Measuring One-to-One Efforts

One-to-one marketing has many faces: Targeted content, direct marketing with email, targeted advertising. All, of course, represent extra effort on the part of marketers, making some of you wonder aloud just when it is that you are going to enjoy the ROI results one-to-one experts claim are possible.

Is the effort worth it? In the coming weeks, we’ll talk about one-to-one marketing over the different web marketing media, with the goal of providing more tangible evidence of the payoff of precision marketing on the web. In 1999, marketers will be measuring ROI on all marketing investments, including specific web marketing and commerce applications.

“Bottom line is that it’s early,” says Rick Bruner, VP and senior analyst at IMT Strategies. “While there are a lot of technologies to make it happen, advertisers are still apprehensive about targeted online advertising. Targeting will become a reality for online advertising in 1999.

Bruner goes a step further, calling online targeting “a standard offering” for ad-funded sites. “However, web sites will have to produce the evidence to justify the higher CPMs associated with online advertising,” Bruner points out.

Pie In The Sky

You all know that it is roughly six times more expensive to acquire a new customer than it is to sell to an existing customer. We also know generally that if you put something in front of a customer that meets their specific needs, they are more likely to buy it. And the web is well-suited to make this happen.

Some companies have already taken the leap of faith toward one-to-one marketing. The obvious players are Amazon.com and CNN.com. There’s also H.O.T! Coupons, Movie Critic, Quote.com, and InfoBeat. These companies have raised the bar on web marketing and selling efforts at a time when many of their competitors are just getting rolling in the one-to-one arena.

Something to Sink Your Teeth In

Many want cold, hard facts to show that all of this one-to-one web marketing is in fact something that will produce more sales, increase users, and build customer loyalty — at a cost that is less for each additional customer interaction or transaction, over time.

Web marketing technologies and techniques are early in the adoption phase, and we still lack enough return-on-investment studies and statistics. But there are a few indications of a profitable future. Here are just a few things to consider when evaluating a one-to-one marketing effort:

• Measurement. At minimum, one-to-one technologies let you track customer behavior. Not only can you find out how many users visit or make purchases, but you will also know what each and every customer does with web sites and how they react to banners. You have logged evidence on what is working and what is not working with your web sites and marketing campaigns. With one-to-one web technologies, you can actually measure what percentage of prospects turn into buyers.
• Knowledge about customers. You need to implement these types of technologies in order to learn more intimate details about customers. They can tell you with their own voice (declarative data) what they want and what they don’t want — in short, what makes them tick. This will help you with the creation of new product, service and web site offerings. It will tell you where to allocate resources so you can put more resources behind what they like, and less toward features or services that are not quite as valuable.
• Increased repeat traffic, increased loyalty. Of course, you cannot track repeat traffic or measure customer loyalty without implementing one-to-one web technologies that track the performance sites or ad banners. In an April 1998 study by Forrester Research, 36 percent of online retailers surveyed used personalized content to create loyalty and repeat purchases. That effort was second only to providing great customer service (52 percent). Only a percentage of your customers will be loyal purchasers. You can use these technologies to identify them, treat those special customers differently, and ultimately increase the size of your pocket book.
• Return on investment (ROI). This issue is increasingly a foreground application for web marketers who are trying to measure the payoff of personalization and ad targeting. According to Jupiter Communications, the breakeven point for an investment in web site personalization can be realized in the seventh month of implementation, and in one year, the personalization can produce an ROI greater than 300 percent. For online advertising, targeting increases click-throughs and conversions to sales, which you can measure and analyze using these technologies.

Next Week: An inside view of targeted online advertising and how to use targeting to enhance results.