Nick Martin's Marketing Pages

 

Now for Public Deleveraging

Nearly 2 years ago I wrote about the risks of a double dip recession. 

Here's what The Economist  had to say about likely economic impact of debt reduction, in a study released in January 2010.

It (the study) finds 32 examples of sustained deleveraging (at least three consecutive years in which ratios of total debt to GDP fell by at least 10%) in the aftermath of a financial crisis. In some cases the debt burden was reduced by default. In others it was inflated away. But in about half the cases—which the report regards as the most appropriate points of comparison—the deleveraging came through a prolonged period of belt-tightening, where credit grew more slowly than output. The message from these episodes is sobering. Typically deleveraging began about two years after the beginning of the financial crisis and lasted for six to seven years. In almost every case output shrank for the first two or three years of the process. 

Bang on cue, we are in all probability now entering a new, massively significant phase of debt reduction, two years on. That's why the banking crisis that became the soveriegn debt crisis may once again turn into a painful liquidity squeeze.

Whilst quantitative easing saved the world from depression - effectively replacing money supply growth that in the normal course of events would be provided by business investment - countries now have no alternative other than to reduce levels of public debt. The fact we've finally reached the point of unsustainability is evidenced by the urgency with which countries need to manage the rates at which they borrow, and to rebuild shattered investor and investment confidence.

As public debt is deleveraged, we must hope that the process of private debt reduction is nearing the bottom. If not, another recession is surely all but guaranteed. That's why everything must be done, however radical, to encourage private sector investment and hope for a rapid return to more predictable functioning of markets.

Dangerous 'peep show' of EU banking sector

A second round of EU banking stress tests - designed to bring transparency and hence confidence to shore up confidence in the eurozone, may well have served simpy to score another own goal.

The European Banking Authority said eight of the 90 banks it examined fell short of the required amount of capital under the tests' simulations of a deep, two-year economic downturn. Those banks faced a total shortage of €2.5 billion ($3.54 billion) of capital.

Compare these results to the last set of stress tests conducted a year ago that saw 7 banks fail, with a combined deficit of €3.5 billion. If this first attempt at flushing out banks with shaky foundations failed to inspire market confidence, do we really think this year's much vaunted round of weighty stats will do any better, the analysis of which adds just 2 more banks to the 'at risk' register with a valued shortage in Tier 1 Capital of a measly €2.5bn?

Sure, banks have raised tens of billions in the intervening period to increase their financial cushions, but is it enough if leading indicators deteriorate? Have current asset values on banks' balance sheets in the property markets of Southern Europe been factored in, or are lenders holding back on write-downs? 

If stress tests are meant to determine the ability of banks to withstand the worst realistically imaginable scenario, how meaningful are the tests when they exclude the shock of a debt default by Greece or Portugal? Whilst such a default may be politically unpalatable, that isn't a good reason not to countenance it. What happens when the strengthened EU Stability Fund comes knocking asking for banks to take haircuts on their holdings of debt, assuming they've not already been sold on to the next institution down the line?

These sorts of impossibly difficult questions point to some of the potential challenges we might face in the months to couple of years ahead. In this scenario, we can expect stuttering growth, with sluggish consumer spending as banks restrict outflows and households pay down debt at record rates. The dismantling of rocky high street retailers will surely continue with an outcrop of liquidations in the faltering weeks following each quarter end.

This isn't to say that the EU banking sector is at risk, but simply to point out that lending to business and funding the consumer, whilst strengthening their own balance sheets and ensuring that they can transparently meet the stress tests' criteria are incompatible goals, with lending certain to take a back seat to the more pressing factors.

Meanwhile, companies will increase focus on investments that have a direct and immediate return. Firms that have built up strong cash reserves are in a wonderful position to pick and choose their moves and are very well placed for a consumer uptick, whereas those that are tight on cash will surely draw in their horns. This is the perfect backdrop for disruptive innovation, driven by market appetite towards lower cost, more transparent and direct ways of delivering value to buyers. In this context, business & marketing innovation, stellar reputation and strong cash flow truly matter.

Google grips its social tiger firmly by the tail

Google+, the search giant's new social sharing project, looks like it's going to be a blockbuster.

In beta phase by invitation only or by request from the Google+ page, beta user numbers shot up to 10M before Google temporarily closed the platform to new requestors.  

Most beta users have GMail accounts, a rich future seam of (currently) 170M consumers worldwide.

Econsultancy report that several thousands brands are said to be extremely keen to get involved early.   

There are two aspects of Google+ that excites me as a marketer:

• Google Circles enables the user to categorise groups of connections or friends according to interests. This compartmentalisation makes sense from the user perspective and may encourage more mature consumer groups to use social media in a more widespread sense. From a brand marketing perspective, it permits a higher degree of segmentation and targeting, should make it easier to tap into the long tail.

• Google+ takes an important step to evaluating the relative behavioural strength of social networks. Just because you're highly connected on Facebook doesn't mean that you're friends with all of them, or that they have any influence over the things you decide to do or buy.  Functionality within Google+  opens up possibilities to sift and separate the relevant from the irrelevant. An individual may have lots of apparent connections, but how many of them have significance? 

Understanding these nuances should help brands determine who is influential within groups and what recommendation strategies are likely to be most powerful in kicking off purchasing journeys.

July is shaping up to be a good month for Google. On the back of tremendous quarterly results showing a 36% jump in earnings, could Google+ represent a major new marketing channel, where the undoubted power of trusted recommendation takes a further significant step in capturing a material slice of online marketing spend? 

 

Email marketing maturity profile?

The latest research from Marketing Sherpa, looking at the most commonly utilised performance metrics by maturity phase of the email marketing enduser, provides some interesting insights into how deeply practitioners systematically measure. 

Of particular interest is seeing the proportion of endusers who do not measure things, even at the mature, strategic, end of the scale. Take a look at the following graph:

So, 40% of mature users don't analyse the different link click-throughs; 56% don't look at the performance of different data segments; and 38% don't or can't analyse post click conversion rates.

This fresh-to-release  study, conducted a few months after the European benchmark survey I authored for FEDMA last year, reminded me of some of the key conclusions of that earlier report. Strikingly, users who had considered themselves strategic email marketing practitioners hadn't projected that sense of savvy when it came to campaign performance practise. Those who saw email marketing as strategically important for their organisations nonetheless often had poor visibility of metrics such as conversion to sale and conversion to action.

With just 16% of campaigns entirely data driven, and 38% of campaigns driven by some data, it is apparent that there is a way to go before the critical insight and testing necessary for optimising the email marketing channel is systematically practised.

Even when metrics are in widespread use, such as delivery rate, are practitioners really measuring in full awareness and knowledge? Most practitioners will determine deliverability as delivery to Internet or to mail server as the primary measure (i.e. less the hard and soft bounce codes), but delivery to inbox or Inbox Placement Rate (IPR) is a far better measure. Why? Because around 18% of email never ends up in the Inbox, or even in a Spam folder; nor  is it accounted for in the bounce data. It simply disappears, into a virtual Bermuda Triangle. The worse your reputation, the greater the problem. 

Much in the same way practitioners focus on improving their click through rates, they must also monitor, manage and take steps to continually improve their reputation to improve IPR, campaign performance and user engagement.

What this evident gap in email practise perception and reality truly highlights, is that whilst we tend to view email as a mature marketing channel, there is still a way to go to master it. Whilst email may have been around as a viable marketing channel for more than a decade, we are far from the point where outstanding direct marketing disciplines are routinely applied to it, and where the nuances of the medium are yet globally understood and managed.

Questionable ethics of data collection

Who is collecting data on behalf of 'The British Consumer' using offshore call centres? Despite being on the UK's Do Not Call List, The Telephone Preference Service (TPS) for 3 years, I'm getting duplicate calls from an offshore call centre requesting permission to undertake a 'survey' on behalf of this dubious entity.

Various tactics are being employed, from a request to verify address and telephone details before launching into a lifestyle questionnaire - and including one that promises to ensure that your details are taken off our list before then saying we'd just like to verify the details we hold about you and your household.

Either no record is maintained of previous contact or they just aren't bothering. All part of a truly low-cost, low-ethics exercise...

One can easily see how hundreds of thousands of consumers are surely being duped by these approaches, that seriously misrepresent, flout TPS regulations by calling under the guise of research when what they are doing is data gathering (but clearly not market research), and damage consumer confidence.

When I pushed representatives to disclose which legal entity they were calling on behalf of, the phones were put down. So they might be naive enough to call repeatedly in spite of several bruising encounters, but not that naive! 

Here's the thing; if data collection goes down an ethical slippery slope in pursuit of the lowest cost collection, campaign performance will follow. Not only that, execution comes with hidden costs arising from higher than average complaint rates. All of which feeds into a negative cycle of brand perception, at a time when reputation and trust is more important than ever.

Among other parameters, being able to provide a simple audit trail to complainants in respect of their personal information when asked, helps allay concerns and restores trust. Transparency is more important than ever, and practitioners using poorly acquired and badly permissioned data run greater reputational risks than ever before.

Dutch Require Consumer Consent to Put Cookies on PC - WSJ.com

The Dutch Parliament passed a law Wednesday that forces websites to get explicit consumer consent before they place small text files known as cookies on a computer. The new law was opposed by the online-advertising industry, which fears the legislation will pave the way for similar moves across Europe.

EU officials have said they probably won't challenge the Dutch law, indicating it is unlikely to be overturned and suggesting that industry may have a bigger fight on its hands than it feared.

In November 2010, the EU passed a directive requiring online advertisers to get "informed consent" from users before placing cookies on their computers. Under EU treaty law, countries then had until May to write that rule into their national legislation, but there has been some confusion about exactly how the language had to be interpreted.

"The Dutch law is an important case study because it's such a big market," said Kimon Zorbas, vice president of the Interactive Advertising Bureau Europe, which represents online advertisers. "We would expect companies from our sector to either move their operations to neighboring countries or lose their clients to companies located elsewhere in Europe."

Online advertisers are up in arms. An increasing number of ad campaigns are dependent on cookies, which store data on users and their viewing habits, and the business model could be crippled, they say. "Fifty percent of campaigns in euro volumes might be shut down," said Stephan Noller, chief executive of nugg.ad, an online-advertising consulting company.

In the Netherlands, publishing companies lobbied furiously against the bill, arguing the law exceeds the EU mandate because it includes a provision that websites must prove they have received permission from users to place cookies on their machines. One news portal called nu.nl said it might disappear entirely.

EU regulators will now "carefully assess the Dutch legislation to verify its compliance with the e-privacy directive," said Jonathan Todd, a spokesman for Neelie Kroes, the EU's commissioner for the digital agenda. EU officials in Ms. Kroes's cabinet say they believe the Dutch law is in the spirit of the EU requirement for "informed consent."

That could be bad news for the online-ad industry, because the EU is committed to harmonizing rules. "We all stand to lose from fragmented rules," said Ms. Kroes, speaking Wednesday afternoon in Brussels at a conference on online legal issues.

via online.wsj.com

With the highest broadband penetration in Europe, marketing practise and spend that has migrated substantially online, this news reported today in WSJ, threatens online behavioural advertising in the Netherlands, and might prove to be a key case point of influence for Eastern and Southern EU States in their own local interpretations of the EU Directive, whilst expanding the market opportunity for competing marketing methods that can target and personalise in real-time. Today the Country of Origin principles that exist within the EU permit multinational organisations to move their operations when local laws are not to their taste; but what happens if and when this basic principle is changed to require conformance to Country of Destination laws?

Radian6 highlights shift in Social from defence to value creation

Salesforce.com certainly splashed the cash on Radian6 - to the tune of $340M - because they believe that Social will profoundly change sales and marketing, and want to connect market conversations with marketing and sales.

As SF's PR put it:

Radian6’s unique technology captures hundreds of millions of conversations every day across Facebook, Twitter, YouTube, LinkedIn, blogs and online communities. The intelligence gained from these conversations has become critical in helping companies better market and sell to prospects, serve customers and understand what’s being said about their brands, products and competitors. With Radian6, salesforce.com will add the ability to monitor and join in these public conversations across its products, bringing the heart of the public social web to customers’ business.

In other words, from SF's perspective, Radian6 will bridge the conversations happening on public social networks, such as Facebook and Twitter, and Salesforce.com’s private corporate social network, Chatter. 

To date social media monitoring has been used a bit like Talk Radio - defensively. Brands have learned that they can no longer smother isolated unhappy customers with broadcast market messaging, and need to nip destructive conversations in the bud - which have an unpredicatable tendency of catching like wildfires.

 

Now brands are trying to work out how to integrate social into their marketing and relationship management strategy. 

Where are we likely to go from here? How about leveraging social networks through recommendations from trusted sources? It's like adding a whole new dimension to targeting, just as the traditional push marketing model is flagging.

World class prospecting and market development is as much about trust as it is about cut through, and solutions that simplify that challenge and make it easy to deploy authoritative acquisition and development programmes will help solve one of marketing and sales' great current challenges.

Image courtesy of Brian Solis

 

CRM 3.0 - where do we go from here?

I'm increasingly firming up the view that the desire of marketing services providers to sell meta systems to large enterprises is not shared by those target organisations, nor, significantly, the big 4 Consultancies. These are the guys with the ear of the Boardroom, and their views matter - to an ever-increasing extent trumping the Advisory firms.

Having invested and reinvested over the last decade in core platforms for creating a single customer view, relationship management et al, there is no desire to do it all over again.

Multichannel marketing is perhaps better approched by thinking about the extent to which your customers have a propensity to be channel agnostic (Forrester). I've set out my stall that trying to deploy integrated, do-it-all multichannel CRM platforms is wrong headed. Far better to have fit-for-purpose specialised execution platforms, with the activity, history and response data looping into the single customer view.

Organisations want to see a return on their investments to date, and are looking for components that can leverage their previous investments. 

• To that end, one overlooked area is marketing resource management, and the speed of deployment benefits to an organisation by alignment of DAMs with customer databases and segmentation. 
• Another emerging channel looks like being on-site assistance, with high predictability and personalisation assured through integrating knowledge bases, scripting, and embedding objects/ web services to determine which experience to serve to different consumer profiles common trigger-based events such as Next Best Offer.

Both of these areas help improve the customer experience, a rising discipline within global enterprises. Why, these guys even have their own thriving industry association! This growing area will, in turn, drive the use of analytics to support marketing and customer relationship based decisions. Expect to see the use of analytics shift from a typically modelled, theoretical basis to more sensitive analysis of real behavioural data. 

 

PETs to the rescue of OBA?

Industry presented plans for self regulation to the European Commission last month , following a public statement by Commissioner Neelie Kroes, in which she established clear benchmarks that a self-regulatory instrument would need to meet in order to be deemed acceptable and sufficient by the Commission.

These are:

1. Effective transparency (paramount). This means that users should be provided with clear notice about any targeting activity that is taking place.

2. Consent, i.e. an appropriate form of affirmation on the part of the user that he or she accepts to be subject to targeting.

3. A user-friendly solution, possibly based on browser (or another application) settings. Obviously we want to avoid solutions which would have a negative impact on the user experience. On that basis it would be prudent to avoid options such as recurring pop-up windows. On the other hand, it will not be sufficient to bury the necessary information deep in a website’s privacy policies. We need to find a middle way.

On a related note, I would expect from you a clear condemnation of illegal practices which are unfortunately still taking place, such as ‘re-spawning’ of standard HTTP cookies against the explicit wishes of users.

4. Effective enforcement. It is essential that any self-regulation system includes clear and simple complaint handling, reliable third-party compliance auditing and effective sanctioning mechanisms. If there is no way to detect breaches and enforce sanctions against those who break the rules, then self-regulation will not only be a fiction, it will be a failure. Besides, a system of reliable third party compliance auditing should be in place.

During the round table, Robert Madelin, Director General of DG INFSO, clarified that the Commission position is in favor of an opt-out approach for cookies. He also clearly stated that profiling is an appropriate tool for marketing purposes and that its use both online and offline needs no distinction. Finally, the Commission stated its interest to find the right balance between data protection and the legitimate interest of data processing for a balanced economy. 

This is good news, and takes us back to the fundamentals of the European Data Protection Principles. Those principles (subject to a EU statutory refresh of the legislation) should be applicable irrespective of channel or marketing application. 

Enter stage right, Microsoft announced its plans to roll out the functionality to block all online tracking as part of its new Internet Explorer 9 (IE9). This announcement, whereby the new IE9 will feature an "opt-in mechanism" and "tracking protection lists", comes only days after the publication of a report on the protection of online privacy by the US Federal Trade Commission (FTC). In its report the FTC prominently calls for industry to provide internet users with a functionality to block online tracking activities, often referred to as a "do-not-track list" (similar to a do-not-call register).

Mozilla are also known to be working on a do not track technology by 'cloaking' the user's internet activity, though they are citing technological difficulties.

In responding to the latest FTC concerns that current tools for blocking online tracking are blunt instruments, Microsoft may nonetheless have gone too far in proposing 'opt-in' for behavioural tracking, (depending on how the technology worked in practise and what they mean by opt in). 

Read more: http://online.wsj.com/article/SB10001424052748704594804575648670826747094.html#ixzz1AoD0nIJm

Teradata gobbles Aprimo to top marketing services leaderboard

Late last month, Teradata Corporation (NYSE: TDC), the world’s largest company solely focused on data warehousing and business analytics, announced the signing of a definitive agreement to acquire Aprimo.

. . . And that, my friends, is how to start the New Year with a BANG!

Seriously, though, I see this planned merger as significant on many different levels –not the least of which is that it underscores

• the need for integrated marketing software and

• the growing focus on overall marketing performance

Today, marketing defines the brand. It differentiates the business. It delivers sustainable revenue growth. And now, more than ever before, companies increasingly rely on information technologies to help achieve these goals. Combining Teradata’s powerful analytics with Aprimo’s innovative marketing will empower clients to integrate, streamline and continuously accelerate profitable growth.

via blogs.forbes.com

So says Lisa Arthur, Aprimo's CMO.

As core marketing services offered by providers (MSPs) become more commoditised, the perceived value rises in being able to pull it all together across production, planning, set up and execution.

That's a value chain that incumbents are ill positioned to deliver upon...for now. They simply don't have the mind-boggling strength in depth around customer analytics that Teradata has, nor the capability to configure content for multichannel delivery, nor a deep understanding of marketing resource management, nor the taxonomy skills to optimise across media.

As I've mentioned before, over reliance on a marketing execution platform (aka campaign management) to integrate marketing channels is plain wrong. It overcomplicates process, forces unnatural workflows that cost time and resources, and demands marketing organisations chuck out many existing components and reinvest body and soul...yet again. 

These guys, on the other hand, look like they are exceptionally well positioned to pull it all together: a space worth watching.