INTERNET MARKETING : INTEGRATING ONLINE AND OFFLINE STRATEGIES Chapter 4 The Direct and Database Foundations of Internet Marketing

Internet Marketing: Integrating Online and Offline StrategiesCopyright 2008 Atomic Dog/Thomson Publishing 3 DELL PREMIER PAGE Chapter 2 Update!

Internet Marketing: Integrating Online and Offline StrategiesCopyright 2008 Atomic Dog/Thomson Publishing 4 INTEGRATED MAIL/WEB?

Internet Marketing: Integrating Online and Offline StrategiesCopyright 2008 Atomic Dog/Thomson Publishing 5 NON-PROFITS GOOD AT DIRECT RESPONSE

Internet Marketing: Integrating Online and Offline StrategiesCopyright 2008 Atomic Dog/Thomson Publishing 6 WITH DR OBJECTIVE

Internet Marketing: Integrating Online and Offline StrategiesCopyright 2008 Atomic Dog/Thomson Publishing 7 TO TRAFFIC STORES, WEBSITE

Internet Marketing: Integrating Online and Offline StrategiesCopyright 2008 Atomic Dog/Thomson Publishing 8 DIRECT ACTION, YES – PURCHASE???

Internet Marketing: Integrating Online and Offline StrategiesCopyright 2008 Atomic Dog/Thomson Publishing 9 In What Ways Is The Internet A Direct-Response Medium/ Channel? And Why Does It Matter?

Internet Marketing: Integrating Online and Offline StrategiesCopyright 2008 Atomic Dog/Thomson Publishing 10 FOUR I’s OF INTERNET MARKETING ARE THE ANSWER

Internet Marketing: Integrating Online and Offline StrategiesCopyright 2008 Atomic Dog/Thomson Publishing 11 P&G—MASS MARKET PRODUCTS - DIRECT-RESPONSE EXPERTISE

Internet Marketing: Integrating Online and Offline StrategiesCopyright 2008 Atomic Dog/Thomson Publishing 12 HOME PAGE AND MICROSITE

Internet Marketing: Integrating Online and Offline StrategiesCopyright 2008 Atomic Dog/Thomson Publishing 13 BASIC DIRECT-RESPONSE STRATEGIES Acquisition Conversion Retention

Internet Marketing: Integrating Online and Offline StrategiesCopyright 2008 Atomic Dog/Thomson Publishing 14 CRITICAL STRATEGY ELEMENTS FROM DIRECT-RESPONSE PERSPECTIVE The ( ) List The Media The Creative Execution The Service & Support The Offer

Internet Marketing: Integrating Online and Offline StrategiesCopyright 2008 Atomic Dog/Thomson Publishing 15 DIRECT-RESPONSE OBJECTIVES Direct-Response Objectives are ACTION Objectives: To Remain on the Site Longer (“Site Stickiness”)  Well Designed Site With Much Relevant Content To Request Additional Information (Sales Lead) To Make a Sale (E-Commerce)

Internet Marketing: Integrating Online and Offline StrategiesCopyright 2008 Atomic Dog/Thomson Publishing 16 SITE STICKINESS = ATTENTION

Internet Marketing: Integrating Online and Offline StrategiesCopyright 2008 Atomic Dog/Thomson Publishing 17 TOP POSTS BY ATTENTION (CLICKS?)

Internet Marketing: Integrating Online and Offline StrategiesCopyright 2008 Atomic Dog/Thomson Publishing 18 SITES RANKED BY ATTENTION

Internet Marketing: Integrating Online and Offline StrategiesCopyright 2008 Atomic Dog/Thomson Publishing 19 WEB 2.0 = ENGAGEMENT

Internet Marketing: Integrating Online and Offline StrategiesCopyright 2008 Atomic Dog/Thomson Publishing 20 TOP ENGAGEMENT SITES

Internet Marketing: Integrating Online and Offline StrategiesCopyright 2008 Atomic Dog/Thomson Publishing 21 LANDING PAGE CAPTURES DATA Figure 4-4a

Internet Marketing: Integrating Online and Offline StrategiesCopyright 2008 Atomic Dog/Thomson Publishing 22 PRODUCT PAGE SELLS Figure 4-4b

Internet Marketing: Integrating Online and Offline StrategiesCopyright 2008 Atomic Dog/Thomson Publishing 23 THE REMAINING STRATEGY ELEMENTS List for Customer Acquisition and Retention The Media  ANY MEDIUM Can Be Direct Response With Action Objectives Creative Execution  Historically Less Important in Direct Response  Rich Media Has Increased Role on Internet Customer Service and Support

Internet Marketing: Integrating Online and Offline StrategiesCopyright 2008 Atomic Dog/Thomson Publishing 24 THE FRONT vs. THE BACK END THE FRONT END All Pre-Sale Activities Marketing and Sales THE BACK END All After-Sale Activities Includes Order Processing, Fulfillment, Service, Support

Internet Marketing: Integrating Online and Offline StrategiesCopyright 2008 Atomic Dog/Thomson Publishing 25 WHAT IS CLV – AND WHY IS IT SO IMPORTANT? Customer Lifetime Value Is The Net Present Value Of The Gross Margin Minus Cost of Servicing An Individual Or A Cohort Of Customers. Reasons For Importance: The Best Metric For Judging The Success Of Customer Acquisition & Retention Programs The Most Powerful Segmentation Criterion

Internet Marketing: Integrating Online and Offline StrategiesCopyright 2008 Atomic Dog/Thomson Publishing 26 THE CONCEPTUAL FRAMEWORK

Internet Marketing: Integrating Online and Offline StrategiesCopyright 2008 Atomic Dog/Thomson Publishing 27 A SIMPLE ONLINE TOOL

Internet Marketing: Integrating Online and Offline StrategiesCopyright 2008 Atomic Dog/Thomson Publishing 28 BASELINE CLV CALCULATION Table 4-1

Internet Marketing: Integrating Online and Offline StrategiesCopyright 2008 Atomic Dog/Thomson Publishing 29 SUMMARY OF FIRST YEAR CLV Total Sales$5,280,000 Less: Total Costs$5,148,800 Equals Gross Profit$ 131,200 Times: Discount Rate 1.0 NPV of First Year Revenue$ 131,200 CLV of Customer in Year 1$ 26.24

Internet Marketing: Integrating Online and Offline StrategiesCopyright 2008 Atomic Dog/Thomson Publishing 30 INCREASE FROM TARGETED MARKETING PROGRAMS Table 4-2

Internet Marketing: Integrating Online and Offline StrategiesCopyright 2008 Atomic Dog/Thomson Publishing 31 EFFECT OF TARGETED PROGRAMS ON CLV Table 4-3

Internet Marketing: Integrating Online and Offline StrategiesCopyright 2008 Atomic Dog/Thomson Publishing 32 THE DIRECT RESPONSE TEST Newsletter Content Version B Newsletter Content Version A A/B Split is One Of Many Types of Tests

Internet Marketing: Integrating Online and Offline StrategiesCopyright 2008 Atomic Dog/Thomson Publishing 33 THE TESTING PROCESS

Internet Marketing: Integrating Online and Offline StrategiesCopyright 2008 Atomic Dog/Thomson Publishing 34

Internet Marketing: Integrating Online and Offline StrategiesCopyright 2008 Atomic Dog/Thomson Publishing 35 TESTING DEMO

Internet Marketing: Integrating Online and Offline StrategiesCopyright 2008 Atomic Dog/Thomson Publishing 36 How is Testing Different From Marketing Research?

Internet Marketing: Integrating Online and Offline StrategiesCopyright 2008 Atomic Dog/Thomson Publishing 37 TESTING vs. MARKETING RESEARCH Testing Tells the Marketer WHAT WORKS. Marketing Research Explains WHY IT WORKS.

Internet Marketing: Integrating Online and Offline StrategiesCopyright 2008 Atomic Dog/Thomson Publishing 38 RECOMMENDATION Behavioral Analysis FIRST Faster, Cheaper, Actionable ONLY THEN Marketing Research IF You Need to Know “Why”

Internet Marketing: Integrating Online and Offline StrategiesCopyright 2008 Atomic Dog/Thomson Publishing 39 RECOMMENDATION FROM SHERPA

Internet Marketing: Integrating Online and Offline StrategiesCopyright 2008 Atomic Dog/Thomson Publishing 40 Hormel Tested Coupon Distribution from an Newsletter vs. from Ads On Their Website Coupon Redemption was “Significantly Higher” from the Newsletter

Internet Marketing: Integrating Online and Offline StrategiesCopyright 2008 Atomic Dog/Thomson Publishing 41 webclinic /player.html?=meblog2

Internet Marketing: Integrating Online and Offline StrategiesCopyright 2008 Atomic Dog/Thomson Publishing 42 Most Viewers Guessed Wrong!

Internet Marketing: Integrating Online and Offline StrategiesCopyright 2008 Atomic Dog/Thomson Publishing 43

Internet Marketing: Integrating Online and Offline StrategiesCopyright 2008 Atomic Dog/Thomson Publishing 44 THE DATABASE IMPERATIVE DATABASE/ DATA WAREHOUSE Marketing Program Data Marketing Support Data Other Business Data External Data

Internet Marketing: Integrating Online and Offline StrategiesCopyright 2008 Atomic Dog/Thomson Publishing 45 USES OF CUSTOMER DATABASE

Internet Marketing: Integrating Online and Offline StrategiesCopyright 2008 Atomic Dog/Thomson Publishing 46 BENEFITS OF CUSTOMER DATABASE Harrah’s Casinos Increased Revenues and Profits By Building and Using (Mining) a Customer Database

Internet Marketing: Integrating Online and Offline StrategiesCopyright 2008 Atomic Dog/Thomson Publishing 47 WHAT IS “DATA MINING?” A Set of Statistical Routines That Permit Pattern Detection In Large Data Sets

Internet Marketing: Integrating Online and Offline StrategiesCopyright 2008 Atomic Dog/Thomson Publishing 48 HIERARCHY OF INTERACTIVE STRATEGIES

Internet Marketing: Integrating Online and Offline StrategiesCopyright 2008 Atomic Dog/Thomson Publishing 49 SUMMARY Interactivity of Internet = Direct-Response Medium  Learning To Use In Branding Also (Chapter 7) Use For Customer Acquisition,Conversion,Retention Generate Sales, Leads, Site Stickiness Judge Success By Customer Lifetime Value To Increase Customer Lifetime Value Targeted, Information-Driven Marketing Is Essential  Data Capture Through Transactions and Customer Contact  Modeling, Data Mining Interactive Marketing Strategies Should Increase Customer Focus and Marketing Effectiveness They May Decrease In Cost As Targeting And Personalization Improve