10 questions

The rise and spread of robust computing and analysis has been a double-edged sword. On the one hand, it’s now possible to measure the effectiveness of marketing initiatives in real time. This promises to help retailers get the best return on their online marketing investments, and avoid throwing good money after bad. On the other hand, the internal transparency created by response data places a great deal of pressure on marketers to improve results.

To aggravate matters, the world of multi-channel marketing becomes more complex every month. Instead of crafting a strategy for a single interactive channel, marketers must now develop strategies to push messages through multiple channels such as banner ads on web sites, e-commerce site promotions, social media and ads embedded in search and e-mail. In each instance, marketers have to understand how customers use these entry points to get to their products. They must react nimbly, swapping offerings in and out depending on traffic flow and strategic objectives. They must continually analyze data and adjust spending and targeting accordingly. The winners in this new environment will be those who can figure out not simply how to respond to a changing marketplace, but also how to create a business ecosystem that continually adapts, learns and improves.

Cutting through complexity

Sounds complicated. Fortunately, there are plenty of marketing services organizations willing and able to help companies optimize their marketing strategies. Marketers can choose from among strategic interactive agencies, multivariate testing firms, web interaction and personalization managers and decision engines, to name a few. In the end, all these approaches share certain characteristics. Each leverages data to assist in making better marketing decisions. Each dynamically controls content to deliver more effective messaging. And each provides reports on the effectiveness of the measures. But, as the standard warning goes, results may vary.

Providers of marketing services today differ in approach, tactics, the scope of services they offer, and ultimately, in the outcomes they produce. Few offer clients the ability to not just improve their marketing results, but also to create and install systems that will transform the company into a learning organization, one that can make sense—and more effective use—of the deluge of data generated. In order to work intelligently and effectively with marketing solutions providers, marketers must first figure out whether the provider possesses the right capabilities and fit. Simply asking for answers to these ten questions can go a long way to providing the information and perspective needed to make a decision.

1) A/B, multivariate, or audience?

This isn’t a trick question. Rather, it aims to seek out what type of methodology a provider uses. A/B testing is the simplest form of optimization, in which one sets up a control (say, a one-page checkout window) and then tests another option against it (say, a checkout process in three windows) to see if it delivers a statistically significant improvement. Such tests are easy to manage and implement, but they are time consuming, not particularly sophisticated, and generally offer the opportunity only for slow, incremental improvements.

Multivariate tests employ more sophisticated algorithms to run multiple tests in parallel. Instead of A/B, think: ACDE/BDGH/AGDC, etc. A marketer using multivariate tests may try out several calls-to-action, price points, content messages, headlines, and images simultaneously in order to produce a new winning control in less time. By conducting a small number of tests and analyzing results, analysts can isolate which factors work best in conjunction with one another. Multivariate works well for the minority of marketers who are seeking a quick, one-size-fits-all solution.

Audience segmentation takes a fundamentally different approach. A/B and multivariate tests may provide guidance on which offers were best, on average. But audiences aren’t average; they differ in their tastes, habits and buying behavior. Audience segmentation seeks to produce a winner for each user that sees an ad, hits the web site, or receives an e-mail. Credit card companies and offline direct marketers have employed such tactics for decades, sending platinum cards to one group, low-interest-rate teasers to another, or balance transfer options to still another. Technology allows interactive marketers to offer much more sophisticated and effective versions of this tactic. Model-based solutions can deliver different messages to different segments, continually measure the responses, and alter text or images subtly as conditions warrant.

2) Can you deal with constraints and flexible attribution?

Many solutions are off-the-shelf offerings. Just follow the instructions and let the technology work its magic. Based on stated preferences and the mandates of a program, a collaborative filtering system will spur a site to offer a certain book at a certain price to a certain group of browsers. If only the marketplace were so simple. What if inventory is running low on a particular title? Or what if a publisher offers special incentives to anyone who can sell 100 copies of a particular book in 24 hours? A market optimization provider should be able to afford clients the ability to work under constraints and flexible attributions. For example, it should be able to dictate that a certain offer needs to be shown no more than 50,000 times, or a minimum of 10,000.

3) Product, People, or Both?

Some marketing services firms deliver tools to do this testing and optimization that in fact are power tools. It typically takes a good amount of domain expertise and statistical background to deploy them effectively. And marketers don’t always have the resources or staff to handle them. Other providers function more like old-fashioned advertising agencies, essentially delivering people who try to improve marketing processes. This approach may provide temporary results, but doesn’t leave any technological system behind it that allows for continuous improvement.

An effective provider should offer a combination of optimization and analytics, of products and people: a product that functions as a strong, malleable and effective platform capable of learning and improving; and people who understand business needs and best practices, who can devise overall strategy and execute it, and then train clients to use the system themselves or remain engaged.

4) Can you cross channels?

This has nothing to do with the ability of an analyst to swim the 21 miles of chilly seawater that divides England from France. Many providers tend to be channel-centric. Some specialize in web site optimization, others in search engine optimization, and others in external media. That would be fine if marketing efforts were confined to a particular channel. But today every campaign is cross-channel. An effective marketing solutions provider should be able to collect and analyze data across numerous channels both online and offline. It should be able to design initiatives that can meet clients’ goals for customer reach and frequency and that can be deployed simultaneously through e-mail, banner ads and search queries.

5) Is your box black or white?

IRCE 2008 Conference Multi-Media CD-ROM

Many providers of marketing services simply offer a black box. Content to charge a fixed fee per lead, they don’t let clients in on the mechanics of how their process works. As a result, there’s no way for the client to glean systemic knowledge that it can apply elsewhere. Others take a different tack, offering a white box. Without overwhelming clients, providers can feed clients data on which variables make the model work, whether and how the audience skews along geographic lines, and how to tweak offers if, for example, an audience skews lower or higher on the income scale. A white box approach makes the relationship between client and provider collaborative. And in the long run, having the ability to dig into the data and really understand what is going on underneath the numbers gives marketers meaningful improvements over time.

6) Can you provide references and case studies?

Everybody likes to keep good company. Marketers should make sure they’re doing the same when choosing marketing optimization providers. It’s not impolite to ask if the vendor works with top brands, and whether the engagements are small, short-term assignments, or long-term, value-creating relationships with senior executives. And given that this business revolves around numbers, marketers should not hesitate to ask for hard, quantifiable numbers. Don’t be afraid to ask: How much money have you made for your clients? That’s their job, after all.

7) Do you have a history of delivering innovation?

In the software industry, vaporware has long been a problem. Companies promise an innovative new product at some point in the near future, which serves to lock in existing clients and discourage competitors. Frequently, of course, the new product never arrives, never works as promised or never exists in the first place.

So when it comes to assessing promised new systems, marketers should do some research on older products. Does the vendor have a history of promising and delivering new optimization products? And can it be relied upon to deliver the next generation systems needed to run the business effectively? In this highly competitive, constantly shifting landscape, the market and competitors are continually growing more sophisticated. Marketing solutions have to evolve and grow in order to keep pace. And when marketers buy a solution they can use today, they are effectively investing in the vendor’s ability to innovate.

8) How many tools are in your toolkit?

If all you have is a hammer, the saying goes, everything looks like a nail. But what if your problem involves a screw, or a broken hinge, or a leaky valve? A handyman equipped only with a hammer won’t have much of a chance at getting the job done. Just so, a vendor who favors a single particular approach—to the exclusion of others—will find a lot of problems that don’t yield to his solution.

Marketers should ascertain whether their vendor is equipped with a suite of solutions, and whether it approaches each business problem—or set of business problems—with a fresh, unbiased eye. In certain instances, that might mean looking beyond the vendor’s own products to tools created by others. When a marketing solutions provider considers using ad servers, or marketing delivery systems other than its own, it isn’t a sign of weakness—it’s a sign of intelligence. It shows that the vendor is more concerned with finding the right solution at the given time for a particular client.

9) Can you make me a hero to my own team?

Marketers naturally look to solutions providers to help them navigate the Byzantine marketplace. They should also look to them for help in navigating internal bureaucracies. Despite the current vogue that favors flat organizations and networked companies, many firms maintain rigidly siloed organizations. They break marketing budgets down along product lines. As a result, there’s comparatively little sharing of best practices and data, and little synchronization.

A marketing optimization provider should be able to help marketers integrate strategies, navigate internal bureaucracies, and generate ideas on how to apply what works in one area to other areas. And the provider should be flexible. Whether the assignment calls for an entirely new strategy, or a simple tweaking of existing plans to get more bang for the buck, it should be able to offer the tactics, the execution and the follow-through that produces results.

10) Are you a boutique or a one-stop-shop?

The marketplace for online marketing solutions is exceedingly fragmented. A typical CMO, or head of interactive marketing, may manage two dozen or more vendors—one for on-site analytics, another for lead generation, ad infinitum. While these relationships can result in a steady stream of dinners and invitations to holiday parties, they can be a bear to manage and coordinate. With so many outside marketing organizations to work with, simply communicating corporate strategy, the values of the products, and the details of new initiatives being rolled out in real time can be nearly impossible.

What’s more, success in today’s marketplace frequently comes about when vendors can become embedded in an organization, when they spend the time and energy to understand a company’s strategy from the inside out. This can only be accomplished if marketers commit to work with a finite number of partners. Given this, it’s more important than ever that marketing services providers function as something more than one-trick ponies.