The End of Site Registrations?

Years ago, I sat through a presentation from a web development firm in which they laid out their approach to web content and design. This was in the mid-90s - you know, the wild old days. One of the element they talked about was "infobarter." "In exchange for useful information, site visitors will tell you about themselves!" the web firm's salesperson gushed.

Maybe then but not anymore. Web publishers - mainly the web site of newspapers, but lots of others too - have been steadily increasing the registration hurdles that visitors must jump to see content. Visitors, not surprisingly are finding ways around the whole process.

That's the topic of this E-Commerce News article. While they talk specifically about password sharing, there's also the more mundane approach of just lying on the registration page.

There's a lesson here. Site visitors will find a way to get information that works for them, not for you. There is always some way around whatever processes you set up to collect information. The E-Commerce News article refers to new technology that will deduce who visitors are and what their preferences are without requiring them to enter information; that's likely to provide far more accurate information than the current "nag the consumer" approach.

Followup...

Check out this article from Hespos.com about the ways that marketers tacitly allow spyware (or "malware") to proliferate.

Don't Be Evil

Remember when Google told the world that one of their company mottos was, "Don't be evil?" Reading about the latest spyware/adware developments, I have been thinking that it's a credo that marketers would do well to take to heart.

The FTC has filed a suit against Sanford Wallace, a guy who's made a career out of enabling intrusive marketing that consumers hate. He was a king of spam; now he's a king of spyware and adware. In defending what he does (which wreaks havoc on PC users), he says, "we believe what we're doing is legal."

"Legal" is not a standard for best marketing practices. As a marketer your job is build the long-term market for your service or product (or that of your client), not to get away with everything you can without being sued or sent to jail.

It's reminscent of the rise and fall of pop-ups. The first pop-up ad appears, and of course they outperformed banner ads because they were new and different. Soon your desktop became a jungle of pop-ups as everyone used them. They became annoying; they stopped working well; and before long, pop up blocking software appeared.

Too many marketers reacted to this the wrong way. Consumers blocking your pop up ads? Well, the answer was to find a way to defeat that software!

The sheer stupidity of this approach, which views your potential customer as an enemy to defeated, is staggering. And of course, it wasn't viable either; today pop up blocking is a feature of most browsers.

One of the interesting aspects of discussions of spyware and adware is the distinction between the two. Some marketers express concern than legal efforts to battle spyware will interfere with legitimate marketing technology. This isn't unreasonable, but sometimes I wonder if too many marketers have lost sight of what they are supposed to be doing.

There's a lot of confusion among consumers about what all of this technology does. At the benign end of the spectrum, we have cookies that let us distinguish one site visitor from another. And by knowing what a given visitor has been doing, we can serve up relevant ads to them. While this is troubling to some consumers, it's largely accepted - as long as the information about web browsing is not merged with real-world identifying information. In other words, it's okay if I visit a site and see ads for cars because I've also been looking at car buyer information sites. Or ads for businesses in Houston because I've been looking at the Houston Chronicle web site.

But it's something else altogether when I am seeing ads because that are being served to me because of purchases I made with my credit card, or because of what's on my credit report, or because I'm in a database of homeowners.

The parameters for this sort of tracking have been in play for some time. What's new is intrusive software that actually affects the functioning of your computer. A combination of the inherent flaws of the Windows OS (which allow things to be done to PCs that should never happen without an administrator logging in and authorizing changes) and evil genius marketers eager to exploit those flaws has led to a situation where criminally unscupulous people can hijack a PC for there own ends. I was reminded of this just this week when I heard from my retired parents, who discovered that a bit of spyware had gotten onto their PC and started dialing the UK through a small long distance carrier to the tune of $10 per minute.

That obviously is a scam. But what about a bit of marketing code that changes your home page? What about web sites you can't escape from without shutting down your PC?

To drop down another level, what about what happened the last (last as in both most recent, and the last time I will ever do this) installed AOL's free chat client on a Windows PC? I discovered that my home page had been changed and my desktop and start menu were littered with icons for AOL software and free trials of their online service. If I have to use a Windows machine now, I use a third-party client such as Trillian, because I don't appreciate AOL meddling with the settings of my computer.

There's a very simple criterion for marketers. Anything that changes the functioning or settings of the user's computer is a bad idea, and should be avoided. Whether it's setting a new home page or just adding icons without asking first, it's a bad idea. The consumer is not some passive target for your messages and your meddling. The consumer is an individual that uses their PC according to their own needs and desires, and if you meddle with that, you are risking alienating that consumer.

There are offline analogues to this, of course. When TiVo first appeared, television advertised worried that people wouldn't watch commercials. They were right to worry, but their reaction - "we have to find a way to make them watch commercials" - was completely wrong. The message there was that consumers don't like commercials, and that they needed to find another way to reach them. (In truth, consumers like creative, interesting commercials, but there's not way to tell whether you're going to see one of those or another mattress salesman yelling at you, so most consumers will just hit the fast forward button on the TiVo or DVR and skip the whole experience. Another tragedy of the commons, where the worst ads kill the audience for the interesting ones.)

So my message to fellow marketers is this: Don't be evil. Don't mess with the consumer's PC. Don't try to force them to do anything they don't want to. There's an army of software developers ready to offer them free or cheap technology to avoid you. Work within the limitations your customer sets, and your customers will reward you.

When I heard marketers complaining that regulation of truly evil spyware will affect them, I am unmoved. If you are relying on these kinds of technology to do your job, you're effectively trying to hold a gun to the consumer's head and make them watch your ads. Yes, it can work, but not for long. As with so many other situations in life, once you find yourself in court, it doesn't matter if you're right - you've already lost.

Does that make your job harder? You bet it does. That's why you get paid the big bucks. Start thinking about how to reach people in ways that they will accept - or better yet, welcome. Because forcing people to see your advertising when they don't want to is ultimately a losing game.

Moving Targets

The language of marketing is filled with some unfortunate metaphors. We've all talked about out targets - you know, that audience that we're trying to reach. When we hit our target we antipate them to respond in certain ways. There are whole disciplines of marketing that are concerned with getting those targets to react to our marketing in predictable ways (that result in revenue).

It's easy to forget that those targets are people just like us. This week I had one of those helpful reminders of what it is like to be on the other end of marketing - to be the target.

A few months ago my mobile phone started buzzing at me. I had a new text message. I have several friends with whom I exchange regularly text messages. We have conversations that are a bit like IM, but spread over hours and days. I looked at the message.

This message was not from a friend; it was from AT&T Wireless, my mobile carrier, and it was informing me of some contest I could participate in that involved a pop group of interest to no one over the age of 30. At the end of the message were instructions on how to opt-out of text messaging marketing.

I went to the URL specified in the message and followed the instructions to opt out. End of story, right? Wrong. A few weeks later I got another message, this time about an extra-fee service I could use. Once again, I opted out.

A few weeks later, guess what? Yet another advertising message from AT&T Wireless.

These things are annoying to begin with. For a marketer, they are doubly annoying; not only are you getting pestered by spam text messages on your mobile phone, but you are being reminded that some marketer out there is doing something really wrong, and making it harder for the rest of us. This time, I called the AT&T Wireless customer service line and asked for help.

After about half an hour on the phone, a representative assured me that the problem was solved, and I would not be getting more of the text message spam.

This week, it happened again; I received a message telling me about a service to help identify song titles using my mobile phone (at a dollar a pop).

What's happening here? Someone in the marketing group at AT&T Wireless decided that the text messaging capabilities of their customers' mobile phones were an ideal ad delivery channel. This was their first error. It's not surprising to find this kind of thinking from a telecommunications company; this is an industry whose reputation for treating customers poorly is legendary (and well deserved). No one at AT&T Wireless seems to have stopped and thought, "Would I want my mobile phone interrupting me with advertising messages?" It's even more irritating than garden variety telemarketing, because with mobile phones, you're likely to get the message while driving, or while you're in a meeting (this was the case with one of the offending messages in my case), or at some other inconvenient time.

So AT&T Wireless went ahead. Someone apparently realized that if you're going to start a campaign to massively annoy your customers, you need to give them some way to get out of it, so they added opt-out instructions to the messages and set up a web page for opting out.

Unfortunately, that web page doesn't seem to connect to any system for then actually opting out of the messages. I visited the "customer support forum" on the AT&T Wireless web site, where customers can post messages to discussion boards about questions or problems. Sure enough, I'm not the only one who can't opt out and make the spam stop; this is not some isolated problem, but just dumb marketing combined with a broken system on the part of AT&T Wireless.

There is, though, one way to opt out of the messages, and that's to opt out of AT&T Wireless services altogether. I've talked to friends who use other mobile carriers and none of them are having this problem.

Now, I have been a happy AT&T Wireless customer. I like my phone. I am very happy with the coverage and reliability of their network. I am happy with my bill; the rates are not the cheapest out there, but they are quite reasonable. I spend nearly $100 a month with AT&T Wireless. Now, in a misguided attempt to get a few more dollars out of me, their marketers have succeeded in convincing me to switch carriers and lose my business altogether.

This is bad business in a market like wireless services, where penetration is high and carriers are fighting over pieces of a fairly mature market.

What marketers have to remember is that the "target" is actually a group of people. When you send marketing messages to that target, you're not feeding information into a black box and seeing what comes out the other end. You are making a permanent and possibly damaging impression on that target, and if you are not careful, that target will respond in unexpected and perhaps damaging ways. Such as deciding not to do business with you anymore.

When you're marketing to your own customers, you need to be even more careful.

Next time you are trying to predict how the target market will react to your program, stop and do a reality check. If you are using some new medium that may be seen as invasive or annoying, be very careful, and do a small text. Think about whether you'd want to be part of that particular target.

Or just ask. For example, AT&T Wireless could have offered me unlimited outgoing text messages (which costs them almost nothing) in exchange for opting in to receiving advertising messages at a reasonable frequency. I pay for my text messages, and probably would have said yes to that. (I don't pay much, but it's something; and when I received those ad messages, I would have thought, "Well, this is what I have to get to send all those free messages.")

Unfortunately, the marketers at AT&T Wireless didn't about people receiving advertising text messages; instead they thought about target markets and incremental revenue and treated their customers like passive recipients of advertising, rather than people with whom they had a business relationship.

I'm not sure what the text messages cost them to send, but in the case of this customer, the net revenue is negative $1200 per year. Anyone feel like calculating the ROI on that program?

The Long Tail

The current issue of Wired has an article on the economics of online retail, and in particular the cost structures that come with "infinite" warehouse and shelf space.

Wait, this is a marketing blog, right? Well, this has big implications for marketing.

The thesis of the Wired article is this: physical retailers have always had to make choices about what products to carry based on those products' popularity, because of the relatively steep cost of putting a product in a store. To use their example: if you are Walmart, you are going to carry only the CDs that are going to cell a certain number of thousands of copies, because your space is a limited resource. So you will have the latest from Brittany Spears, but you will not have a disk of John Zorn interpreting the work of film compose Ennio Morricone.

If you are Amazon.com, you do not have the same limitations. Yes, you need to keep the disks in a warehouse somewhere, but your retail shelf space is infinite; you can stock all kinds of things that few people want. And because the geographic market of your store is the world, it doesn't matter if the buyers for those little-known CDs (or books or DVDs) are scattered about - whereas the person deciding what to stock at Tower Records needs to choose things that enough people within a few miles of the store will purchase.

If you are the iTunes Music Store, and your product is information downloaded across the net, it's even better. Your costs are mostly sunk costs for your site. Variable costs like transaction processing and bandwidth can be easily covered by purchases. So you might as well offer music that only a dozen people are going to buy. You'll make money on it.

So far, simple enough, and those of us who shop online retailers are accustomed to finding things that are hard to find in local stores, even in large cities, online. But the interesting finding that the article discusses is this: the assumption has always been that the blockbusters will still be where the money is. They are blockbusters for a reason: marketing support, word of mouth, and yes quality as well (even if only production quality rather than artistic quality).

That turns out to be wrong, and when you start aggregating all of those little purchases farther down in popularity (the "long tail" on a distribution of titles and sales), it turns out that sales are much stronger than anyone expected. In fact, sales of lesser-known entertainment products may actually account for more revenue than the blockbusters.

What does this mean for marketers?

• First, you need to understand both the traditional cost structures in your industry, and how they are changing (whether because of online sales, or any other factor). Changing cost structures may make niche markets where you've seen strong demand but couldn't profitably sell much more appealing.


• Second, expect more competition there. A few years ago, if you decided to rent documentary films by mail, you would not have a lot of competition. In the universe of DVD rentals, that is a relatively small niche. Today it's one that Netflix is profitably exploiting, as the Wired article notes. Expect the big guys to start moving down that long tail into specialty niches.


• Third, your online presence matters. This isn't discussed in great detail in the Wired article, but the technology that drives online purchasing makes the profits in the long tail possible. Customers have to find those products. Online merchants that not only help them find what they want, but guide them to other products in the long tail will be the winners. Amazon is a great example of this - the Wired article gives an example of a book that went from near extinction (it was about to go out of print) to solid sales because of Amazon's sophisticated recommendation system.

One of the keys to marketing success is understanding your overall market and the segments where you can be a strong player. As Wired points out this month, costs are a key part of that, and new ways of marketing and selling change the segmentation equation.