Friday, May 18, 2007

The world today: Technology and Marketing-2

I would stare at her for hours and hours together. Sometimes sneakily and sometimes brazenly, with hope and yet with bittersweet, breathless despair I would study everything about her. Every little detail fascinated me, from the way she would flick her curls behind her ears from time to time, the look of intense concentration that came over her face when she was working to the slight puffiness under her eyes. Every feature was studied intently, all strengths and weaknesses tallied. Every reaction was thought about and analyzed. That’s what attraction is. To an extent, that also describes the field of Marketing.

Hope, longing and despair: that familiar sinking feeling

To sell something to someone, you’d better know them inside out. Yet till now, existing methods of information collection have often yielded results that are limited in scope, offering stilted or one-dimensional views of consumers. Marketers everywhere have had wet dreams about obtaining ‘that perfect piece of information’ leading to the blindingly obvious insight that would help improve marketing efforts. No wonder then, that information is gold for most companies, helping to drive advertising campaigns, targeting efforts, consumer promotions, pricing and product development efforts.

In this search for information, the internet has emerged as a major tool in the hands of Marketers. And I am not talking about online advertising. I am talking of the usage of the internet to track and collect consumer’s information. This is a still emerging world that is murky and ill-regulated, rife with controversies related to privacy issues and the rights of individuals vs. those of governments and companies. However, those controversies aside, I believe this is a HUGE, HUGE, HUGE tool and an absolute boon for marketers. In my opinion, every company better have a strategy to take advantage of what the internet enables us to do.

The Internet: Better than Mr. Holmes

Consider the advantages of the Internet.

Firstly, it is almost universal and access to the internet is growing. Sooner or later, almost everyone (except of course for the few inevitable religious nuts) will have access to the internet.

Secondly, once all the infrastructure has been put in place, sending messages or undertaking transactions is very cheap at the margin.

Finally, and to my mind most importantly the quality of information that can be collected through the internet is more comprehensive, finer grained and qualitatively much better or truer than anything available till now. This is due to a number of different factors. Firstly, there are many motivations, opinions or suppressed desires that we may not express in public or even be aware of which will be accurately reflected by our surfing behavior. (You know what I mean when I say suppressed desires, my friend Loknath Rao is a prime example of this.) Secondly, websites can be made to be interactive, thus enabling two-way communication between the marketer and the consumer. Thirdly, the internet can be customized thus matching a particular ad or a particular web page layout to a particular consumer’s previous online behavior. In fact, there are already some indications that Google is matching search results to the previous search patterns emanating from a particular IP address. And finally, I really do believe that the quality or the integrity of the information that companies can collect through monitoring online behavior is much better than that available from other sources. (I used to work part-time as a field researcher with the Indian Market Research Bureau through college and that experience left me quite pessimistic about the quality of consumer insight that companies can get through the standard question-and-answer survey method. I have no doubt that the internet is far truer than some of these methods.)

Already things are happening. Consider Google. Every time you search something on Google, one of their servers will be recording your cookie ID (the Google cookie that was downloaded to your computer), your IP address, the time and date of your search and your search terms. Not just that, it is alleged that Google's free toolbar for Explorer phones home with every page you surf, and yes, it reads your cookie too. And it is not just Google. Companies like DoubleClick are known to be downloading cookies to your computer and monitoring your online behavior. Even programs like Real Audio, Comet Cursor, and Netscape Smart Download have been detected communicating in the background of users' computers with servers on the Net.

They are watching you

Thus today, not just a person’s online behavior but the contents of their hard drives etc. can be accessed by private corporations. When such information is matched to a person’s offline identity, it offers a much more comprehensive, 360 degree view of consumers. In fact, companies like Axion are already specializing in offering consulting services to Marketers based on their tracking of consumer’s online habits. To some this is a scary thought, but for the moment, I would like you to look at this from the point of view of the Marketer or a company.

The 360 Degree view- Much, much better now

Would a Marketer not like to know what sort of music you like or what your hobbies are? Of course they would, and not just that they would also kill to know if your favorite colour is Blue or Red, or whether you are Republican or a Democrat. Marketers would kill for this sort of information, as it can drive Product Development, Marketing, Pricing and Distribution decisions. Through your IP-address, marketers could also know your physical location and if a significant segment of people in your area are like you, then you might see stores in your area being stocked with the kind of styles, designs or price ranges that you are partial to. Marketers can also map out social networks and be better able to understand different niches or segments whose consumption behavior is similar.

Consider local advertising, something that was uniquely identified with Newspaper advertising earlier. Today, the internet can help local businesses reach out to consumers in its vicinity in a much more targeted manner than newspapers ever could. In fact, by making these ads interactive, these ads can also do a much better job at ensuring that consumers are in fact, actually reading the ad. There are many other ways in which Marketers can gain through using the internet and each would require almost a whole posting by itself. I will not try and enumerate everything, but I’ll leave you now with just one anecdote that illustrates just how the Internet can be a marketer’s wet dream.

It so happened that one day, one of my professors realized that he wanted a new mobile phone and service provider. So like all self-respecting geeks, he immediately went to the site to check up on technical specifications and read reviews put up by other geeks. After doing his due diligence, he finally decided upon a particular model and decided to order his phone. Through the cnet site, he was taken to the Sprint website where he was given a great deal on the phone and a calling plan at a discounted price. He ordered it immediately, and couldn’t have been less satisfied with the deal he got.

A Great Deal

That should have been the end of the story except that a couple of days later he ran into one of his own students who had the same phone and the same plan and had got it from Sprint around the same period for 20-30$ cheaper. When the student insisted that he had got the offer from Sprint, the Prof. decided to investigate. So this time, he logged on from an office computer and deleted all cookies. Then he went into and created another profile and started looking for a mobile phone, but this time he searched by price. He also made sure to spend more minutes looking at the cheaper phones and discounted offerings than the more expensive ones. After following this pattern, he finally settled on the same mobile phone and was again taken to a Sprint page but only this time the same number of minutes and the same phone was being offered for cheaper.

He went back to his laptop and repeated the experiment, this time searching by specifications and not bothering about price. Lo and Behold, he was offered the higher price once again.

Question: A lot of people were very angry when they realized that individuals who had their phone number could just go onto google and get a map of where they lived. (Reverse directory lookup- Does it bother you that anyone can get to know where you live if they have your number? But why should it, unless you have a unlisted number such information is already available to a determined stalker through telephone directories. Much of what the internet enables is also like that, just an online application of practices already taking place off-line- only a LOT better


Kapil Gupta said...
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Kapil Gupta said...

Good stuff...a lot of what you have observed seems to have been around for sometime. Traditional techniques like Surveys and Focus Groups are definitely not that reputed these days but they have been replaced by things like Ethnography.
Also, I think the challenge for those using internet is how best to use the data captured. I am not sure a lot of companies do a good job at that. That is the reason Amazon rocks and Barnes and Noble sucks.