OTOinsights

One to One Interactive Set to Bow New Neuromarketing Research Division: OTOinsights

Today, One to One Interactive announced the formation of its new neuromarketing division called OTOinsights.   In the next month, this blog will begin to take on additional duties to support this new division and to assist in disseminating the various research that is scheduled to be published over the course of the next year.  In the mean time, enjoy the below official announcement and do not hesitate to comment or e-mail us with any inquiries.

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One to One Interactive Announces the Launch of OTOinsights

New Research Unit to Provide Quantifiable Insights into Consumer Brand Engagement 

Boston, MA, November 12, 2007 – One to One Interactive, a leading digital marketing holding company, announced today the launch of its new media research company OTOinsights. This business unit will focus on the emerging discipline of neuromarketing and will offer a collection of both primary and secondary research to brands, agencies, and publishers. Initial OTOinsights products include: Quantemo, a neuromarketing research lab; t=zero, a secondary research offering that provides clients with timely critical analysis and insights about emerging digital platforms; and RedOktober, a trend-spotting service. The birth of the OTOinsights business unit began earlier this year with One to One’s acquisition of the Quantemo neuromarketing research lab. Quantemo offers a scientific approach to measuring a target audience’s emotional reactions to digital media via five modalities including:
1.)    Physiological stress through the measurement of heart rate, respiratory rate, and galvanic skin response,
2.)    Neurological focus by measuring EEG traces,
3.)    Behavioral via eye/mouse tracking technologies and digital video recordings of research participants,
4.)    Emotional through facial recognition software, and
5.)    Interrogative via traditional survey research methods.
Data collected is correlated on a second by second basis and assessed depending on the type of study performed. Quantemo currently offers usability testing and media effectiveness research. 

The second core product offered by OTOinsights, t=zero, is a collection of findings gathered through an ongoing partnership with researchers at the Indiana University School of Informatics. The team of researchers, which is led by Shaowen Bardzell, Ph.D. and Jeffrey Bardzell, PH.D., specializes in cultural computing in computer-mediated social spaces such as video games massively multiplayer virtual worlds and social networks. Current t=zero research projects are focused on affective interaction with internet videos, “serious games” for marketing, user engagement with in-game advertising, and successful disaggregated media applications on social networking sites.

“This is one of the first significant collaborations between the private sector and academia to publish a body of work that will break new ground in measuring engagement across several emerging media channels,” said Shaowen Bardzell, Ph.D.. “The commitment that One to One Interactive and their OTOinsights division to academic critical thinking and scientific method will no doubt play a significant role in their contribution to the burgeoning field of neuromarketing.”

A third OTOinsights offering, RedOktober, is geared to keep One to One employees, clients, and prospective clients, current with trends in new media. The service will offer up-to-date information about how trends are changing consumer expectations, and will reveal related business and marketing opportunities.

“The introduction of OTOinsights is exciting for our company, as it rounds out our vision to provide brands, agencies and publishers with truly quantifiable, scientific data to help measure engagement,” said Jeremi Karnell president and co-founder of One to One Interactive, “OTOinsights’ innovative research techniques will deliver much needed insights into human emotional response to digital media and will provide the strategies and subsequent tools needed to optimize one-to-one dialogues with consumers.”

Jeremi Karnell-President, One to One Interactive

Towards a Sociology of Massive Cultural Production

I've spent the last two days devoted to the work of French sociologist Pierre Bourdieu (1930-2002), who wrote extensively on what he calls the field of cultural production. I think "cultural production" is an important category for study, because I think a lot of recent work on Web 2.0 (such as Tapscott & Williams' Wikinomics book and Benkler's Wealth of Networks) focuses too narrowly on professional collaborations in the discovery, production, and dissemination of "knowledge" and "information." These are important contributions, but many of the big sites aren't about knowledge or information. They are fundamentally about experience: of culture (YouTube, Newgrounds), of friendship (Facebook, MySpace), of shared fantasy (Second Life, World of Warcraft), etc. The Web isn't an encyclopedia: along with the home and the workplace, it's a primary environment in which we live, play, love, learn, and express ourselves. Thus, the sociology of massive cultural production is as necessary to study as the economics of networked collaboration. Which brings us back to Bourdieu.

Among Bourdieu's goals are disentangling and even modeling the incredibly complex inputs that lead to epochs of cultural production, such as late 19-century French literature. These inputs include things like the following:

• The intentions and dispositions of the artist or author
• Economic and political contexts, including material production, income, and influence of dominant class ideology
• The artist's particular use of a generic "language," such as the visual and thematic conventions of a contemporary science fiction movie
• The role of the critic in justifying, discovering, or downright creating the value of a work (think of Oprah's effect on a novel's sales and prestige)
• The education, dispositions, and tastes of the audience and how they combine to create demand

The obvious strength of Bourdieu's approach is that it avoids reducing cultural production to an oversimplified account, such as "the author's intention," or "serving the needs of the dominant economic class," or "whatever happens in the cognition of the reader/viewer," etc. Reductiveness is particularly a problem in scientific sampling, which seeks through its "operational definitions" to place discrete boundaries around phenomena whose very essence is the struggle to create boundaries; in other words, for Bourdieu, sampling of phenomena relating to cultural production predetermines the data, rather than enabling its representation.

The obvious weakness of Bourdieu's theory is that this is not an easy model to go out and apply. Fortunately, Bourdieu does apply his model in analyses of French literature, which we can, in turn, at least try to emulate in a domain of cultural production that we all care about, say, Newgrounds animations, SecondLife builds, or MySpace mini-apps.

So, simplifying for clarity and brevity, Bourdieu characterizes the "field" of cultural production as a "space" in which actors (artists, critics, etc.) struggle. They struggle not only to promote their own ideas over others, but also to draw boundaries of inclusion and exclusion as to who has a voice, who belongs in the struggle. This field he represents as a two-dimensional graph. Different agents, through an interaction between their own predispositions and the objective world of options they have in front of them, position themselves in this space.

The X-axis maps the range of popularity, from no audience to a large audience. Related to that are economic matters: large audiences tend to mean lots of money but also lots of market interference on the artist's vision. Small or no audiences mean lots of autonomy for the artist--who can do whatever she or he wishes--but at the expense of economic profit.

The Y-axis maps the degree of consecration. High consecration refers to academic and institutionalized consecration: the work is recognized as "high art," "worthy," or "important"; it also correlates to the category of the "old." Low consecration is associated with youth, the merely popular, throwaway culture.

Now, here is my central question: Can Bordieu's model be used to represent massive cultural production in the era of Web 2.0? Here are some objections that have occurred to me:

• Both French literature and contemporary mainstream film, books, and comics have high barriers to entry, that is, restricted access; that clearly is not the case (at least, not in the same way) for Web 2.0 creativity.
• Institutionally, we know how to handle all aspects of 20th century mass media: production, distribution, and consumption. Thus, we have established protocols for "consecration." With massive cultural production, the relationships between the relevant institutions (such as the hierarchies of blogs and wikis on the one hand versus universities and journalism on the other) are anything but clear, and the protocols for consecration are likewise confused.

That's all pretty abstract. Let me make it more concrete. In April, Jeremi Karnell, Carl Marci, and I did a presentation for MITX on the Numa Numa dance viral video. It doesn't get any more establishment than the president of a digital marketing services firm, a corporate researcher, and a university researcher coming together to present under the auspices of something like MITX. In Bourdieu's model, that would be a consecration of high order. Did we consecrate Numa Numa in that presentation? Surely we did on some level, but what does "consecration" even mean in this context?

Another example. Earlier this year, YouTube held awards for its "best" videos of 2006, as divided into seven categories. Each category had 10 finalists. That's 70 finalists taken from around 24 million videos uploaded that year. What possible protocol could justifiably identify the best 0.0003% of YouTube videos, from a cultural standpoint? And once this task is complete, for better or worse, again we are faced with the question of what kind of consecration is it to be a finalist of a YouTube video award.

Returning to the original question: Can Bourdieu's model be used to expose and represent the field of massive cultural production? The answer is yes, but with a caveat. Many of the underlying characteristics and concepts of Bourdieu's model will apply (e.g., field, habitus, position-taking, cultural capital), but identifying the specific categories of the space of massive cultural production, that is, finding alternatives to, or at least redefinining "degree of consecration" and large versus small audience, will require deriving or defining the new categories empirically. And that's gonna be a bit of a job. And I've got six weeks to do it. Hrm.

One to One Interactive Acquires Quantemo

On Monday, April 16th, One to One Interactive formally completed its acquisition of the Quantemo Usability Lab.  The Quantemo lab, its brand and technology platform will be incorporated as the foundation for a new neuromarketing research offering that is currently under development at One to One's professional services division OTOi. 

The Quantemo acquisition is One to One's latest step in marrying science and marketing.  This past year One to One has engaged in a number of bio-measures studies (see: Bio-Measures Able to Predict with 77% Accuracy an Online Communities Rating of Viral Video Content) that have sought to analyze the physical responses test subjects experience when exposed to certain media stimuli.  This data has in turn been used to predict, with high levels of accuracy, consumer behaviors across a variety of media channels and platforms. 

"We're excited to evolve the Quantemo technology to measure engagement across a number of emerging digital platforms, including social networks, blogs, podcasts, widgets, online video, rich media advertising, and virtual worlds such as Second Life.  Furthermore, we intend to extend the offering to measuring traditional offline marketing channels, our aim is to harneess the accuracy afforded to us by neuro-research to optimize our clients' marketing programs so that they are as relevant and engaging as possible in this new consumer controlled media landscape." - Jeremi Karnell, President

To date, the field of neuromarketing research has been predominately defined by researchers who use functional Magnetic Resonance Imaging (fMRI) to scan the brains of test subjects as they look at various products and advertisements.  The information gleaned from neuromarketing research is intended to provide deeper insight into the human brain for purposes such as more effective advertising and brand loyalty campaigns.  A significant barrier to the evolution of this research method has been both the high costs involved in a typical fMRI study as well as the method itself which limits research studies to only take place at the university or medical research facilities that house the large and expensive fMRI hardware.  One to One, through its acquisition of Quantemo, seeks to help expand the field of neuromarketing research by incorporating newer and less costly methods that measure skin conductivity, respiratory rates, heart rates, and EEGs as both an augmentation to and proxy for fMRI studies.

“I am very pleased to see One to One Interactive  taking Quantemo ™ to its full potential , with a state-of-the-art facility  in Boston and increased resources for very scalable study options. The future of digital marketing relies heavily on understanding and improving the user experience, and Quantemo™ has a unique position in the field of online research as the first method to objectively assess user emotions and mental effort. One to One Interactive and Quantemo will provide enormous mutual benefits that will ultimately help clients in terms of availability, scale and methodology.”  Theodore Agranat, Quantemo Founder

OTOi's neuromarketing research facility will be located at its corporate headquarters in Charlestown, MA.  The facility will include state-of-the art eye tracking, neurological and biological feedback platforms  as well as video and click-stream capture and analysis capabilities.  The facility will be used both for client-based studies as well as independent research conducted by OTOi.  OTOi's neuromarketing offering will also boast a mobile lab capability that will allow for research to be conducted at any location.

Aligning Design With Strategic Intent

Wanting to see if we each took from it similar conclusions, Jeremi swung by last week with a copy of this Deloitte Research article with the nicely alliterative title Navigating the Marketing Measurement Maze: Aligning measurement design with strategic intent.

The paper makes the case that often marketing measurement is siloed within specific departments of a company, where ideally marketing measurement should be focused on a company's overall strategic goals, and measurement planning should adjust dynamically to include metrics to support these goals.

To support this proposal, the report suggests that marketing metrics should be anchored from the highest levels to the firm's strategic intent, allowing management of outline activities grounded in performance of these strategic goals:

"Instead of just revenue growth per marketing dollar, metrics include the number and quality of insights and dollars spent on marketing research."

This all makes sense, except that any kind of quantification of insight and dollars spent on research would then suggest a need to quantify the results of that insight. New research findings which result in neither action nor quantification of returns on said findings are about as useful as coming up with a new way way to say the word "twelve". Unless it's actually useful to someone, aren't you just saying "twelve"?

With the ability today to connect results across multiple campaign channels, and tests available for almost any kind of marketing -- particularly in interactive digital media -- surely there are better examples of ways in which the described insights could be researched, built upon, and launched into new streams of revenue?

One useful point authors Mahidhar and Cutten did describe is the oft-neglected need to include external market factors into measurement design. They give the example of a company's product being underpriced by its competitors just subsequent to launch, bringing down projected returns. The low initial returns would at first glance seem to indicate a flaw in the launch, but instead just reflects a more dynamic market, meaning extra-corporate metrics like relative pricing should be included accordingly.

That issue aside, it continues to amaze how so much published "research" consists of three-to-five-page whitepapers which manage to discuss a great deal related to "C-suites" and "aligning business objectives" while actually saying extremely little. Here's a quote from the paper's conclusion:

"An effective marketing performance measurement system must include... holistic measurements, including... the process dimension. Metrics that span the value delivery process address the influence of other functions and channel partners on marketing outcomes."

What does this even mean?

Let's break it down. Marketing performance measurement system. A process by which marketing's effectiveness can be measured. Got it. The process needs to holistically include metrics which cover ground outside of the specific campaign objectives. Still there. But metrics that span the value delivery process address the influence of other functions and channel partners on marketing outcomes?

If the authors had provided even one example of a metric which spans the value delivery process the above might make perfect sense. If the influence of other functions or channel partners had been illustrated via their their influence on more commonly used performance metrics then it might have a point.

But to write about strategy in a vaccuum with no clear calls to action? About as useful as creating a campaign measurement plan with no clear target objectives.

Listen to what you're preaching, guys.

Don't Underestimate Microsoft

An article published in today's MercuryNews.com  titled "Hooked On Google" by Elise Ackerman explores whether or not Microsoft still has a fighting chance in todays changing technology/media landscape.  When compared to the enormous success  the likes of Google has experienced over the last couple years, the picture indeed looks grim.  Ackerman points out in his article:

"Microsoft's page views, an approximation of how long visitors spend at its sites, was down 12 percent in December to 18 billion, according to the research firm. Google's page views were up 90 percent to 13 billion.

Microsoft has steadily lost ground in search, despite developing its own search engine in 2004. As of November, Microsoft's share of Internet searches has fallen to 8 percent. Two years ago, when MSN search was released in beta, Microsoft share's of U.S. searches stood at 14 percent, according to Nielsen//NetRatings.

Microsoft's Internet slide is reflected in its online sales. During the quarter ended Sept. 30, sales for the online business unit were $539 million, down 5 percent in a year. Google, in cruel comparison, reported revenue of $2.69 billion, an increase of 70 percent."

In fairness, Ackerman does offer that despite the above situation Microsoft has had a rather active 2006 by introducing a "slew of online offerings":

"In addition to the widely praised Virtual Earth, an exact 3-D representation of major cities, there were three new search services, a new portal, online video, classified ads, mobile e-mail and social networking. And perhaps most importantly, there was new adCenter software released in May that was supposed to help Microsoft make more money from its online offerings."

However, I think this misses a more important point why Microsoft should not be underestimated. 

Reason 1: They are the only major operating platform that cuts across desktop PCs (Microsoft OS), Mobile Phones/PDAs (Microsoft Mobile), TV (Microsoft iPTV) which both Verizon and Comcast are deploying across their massive Fiber and Coaxial nets, and Game Consoles (Xbox & Xbox 360).

Reason 2: Due to the reach across their installed platform base detailed above, Microsoft is in an enormously unique position to be one of the first companies to have a viable cross channel digital media offering.  From behavioral targeted web, e-mail and search  properties, to instant message, in-game  (via their purchase of Massive Inc. last May), mobile  and interactive TV advertising the folks in Redmond seem to be slowly transforming themselves from a software company to a media company.  Even though it does not exist now, it does not take one to imagine Microsoft's plans for using adCenter as the hub of their emerging cross channel media universe.

Reason 3. One word: PASSPORT.  Microsoft Passport accounts are central repositories for a person's online data and can include personal information such as birthdays and credit card numbers. They can also act as a single key to access many online accounts.

Microsoft uses Passport authentication for its Hotmail e-mail service, MSN Messenger instant messaging service, XBox Live Service, and Mobile Services. Several online retailers, such as eBay, Canon, Expedia and Starbucks, also use Passport authentication. Microsoft estimates there are 200 million active Passport accounts. 

It does not take a rocket scientist to guess that Microsoft will use this Central Customer Information (CIF) file to help deliver more personalized content/advertising to its opt-in customers as its able to understand their behaviors and activities across digital media platforms.

Its important to note...that I am hardly a fan of Microsoft.  Indeed, I have switched my work computer to the Powerbook just a couple of months ago.  I am a huge fan of the iPod (with exception to their Nazi DRM platform) and also plan to be one of the first to buy an iPhone when it is released.  I also do not proclaim to have a crystal ball that give me any special insight that the points made above will make a lick of difference.  All I am doing is agreeing with Gartner analyst,  Allen Weiner, when he states at the bottom of Ackerman's article: Don't Underestimate Microsoft.

Jeremi Karnell-President, One to One Interactive

 

Pentaho BI Open Source Solution Continues to Grow

Since 2002, a group of executives from companies including Hyperion, SAS and Cognos have been developing a series of interoperable open source packages that provide a full range of Business Intelligence (BI) offerings.  As of November, SourceForge.net reports over 500,000 downloads of Pentaho's software from their servers alone, and Pentaho estimates over 2.5 million total downloads in the past 2 years which may not seem like a large number in the grand scheme of things, but is akin to a landslide when compared to the number of operational licenses sold and managed by the proprietary BI players. 

In 2006, Pentaho was named to Red Herring's list of 100 privately held North American companies that are innovating the technology landscape.  They also made the Red Herring 'Open Source 20' list in August and were highlighted as the most popular open source BI suite by Intelligent Enterprise magazine. 

Also launched this year was Pentaho's Partner Program, with nearly 30 implementation and hosting companies already signed up.  They also formally joined IBM's partner program in October and partnered to demonstrate a join IBM/Pentaho solution at the "Information On Demand" conference. 

Press has been very favorable, including clips such as:

"Pentaho is well-positioned for the high-growth performance management market, which is poised to reach $23 billion this year. Some important wins include Abbott Labs, Divx, and Orbitz. To compete in a market of very big players, Pentaho will have to continue to snag large customers, but Chairman Andre Boisvert, an enterprise software veteran, can open a lot of doors for this fledgling." Source - Red Herring August, 2006

"After a lengthy development, and some initial market skepticism, Pentaho BI certainly seems to be gaining steam and followers. It's already listed as one of the top one hundred projects hosted on the Sourceforge.net nexus, a website that lists around 120,000 open source projects. The ranking is based on the number of downloads and activity." Source - Computer Business Review Online April, 2006

Pentaho has also made numerous enhancements and additions to their suite this year including integration with Google Maps for enhanced geographic analytics, rollout of Mondrian 2.2 including a wizard-driven business cube creation engine, and acquisition/integration of the Weka open source project which adds a rich new layer of data mining offerings developed by the University of Waikato in New Zealand.

To learn more about Pentaho's free* suite of products, check out their website.    

*Software is free, licensing for professional use will run $20k-50k which is 10% of the fees for the bigger proprietary players

Where Are All Those Clicks Going?

Last week Business Week decided to scare the world with a shocking cover: Click Fraud, The Dark Side of Advertising. This is about as timely as Roger Waters launching a tour where he plays the Dark Side of The Moon in full. If you recall, 12 years ago his fellow former Pink Floyd band mates had done the same. In both cases, you got to hear the Dark Side of The Moon but you didn’t get the full picture.  Which is more or less what you got in the Business Week article.  Yes, it’s true, there are cases in which as much as 15% of the clicks may be fraudulent, and yes, it’s true, the search engines may not be equipped to detect them.  However I felt very reassured when I read this article from an August issue of Fortune.  Apparently Nielsen has found a solution to the issue of measuring the impact of online advertising.  They have 30,000 households who will act as a sample, and they will be able to project from that sample the amount of  traffic that is really generated by online advertising.  Mmmm. Where have we seen this before?If you think I am taking the issue lightly I am not. 

These two articles point out a few major issues that as digital marketers we need to take extremely seriously.  First of all, whether we like it or not, the debate on the impact of digital marketing is now in the mass domain. The fact that mass media outlets are now covering the topic however does not change the fact that it is still a complex science. As an industry, we have a duty to set our standard higher than the standard expected by our clients or by the masses.  At the same time though it is extremely important to act as the voice of reason, and reframe the debate.  It is true that there are instances in which the measurement is not perfect, and it is true that there are instances of click fraud.  At the same time, for every 15% of fraudulent clicks, there is an 85% of legitimate, targeted and effective clicks.  The answer is not to go back and try to mirror the old media model, or even worse, to give up on Internet advertising. The answer is to keep working on improving the measurability of the web.

"Atlas Solutions, time to wake the hell up."

Coming off the heels of the last post titled "The New General Agency" by my friend and colleague, Charlie Ballard, I felt compelled to explain why he ended with the statement "Atlas Solutions, time to wake the hell up".

As a matter of full disclosure, Atlas is a vendor One to One Interactive uses for third party ad serving (Atlas DMT) and paid search bid management (Atlas Onepoint).  We have been increasingly frustrated with the level of customer service we have been receiving as well as the lack of any substantial product innovation specifically around AtlasOnepoint.  To that end, we have started to review alternative technology solutions in the marketplace (We are meeting with Omniture tomorrow to review their new bid management product called SearchCenter). 

However, before we got to far along in the process of identifying an new bid management solution, One to One Interactive wanted to make sure that we were not shooting ourselves in the foot by divorcing our third party ad server from our bid management solution.  Too often we have received requests from clients regarding the impact their display/rich media campaigns are having on their search campaigns.  Questions include:

• Are my digital display campaigns increasing the amount of searches for my brand?
• What is the optimal display media spend level, reach, and frequency to positively impact search queries for my product or service?
• What is the latency (amount of time) between when someone sees a banner ad and then conducts a search query for my product/service.
• What is the conversion rate of those who engaged in both my display and search efforts vs. those who just came through a single channel?  Is the ROI on those converts higher or lower?
• Etc.

Since Atlas uses the same cookie for their third party ad server and paid search bid management solution, it makes sense that they easily collect the data to answer the questions posed above.  Indeed, a few of us at the firm got pretty excited when we ran across a recent press release by the Atlas Institute, their in-house think tank that studies the most effective ways to use digital marketing, titled "The Combined Impact of Search and Display Advertising"(96k pdf).   

A phone conference was scheduled between representatives of Atlas Solutions and our marketing services staff to explore if Atlas had someplace on their product road-map to provide cross channel insights between display and search..........we were met with silence.  What came next was even more disturbing.  The conversation went something like this:

• (OTO) We are interested in understanding the time frames around when Atlas will provide data/insights regarding how a clients display campaign impacted their paid search campaign.
• (Atlas) Why would you want to ever do that?
• (OTO) <with a mixture of disbelief, shock, and horror on our faces> Did you understand our question correctly?
• (Atlas) Yes.  To be honest, you are the first company to ever ask that type of question.  We really do not see the value in how the two channels impact one another.
• (OTO) Buh-Bye <Click>

Obviously, the people we were talking with were not too up to speed on the recent research that their own company just published explaining why it was important that marketers measure across the display and search channels.  More frustrating is that they destroyed whatever small amount of confidence that we may have had left in considering them as a viable online cross channel management and measurement solutions provider for the long term.

To conclude, I feel compelled to echo the sentiments of Mr. Ballard: "Atlas Solutions, time to wake the hell up."  I will go on to add the following plea: Omniture, please build, borrow, or buy a third party ad server so that we can move all of our business your way.

Jeremi Karnell-President, One to One Interactive

The New General Agency

The Winterberry Group recently came out with an 18-page white paper which can be downloaded here, highly recommended. Discussing in detail the rise of the online agency and its effect on traditional advertising, the study describes the effect that personalization technology and an increased focus on ROI is having on the the agency/client dynamic.

Despite a few questionable interviewee quotes ("This means less advertising in the future and less money for media -- all media. That's a reality." -Dave Morgan, CEO, Tacoda), the article is generally well-structured and thought out, and ends with a rather strong conclusion:

"Going forward, we expect even more dramatic changes to affect the marketing model. Exemplified most dramatically by the evolution of the established 'agency holding company' enterprise, it is likely that today's execution silos may disappear altogether, as brand advertising and direct marketing services merge under the banner of a new, consolidated "general agency" -- one that will be channel agnostic, following market demand rather than trendy creative in search of the optimal media mix."

I'd argue that trendy creative will always play a role within the channel-agnostic general agency they describe, as market demand will never provide more than guidance, and new ideas will always lead the pack.

That said, the discusson without a doubt further supports the ideas discussed in the Efficiency, Not Spend post relating to how the concept of a one-off, single-channel campaign is dying, instead being replaced with a web of connected tactics all supporting one central call to action, and the agencies that will survive will be the ones who are nimble enough to either directly support or at least manage all the different pieces.

How these kinds of more complex "metacampaigns" are going to be measured across all their aspects has still to be defined, but here's hoping that with an increased focus on analytics being integrated into tactical efficiency (see Omniture launching their SearchCenter product last year), the battle for the agency analytics spend will be won by the software who offers not just the deepest tools, but the broadest ones.

Atlas Solutions, time to wake the hell up.

Efficiency, Not Spend

Greg Slama just forwarded me an email with the article below (originally published here). Author Bill Wise could not be more on the money:

Efficiency Levels, Not Spend Levels
by Bill Wise, Monday, Jul 31, 2006 12:00 PM ET

So back to the original question: How much should you be spending in search? The answer is that you should be spending however much it takes to make you efficient. Once you've hit the right level of efficiency, the search dollars you invest will justify themselves.

AT THE MEDIAPOST SEARCH INSIDER Summit last week, my colleagues Kevin Lee and Brian Silver had the opportunity to sit on in the Insider's panel. At the end of the talk, the floor was opened up for the crowd to request future articles they'd like to see. I hope to get to all of the topics that came up; for today, I'd like to tackle just one: the issue of how to know how much to spend in search. It's an entirely reasonable issue for marketers to look to understand. Since search is relatively new, it's a new item for marketing budgets, as well--so there's little precedent against which marketing managers can set the bar. Meanwhile, search metrics are phenomenally precise, placing a level of accountability into marketing that's never been present in the traditional sphere. With that greater accountability comes more responsibility, at every stage of the campaign--including at the initial stages of spend allocation.

But as reasonable as it is to want to know how much you ought to be spending in search, the question happens to be largely irrelevant. After all, your goal in any business venture--search included--isn't to hit a particular level of spend; your goal is to get the right level of return. If spending a million search dollars a day would bring in three million dollars an hour, you'd spend it, no questions asked; and if spending 10 cents a day brought in only 5 cents, then even 3 cents would be overpaying. It's the profits you make, not the amount you've spent, that make a difference.

In other words, the focus on spend needs to be replaced with a focus on efficiency. Efficiency means getting the most powerful outreach you can, at whatever level of spend you're working at; it also means being able to drive a greater portion of the traffic you collect into conversions. Efficiency means, for example, creating optimized ad copy that attracts the searchers you want to attract, and that sends away the ones who probably won't convert. It also means delivering landing pages that are sticky and usable enough to drive visitors towards your shopping cart, registration page, or display ads that you're siring on your content site. It also might mean applying behavioral retargeting, to deliver ads to the searchers who have come to your site and left--so you can pull them back in and drive them to a conversion.

The more efficient your campaign, the less relevant the question of spend level becomes. That's because greater efficiency means greater net profit--which both improves your bottom line (the ultimate goal of your campaign), and gives you more money to reinvest on more advertising. Which means that $1 of efficient spend might be worth $3 of inefficient spend, and vice versa. The question of efficiency, in other words, changes the focal spend question from: How much should I spend? to How much is my spend worth?    

Building your efficiency requires understanding your customers. The better grasp you have of issues like where your core market lives, what times of day they search, what kinds of messages they like to see, and what kinds of sites they go to, the better you'll be able to reach out to them and build the architecture that drives conversions.

Developing that understanding requires that your search management has the best client services possible, and the best analytics possible--both are necessary for building an accurate picture of your core market's identity and behavior.

My only problem with Bill's sentiment is that he really should take the next step and apply his efficiency rationale to all marketing tactics. There is a total marketing budget which is ideal for any product or company, beyond which dollars are wasted. Despite year 2000 ad campaigns which would claim otherwise, you do not spend $100 million in advertising on a company which will never break annual revenues of $2 mil.

Within your optimal marketing budget, you also need to max out the spend on your best tactic until it is at the lowest acceptable level of efficiency, then continue to spend money on the next-most-effective tactic, while focusing not on each tactic's effiency unto itself, but on the aggregated efficiency of all your live campaigns.

If you have three tactics in market -- let's say search, direct mail, and DRTV -- and together they are producing an ROI which is only three percentage points above your lowest acceptable level, then you essentially have no wiggle room, and any new tactic you add needs to outperform any of your in-market tactics.

If, however, your paid search campaign is kicking ass, with an ROI 20 percentage points higher than the lowest acceptable level, well, then you have two options. You could pour more money into search -- and this is naturally the obvious, easy way to go -- until your Search ROI comes back down to its lowest margin. However, you also then have room to run with a riskier tactic, which may run too inefficiently on its own to suffer, but combined with the results you're seeing with Search, it may perhaps then put you at an overall return on your investment you can be happy with.

Which leads to another interesting point -- the relationship between all your tactics. As most new marketers quickly realise, no campaign operates in a vaccuum. Word of mouth, television campaigns, email, online display advertising, billboards, paid search, every one of these exists to not just drive revenue on their own, but to lift the results of the others.

Yes, you may find that your Paid Search efficiency was maximized at a $100k spend in Q1. However, if you throw that expensive and hard-to-measure DRTV campaign into the mix, you may suddenly find that your search volume skyrockets, to the point where your $100k Search spend is driving unheard-of efficiency due to the volume you're getting and where Google (and soon Yahoo!) is kicking you on your CPC. Suddenly you can spend $300k on Search while maintaining an even higher efficiency, all because you dropped money into a relatively inefficient tactic which nonetheless lifted all boats.

It's all relative, but now the game becomes figuring out the mix model so the result of every possible option's interplay with the others becomes defined and quantified. Should be interesting.