Sunday, April 26, 2015

Why Traditional Marketing Hasn't Died

After reading a newspaper account of his illness or death, Mark Twain famously wrote, "The report of my death was an exaggeration." We can make a similar statement about the health of traditional advertising and marketing techniques.

It's been fashionable for several years to predict the impending demise of traditional advertising and marketing tactics such as TV, radio, and print ads. Marketing thought leaders have advanced this view in many of the best-known and most influential marketing books published during the past two-plus decades. Some of the notable examples include The One to One Future by Don Peppers and Martha Rogers, Permission Marketing by Seth Godin, The New Rules of Marketing and PR, by David Meerman Scott, and Inbound Marketing by Brian Halligan and Dharmesh Shah.

Based on these predictions (and many others like them), we would expect to see the use of traditional advertising and marketing methods in a free fall, but that hasn't happened. ZenithOptimedia recently estimated that global advertising spending will grow 4.9% in 2015 and reach $545 billion by the end of this year. Magna Global has predicted that global ad spending will grow 4.8% in 2015 to $536 billion.

So, were all of the well-respected marketing thought leaders simply wrong? Not completely. Research clearly shows that digital marketing, content marketing, social media marketing, and inbound marketing are the fastest growing segments of the marketing industry. And to some extent, these segments are growing at the expense of more traditional marketing methods and channels.

It's also clear, however, that many companies - particularly larger enterprises - are not close to abandoning traditional advertising and marketing methods.

Companies are still using traditional methods and channels for several reasons. First, there's a lot of inertia in large organizations, and the primary cause of the inertia is fear. Even when company leaders recognize the need for change, fear of the unknown and/or fear of making a mistake will cause them to implement changes gradually and incrementally.

But more importantly, companies are still using traditional advertising and marketing methods because they still work. They may not work as well today as they did in the Mad Men era, but they are still more effective than some marketing thought leaders would like to admit.

Traditional advertising and marketing methods still work because they benefit from several deeply-ingrained characteristics of human judgment and decision making. For example, numerous studies by psychologists have demonstrated that the more often something (an idea, an image, a brand or product, etc.) is presented to people, the more they tend to like it. Psychologists refer to this phenomenon as the mere exposure effect.

The mere exposure effect exists because we humans have a natural tendency to prefer things that are familiar and therefore are easier to mentally process. As I discussed in an earlier post, the psychological equation is familiar = easy to process = good (or true or safe). And mere repetition produces familiarity.

Equally important, research also shows that the mere exposure effect operates - and may even be more powerful - when we aren't consciously aware that a message or other stimulus is being repeated.

The mere exposure effect explains why repetitive advertising and marketing messages like TV and radio commercials and print ads can influence our attitudes and preferences even when we believe that we are paying little or no attention to those messages. The existence of the mere exposure effect also provides part of the explanation for why traditional advertising and marketing methods still work.

Sunday, April 19, 2015

Will Technology Soon Turn Sales Reps Into Marketers?

A recent post by David Raab at his Customer Experience Matrix blog provoked an interesting discussion about the respective roles of marketing and sales in the demand generation process in B2B companies. David Raab is a well-respected analyst who has covered the marketing technology space for many years, and I respect his work.

In his post, David suggested that the recent trend of marketing playing a larger role deeper into the sales funnel may have peaked, and that technology solutions now exist that enable salespeople to take a more active role earlier in the buying process. As one example, David pointed to a solution offered by MDCDOT, which gives marketing automation functions to sales reps.

Shortly after David's post was published, Direct Marketing News reported that is enhancing its Sales Cloud offering to put marketing capabilities into the hands of sales reps. Salesforce has already released a tool that combines sales-stage data from the CRM system with behavioral marketing data. This will enable sales reps to better understand how a lead is progressing through the buying cycle. In the second half of 2015, Salesforce will release an offering that will enable sales reps to execute e-mail campaigns using marketing-approved templates, with no additional marketing involvement or approval needed.

David Raab speculated that these types of technology tools could enable salespeople to nurture leads themselves and eventually push marketing back to its more traditional role. He doesn't argue that this change should happen, but rather that it could happen, especially given the tension that still exists between marketing and sales in some organizations. Given the market reach of Salesforce, its recent product moves makes this kind of change more likely.

On a deeper level, these developments raise the sometimes contentious issue of how B2B companies should organize demand generation efforts and allocate responsibilities between marketing and sales. As I wrote in an earlier post, there are now two distinct paradigms of B2B demand generation. Advocates of the marketing-centric paradigm contend that the optimal approach is to expand the role of marketing in lead acquisition and lead nurturing. According to its proponents, this approach has two main advantages:

  • It fits better with how most business buyers now prefer to learn about business issues and possible solutions.
  • It enables companies to use their demand generation resources more efficiently.
In contrast, the sales methodology paradigm emphasizes the role of sales reps in the demand generation process. Advocates of this approach contend that salespeople should engage with early-stage buyers and use disruptive insights to "shape" how they are thinking about business issues and challenges.
The reality is that B2B demand generation is more varied, complex, and "messy" than it is often portrayed, and therefore neither of these approaches is right for all companies. We now know, for example, that the most effective lead nurturing programs include both content-based communications and person-to-person communications. Many companies rely on marketing to handle most of the content-based communications and on sales reps to handle the person-to-person communications. So, most highly-effective lead nurturing programs involve both marketing and sales.
Market structure and dynamics also play an important role in determining the optimal way to structure demand generation efforts. For example, if your company has a relatively small universe of target prospects, it may be appropriate to have your salespeople take the lead in lead acquisition and lead nurturing. On the other hand, if your company has a large universe of potential customers, you will probably find that marketing should play the dominant role in lead generation.
The important point here is that an optimized demand generation system requires a closely coordinated effort by both marketers and salespeople. In fact, marketing activities and sales activities are interdependent components of a single demand generation process, and in many companies the lines between some marketing responsibilities and some sales responsibilities are becoming less and less clear. The increasing interdependence of marketing and sales constitutes a strong argument for integrating the two functions at the leadership level.

Sunday, April 12, 2015

How to Use Framing to Make Marketing Content More Persuasive

Imagine that your community is preparing for the outbreak of a serious new disease that is expected to kill 600 people if no action is taken. Officials are considering two programs to combat the disease. Suppose that the estimated results of these programs are described as follows:

  • If Program A is implemented, 200 people will be saved.
  • If Program B is implemented, there is a 1/3 probability that 600 people will be saved, and a 2/3 probability that no people will be saved.
Which of these two programs would you favor?

Now suppose that the estimated outcomes of the two programs are described as follows:
  • If Program C is implemented, 400 people will die.
  • If Program D is implemented, there is a 1/3 probability that nobody will die, and a 2/3 probability that 600 people will die.
Which of these two programs would you prefer?

If you're like most people, you preferred Program A over Program B in the first scenario, and you preferred Program D over Program C in the second scenario. But here's the catch:  The outcomes of Program A and Program C are identical, and so are the outcomes of Program B and Program D. So, if you preferred Program A in the first scenario and Program D in the second scenario, your preferences aren't logically consistent.

The above hypothetical restates a classic experiment conducted by psychologists Daniel Kahneman (who won the Nobel Prize in economics) and Amos Tversky and illustrates a psychological principle known as framing. The framing principle holds that the way information is presented influences how we respond to that information. More specifically, changes in how information is presented will often cause us to respond differently, even when the changes aren't logically relevant. The framing effect is an attribute of human decision making that marketers can use to make their messages more persuasive.

The framing effect involves how we perceive gains and losses when making decisions. The research by Kahneman and Tversky established three core principles of human decision making:
  • When choices are framed in terms of gains, most people are risk averse. They will usually choose a certain benefit rather than a gamble that may produce a greater benefit of no benefit at all.
  • When choices are framed in terms of losses, most people become risk seeking. They will resist a choice that will result in a certain loss and will prefer a gamble that may result in a greater loss, but also may result in no loss at all.
  • As humans, we are more sensitive to losses than we are to gains. We are more likely to act to avoid losses than to win gains.
These principles apply to all aspects of B2B marketing, but they are particularly important when you are developing content for early-stage buyers, where your primary objective is to loosen the grip of the status quo. Business buyers, like all humans, often prefer the status quo, even when an available alternative is superior on a purely rational basis.

Because buyers tend to focus more on losses then on gains, they will be more aware of the "benefits" of their existing practice or solution, and any drawbacks or weaknesses associated with the proposed alternative. In addition, buyers are likely to overvalue the benefits of their existing solution simply because they already "own" it - a psychological phenomenon known as the endowment effect.

So, how can marketers leverage framing to create content that will help break the grip of the status quo? The first key is to frame the flaws or weaknesses of the existing practice or solution as a loss that is immediate, significant, and, most importantly, certain. This will tap into our human psychological desire to avoid losses. To use a medical analogy, the objective is to frame the status quo as a chronic, progressive disease that is already doing harm, and will only get worse if left untreated.

The second key strategy is to frame your proposed solution as a low-risk alternative to the status quo - one that has a low probability of producing a worse outcome and a high probability of producing a significantly better outcome. This helps to neutralize the risk that potential buyers inevitably associate with making a substantial change.

Today's marketers are understandably focused on how to use data and technology to improve marketing effectiveness. The power of framing should be a reminder that leveraging  human psychology is also still critical for successful marketing.

Sunday, April 5, 2015

Why "Content Marketing" is the Wrong Thing to Measure

Despite the widespread popularity of content marketing, research shows that most marketers aren't confident in their ability to measure its effectiveness. For example, in a 2014 survey by Contently, only 9.4% of marketers said they are very confident in their ability to measure the business impact of content marketing.

In an earlier post, I noted that measuring the performance of content has recently become a hot topic, and I pointed to measurement frameworks suggested by Jay Baer, Curata, and Contently. I agree with many of the specific metrics that these frameworks include, but I also contend that most companies should not focus primarily on measuring the performance of content marketing per se. Here's why.

Content marketing is a marketing method that emphasizes the use of informative or entertaining, and primarily non-promotional, content as the "fuel" for marketing communications programs. These programs are designed to achieve a variety of marketing objectives that have remained largely unchanged for many years. Therefore, the essence of what we now call content marketing is simply about using a distinctive kind of content to accomplish long-standing marketing goals.

In most B2B companies, a comprehensive marketing effort will include four core types of marketing communications programs:

  • Reputation building programs that are designed to build brand awareness and bolster brand preference
  • Demand generation programs that are designed to acquire new sales leads and nurture those leads until they are ready to engage with a sales rep
  • Sales enablement programs that are designed to support the efforts of the sales force
  • Customer retention programs that are designed to sustain and enhance relationships with existing customers
Collectively, these four types of programs define the scope of the marketing communications function, and the results of these programs are what companies should measure. Content is an essential ingredient in all of these marketing programs, but it is one of several factors that determine program success. Therefore, metrics that focus exclusively on content performance (consumption, engagement, sharing, etc.) won't adequately measure program performance
A sound measurement system will certainly include content-related metrics, but the primary metrics should be based on the outcomes that each type of program is designed to produce and, ultimately, on the business impact of those outcomes. 

For example, an effective measurement system for demand generation programs will emphasize metrics that focus on the volume of new leads generated, the percentage of leads that are progressing or "converting" from one lead stage to the next, and the velocity with which leads are moving through the lead-to-revenue cycle. Likewise, the metrics for customer retention programs should probably include customer retention rates, share of wallet, and net promoter scores.
As its popularity and use have grown, we have come to view content marketing as a distinct marketing discipline. Overall, this has been good because it has supported the development of a body of knowledge about how to do content marketing well. The downside of this approach is that it can lead us to view content marketing as an end unto itself. 
Content is a critical ingredient in the recipe for successful marketing, so measuring the effectiveness of our content is important. But, it's even more important to measure the results produced by our marketing programs.