Shop.org Blog

Check out the post on Avinash Kaushik’s Occam’s Razor blog about measuring the offline impact of online marketing.  Avinash is a past (and hopefully future) speaker at Shop.org and highly regarded as one of the world’s foremost experts on Web analytics.  He offers some great tips on this post.  If I can use Avinash’s language, the post is “awesomely cool” and very relevant to multichannel retailers.  Enjoy!

I spotted an interesting story (subscription required) in today’s Shop.org SmartBrief (free subscription!) from the Wall Street Journal.  According to the story, Moody’s Investors Service has started including online sales of major retailers as an important factor in its credit ratings.

Moody’s cites the high volume of online retail sales as a primary reason for this decision.  With online retail expected to generate more than $200 billion in sales in 2008, this move makes complete sense and is another sign of our industry maturing.

The article references two publicly-held retailers whose outlooks were adjusted due to their online sales.  One retailer was adjusted negatively because of order fulfillment problems.  The other was positively affected due to strong online sales.

Each day there is more evidence that shoppers are turning to the Internet as part of their shopping.  When they do, what they see online is more likely to influence their off-line purchases than result in an online sale.  Hopefully, what Moody’s has started will lead to Wall Street looking more closely at the overall online presence of retailers – not just online sales.

Fundamental elements of the customer-marketer relationship are changing faster than retailers can adapt. In fact, they’ve already changed! While it seems obvious most of us are only beginning to appreciate something important: How customers interact via the Web with a brand is an experience.

Ok… seems obvious but let’s frame it in a new light that may strike you as a little odd:

At a very high (basic?) level Web retail is not about clicks, conversions, optimization… it’s not about the numbers or the metrics. It’s about your ability to create hunger, desire or capitalize on a human being’s latent intent. It’s about stimulating, comforting, rescuing and helping (etc.).

The Web is inherently interactive and increasingly social. This sounds trite and simple but it cannot be under-stated.

Recently, I suggested that authentic digital experiences must be the future of online customer acquisition and challenged the affiliate and search marketing industries to step up to the plate. This week I’m qualifying the opportunity a bit more since some are a bit skeptical. I’m also explaining why it’s urgent to start making change.

Retailers are continually hearing the mantra: “Participate and have a conversation with customers.” Why? It’s because of this newly realized element of interactivity among Web users. The power of this element is breathtaking when one considers its raw EXPERIENTIAL power… the Web’s ability to make humans feel a certain way.

According to Keller Fay Group (2008), Americans have 3.5 billion brand-related conversations per day. With a population of 300 million, that means the average American engages in over 10 such conversations per day.

We know that 8 out of these 10 is likely more influential than any advertisement or paid sponsorship. Why? Because nearly 80% of consumers trust recommendations from friends, family, and trusted sources over any form of advertising.

What are you doing to foster such conversations under your umbrella?

Perhaps you don’t see the opportunity clear enough. You may ask, “why should I bother to foster conversations?”

Here’s why: By providing customers and/or prospects with access to trusted recommendations (and other forms of authentic, relevant, engaging content) marketers stand a better chance of winning their business.

Customers are finding new ways to participate in various online activities. Sure they still love search, but they’re rapidly finding more social and participatory elements such as product reviews, product design suggestions and a new thing called “crowdsourcing” (more on that in weeks ahead) to be helpful and even fun. Remember fun? It’s powerful stuff!

The world belongs to companies that can…

1. Identify the right micro-verticals where consumers engage deeply
2. Activate new or existing consumer communities that welcome their participation
3. Make the ‘network effect’ work for them through syndication & aggregation
4. Think the way industrial designers think about ergonomics – in our case it’s form factors of media consumption

So says Jeffrey Rayport, founder of Marketspace LLC.

So how can one become one of these companies?

As new customer behavior patterns emerge new marketing practices are needed to capitalize on them. We need to create them. Customer acquisition and retention cannot survive on traditional strategies like affiliate and search marketing alone. Intercepting customers during buying processes is no longer enough.

What are these new strategies? Some call it “conversational” marketing. Whatever name you give it, this emerging practice area is all about joining in with customers – listening to them and interacting on a more intimate level.

Quite literally this translates into socializing with customers and prospects – a skill set that is a bit foreign to most marketing departments (beyond traditional market research). After all, we’re not formally trained in good listening skills or prone to making altruistic gestures. Rather, marketers expect measurable return on investment (ROI).

Some retailers will be satisfied with following the crowd, others blaze trails. This begs the question: Can you afford to wait to implement pioneering and innovative digital marketing strategies, or will you help lead the charge?

The best way to answer this question is to make sense of and prioritize these emerging, digital acquisition and retention strategies. Your decision should ultimately be based on your market’s active use of digital technologies. If a social, experiential marketing approach is right for you, begin testing now. Eventually you can vet strategies to decide which are worth continued investment.

Before all else, the key to success in today’s digital, multi-channel shopping world is a bold, new mindset. This way of thinking is what feeds new decision-making and creative strategy development processes. I admit… I’m making it sound pretty easy so we’ll get into the details on HOW to do actually dip toes in the water (safely) and experiment with social marketing in weeks ahead.

Successful, Daring Marketers are Focusing on Authentic Forms of Persuasion to Win & Keep Customers.

Customers today have access to so much content — and have so many ways to gather news and information — that the likelihood of your corporate message penetrating the clutter is virtually nil. Instead, if you engage the audience in a conversation and learn what the social community is looking for and concerned about, you might be able to persuade them to hear your message.
In other words…

“There is no market for your message.”

David Weinberger at the 2007 New Communications Forum

Let’s take a big step back for a moment and realize how selling on the Web is quickly becoming less about marketers’ supply meeting up with customers’ demand, and more about customers themselves actively bringing their demand toward supply. In fact, they’re CREATING supply in many cases… and taking action to monetize that supply in a niche community setting.

Given the Web’s increasingly social nature, today’s customers are bypassing “interceptive” strategies like search and, yes, affiliate marketing. No, affiliate marketing isn’t dying or threatened but it IS challenged to change. How? Affiliates are challenged to do more than just shuttle traffic and get ‘in between’ demand and supply. Affiliate networks are challenged to house more than just ‘helpful interceptors.’ Marketers expect networks to provide value-added resellers. Or as blogger, David Lewis refers to them, “value added pre-sellers.”

Getting back to the consumers… they’re increasingly choosing a variety of non-traditional paths to discover products and services – faster and easier than ever before. Says Jupiter Research:

Social and community sites affected the purchase decisions of 51% of online shoppers aged 18-24. This is far beyond any other age group, which averaged less than 26%. A total of 36% of online shoppers influenced by social/community sites said they buy offline even though they use online social/community sites to make their decisions.

So what’s a savvy marketer to do? The answer may seem radical. Today’s marketers must help customers find, consider and purchase products and services by creating authentic digital experiences. That’s the new twist – and it’s not just a load of hyped-up social media spin.

This new paradigm will be fueled by the recently announced Data Portability Working Group. This consortium of unlikely partners (including Plaxo, LinkedIn, Google, Sixapart, Facebook and Yahoo’s Flickr) are banding together to ensure users of the “social Web” can have power over the data they’re putting out there. By making sure social media sites and services are interoperable the user experience becomes simple, the social information portable and shared. It’s the first step toward providing marketers with a serious “social marketing platform.”

How exciting is that?!

Should your company be involved with multiple affiliate networks? Why or why not?

If so, how does it work technically — from a tracking, reporting and optimization perspective?

I recently asked these questions to a group of veteran online affiliate marketing experts and got some surprising answers. Some were strongly ‘pro’ and others were firmly ‘con.’

One participant ended up confessing, “I wouldn’t advise it… in my personal experience and from what I’ve seen with merchants that I have worked with… it’s not worth the extra effort. It’s not worth the dilution of your reports.”

In on the discussion were:

Donald Schamber, Online Marketing Manager, Vistaprint.com
Carolyn Tang, Client Services Dir, Shareasale
Jonathan Miller, Founder, Forge Corporation
Jamie Birch, Dir, Affiliate Marketing, Converseon (formerly of Coldwater Creek)
Chris Sanderson, Managing Partner of AMWSO

I’m pleased that some of the most experienced affiliate-focused retailers and industry veterans around participated. Some described their successes while others their failures. The conversation was part of a live Webinar this month and had some valuable take-aways.

Notably, the group did not include the affiliate/publisher-side perspective which is an important one and leaves room for discussion. That stated, we did briefly discuss the recent entrance of AffSpy.com — a tool-set aimed squarely at affiliates but one that sheds serious light on the wasteful spending of some advertisers leveraging multiple networks.

The Issues
Simply stated, there are two primary concerns for retailers when swimming in multiple affiliate network ponds. These are:

1. Proper attribution of the sale:
   Avoiding duplication of ‘counts’ or ’scores’ among Web marketing channels (affiliate, search, email, etc.)
2. Proper payment:
   Avoiding duplicate payments to affiliate networks (in scenarios where customers ‘touch’ multiple affiliate sites or cookies)

ShareaSale’s Carolyn Tang, who ran the Orbitz.com affiliate program for a few years, suggests that Web marketers are maturing as they adopt Web analytics packages.

“In the past the emphasis has definitely been on duplicate reporting… on (avoiding) having to pay multiple times on a single transaction. Obviously, this is not very cost-effective,” says Ms. Tang.

Yet as retailers put more analytics and reporting tools in place, she says they’re focusing more-and-more on correct attribution of the sale. In their quest to understand (tactically) which marketing strategies are working better than others it’s becoming very important to ’score’ each performance-based marketing channel (indeed, campaign) properly.

Proper Channel Attribution
Ms. Tang warns that retailers could be attributing the transaction to a completely different channel. As an example, although a sale or lead came in from an affiliate the Web analytics package may attribute it to a search campaign.

“Many times those tools don’t necessarily track correctly,” Ms. Tang says.

“They will attribute a transaction to a single marketing channel but because of the way the technology is set up it may or may not attribute it to the correct channel. So I think whereas before the concern was overpaying on a single transaction, now it is on actually attributing the transaction to the proper channel.”

Indeed, this squares with my recent discussion with Alan Rimm-Kaufman regarding how retailers should be tweaking affiliate marketing programs to zero-in on incremental sales.

On the positive side, Ms. Tang says, “There are definitely fixes for it. Many of our merchants are using Omniture and we’re able to work with tools like that… but what’s happening is that a lot of merchants don’t realize that when they do put these tools in place they do need to make tweaks to those tools. You can’t just use it ‘out-of-the-box’ to automatically (correctly) detect everything.”

C’mon In… The Water is Fine!
Those suggesting that marketers SHOULD jump in multiple ponds are heavily invested in the strategy. Vistaprint’s Don Schamber suggested that he could hardly keep track on the number of cost-per-action (CPA) affiliate networks he participates in. That stated, his approach is a sophisticated one taking into account typical challenges including proper channel/strategy attribution (and potential double-payment) in scenarios when one customer “touches” multiple affiliate sites when making a single transaction.

Vistaprint uses a proprietary, home-built technology solution to keep tabs on everything. Of course, that’s a rather luxurious position but one that’s worth considering.

What You Need
Forge’s Jonathan Miller is gung-ho about swimming in multiple CPA network ponds and has built a niche business around serving the needs of retailers looking for a similar technical solution (to the attribution and payment issues).

Mr. Miller suggests that before launching a multi-network affiliate program, retailers must be sure that:

1. Their shopping cart can handle multi-network referral sources without duplicating affiliate pixels / tracking
2. The networks’ tech platform (tracking and reporting technology) meets your business requirements
3. The platform allows you to download reporting for use in your own business intelligence (i.e. analytics) system
4. You have access to advanced business intelligence tools to collate and analyze data

As well, Mr. Miller suggests that retailers must have a focus on synchronizing internal and external reporting engines. Not a trivial task, indeed, but mandatory for success and critical on measuring the ROI of affiliate networks themselves on a network-by-network basis.

AMWSO’s Chris Sanderson shared remarkable insights. He believes “in-house” (proprietary tech platforms) can be attractive to affiliates once you’ve built a track record on a network yet, “The ’see if it succeeds and move’ concept is flawed,” says Sanderson.

“If you succeed you don’t move. You expand.”

“Affiliates do have network preferences and networks they refuse to work with,” says Sanderson. “Variety can help.”

He also believes that participating only on smaller networks can mean missing the bigger affiliates. Sanderson also recommends auditing of sales for proper attribution and payment duplication is a must.

“Split commission rather than ’selective’ cancellation (of commission) is a good option.”

Yet Ms. Tang seems to disagree on what drives the affiliate loyalty-to-networks issue suggesting, “… the larger affiliates, that are not adware-oriented, don’t care which network a merchant is on. They want to work with a merchant. The technology, the tracking, doesn’t really matter to them.”

In fact, this has been my experience as well but I sense that it’s a very retail-focused (multi-product selling, brand-centric) perspective that doesn’t apply widely across other kinds of marketers.

Proper Affiliate Payment
Yet the ‘proper’ or ‘best’ affiliate payment scheme is a contentious and confusing issue — the proper payment model in such a scenario. What’s best for whom, when and how? My posing the question resulted in more questions than answers.

“Is it right to say that the coupon-code affiliate should get the commission even though the content affiliate did the selling?” asks Ms. Tang.

“But then again, the coupon affiliate is the one who actually may have been that last little push to get the consumer over the final hurdle. You can’t really know what the consumer is thinking when they made that purchase. So is it right for the merchant to assume which affiliate to give credit for?”

What do you think? What’s the best affiliate payment model in a multiple-network scenario? For that matter, what’s the best affiliate payment model when considering the ‘incremental sales and affiliates’ issue?