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May 20th, 2009, 10:26 AM #1The upcoming shift in Internet marketing
I'm a big Gordon Borrell fan. And his research, like most other research, shows an increasing shift in marketing dollars to online. But he's also been pointing to another trend, something subtle; we've been putting a lot of thought into how this is going to change our business model in the near-term and I thought it might be interesting to get some dialogue going here.
In a nutshell, the percentage of revenue dedicated to "traditional" display advertising online will shortly level off and begin to decline. But where will all the projected increase come from?
Well, for starters, the big boom will be on promotions. Borrell is projecting that many companies will actually shift dollars from their marketing budget to their promotions budget. Things get sort of vague there, especially in the online world. Offline, promotions are easy - we're having a book signing, we're giving away a free toaster with every purchase, that sort of thing.
What does it mean online? The answer will be very lucrative.
So, what does this mean for affiliate marketing? I'm an optimist, of course, so I see this as a net positive. My logic is that whatever shape online promotions come in, there will be a need to get that message out to the masses and AM will be a core part of that. Thinking that through, it may create a different approach for the affiliate. Instead of plowing datafeeds, a greater emphasis will be placed on finding ways to promote these time-sensitive promotions.
I'm interested to hear from merchants here, too.
Hoping this stirs some interesting discussion!
May 20th, 2009, 11:23 AM #2
I know that in the realm in which I do business (Education CPL) incentivized offers end up bringing lots of LOW quality leads. Not good business.
How does he think that doing promotions and incentivized offers will draw the right targeted traffic and not just people wanting the "stuff"?
May 20th, 2009, 11:58 AM #3
Interesting observation...and thinking on it, I can sort of see the beginnings of it take place online as well. We're starting to see more cross-promotional efforts, like buy something here, get 10% off over there. Not sure how that's going to work for affiliate marketing though. It does get kind of convoluted, because if MerchantA sells an item for $20, and MerchantB sells the item for $25, but you also get 10% off at MerchantC...
May 20th, 2009, 12:15 PM #4
- Join Date
- January 18th, 2005
One potential benefit from "promotional" activity is word-of-mouth or pass-along exposure.
The "Oprah/KFC" fiasco this month is an example: a promotion on the Oprah TV show (for a downloadable coupon for a free "grilled chicken" meal) was disseminated much more widely through pass-along (email, twitter, etc.). (Unfortunately, KFC made several big mistakes, including failing to have scanners that could read coupons printed on many printers, AND failing to have adequate inventory on hand to meet the surge in demand.) KFC succeeded in nearly saturating its target audience/market with "awareness" that KFC now sells grilled chicken, but of course its failures may create additional negative mental associations with many disappointed consumers.
Incentivized offers require a good match between the offer and the target demographic, along with appropriate qualifications and possibly some "disincentives." The "qualifiers" for the Oprah/KFC deal were: access to a computer and printer, plus reasonable proximity to a KFC outlet, plus a desire to eat a KFC meal.
In some segments, there may be inadequate qualifiers or disqualifiers. I suspect this is an issue with the education segment Sheri mentions; I assume she is referring to cost-per-lead payments to sites generating leads for college "recruitment." That segment is pounded by lead fraud and unqualifiedleads due to the structure of the reward offered to marketers/promoters (especially incentive/reward affiliates).
"Promotion" is not a synonym for "discount." A promotion that offers "buy one, get one free" or some other "financial" incentive may create an expectation of recurring discounts. A better promotion for most merchants would be an "extra" (buy shampoo, get a free travel-size; buy a perfume, get a free ___).
And consider "advertising specialties" -- free or super-discounted items (other than stuff you sell) that promote brand awareness in your target audience.
A perfect example is the "branded t-shirt" -- "anyone placing an order with us can add our CompanyName.com T-shirt for only $5 extra" (or $1 or $3 or $9). For a company selling anything other than t-shirts, this means that their responsive customers (or their family members) will be wearing the brand.
May 20th, 2009, 02:07 PM #5
You've hit on a lot of important details there. Nicely done.
Sheri, you bring up something I hadn't really had time to consider ... just how widely this will vary based on the vertical. Education is a tricky one, I think.
May 20th, 2009, 11:19 PM #6
I always believed free shipping is the best incentive online merchants can offer their customers - not sure if that counts as the kind of promotion Karl is talking about - most incentives and promotional offers complicate the purchasing process - free shipping simplifies it - and it can't be intercepted by parasites.
May 21st, 2009, 08:15 AM #7
No doubt, I've seen multiple surveys showing that free shipping is the single biggest driver in online sales. Can't go wrong. Not sure if that falls under this rather vague umbrella, but it certainly could.
May 21st, 2009, 09:09 AM #8Originally Posted by phillyburbsOriginally Posted by phillyburbs
Don't tell me I was actually paying attention in my marketing class?
As I recall, the marketing beast has 4 arms (the 4 "P"s):
Product - How good is your product? Is there a demand for it? A need? Can a demand be created? Is it new and improved?
Price - At what price point would people buy? What is too high of a price? Can we make a profit at this price point?
Place - distribution and availability. Should the product be available in every corner, or should it be selective. Which verticals should be used? Internet?
Promotion - discounts, coupons, freebies, giveaways, buy 1 get 1 free, free shipping, etc.
So, with internet marketing the cost for "Place" is much less since you may not need to have your product physically at all levels, cutting out a few middle men so more $$ is being used to support the "Promotion" arm. I have seen this especially with social media where contests, freebies, giveaways can get the buzz out and help spread the word. It shows how important it is to establishing communities, social sites, relationships with your audience. Once you get the word out about something and if you have a big following, they can help you spread the news.
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