM?

Lauren: Any organization willing to listen and participate in a two-way dialog are ready for social media engagement.

Social media is another business channel, but the thought process to accept this conflicts with many organization cultures. Invest in education, time and resources for your social media efforts and ensure your success and lessons learned go from campaign to program commitment.

Akin: Additionally, there is a side to social CRM that is about marketing automation. E.g. registered site visitors who are not only readers but contributors on a company’s branded community site could be prioritized for special offers. Going to this step requires an organization where the customer marketers have built up expertise on marketing automation (often the case) and where they are cooperating with the web and social media team (not as often the case as should be).

Can your “Social CRM” work on an environment or organization where the original “CRM” methodology/tool didn’t work or was not really used to its potential and expectations?

Akin: By corollary from the previous question it would seem that such an organization is not yet ready for automating social CRM. They may nonetheless be ready to listen to customer tweets and respond manually to provide customer service and encouragement.

What are the most important metrics for social media marketing?

Lauren: There are no cookie cutter social media metric solutions.

Your organization must determine the correct social media metrics that align with measurable business objectives and company culture. Answer this, what do you want your community to DO after engaging with your organization online? The answer will point you in the right direction to determine relevant metrics.

Akin: Unica also recommends our short paper on this exact topic: “Align social media metrics with your (true) business goals.“.

I am doing a SMM report for gaming website. What should be the metrics for it? The goal is selling games .

Lauren: Only you can determine the proper metrics. If the goal is sales, you may want to look at metrics around revenue and business development, such as: speed of sales cycle, number/% of repeat business, % customer retention, transaction value, referrals, net new leads, cost per lead and conversions from community.

Akin: As Lauren says, you must also decide what the contribution is that you expect from SMM for selling games, i.e. reach and brand awareness? Click-throughs and conversions? Measure accordingly.

What do you think of John Lovett Social Media Measurement Model? What do you like? What you don’t like about it?

Lauren: This report is a great launchpad for building a social media program around sound measurable objectives. Do not use the report as a cookie cutter approach, but make it your own.

 Akin: I like especially that strategy is at the center of it and that it raises measurement to the level of key performance indicators, i.e. KPIs to start with. Great way to avoid drowning in chasing too many tactical metrics. There is also room for creating their next release of the model, I believe. Namely, it doesn’t go very far into the opportunities from social CRM yet.

 How is this new “RFF” new model really different from the traditional RFM model? Can we not translate this new “F” to some sort of “M”?

Akin: The Recency, frequency, friends (RFF) model is very similar in its purpose to the traditional RFM (recency, frequency, monetary) model. However, friends cannot be translated directly into Money for each individual. This is because an individual may not be a big direct customer but they may be a big influencers helping sell others on buying more. That should still translate into “M” eventually, but just not directly. The point of RFF and RFM is to score individuals’ for prioritizing in marketing efforts.

What sort of social data can be integrated with web analytics?

Akin: Depends on the channel. E.g. if you are running a Facebook application you may want to include data about the kinds of users (and their friends) that are taking a liking to the application. For Twitter and the blogosphere you may want to include how many people are following the Tweets and posts of your promoters to rank by their influence.

In terms of adding tracking codes to inbound links, do you drop cookies as well?

 Akin: Yes, when people click through on inbound links a cookie is set by the web analytics solution per the usual web analytics best practices. More interesting scenarios arise in tracking cross usage of for example a Facebook application vs. website. For such purposes Unica has a technical paper for its customers that can be requested from your favored Unica’n.

Does Unica have the capacity to influence conversion? if yes, how?

 Akin: Customers are using Unica’s OnDemand and Enterprise solutions to conversions at every step of the life cycle.

• Unica Search helps manage the PPC budget towards the ads, keywords, and engines that convert best.
• Unica NetInsight is the web analytics solution that helps identify bottlenecks in the conversion process, decide where to make adjustments, and evaluate the success of those adjustments.
• Unica’s Interactive Marketing solutions help design and test landing pages, and target visitors with relevant content and offers based on their behavior.
• Re-marketing, cross-sales, or retention campaigns (e.g. via email) can be configured and automated for registered visitors based on their behavior and customer data

My co. uses unica. I would like to test how this can work for a multilocale program.

Akin: Great. Within the web analytics solution social media and other data can be incorporated through the data integration framework. When it comes to automating Social CRM, we would recommend the other direction for data integration. Namely plugging data from Unica NetInsight into the other products from Unica (e.g. Unica Campaign and Interact) for behavioral targeting.

Sadly, genius never struck.

But here are a few Venn diagrams anyway that kind-of, sort-of make sense and contain a few useful reminders.

The Analyst vs. Change Agent Venn Diagram

A good reminder how critical both business acumen and political skills are so that analysts can be the change agents that we so much desire to be.

The Bean Counter Venn Diagram

A web / marketing analyst also needs to balance an eye towards saving money with an entrepreneurial spirit towards identifying new sources of cash. Veer off too much into one or the other direction, you might be either a bean counter or something worse.

The Segmentation to Recommendation Venn Diagram

A good reminder how critical segmentation is to analysis because static reports probably never tell a story that leads to action. Good reminder also that the true goal of analysis is to get to recommendations as Eric Peterson was pointing out in his keynote at the eMetrics Marketing Innovation Summit conference in San Jose in May.

The Business Optimization Venn Diagram

The purpose of the last one is to remind how web analytics by itself just doesn’t lead to web business optimization. It needs to be combined with customer analytics and put into context with the wider marketing history. The latter refers to preceding marketing touch points and each individuals’ responses (e.g. did or didn’t click-through on an email that they received).

Another possibility that arises at the center of this Venn diagram is interactive marketing. My colleagues and I at Unica take interactive marketing verbally, i.e. the kind of targeted marketing communications that take into account each customer’s past and current actions. That makes the combination of web analytics, customer analytics, and marketing history indispensable.

Or was today another step forward on the inevitable path of web analytics (as we knew it) to becoming history?

For Unica’s read of today’s news, check my post on IBM’s acquisition of Coremetrics on Unica’s blog.

The site is clean now. The hosting provider (GoDaddy) has also checked over it and found no more infected files.

Users of Trend Micro and Kaspersky virus software were receiving a warning when visiting the site earlier this year. Meanwhile Symantec/Norton and Avast users (like myself) unfortunately didn’t receive a warning.

If you visited this site around May 20th you may have seen a scareware dialog box. It scared you with a fake warning that your computer had malware and to my understanding would redirect you to a malware site and encourage you to purchase fake virus software. Presumably, if you did that then your computer will have been infected (my apologies).  If you didn’t, then you should be fine.

GoDaddy’s blog has a mindblowing description of how this sophisticated worm worked. Even more surprising are articles on the criminal networks that seem to be linked to this worm.

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Rebuilding and upgrading WordPress didn’t fix the problem. The worm was coming back in a matter of days.

Technically speaking, the worm was a string of (based64 encrypted) PHP code that was being injected as the first line of every PHP file on my site. Given that this blog is running on WordPress there are countless PHP files being used.

Going down the long list of things that one needs to do for closing holes to worms, finally one of the measures seems to have done the trick.

Keeping fingers crossed.

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Until today, I couldn’t Google any useful info about this worm. But my old colleague Ozgur from MicroStrategy suggested decrypting the base64 encoded worm code which was being injected into every PHP file on my site. So I took an old infected file that I had saved away. In it there turned out to be double encoded code that led to a domain name which was registered by a fake Yahoo address. A Google search on that Yahoo address led to all the background info above.

Fingers crossed that the holes are all closed.

Many thanks to Ozgur!