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What if We Tossed Out the Advertising Model?

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Advertising and much of marketing is still based on sending crafted messages to a broad demographic or psychographic group at a time. Okay, so what if it is avowed to be 97% ineffective or even less than that, you really needed that junk mail, right? That DVR you installed is really there so you can enjoy each commercial in their full glory, am I right? As long as the revenue it generates is more than it costs, it seems that both businesses are satisfied and consumers are at least tolerant. I am poking at only a small slice of this industry, but what would it be like if we tossed out that model for something that can only be described as hyper-accurate, super-personalized, and permission-invited. How much would business functions and the industry change?

I may still be as vague as the effectiveness of advertising today, but think about all that content created, that creativity milled, the deals made, and the multiple industries held afloat by this old model. We know it is becoming increasingly irrelevant in the minds of people, as the war between ways to ignore or avoid these messages, and ways to keep promoting them in a new fashion. We know this not only because traditional media has been bleeding away slowly as the Internet and the Web has matured, but why people are taking to it: beyond just consuming more information, the ability to engage in dialogue.

Lest I sound very anti-business, I am not speaking about eliminating the need for businesses to communicate out what they offer to people, but rather the broad shotgun approach they use. This approach forces the information into our eyes and ears regardless of whether we have any interest in it until there is so much of it its omnipresence overwhelms us, and chokes our senses, and often, our environment as well.

A newer idea outgrowth of this is that information is so omnipresent and that consumers face so much of it that businesses are now in a completely different economy model fighting to get people’s attention. This Attention economy has new rules based on how much time people are willing to spend paying attention to some piece of information and to their hopes the advertisements that may surround it. New tools are emerging to analyze not just what is talked about but also sentiment, audience demographics, and how quickly it spreads.

But what is the alternative? How else are businesses going to get the message out about their product to get more people to engage and buy from them? Perhaps we start by thinking about efficiency of that message. Let’s start with that 1-3% number for mail marketing. Even if people are about triple its efficiency its still barely 10%. The emphasis has usually been on how to create a more compelling offer to grab their attention, but that attractiveness is based on a guess. I love that it empowers more creativity and imagination to make it compelling, but in the end the likelihood of a consumer accepting it is still quite low.

To push efficiency, the better way would be to be able the craft the message more accurately to specific people, not just a demographic: to me personally, not just to ‘people who live in that part of the city’. How would that be possible? It starts with trying to understand the intention of what people want, rather than trying to just grab their attention as they walk away. If we knew, or better yet, if the consumer each told us what they wanted and we could craft the message for each person as well as target exactly who would be interested, then the efficiency of that message suddenly shoots way up. It hinges on that dialogue with the consumer.

I interviewed author and thought-leader David ‘Doc’ Searls at the SXSW conference, right after his presentation and we talked at length about the ideas of his new book The Intention Economy (Harvard Business School Press, 2012) which has finally hit the shelves, and it contains a radical game-changing idea that can make this possible. Doc Searls is well-known for his role in the Open Source Software movement, his role as editor in Linux Journal, and most famously for co-authoring The ClueTrain Manifesto. During our discussion he described a system that goes so far beyond ideas like permission marketing that some might call it alien in our mental business landscape, but offers a way out.

I have described Doc’s idea before by its technical sounding name: Project VRM. A quick description is that just like many businesses have a Customer Relationship Management system to keep track of each potential or existing customer’s history and particulars, perhaps customers themselves need a Vendor Relationship Management to keep track of what particulars they shared with each vendor.

VRM focuses on the tooling that makes it possible for your browser or software to auto-fill the forms that we so often have to fill out over and over again, or share other particulars about yourself, given your permission. More so, you as the customer have a much finer degree of control over what you share. You do not need to give them every single field of information to hold on to forever; perhaps just 30 days or one year?

The software takes care of the menial tasks of tracking where your data has gone and to what use. It becomes your representative, your solicitor, your agent for managing the valuable data and who gets to have it. (Incidentally, that may also seriously cut down on information and identity theft possibilities)

The mechanism and permissions aside, the real winner in that model is that people can give accurate information not just about where they live or what credit card they have, but their actual current interests, recent investitures in other brands (purchases), and all the other aspects of data that they think the vendor may need to better shape what they are offering to them.

Now we are getting closer to how to replace the shotgun approach to advertising. If the vendor has a customer’s current data, not just the long-term information about where you live, but what you like, even what your mood is, then they have a better shot at improving the efficiency of the message. We aren’t just tossing out the baby with the bathwater here: can cut down a lot of waste everywhere, but also improve business at the same time.

There are number of secondary effects of this model as well: it shifts the business of customer data collection and business analytics in a different direction; it elevates the level of security of information; it creates new feature needs in online retailing and commerce systems; and if Doc is right, it may even transform the banking industry by creating a whole new business opportunity line for them.

This approach creates the multi-way dialogue with customers, their networks, and people of like interest that we need to see happen in the world of marketing, transforming the model towards greater efficiency. In doing so, IT directly becomes a stronger part of the business function of marketing, as well as impacting how we manage inventory and distribute goods and services. It contributes to the integrated, cross-functional future as we move away from the Value chain model of the enterprise, and into a social business world.

[More to come in the future post: the interview with Doc]