Using Audience Targeting to Own the Latent Pipeline

B2B marketers are intimately familiar with the concept of a funnel or a pipeline. Whichever term you use--you might use both--the ideas are the same from company to company. A lead is entered into a system at some point in time. It might be someone inquiring on the web site, or it might even be a name from a list. From this point onwards, that lead can either move forward, do nothing, or drop out of the system. The resulting graphic looks like a funnel.

Having covered that ground, let me state up front that this post is not about pipeline management, acceleration, nurturing, systems, or email marketing. This post is about a fundamental problem with the funnel concept as operationalized at most B2B marketing organizations today, and what I think is a pretty seminal idea on how to fix the problem.

The problem with funnels is that they're missing a lot of the folks that are actually going through the purchase process. This is because we as marketers are dependent on our own internal systems to track these folks. Our own websites; our own emails; our own sales reps; you name it. However, we know there are many individuals with needs that are going down an awareness / consideration / trial / purchase process that we are completely oblivious to. I call this the latent pipeline. For analytics geeks, this should be a comfortable term. It is the implicit pipeline that we don't have information about but that we know exists.

I'd argue that the latent pipeline can be broken into two parts. The first part is the upstream part of the funnel that could be defined as "pre-company web site". This is when latent prospects are starting to think about their needs and what they're going to go do. Today, this is going to be largely addressed via search, assuming that we can intersect people when they type in search terms. There is no question that this is a powerful tool for intercepting prospects, but I'd argue that there's an even more powerful way to target them. More on that later.

The second part are the folks that are going through our stages, as defined via our systems, that we don't know about. So, when we have 10 leads that are "qualified", there are another 50 leads out there that are being qualified by other companies. We don't know about them, so chances are, we'll never get to pitch to them. Ouch! That's pretty harsh.

So, we've defined a pipeline that has an explicit and a latent component, that will look something like this:

This fundamentally changes the concepts of B2B marketing, when you think about it.

• Acquisition marketing really becomes about understanding the top of the latent funnel
• The scope of CRM can be expanded to include not just leads / opportunities in our CRM system, but to leads / opportunities in other company's CRM systems

I'm not suggesting that we all go do industrial espionage and steal other firm's CRM data. I'm suggesting that through online audience ownership, we can extend the CRM layer from the explicit to the latent, via display advertising. I already posted on this once, so read that one. Basically, I'm arguing that we need to take a few steps to own the latent pipeline:

1. Understand our audiences
2. Map their typical B2B Internet behavior and map their pre-buying cues
3. Build analytical models to tag them
4. Target them via display advertising before they ever come to our site
5. Keep doing search marketing

In other words, create a rich, targeted online tapestry that is always on, and no longer shackled to company web sites and email. B2C marketers are ahead on this, but B2B has so much more potential.

I know this needs more detail. Next post will be on how one might do the steps above and make it work.

Verticalizing Internet Marketing

The hottest thing in direct marketing today is targeting individuals online vs. targeting via publishers or content. The idea that we can "know" a user and target them frees up the 90% of online inventory currently referred to as "remnant" space-- e.g. the space left over after GM, Microsoft and Coke buy the top page banners at Washington Post and NY Times. The remnant space can be just as valuable as the prime space if we only knew who the users were. A user interested in gourmet cooking is still a user interested in gourmet cooking when she leaves the NY Times food page and goes to her hotmail account or to her son's preschool website.

Verticalizing the internet is a potential solution. Or rather, verticalizing internet users. The internet is already as verticalized as it's ever going to be. So how would one verticalize internet users? First of all, it's only going to happen on specific networks of sites. You can't, for privacy and chinese wall reasons, put a universal cookie a browser that decodes them perfectly everywhere. I guess you could, and maybe that's an interesting business model. But for now, you need to work within the context of a network or a publisher. Let's use Yahoo! as an example.

So, say Yahoo! decides that they really want to make their inventory appealing for technology marketers, specifically B2B technology marketers. One option would be to put up pages that are really appealing to B2B technology buyers and influencers. These pages, assuming they attract a lot of volume (another key issue for networks / publishers), would get high CPM / CPC from technology marketers. However, once the user leaves this site, they're still valuable, right? So here's the rub, and how you can actually verticalize the internet. You've got the site; you've got the interested users. So you're missing two steps: (1) follow them around, and, (2) identifying the same types of users regardless of where they are on the property. I'd call this "200-level" and "300-level" verticalizing.

200-level verticalizing. Following them around is pretty easy. This basically means finding the really good vertical targeting-type pages, tagging engaged customers, and making sure we follow them around. This is pure behavioral targeting. We can get quite fancy doing this, by adjusting content on the verticalized page to correlate to segmentation dimensions and then adjusting people's segments based on what they click on. The trick seems to be in the details on this. For as long as I've been a member of Microsoft "Live", for example, I still seem to only get display ads for Hannah Montana movies. I view this as low-hanging fruit.

300-level verticalizing. The real nugget will be identifying all traffic according to vertical. There are two ways to do this. The first way would be doing traditional market research, such as a quantitative instrument, that would be distributed to a broad cross-section of a network or publisher's traffic. All respondents would be pre-linked to as much "targetable" behavioral data as possible. For example, Microsoft could use all the cookie data it aggregates for Windows Live ID users. Then, an analyst does a latent class analysis to derive segments relevant to advertisers; does a multinomial logit model to assign; and hands it off to the ad sales team. A/B testing to determine incrementality, and you're off to the races.

The second way would be to use only behavioral data to create "mock survey data", specifically from the vertical-relevant sites. So, we'd define our orthogonal dimensions that would be relevant to advertisers, such as "self integrators vs. needs help" and "windows vs. open source" etc. for a B2B technology scenario. Then we'd create content on our verticalized site that reflected these dimensions, and start measuring who clicked on and was otherwise engaged with what. We then use the same exact technique I outlined above to define and target segments.

The promise of these approaches is, I think, pretty huge, specifically for B2B where it's much more important to be much more targeted online.

Mobile Codes and B2B

Over the past decade, I’ve been involved with many projects to “de-tangle” digital marketing for big companies. Big companies want to know what’s out there in the digital landscape, and how it all fits together. Most importantly, they want to know why the latest trend is important to them. Take Twitter, for example. Is it a real, honest-to-goodness life changer that will be used addictively by a whole generation of digital influentials? Or, will it be the Segway scooter of web 2.0, a tool in search of a solution, that enjoys a surge of activity followed by a slow decline into boredom and malaise? I won’t comment on Twitter (at least not for now), but I will mention a truly cool tool that could be very, very important for B2B marketers.

QR codes were invented in Japan in 1994 and are used a lot in Asia. They’re all over the place in India. The basic concept is simple—a mobile two dimensional barcode. Instead of putting barcodes on merchandise for use in payments, you can put them anywhere. Here’s what one looks like. This is the one for wikipedia's home page:



Microsoft’s biggest announcement at this weeks’ CES was their version of QR codes called Microsoft Tag. These are two-dimensional color codes that contain a lot of information and are very readable by mobile phones’ cameras. A key to adoption of these codes is ease. How close do you have to be to the code to take an accurate picture; how much light is necessary; how good does the camera have to be to pick out the contrasts in color. From what I’ve heard through some savvy friends, the new Microsoft technology is best-of-breed on all fronts. Here's what a Microsoft Tag looks like for B2B Marketing Confidential:





However, we’re back to the Segway question. Will this thing take off, and will it last? I think it will. For one thing, it’s taken off and lasted in the more mobile-phone-savvy countries already. For another, it’s got a lot of real, honest-to-goodness business applications. Microsoft points out several of these:

• Real Estate Listings: Snap a code of a for sale sign, take a virtual tour on your phone.
• Business Cards: Snap a code on a business card and download the person’s contact info.
• Dating: Print out a t-shirt with your code. If people are interested, they snap you and get your digits (my friend Jeremy came up with this, I agree, it’s a bit sick).
• Linking to Facebook / Twitter: Snap codes and people automatically see what you’re looking at and where.

There are lots of others that I’ve thought of for B2B marketers:

• Put codes on retail displays / end caps. Snap the code and you download a coupon and get loyalty points
• Put codes on all of your hardware components. Snap the code and you’re automatically routed to the best tech support person for that device, along with the device’s serial number and configuration.
• Put codes on drug posters. Snap the code and a doctor downloads all the clinical data and prescription guidance.
• Put codes all over at events. Snap the codes to create a customer event portfolio, complete with time visited. The sponsors also know who you are, who else you visited, etc.

There are probably 10,000 other applications. I came up with the above in three minutes; I think with some heads-down time you could come with many more meaningful B2B applications. So B2B marketers, start planning for mobile / QC codes in your planning. Some open questions:

• Is Microsoft going to out-innovate Google here for a change, or will Google release their much better version shortly and snap up all the share?
• What does this mean for GPS integration? Didn’t even go there but imagine that…
• Implications for privacy? Is there a way to streamline “opt-in”?

So, so cool. I don’t say stuff like this too often, but this is exciting.

What if Don Draper was a B2B Marketer?

I was watching the Mad Men season finale last night on my DVR, thinking how ironic it was that I was (1) watching a show about advertising and (2) watching said show on a DVR. A show about advertising. Or for another example, if you like, a show about a show... actually a show about a show in the context of a real company (30 Rock). Have we reached the postmodern singularity event where all media implodes on itself in a giant self-aware fusion reaction? Or how about this. I was watching a show about advertising on a DVR instead of watching an historic 30 minute address by Obama. And in the show, the background plot line was Kennedy's addresses to the country on the Cuban Missile Crisis.

I see all this as a good thing for advertisers, and here's why. I am watching something. I am engaged in something in a way that I wasn't ten years ago. Ten years ago, television had reached its nadir. It was clear that post-Seinfeld, there wasn't anything not on HBO that truly captured the zeitgeist out there. But now, we have all kinds of zeitgeist forming going on all over the spectrum. SNL has managed to massively elevate its profile courtesy of Tina Feylin. John Stewart of The Daily Show continues to function as the zeitgeist puppet master. Mad Men has somehow broken into the mainstream from AMC. Quality--at least for a few shows--is way, way up.

What's down is distribution. The switch to digital signals this fall is symbolic for most, but it does mark an important turning point. Video in all its forms will become one massive feed. Accessed through Apple TV, DVRs, "live", via Browser, or via handset, it doesn't really matter anymore. The content creation is being decoupled from the distribution--and thank God!

I guess this is really the democratization of content. The doomsayers who think that we'll see the death of (the novel; the TV show; the sitcom; the drama; etc. etc.) are clearly spectacularly wrong. We are actually seeing quality improve because monetization potential is and will be going way up. Why has Mad Men been able to spend $2.5 M / show on AMC? Because they can now distribute on Apple TV / ITunes. Why is GE investing so much in SNL? Because they are getting huge pageviews on the NBC domain for SNL skits (bite sized, perfect for office viewing).

My possibly naiive hope is that we'll get smarter and better entertained over the next ten years, and that marketers will thrive. As we have access to everything we want, we'll be more and more targetable. Just as email marketers crave the "opt in", video marketers crave the audience that cares. There are monetization technicalities--such as the fact that there's no advertising in Apple's model--but I believe that this will work itself out through the free market. Not sure exactly how yet.

So what if Don Draper were a B2B marketer? I think he'd quit his agency and become a consumer focused Digital marketer. So I guess my post title was misleading. Sorry.

Ways Around Click Fraud?

Click fraud is getting a lot of attention in the mainstream press. The Economist had an interesting article this week on the problem, suggesting that it could be the number one threat to Google's market capitalization moving forward. Google's engineers are quoted glibbly proclaiming that "they're having a lot of fun" keeping up with the fraudsters. This attitude is probably not appreciated by the folks buying the adwords or banners.

I've talked to a bunch of online marketers about where this is headed, and I've heard some really interesting ideas (one of which is mentioned in the Economist article.)

1. Begin tying pay-per-click back to some more concrete pipeline metric. The problem with comping search vendors on clicks is akin to compensating B2B marketers on leads (with no strings attached.) Smart B2B marketers demand to be measured further up the pipeline--for example to qualified leads or even to closed deals. The added credibility of "real revenue" far outweighs the potential for "the incompetence of the sales force" or other such drivel. Marketers / search engines should start thinking of ways to pay little for clicks and a lot more for qualified leads or even wins. This takes better systems, sure--but Google should have no problem with this. Witness the ease with which they've been able to get people signed up for Adsense!

2. Begin thinking about impressions as well as clicks because of the attitudinal component. Google could get around the clicks issue largely by starting to look at unique served impressions across some segmentation--the idea that Google isn't just in the business of filling the pipe but also in the business of changing impressions. Even if someone doesn't click on it, if Oracle comes up everytime someone does a database search, that's gotta have an effect on attitudes (if anyone knows of research showing this, we'd love to hear about it.) This gets around click fraud because Google could start looking at research-driven test / controls--essentially changing the game.

3. Just keep going with the arms race. Hackers are constantly thinking up new ways to fool Google on what makes a legitimate click, and of course Google "has fun" responding. Not getting into all of the specifics, the danger is that Google will eventually start cutting into more and more legitimate clicks--which will harm their revenue streams and also the reputation of search and online advertising in general over the long haul. All of this is statistical or algorithmic in nature--thus not perfect. If we've learned anything from years and years of Microsoft / hacker battles, there's no sure fix for anything like this. Unfortunately, this option is both most likely in the near term and also least likely to be effective.

For those of you interested in the original article in the Economist, you have to be a subscriber or view a short advertisement for a day pass, but here's the link.

Needed: Longitudinal Tracking of B2B Online Behavior

There is an interesting article at eMarketer by Dave Hallerman published last summer called "Finding the B2B Marketer." There are a lot of great charts (such as the one to the left) showing where business decision makers (BDMs) look online to search, find information, compare and potentially buy. Not surprisingly, Search and particularly Google come up at the top of the list. It also points that (at least as of last summer) businesses were not optimizing for search.

There is another article recently posted at marketingpower.com that claims that online advertising is much more effective on branded original content sites than on portal sites or search sites. I guess my reaction to that article is--yeah, no kidding. But search sites are still incredible important because most of the time people are clicking on the search results, not the ads on the side. However, there are instances where the paid ads are powerful, such as when a BDM types "marketing analytics optimization" into Google and gets five vendors on the right side. I bet some of those make his short list.

This is all interesting information, and there's a lot more of it out there online, but I think it points out the need for longitudinal tracking of B2B searching and buying behavior online. My hunch is that the influencer communities, both formal and informal, are becoming more and more important in searching for solutions. I'd define formal influencer communities as those like LinkedIn or more specific industry-specific communities such as the CMO Council; I'd define informal communities as largely those loose affiliations of sites in the blogosphere (such as the B2B marketing community of which this site is a part.)

My other hunch is that the relationship between third party communities and manufacturer sites is critically important. If it's true that BDMs start by searching, hit 10-20 relevant third party sites, and then develop a short list of candidates, what are they using manufacturer sites for? I'd argue that the main purposes at this point are likely:

• Establishing credibility
• Anticipating and answering technical and business solution questions clearly
• Providing a clear path forward (e.g. demo, live chat, 1-800 number, etc.) to avoid the stale lead syndrome

Clearly, it's important to get a high site ranking in search--but I'd argue it's just as important to make sure that all paths lead to the manufacturer site. This means, once again, mastery of the influencer communities first and providing a credible path forward on the manufacturing site second.

So I guess the point I'd like to make is this--if anyone knows of a solid longitudinal tracking study focused on BDMs' online behavior I'd love a comment on it. It could be a really powerful piece of analysis that would have a big impact on how online marketers spend their energy in the B2B space. If not, I think there needs to be a good study done on how BDMs are changing in how they search, evaluate and buy using the Internet... it's changing every day.

Google's Continuing March Forward

“We believe the company is rapidly becoming the digital advertising agency for every company in the world.” --Stifel Nicolaus & Co. analyst Scott Devitt

http://www.kansascity.com/mld/kansascity/business/15811833.htm

Google's market capitalization ($143 B as of Friday, October 20th) continues to blow by various old media, software, and computer hardware companies. Is the valuation justified? There does seem to be a bit of the extrapolation-driven valuation going on--the same methodologies that drove up the prices of Enron and Global Crossing in the late 1990s. However, the difference is that Google's business model is actually simple, understandable, and makes money. There are three big questions that dog Google today and basically form the "beta" around the stock's current meteoric rise.

1. Barriers to Entry. I don't think there's any question that if Google can grab up 40-50% of the online advertising and media game over the long-run, the current valuation is actually pretty conservative. However, what is preventing others from joining the party? This is really the YouTube question. Sure, YouTube has the lion's share of Internet video today, but there is really nothing behind it. It would take a Microsoft a couple months to throw together a competitor--wouldn't it? Google needs to get barriers to entry up fast, and I still think it's an open question if barriers to entry are even possible in an open-standard Internet.

2. SEC Action. Uh, remember when Microsoft had all of the OS share and was using it to sell Office, Media Player, etc. etc.? We're not there yet, but I have to think that the SEC's lawyers have a list somewhere in Washington and Google is on it. The difference is that so far they haven't done anything anti-competitive, but at this rate, they will be a Monopoly over multiple forms of digital media, and it'll be harder and harder for them to argue that they're not stifling competition and innovation. Google needs to figure out how to grow smart, leaving just enough competitive pressure out there to avoid a costly SEC investigation. Was it just coincidence that Microsoft's transitition from growth stock to mature stock happened just when the SEC investigation reached its peak?

3. Transition to Old Line Media. Google has publicly stated that they want to move into TV, radio, print, etc.--essentially optimizing media for its clients across both online and offline channels. Why? Is this the first sign of a company losing its focus? This strategy could dilute Google's strategy and definitely could turn into a boondoggle. The reason is simple--you can't write code to track the effectiveness of offline media, and there are about 10,000 companies creating, buying and measuring offline media today. It's true that Google's smart people could be scary here, but isn't there a lot more room to grow online?

So will Google see a real competitor emerge in its core search and online advertising business? Will the company start down the dark path towards anti-trust? Will their non-core business forays distract what has been an extremely deliberate and effective growth strategy thus far? We'll see. I'll revisit the topic in a year and we'll see how they're doing.