Purchasing Channel Versus Decision Making Channel

94% of retail sales are still generated at brick and mortar stores. This stat is usually referenced to defend traditional retail when people see Amazon increasing their revenue from 2009 to 2013 by $50 billion, and state that the death of the traditional retail store is a foregone conclusion. The big effect that the internet makes on shoppers is not on their purchasing channel, it’s where they make their purchasing decisions that has changed.

This is why most consumers know what they want before they show up at the store. The reaction between stimulus and purchase is not going to the store, but the customer accessing the internet with questions like “how do I keep diapers from leaking through the night?”, “what kind of jeans is Beyonce wearing” and “what will remove crayon marks from my wood dining table?”  Even if TV advertising is the stimuli, the internet intercepts the purchase funnel at some point.

You wouldn’t think this insight has been made if you were to review most multi-channel retailer’s today. Online marketing efforts are still overwhelmingly focused on driving sales online. A big part of the problem is calculating how much revenue is driven offline from online advertising. Since online advertising’s effect on online sales is easier to measure, it has a bigger budget.

There is a change coming to the marketing departments of multi-channel retailers and that is, all advertising for retail stores will soon be online (the day is coming when TV and the internet are one in the same, and those ads will be scrutinized with the same criteria as online ads). Regardless of which channel the customer chooses to purchase from it will all be from digital advertising.

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How Much Longer Do We Have To Tolerate Mobile Apps?

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I dislike the whole premise of mobile apps. Why can’t I just use the internet on my phone? Why all of this app account logging in, downloading, updating nonsense? I have to believe that mobile apps will go extinct in the future.

The only reason the idea of downloading applications on a mobile phone made any sense to begin with was because mobile devices and wireless carriers couldn’t handle internet at the speeds needed to make anything useful. Once the internet is faster on phones and I can get the same experience online as on an app then what’s the point of having apps?

Nobody downloads apps on their desktop computer because they can just use the internet. And the internet is a far superior experience than using apps. Think of all the easy things you can do online that suck on apps: linking between sites, buying stuff, and updating a webpage requires nothing from the user.

Apps are particularly challenging for ecommerce sites. You already have people navigating to your mobile site, why build something outside of your site where all your traffic is already going? Once you build an app then you have to advertise to get customers to download it and then find a way to get them to use it.

Apps also give centralized control to Apple and Google over what apps can exist and which apps get downloaded the most. Unless you know what you want, at both app stores you are shown leaderboards to pick from. Search is a horrible experience. Discovery is worse. A decentralized system, like the internet, offers much more opportunity to start ups and diversity to consumers.

Apps suck.

</rant>

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Stop Telling Stories With Data

There are so many variables when it comes to ecommerce that I’m convinced that the idea of knowing why visitors do what they do is not really possible. All you can know is the results, not the why.

But not knowing why doesn’t sit well with our human brains. We yearn for patterns, explanations and stories to explain why what is happening is happening. Not knowing why also makes it difficult to get buy-in from others. If you’re trying to convince a manager to make a choice based on your data, you can be much more convincing with a story coupled with data, instead of just the data itself. Storytelling is a powerful tool, but if taken too far it can quickly go from presenting what happened to pushing an agenda.

The problem with creating stories with data that reach too far is called the narrative fallacy, made popular by Nassim Talbm in his book The Black Swan:

“The narrative fallacy addresses our limited ability to look at sequences of facts without weaving an explanation into them, or, equivalently, forcing a logical link, an arrow of relationship upon them. Explanations bind facts together. They make them all the more easily remembered; they help them make more sense. Where this propensity can go wrong is when it makes us think we understand it more than we really do and as a result, become more confident in a story that isn’t true.“

When you think you understand what the visitors on your site are doing more than you really do, you may start to let the data take a back seat going forward, and fall into the trap of confirmation bias where you start paying attention only to information that confirms your story while ignoring information that challenges your preconceived notions.

Somanyblogs are promoting the idea of telling stories with data without a bit of warning on the dangers of that approach. The world is a very com­plex place, and there is almost never a sim­ple  answer or a sim­ple series of events to explain any action. In the end we don’t actu­ally need sto­ries to make deci­sions. Stop pushing agendas and get over who gets to take credit (I don’t think it’s a coincidence that the ones most interested in story telling  are the same insufferable people who want to put off doing anything until after a meeting is held about it).
To make a deci­sion, you sim­ply need the abil­ity to com­pare num­bers and choose the best one. I don’t need to know why vari­ant C was bet­ter than B, I sim­ply need to know that it was 10% bet­ter and then I can take that insight, apply the change and move forward.

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The Reason To Do Creative Things

Somewhere along the line we were told that writing a book, making a movie, singing a song or creating anything was not worthwhile unless there were people who would pay us for it. But getting paid to create stuff is a relatively new idea and should not be the reason to, or not to undertake a creative pursuit. Throughout most of history the concept of earning money from being creative was not plausible but it didn’t stop anyone from doing it. Only recently has making money been a reason to do something creative.

In 1906 John Phillip Sousa held a very low opinion of the emerging and upstart recording industry during his lifetime. In a submission to a congressional hearing, he argued,”These talking machines are going to ruin the artistic development of music in this country. When I was a boy…in front of every house in the summer evenings, you would find young people together singing the songs of the day or old songs. Today you hear these infernal machines going night and day. We will not have a vocal cord left. The vocal cord will be eliminated by a process of evolution, as was the tail of man when he came from the ape.”

Author Lawrence Lessig comments, “Looking at the 20th century it would be hard not to conclude that Susa was right. Never before in the history of human culture had it been as professionalized, never before as concentrated, never before has the creativity of the millions been so effectively displaced, and displaced because of these “infernal machines.” We have handed over creating to those “professionals” and have left all the creation up to them.”

Writer Aldous Huxley concurred with his statement saying, “In the days before machinery men and women who wanted to amuse themselves were compelled, in their humble ways, to be artists. Now they sit still and permit professionals to entertain them by the aid of machinery. It is difficult to believe that general artistic culture can flourish in this atmosphere of passivity.”

Creative talent that demands payment is a very rare and very precious commodity. Not everyone has it. As a matter of fact, hardly anyone has it. But I don’t think that should stand in the way of us thinking of ourselves as singers, writers, painters and actors. Just because we will never be as good as Bob Dylan or Meryl Streep doesn’t mean we should limit ourselves.

Does encouraging people to pursue their artistic dreams do more harm than good? So many people will never “make it.” After all of their toil the outcome will at best be parked out in the “long tail,” selling only to our uncle Sam and a few demented fans. I think the fact that you want to, and can do it, is reason enough.

Amuse yourself by creating something instead of passively handing entertainment over to “professionals.” Do it because you feel like you need to regardless of any monetary gain.

Bill Watterson’s advice is essential: “We need to do more than find diversions; we need to restore and expand ourselves. Our idea of relaxing is all too often to plop down in front of the television set and let its pandering idiocy liquefy our brains. Shutting off the thought process is not rejuvenating; the mind is like a car battery-it recharges by running.”

 

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Mindfully Selected News

My consumption of news has decreased over the last few years and I think I’m becoming less informed. I think its my lack of interest in breaking news along with the new’s declining credibility.

Publishers are incentivized to push the extreme, breaking news because it’s how they get more clicks, and that means more revenue. There is such a need for publishers to keep the user’s attention that the “news” is more often click bait hyped to make them think it is important. Once the user is on the page the only thing important is not the article that got them there, but the ability to keep them clicking, so anything you read is surrounded by junk. I’ve frankly given up because headlines write checks that their articles don’t cash.

So much of the news is breaking news which is boring and incorrect. If you try follow anything breaking you have to wait through the whole thing just to get to the good parts with no guarantee that anything worth seeing will happen. Plus, what is first reported is typically incorrect, out of context and not understood.

The solution offered is usually to filter the news according to my interests. But I don’t want what I’m interested in, I want what’s important to know. The internet has no concept of “all the news that’s fit to print,” because there is no constraint in available space. Whatever filters I proactively place to make the news more relevant to me will always find a “top 5” no matter how unimportant it is. It is similar to the productivity-killing recurring meetings in the office – when an amount of time has been allotted, things will be found to fill the time even if they are irrelevant.

I only want the news that’s been vetted, acknowledged as worthwhile, analyzed and interpreted into the larger scheme of things. I want to learn about the way things work along with what is going on. I want a service that sends me an email only with news that is worth reporting. It would have no regular scheduled cadence. I’m wary of any publisher that promotes a “top 5” list of articles, because again, if it claims five articles every week, irrelevant articles will be found to fill the “top 5” quota — if I don’t get an email for a couple weeks even better, nothing worth knowing about has happened! Until this service exists I’m opting out of news site online and am going for books that are based on well-understood truth instead of the latest rumor.

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Fulfilling Demand vs Creating Demand

Fulfilling demand is advertising where you help people who are already inclined to buy make a final purchase decision. Creating demand is advertising that puts an idea in the person’s head to go out and buy something they hadn’t previously considered.

Fulfilling Demand vs Creating Demand

The reason why TV ads are so good at creating demand, I think, is because it’s in a medium aligned with entertainment. You’re passively sitting back, letting the TV take you where it wants, the ads act as mini stories that you’re already expecting to see.

The internet is much more of an active, informational and communication-driven medium. You go to the internet to find things out just as much, if not more, than for entertainment. This is why display ads generally suck – they don’t fulfill demand, and if they do any creating of demand it’s minimal because the user is not in entertainment mode, they are in research/communication/info gathering mode.

Content that is interesting/informational/helpful/entertaining is a little closer to nirvana – it can fulfill demand: people looking for answers can find them in your content, which hopefully refers them to purchase from you, and it can create demand: the content can be convincing enough to create a new need in their mind to motivate them to buy something. But quality content doesn’t scale in a linear proportion like paying for ads does and it’s hard to always be original.

We will reach advertising nirvana (maybe) once the internet more closely resembles television so that it becomes more of a passive medium while retaining it’s active capabilities, and some new forms of advertising are invented that better facilitate the two.

 

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The Bleak Reality Of Social Media Marketing

There once was a time when social media was the solution to all of advertising’s woes. Social media was to replace antiquated interruptive advertising techniques by allowing customers to have “relationships” with brands. Brands could “join the conversation” and let customers “tell their story” too. All of this “engagement” would be called “earned media’ instead of paid media. But reality has struck, we’ve all been duped (including me) and it looks like what really matters is what has always mattered: interrupting people with interesting ideas about interesting products.

From Forrester “Social tactics are not meaningful sales drivers. Forty-eight percent of consumers reported that social media posts are a great way to discover new products, brands, trends, or retailers, but less than 1% of transactions could be traced back to trackable social links.”

Sure, the same arguments are still valid: social media (and display ads) has an impact the same way TV ads have an impact – people just don’t click through as much so the influence doesn’t show up in the data. Another valid argument is that most brands still just aren’t using social media right: they post self serving drivel that no one cares about.

But consider this quote directly from Facebook: After instigating the biggest bait and switch in ad history, Facebook has the audacity to say in Time Magazine, “Like many mediums, if businesses want to make sure that people see their content, the best strategy is, and always has been, paid advertising.” Facebook itself concedes that trying to market a product by engaging a community with posts is ineffective.

Create your own site, for creating quality, interesting, unbiased content where you have full control instead.

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Corporate Blogs Suck, Do This Instead

The common advice is that you should include a blog to your ecommerce or business website. So attached to your site is a blog.yoursite.com or yoursite.com/blog. The reasons behind this are sound:

  • Build traffic through search engine optimization
  • Increase credibility
  • Enhance customer interaction

But there is a common problem with corporate blogs: they lack credibility. This is especially true of big companies. When the blog isn’t boring every visitor by incessantly talking about itself, PR wants to throw in the latest earnings report and then the marketing team wants to repurpose it’s email creative in a post about the monthly sale.

I think there is a better way to still get the benefits of blogging for your business without having a corporate blog: give your blog it’s own brand.

Instead of yoursite.com/blog, make a whole new site that’s sole purpose is to be the voice that speaks to your target audience. It’s hard to not come off unbiased when right next to your content you’ve got links to buy all your stuff right there. With a separate blog you can say all the things that resonate with your target audience while not worrying the brand managers that you’re going to be “off-brand”. At the same time you can still slip in links to your own business when it’s called for.

This may seem sketchy but it’s a standard business practice. Big companies that are no longer “cool” buy smaller ones who have more credibility in the marketplace. Nike would never tell you that they own the counter-culture brand Converse. Or the company that owns the posh ski brand North Face would never let customers know that they also own the skate and surf company Vans and the cowboy brand Wrangler.

Keep yousite.com/blog for all the lame content that no one reads if you want to so that you can appear “relevant”. But build a different blog outside of your brand. If you can, build a few. Retailers need to become publishers online instead of relying so much on other content sites to post their links and serve their ads.

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You Bid On Keywords Not Search Queries

I think the distinction between queries and keywords is important. A keyword is the flat, literal, lowest-common-denominator word that you want as much commercial intent in it as possible. A search query is the actual phrase that the user puts in the search box. More often than not search queries are absurd. The keywords you select are just as much about what queries you don’t want your ad to show up for, as the queries that you do want your ad to show for.

As seen above, search queries of all types are swimming through a stream and you lure the ones you want your ad to show up for by using keywords, match types and negatives.

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You Can Do Better Than Brand Marketing

Often online marketing budgets fall into two camps: direct response and branding. The purpose of direct response is pretty obvious – to make money at a return that is aligned with the business’s goals. The other camp – branding – I’m kind of convinced is always a waste of money (at least the conventional idea of brand marketing is).

Boiled down to it’s most simple terms, advertising is when you are trying to persuade someone to purchase your product. Too often the idea of a “branding” campaign is something that is far from persuasive – it mostly consists of showing people your logo. Persuading someone is about highlighting the product benefits and differentiation with similar products. Customers rely on their own experience with products more than anything else. Showing your logo to more people is not enough to overcome the inertia of  purchasing habits and get someone to make a change. Persuasion isn’t easy; trying new things is high on the list of things people most want to avoid.

From the Ad Contrarian:

“Next we have to realize that successful brands are by-products. They don’t come about by “branding.” They come about by doing lots of other things well. Like making great products; satisfying our customers; differentiating our products in advertising.”

Trying to quantify the value of branding ads usually ends up being very anti-climactic. You can count the amount of impressions that were delivered to the targeted demographic, use click-through-rate as a way to evaluate relevancy – of those that click through you can measure page depth, return visits, bounce rate – all of which give you an idea of the kind of impact you made on the visitor – hopefully an indication that they will buy from you next time when they are ready.

So why would anyone want to do “brand advertising”? Because your direct response budget has such high return on ad spend targets that you end up only advertising to those people at the bottom of the funnel – you’re preaching to the converted. You’ve got to pay to add more people at the top of the funnel right? Yes, but you can do better than “brand advertising.”

Maybe it’s just semantics but when you think about your next media buy, your display ads, or the next bit of content you create, make sure that it has something to it that will persuade someone to buy instead of having the sole purpose of “branding.”

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