Apr 282009

Vertical (Dis)Integration

Vertical (Dis)Integration

A couple years ago, Dave Morgan wrote one of the best thought pieces on the future of the newspaper business in his Mediapost column.  Essentially his observation was that newspapers are an outdated vertical integration, and that to survive, smart papers would disaggregate into 5 separate companies and run each one as a separate business, taking on a new life unshackled from the newspaper:  local ad sales (they could own that franchise for the Yelps and Yodles of the world), local content (who better to syndicate local content?), local distribution (no other companies drop something on every doorstep every day), printing (still a business that requires scale), and digital.  It’s just a brilliant idea.

And it’s a shame none of them followed his advice, since they’re all going out of business now.

What occurred to me this week as I’m soaking in the goodness that is my new Amazon Kindle is that while newspapers may need to disaggregate to stay alive, Amazon is slowly amassing a strategy of very clever vertical integration that could well fuel its growth for decades to come.

The Kindle is brilliant vertical integration — it’s the device, the distribution, and the retail model all in one.  And if Amazon is smart, eventually once they have enough market share, they’ll just start doing deals directly with authors and cut out the publishing industry altogether and own the content as well.  They can hit both the long tail (with publishing and distribution costs approaching zero, the risk associated with signing a new untested writer for a revenue share deal are nil) as well as the head (cool place to release your newest book if you’re, say, Steven King).  And at that point, they’ll have a model that should produce an enormous amount of profit for them.

It’s interesting to look at these two situations in parallel — the transition of old media to new media, with one set of losers and a winner, where winning strategies are polar opposites.

Filed under: Business, Email


May 102007

In the Land of Too Many Conferences, This is a Good One

In the Land of Too Many Conferences, This is a Good One

It’s rare that I’m sad to leave a conference — usually I can’t leave fast enough.  But such is my mood today leaving Mediapost’s third Email Insider Summit.

Our industry is way over-conferenced in general.  I’m guessing that our company’s full conference calendar has 40+ events on it over the course of a year.  It’s more than we can afford to exhibit at, participate in, speak at, attend.  We do our best, and what money we spend is much more carefully monitored and measured than it used to be, but usually it’s with that sick feeling in the pit of our collective marketing stomach that we’re throwing money away just because our competitors are there.

But the Email Insider Summit is different.  While there are some aspects of the show that I don’t love — four days is a long time, and three half days of golf and snorkeling is a little too heavy on the boondoggle side for my personal taste — the content and attendees are fantastic.  Mediapost’s formula of comping marketers and charging vendors very high prices to attend ensures an intimate, high level, and vendor-light crowd.  That’s a recipe for success in my book!

The two most interesting nuggets from today:

1. John Stichweh from Coca-Cola’s observation that brand marketing and direct marketing continue to rapidly converge, and that measurement of outcome (e.g., ROI) as opposed to measurement of process (e.g., GRPs or impressions) are gaining steam, never to look back.  I couldn’t agree more.  What can be counted will be counted.  And it can all be counted in the world of advertising, somehow.

2. Lisa Galli from CNET’s discussion of mobile marketing and what they’re doing to take advantage of the channel.  The best example I’ve heard in years of a marketer leveraging a medium is their new SMS Reviews product — just text message CNET1 the words Review xxx (insert name of product here), and you’ll get a text message back with a product review.  Now THAT ought to make shopping for electronics much more interesting.

I’m ready for more conferences like these, and fewer mammoth trade shows.

Mar 282007

Marketing is Like Baskin Robbins

Marketing is Like Baskin Robbins

A couple years ago, I wrote that Marketing is Like French Fries, since you can always take on one more small incremental marketing task, just as you can always eat one more fry, even long after you should have stopped. Today, inspired in part by our ongoing search for a new head of marketing at Return Path and in part by Bill McCloskey’s follow up article about passion in email marketing in Mediapost, I declare that Marketing is also like Baskin Robbins – there are at least 31 flavors of it that you have to get right.

McCloskey writes:

I submit that the über marketer who is expert in all the various forms of interactive marketing is someone who just doesn’t exist, or is very bad at a lot of things. An interactive jack of all trades, master of none, is not the person you want heading up your email marketing efforts. What you want is someone who is corralling those passionate about search, RSS, email, banners, rich media, mobile marketing, WOMM, social networks, viral into a room and figuring out an integrated strategy that makes sense.

Boy, is he right.  But what Bill says is just the front row of ice cream cartons — the interactive flavors. Let’s not forget that running a full marketing department includes also being an expert in print, broadcast, direct mail, analytics, lead gen, sales collateral and presentations, creative design, copywriting, branding, PR, events, and sponsorships.  Wow.  I’m getting an ice cream headache just thinking about it.  No wonder CMOs have the highest turnover rate of any other C-level executive.

I think Bill’s prescription is the right one for larger companies — get yourself a generalist at the helm of marketing who is good at strategy and execution and can corral functional experts to coordinate an overall plan of attack.  It’s a little harder in small companies where the entire marketing department might only be 2-3 people.  Where do you put your focus?  Do you have all generalists?  Or do you place a couple bets on one or two specialties that you think best line up with your business?

I think my main point can be summed up neatly like this:  Running Marketing?  Be careful – it’s a rocky road out there.

Mar 212007

Leaders Discredited from Leading?

Leaders Discredited from Leading?

In Bill McCloskey’s Email Insider column on Mediapost today (hopefully the link will work; sometimes Mediapost isn’t open if you’re not a subscriber), he decries the lack of passion and industry evangelists in the email marketing space and compares it to the search world with at least one example involving Dave Pasternack, co-founder and president of Did-It.  He then goes on to say that there are a few evangelists in the email world, but that two of us — myself and Rich Gingras, CEO of Goodmail, don’t count because we “have a vested interest in being passionate.”

While I appreciate Bill’s main point and appreciate his recognizing that I do evangelize our space and am passionate about it, I have to take issue with his comment on a few points.  I have already privately emailed him about this, and Bill and I have known each other for a long time, so this isn’t meant to be an attack on him at all.

First, the internal inconsistency in his argument is glaring.  By his definition of “vested interest” (company founder/leader), Dave Pasternack has about the same vested interest in what he does as I have in what I do and Rich has in what he does.  So why does the passion count for search and not for email?

Second, I’d argue that we as an industry need more passionate CEOs and founders and executives to step out and be evangelists for our cause.  Just because we started companies or run business units — we’re somehow discredited or unqualified to speak out and lead the charge on something?  I think it’s the exact opposite!  The industry needs more of its leaders to do just that.  And Bill of all people (CEO of Email Data Source) should know that.

But finally, I’d argue that we (meaning we humans) all have a vested interest in what we do, whether it’s Baker or Mullen or McCloskey or Melinda Krueger or Stephanie Miller.  All people who work for a living , at any level (and I am certainly on that list), have a built-in reason to support their field/cause/company — they want and need it to succeed.  But beyond that, high quality people are always emotionally vested in what they do, even if they didn’t start a company or have equity in it.  They throw themselves into their work and treat it like a cause.  Discredit all those who have a vested interest in something as legitimate evangelists — you eliminate most evangelists, at least in the corporate world.

All that said, I agree that more people should be out there sharing their passion for the email space and evangelizing it, and kudos to the Bakers, Mullens, Kruegers, Millers, McCloskeys of the world (and there are more of them than that group) for doing just that every day.

Dec 072005

The Rumors of Email’s Demise Have Been Greatly Exaggerated, Part V

The Rumors of Email’s Demise Have Been Greatly Exaggerated, Part V

Thank goodness I can finally write a positive piece under this headline, and not a rebuttal like I did here, here, here, and here.

It seems like there are signs of an email marketing renaissance left, right, and center these days.  First, the industry has enjoyed significant growth this year.  Every vendor I speak with in the space except for one or two is posting record numbers — whether they sell data, technology, or services.  And lots of vendors have been swallowed up by larger multi-channel CRM or DM companies for nice prices.  Every marketer or publisher I speak with is investing more money into their email programs, and they are seeing stellar returns.  In fact, their most persistent complaint is that they can’t get enough good names on their lists fast enough.

But beyond those signs, the much-maligned email channel has finally garnered some positive press of late.  First, as, Ellen Byron wrote on November 23 in her Wall Street Journal article entitled “Email Ads Grow Up – Department Stores Discover Devoted Fashion Fans Read Messages in Their Inboxes,” consumers are beginning to much more easily separate spam from commercial email they want, one consumer even going so far as to call emails she receives from retailers “like a quick shopping trip…a guilty pleasure.”

Byron also went on to quantify what some mailers are doing to tilt the balance of their marketing spend ever so slightly in the direction of email.  For example, The Gap is diverting over $26mm that they spent last holiday season on TV towards online and magazine.  And analysts point out that no matter how much marketers spend on their email programs, it’s still a small fraction of what it costs to create and insert a big print or broadcast spot.  I couldn’t even find the full article to link to, but it wouldn’t matter, as you have to be a Journal subscriber to read it (annoying).

And today, email industry guru Bill McCloskey wrote an admittedly self/industry-serving piece about how he is seeing the signs of this email renaissance moving into 2006 as well, starting with the fact that trade associations like the ESPC and the DMA are doing more to step up to the plate in terms of defending and promoting the email channel with the press and consumers.  He also cites the fact that consumers are getting more used to spam and mentally separating out good email from bad email as a reason for the comeback.  Bill even goes so far as to say that “email will surpass search in the battle for marketers’ hearts and minds.”  The full article is here, but warning again, you have to be a Mediapost subscriber to read it (free but still annoying).

It’s nice to see the media tide turning here towards a more rational, balanced position on email.  It’s not just about spam and scams — it’s about the power, customization, and intimacy of the channel!

Jun 102005

The (Email) Elephant in the Room

The (Email) Elephant in the Room

Email marketing continues to be under attack by some members of the media who are looking to stir up melodrama and controversy and seem to be uninterested in or unwilling to look at real metrics from real companies who are enjoying unparalleled success with email.

I can’t say this any better than Bill McCloskey from Email Data Source, who writes in MediaPost:

The Elephant in the Room that no one is willing to talk about is that Spam is not the problem. The problem is the OVERREACTION to Spam. This overreaction is not something that is hurting e-mail marketing communications–it is hurting all communications.

Read the full column here.  It’s great.

UPDATE:  Apparently, the column is only available if you register for MediaPost (grrr…).  It’s good enough, and free, but don’t feel compelled.  Two other useful paragraphs to read are below:

And all this hysteria is wiped up without looking at the facts. Because if you look at the facts, you’d see a pattern emerge. For instance, according to the DMA, e-mail has the second-highest ROI of any direct marketing channel, even with reduced deliverability and open rates. The fact is that if you examine the clickstream data from companies such as Hitwise, you will see that the biggest traffic driver time and time again is e-mail. E-mail is not just an important interactive marketing channel, it is the most important marketing channel–but you’d never know it judging by today’s trade shows and industry publications.

In the name of keeping us free of viagra ads in our inbox, we have crippled the most efficient communications system ever developed. We have allowed the free flow of information to be hijacked by fanatics. And because no one speaks for the e-mail industry, this is going on under our noses with no cry of protest.

May 252005

Email Articles This Week

Email Articles This Week

I know, not a real inspired headline.  There are two interesting articles floating around about email marketing this week.  I have a few thoughts on both.

First, David Daniels from Jupiter writes in ClickZ about Assigning a Value to Email Addresses.  David’s numbers show that 71% of marketers don’t put a value on their email addresses.  I think that may be an understatement, but it’s a telling figure nonetheless.  David’s article is right on and gives marketers some good direction on how to think about valuing email addresses.  The one thing he doesn’t address explicitly, though, is how to think about the value of an email address in the context of a multi-channel customer relationship.  Customer Lifetime Value is all good and well, but the more sophisticated marketers take the next step and try to understand by customer (or segment) how valuable email is relative to other channels.

Second, David Baker writes in Mediapost’s Email Insider about Finding New Customers Via Email.  The column is a nice discussion of how important email is to retaining customers.  We at Return Path completely agree.  However, the question Baker posed at the beginning is not well addressed — “Should I use email to find new customers?”

My company works with hundreds of smart marketers every week who say, “Yes!  Because it’s effective, cost efficient and is the only way to combine the relevancy of search with the power of online advertising.”

I applaud Baker’s note of caution to marketers planning to acquire customers via email.  It’s always a good idea to plan the campaign with the same diligence you plan any marketing outreach — making sure the targeting, message, design and offer are all optimized for the prospect interest and the medium.

However, I take great issue with his conclusion that email acquisition marketing “does more harm than good.”  Our clients disprove this claim every day.  Email prospecting done well includes a synergy of organic, viral and paid techniques.  Consumers and business professionals still want to receive relevant and informative offers via email.  More than 50,000 of them sign up every DAY for email offers from Return Path alone.

Poeple who have failed list rental tests (and there are lots of them) need to ask some hard questions of their campaign strategy, their creative, their list rental partner, and their agency.  Did you try to send the same message and design to a list of prospects as you do to your house file?  No wonder no one got the message, they don’t even know you.  Was your list double opt-in?   Did you segment the list by interest category or demographics?  Perhaps your message was mis-targeted.  Did your landing page make it easy to take advantage of the offer?  Did you test on a small portion of the list before blasting the entire file?  Did you optimize your subject line to ensure higher open rates?  Did you try to do too much?  The golden rule of email list rental is “one email, one message.”

The success of many marketers using list rental today can not be ignored.  Done well, email acquisition is extremely powerful.  And, the addition of new lead generation, co-registration and offer aggregation opportunities create even more custom and targeted opportunities to connect with prospects.

It’s too easy to dismiss something that didn’t work two years ago by blaming the medium.  Instead, recognize that old experience for what it was.  A well-intentioned effort to test out a new medium, that didn’t work because many tried to apply practices from other media to it.  Times have changed, and email acquisition has proven its value.

Stick with Daniels’ article, figure out how valuable an email address can be for you, then go out and collect as many of them as you can from customers and prospects who will be all-too-willing to give them to you in exchange for content, offers, and other points of value.