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

Chapter 2 Update! DELL PREMIER PAGE

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Direct-Response Medium/ In What Ways Is The Internet A Direct-Response Medium/ Channel? And Why Does It Matter?

FOUR I’s OF INTERNET MARKETING ARE THE ANSWER

P&G—MASS MARKET PRODUCTS - DIRECT-RESPONSE EXPERTISE

BASIC DIRECT-RESPONSE STRATEGIES Retention Conversion Acquisition

CRITICAL STRATEGY ELEMENTS FROM DIRECT-RESPONSE PERSPECTIVE The Service & Support The Offer The (Email) List The Creative Execution The Media

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)

SITE STICKINESS = ATTENTION

SITES RANKED BY ATTENTION

LANDING PAGE CAPTURES DATA Figure 4-4a

PRODUCT PAGE SELLS Figure 4-4b

THE REMAINING STRATEGY ELEMENTS E-Mail 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

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

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

THE CONCEPTUAL FRAMEWORK

BASELINE CLV CALCULATION Table 4-1

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 CLV of Customer in Year 1 $ 26.24

INCREASE FROM TARGETED MARKETING PROGRAMS Table 4-2

EFFECT OF TARGETED PROGRAMS ON CLV Table 4-3

THE DIRECT RESPONSE TEST Email Newsletter Content Version A Email Newsletter Content Version B A/B Split is One Of Many Types of Tests

THE TESTING PROCESS

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TESTING DEMO http://www.omniture.com/products/optimization/offermatica

How is Testing Different From Marketing Research?

TESTING vs. MARKETING RESEARCH Testing Tells the Marketer WHAT WORKS. Marketing Research Explains WHY IT WORKS.

RECOMMENDATION Behavioral Analysis FIRST Faster, Cheaper, Actionable ONLY THEN Marketing Research IF You Need to Know “Why”

RECOMMENDATION FROM SHERPA

“Significantly Higher” from the Email Newsletter Hormel Tested Coupon Distribution from an Email Newsletter vs. from Ads On Their Website Coupon Redemption was “Significantly Higher” from the Email Newsletter

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Most Viewers Guessed Wrong!

THE DATABASE IMPERATIVE DATA WAREHOUSE Marketing Program Data Support Data Other Business Data External Data

USES OF CUSTOMER DATABASE

BENEFITS OF CUSTOMER DATABASE Harrah’s Casinos Increased Revenues and Profits By Building and Using (Mining) a Customer Database

A Set of Statistical Routines That Permit Pattern Detection WHAT IS “DATA MINING?” A Set of Statistical Routines That Permit Pattern Detection In Large Data Sets

HIERARCHY OF INTERACTIVE STRATEGIES

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