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Isn’t Customer Loyalty a "memory trace"?

In an Internet shopping world, what is the meaning of customer loyalty? Type “loyalty” at Thesaurus.com and you will see definitions like Affection, Faithfulness and Constancy, and synonyms such as Adherence, Affinity and Allegiance. When you strip down the concept of Loyalty in the human mind, you will find that Loyalty is simply an accumulation of memory traces – a memory trace being a “summary or tag” of a memory of an experience. In other words, the memory trace, when followed, will actually lead you to the memory of the actual experience. Simple enough, right? Now, in the physical retail world, a memory trace can be a conversation with a sales person, or the smell of the store (Aveda? Anyone?)-Or the physical appearance of the store or the sales person or both or a scent that reminded you of an ex boyfriend (or girlfriend). But what happens in the Internet Retail or Non Physical or Virtual world? I’ll get to it in a second. Now, keep in mind, that in the physical world, you (as the retailer) have little control over where a customer walks, what she picks up, what she looks at, and so on, despite skilled sales people and deliberate store layout and product arrangement. In the Internet world, however, it seems like you have a greater ability to manipulate a customers’ interaction often and at little cost – and therefore a greater ability to control the memory that leads to loyalty. For example, you control the visual aspects of the site (gradients, resolution, colors, ‘depth’, product arrangement, fonts, numbers (price!), words, descriptions, ideas; you control the aural aspect (not of the aura but of the ear) as in music and voices among others and you also control the “path” on which the customer is led- creating a sum total of “experience” on your site and an opportunity to create loyalty at every step. Add to this the unique ability the Internet offers, to personalize every interaction the customer has with your site and you have a situation where you CAN actually manipulate (I mean that in a good way) that memory which leads to “loyalty”. This could be one way of explaining the concept of “branding every customer impression”- make sense? So in effect, loyalty is not an emotional connection at its very root. It is a memory of an experience (which could be emotional) a customer has stored in her mind. What it really is; is a “memory bank” of interactions with a particular entity (in this case your website). Think about it…

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Changes...Plasma TV’s, Car’s and Generation- Y

Used to be that when you wanted to buy a TV, you went down to your Sears or Wal-Mart or Tweeter and looked a few TV’s, asked a few questions of the salesperson, did a little comparison shopping (and if you were really into doing research, you’d look up the latest Consumer Reports) and spent $400-$500 on the TV. You could have it delivered and set up but most of the times, you’d just put it in the back seat and took it home yourself. Done! 

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Yo! You wanna play? Gaming Media Business Models: Has the time come?

When I wrote a thesis on Internet Market development (in 1995) there was clear evidence that technologies take decades (and most almost exactly 30 years) to go from the ‘ lab’ to consumer acceptance. Having done a lot of research in the ‘Online Gaming Based marketing’ world, it definitely seems to me that the time for Retailers and Consumer Product Marketers, to seriously look at Gaming Media as the next pretty big thing – has come.

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Community, On Demand Media, Social Networking and on Making it Mine…

On Demand Media is completely changing how we consume media. It is also chipping away at traditional, centralized media. In the post-Tivo, decentralized, on-demand or as Mr. Dennis Haarsager calls it; "My Time" world, it is clear that consumers have more control (and soon total) over what advertising, if any, they want to be exposed to. (Please, please read an essay on this topic, by Dennis, in its entirety and save it for future reference. It's good stuff.) Many choose to watch ads, for entertainment or novelty purposes. Probably the same reason you would watch a new video on JibJab. Also, try BMWFilms.

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Social Networking at CIO Symposium at MIT

The last panel at MIT's Fourth CIO Symposium was the most interesting one- to me. Generally we discussed Social Networks  ((a la LinkedIN ). The panel provided a thought provoking range of ideas on measuring the effectiveness of social networks in generating revenue. Erik Brynjolffson presented quality data on the correlation between revenue production and level of networked-ness (connectedness?) which intuitively seems pretty direct. David Teten talked about specific ways of measuring and assigning value to a particular aspects of an individuals network.

All in all very thought provoking stuff- given the bright light that is on this space at the moment.

more to come

A reality check for online advertising

(From McKinsey)

A rising demand for online ad vehicles could surpass supply in the near term.

Chris Grosso, Amy Guggenheim Shenkan, and Hobart P. Sichel

2006 Number 3

Internet advertising has recaptured the imagination of marketers, who see an enormous potential to raise the profile of their brands through vehicles such as paid search and online video. But the fact that scarcity is an issue for digital-advertising often gets lost in the enthusiasm. McKinsey research finds that bottlenecks in supply could limit the pace of online ad growth and raise prices over the next 24 months.¹ The study also suggests that a dearth of ad agencies that can manage both traditional and digital campaigns could further slow the shift in spending to online ads.

Our research combined quantitative analysis and more than 50 interviews with leading digital advertisers, ad agencies, and media companies. We compared both current and projected US ad spending for online vehicles—including video, banners, and paid search (ads tied to keywords that consumers enter in search engines)—with the maximum amount of advertising such vehicles could theoretically absorb today. This analysis revealed that the utilization of the most attractive digital-ad vehicles is already quite high and that, without large increases in the level of online advertising "inventory," demand could outstrip supply over the next 24 months (exhibit). While prices are a closely guarded secret, our interviews indicate that they are already rising and likely to jump further as advertisers bump up against constrained supply.

Short-term mismatches between supply and demand appear greatest for the video ads that interrupt or precede online content, such as news clips. The inability of consumers to skip these ads and their use of sound and motion—proven tools for driving brand awareness among consumers—make online video highly attractive to marketers. According to many of the video suppliers we interviewed, very little unsold advertising capacity remains today. Assuming that marketers don't increase the number of ads they place in each video stream, the maximum supply of video ads is currently about $600 million a year—far less than future demand, which we expect to reach $1.4 billion to $3.2 billion in 2007. Help will come from new strategies (such as Disney–ABC Cable Networks' recent offering of television shows for download and the creation, by Ford Motor's Mercury division, of a series of short online films), but they don't seem likely to meet burgeoning demand on their own.

The situation is similar for paid search. Annual growth in the overall number of searches is slowing, from 30 percent in 2004 to 20 percent in 2005. Without significant changes in consumer click-through rates or in the prices advertisers are willing to pay, we estimate—using our analysis of the prevailing cost per thousand impressions (CPM) and Nielsen Media Research figures on paid search—that the maximum current value of paid-search advertising is about $7 billion. Meanwhile, our analysis of current and forecast page views, ads per page, and CPM rates suggests that advertisers will want to spend $9 billion to $12 billion on paid search in 2007, up from around $5 billion in 2005. Even without severe supply bottlenecks, there won't be room to handle rapid near-term growth.

Finally, although the inventory of banner ads—$4 billion to $8 billion—appears more than sufficient to accommodate the likely demand of $2.5 billion, advertisers probably won't be interested in much of what's available. The complex task of spreading media spending across thousands of small Web sites, many with different ad formats, means that advertisers tend to return to heavily trafficked sites, where supply is at a premium. Even on the big portals, marketers are leery of having their ads placed near consumer-generated content that might be objectionable. In fact, advertisers currently direct 96 percent of their spending for online display ads to pages that represent just 30 percent of overall Web traffic.

Our interviews highlighted two additional hindrances. First, most advertisers expressed frustration at the small number of ad agencies with the skills to manage both traditional and digital campaigns. Many advertisers have no choice but to employ separate agencies and to coordinate cross-media efforts themselves, which makes it more challenging to manage—and evolve—their marketing mix. Second, the absence of a widely accepted independent metric for digital media (such as the NielsenTV ratings) makes it difficult to compare the results of online campaigns and to measure their impact—an uncomfortable fact for marketers considering major spending reallocations.

Of course, digital advertising won't be permanently constrained. Consumers will eventually come to spend more time watching video on PCs and mobile devices. By some measures, they already focus upward of 30 percent of their media attention online—a far higher proportion than advertisers currently spend there. Marketers and media players thus have an enormous incentive to innovate and increase supply, which, along with better measurement technologies, will allow marketers to shift more of their budgets online.

Marketers must build the capabilities necessary to thrive in an environment where audiences and vehicles are highly fragmented, prices change quickly, and advertising's performance differs by customer, vehicle, brand, offer, and message. This transition will require not only new management skills but also a detailed understanding of the marginal economics of products, customers, and customer conversion.

Sandi Thorn- Top UK single last Week.

First Thank You UK Music fans for reading my blog entry about Sandi Thorn. It is much appreciated. I am glad you are as fascinated by what I now call "The Sandi Thorn Phenomenon" as I am. I mean think about it! You can produce your own music for very little money and webcast it for very little money and build not only a paying audience but a passionate fan base!

I wish I Was A Punk Rocker' is the first hit single to be released from Sandi Thom's debut album. Other highlights on the album include: 'Little Remedy', where Sandi throws down the gauntlet to a prospective lover; 'Lonely Girl' an ode to the lost, isolated and the abandoned; 'Time' a comment on the current hare and tortoise race between humanity and the clock; and 'What If I'm Right' which explores the bittersweetness of a newfound relationship, where the excitement of what there is to gain is eclipsed by the fear of what there could be to lose. (This paragraph is from Sandi Thorn's own website-not my writing)

I'd love to hear your comments, since I will be devoting a small section of this blog on the Sandi Thorn Phenomenon. Let me know how you think I can do more here and if you would like to write something (About Sandi related stuff)

Teens Online Doing Homework, Text Messaging and Watching TV

I know none of this is a surprise, but read on...
(From AdAge.com)

Survey: A Third of Teens Spend Three Hours Each Day on the Web

By Gavin O'Malley

Published: June 12, 2006

NEW YORK (AdAge.com) -- As any parent of teenagers will attest, the internet is occupying an ever greater portion of young peoples' time. Indeed, nearly four in 10 teens -- 37.4% -- are spending at least three hours online daily outside of school settings, according to a Burst Media survey of more than 1,800 connected teens between the ages of 13 and 17. Just one in five -- 19.6% -- say they're spending less than an hour online outside of school.

For teens, the web is a more meaningful source for movie and TV news than word of mouth or local newspapers.

Photo Credit: AP

Today's kids are multitaskers, however, so internet time is simultaneously homework time, or TV time. About half -- 48.9% -- at least claim to be working on homework assignments while online, while 33.8% say TV or a movie usually competes for their attention.

Additionally, a combined 40% say they're also text messaging or talking with friends on their mobile phones while online.

"Corralling these distractions to minimize their disruption is a significant challenge for marketers," said Chuck Moran, manager of market research for Burst Media.

Net gaining on TV
How do brands overcome this challenge? "Use the internet to create a central content point for teens on a variety of subjects and interests," Mr. Moran said. "By doing so, marketers can then develop integrated-marketing campaigns with advertising creative and programs referencing a central platform and working in tandem to get teens' attention."

Notably, the internet is now seen by teens as the top source of information on music artists and bands. And, while teenagers are still more likely to cite TV as their main source for movie and TV-show updates -- 29% in the survey did so -- the web isn't far behind, at 25.5%. That makes the web a more meaningful source for movie and TV news than word of mouth (15.7%) or local newspapers (10.3%).

The Burst findings mirror broader research surfacing today. About 20% of all Web usage occurs while viewing TV or immediately before or after, according to a study just released by the Online Publishers Association and conducted by Ball State University. More than 60% of all web users spend two hours a day online, the OPA study found.