05 November 2007

Intrusion vs seclusion: some reasons why direct marketing is failing online.

Direct marketing is failing online because brand owners, marketers and their agencies are relying on old forms of marketing, according to the latest Harvard Business School research.

The paper, entitled Digital Interactivity: Unanticipated Consequences for Markets, Marketing, and Consumers, released last month by Harvard Professor John Deighton and a Vancouver Research centre director Leora Kornfield argues that the much anticipated transformation opportunity in marketing created by digital interactivity is not unfolding along the lines of a traditional model of direct marketing.

Research like this is the elephant in the room for digital and advertising agencies and their clients, who continue to cling to the dated notion that consumers (of all kinds) really do look at this stuff and believe that digital based direct marketing is both cost effective and really has a demonstrable ROI.

Deighton and Kornfield argue that under the old model digital media would use the rich profiling data it gathers to create more penetrative marketing messages which would go more deeply and more precisely into consumer lives than broadcast media had been able to do.

Instead, they claim the threatened intrusion is actually delivering seclusion.

“The transformation is unfolding on a model of consumer collaboration, in which consumers use digital media that lie beyond the control of marketers to communicate among one another, responding to marketing's intrusions by disseminating counterargument, information sharing, rebuttal, parody, reproach and ... fandom” (they might be meaning Apple here or eBay’s newly created Neighbourhoods), Deighton and Kornfield said.

They describe marketers in peer-to-peer environments as an ”interloper, more talked-about than talking” and that marketing, against an old definition, may now be less a matter of domination and control, and more a matter of “fitting in.”

The article identifies five discreet roles for interactive technology:

1. Thought tracing: which is typically what Google does, and which allows advertising to be served on the basis of user's search terms and patterns of usage.
2. Ubiquitous connectivity: the notion of always on and connected especially with the increasing penetration and speeds of broadband alongside mobile phone usage. Microblogging via sites like Twitter is a good example and there are huge opportunities for marketers to exploit ideas around “attention banking”.
3. Property exchanges: in their ideal form best represented by the late lamented phenomenon of Napster and file sharing. More market acceptability of this has been built by eBay, Flickr and Youtube.
4. Social exchange: Deighton and Kornfield cite South Korea’s Cyworld, where 40% of all South Koreans maintain a presence and where 90% are in their 20s, generating $100 million in revenues each year (Wikipedia 2007). They identity the explosion of Facebook and MySpace as more recent Western examples but question whether this phenomena will “change society and therefore markets as much as the automobile did”.
5. Cultural exchange: they describe marketing as a “cultural producer”, aspiring to be an author in the culture of its customers. Most importantly for marketing to play this role it needs to be “welcomed, not resisted. “

The paper concludes that while meaning-making still remains the central purpose of marketing communication, the shift from broadcasting to interaction within digital communities is moving the locus of control over meanings from marketer to consumer and rewarding more participatory, more sincere, and less directive marketing styles.

What matters for marketers, say Deighton and Kornfield, is that the form of interactivity most attractive is the one which can facilitate personal identity projects and contribute to the collective making of meaning. And within this context, digital based direct marketing as it currently stands – the use of email, spam, banners, interstitials, splash pages, microsites etc etc - makes a marginal contribution to our identity and the creation of meaning.

As it stands the research is qualitative and largely desk research and while it suggests a direction for direct marketing, it doesn’t back its assertions with any quantitative evidence, though there is plenty around (we remember the Australian Financial Review’s digital unit telling us that click through rates on banners on it’s marketing pages were a mere .01%).

Maybe the best way to view this paper is as further evidence that more traditional passive direct marketing is not working in the new fragmented digital world. The challenge is how to stay ahead and engage an increasingly antipathetic target market.