Magazine Article | July 18, 2007

Missing The Sale For The Sizzle

Source: Innovative Retail Technologies

Pragmatic investments in brick-and-mortar technology provide the best return.

Integrated Solutions For Retailers, August 2007

The American business love affair with metrics nauseates me. It seems the only way projects will get funded or justified anymore is to provide concrete metrics on the project's return. This bothers me because it's causing many companies to make investments based not so much on their projected return, but on how easily their returns can be measured. That's faulty reasoning, but I see it playing out right now in our industry as retailers invest millions — soon to be billions — of dollars in targeted, online behavioral marketing. The idea behind behavioral targeting is for marketers to track the Web sites a consumer visits, create a profile of that consumer's interests, and advertise accordingly. Targeted? Absolutely. Easily measured? You bet. A wise investment? Not necessarily.

Curb Your E-Commerce Enthusiasm
Allow me to share my bias. In a roundabout way, my mortgage is paid by advertisers like the one that graces the full page to the right of this article. I believe that company over there is spending money wisely by purchasing that real estate. Yet, we're increasingly fielding advertiser inquiries about shifting what I feel are inappropriate ratios of their marketing budgets to advertising opportunities at, or through our electronic newsletters. Why? Because clicks on links, pop-ups, and banner ads make it easy to measure interest in their campaigns. Online marketing performance is measurable, concrete. Magazines are to the publishing industry what brick-and-mortar stores are to retail. The magazine is where our editorial is most often read (the U.S. Postal Service still greatly outperforms the Internet in terms of ensuring content delivery), it reaches more people than our electronic messaging (our e-mail opt-in rate is roughly half that of our qualified print edition subscribers), and it's the place where 90% of our revenue is generated. When we make investment decisions, we keep an eye on future trends but spend the bulk of our money where we make it. Sound familiar?

So it goes with behavioral marketing. Research firm eMarketer suggests that by 2011, marketers will spend $3.8 billion on behavioral targeting online. Meanwhile, online purchases will still account for less than 7% of the three-point-something or other trillion-dollar North American retail sales pie.

I'm suggesting that retailers treat the temptation of easily achieved metrics with a healthy dose of pragmatism. Strive for an investment budget that achieves a good mix of cross-channel marketing and technology integration, yet treats what will remain retail's cash cow deservingly.

By the way, HP, the advertiser over on page 9, runs that campaign electronically, too. In the electronic version of HP's advertising creative, the little IT guy  pictured over there is animated. It's pretty neat. But it will still be seen by more of you — HP's target audience — here in print.