The Online CMO by Philip Hallenborg

eMarketer CEO and co-founder, Geoffrey Ramsey, recently published an interesting piece on on-line marketing called “Digital Marketing Now: Seven strategies for Surviving the Downturn“. In addition to presenting some key strategies to fight off the downturn, he also shares his valuable personal experiences from previous downturns.

Ramsey offers seven strategic suggestions to more effectively drive demand and spend money in a difficult economic environment. I have chosen to extract the most important ones and comment on those to offer further granularity on the subject matter.

1. Get with the Accountability program.

Ramsey suggests that this is the time to step up efforts to better measure marketing seeing that all managers will feel increased pressure from senior management. The specific actions areas named are:

• Measure on-line branding efforts.
• Breakdown silos between off and on-line (and maybe intra company segments).
• Build a sales impact model using sophisticated measurement tools.

Whereas I agree that these three areas of accountability are ever so important in an economic downturn, I kind of wonder how you can be a successful on-line marketing manager without having addressed these regardless of economic climate.

I have previously discussed difficulties with off and on-line business optimization (i.e. channel conflict). This will always be an issue and I hardly believe that the economic climate will make sub channel managers more willing to experiment with their targets, despite an increase in pressure on performance.

On the building of a sales impact model, I have experienced a number of attempts to address meta effects both between off and on-line marketing communications , and between different types of marcom (transactionally vs. consideration focused). These attempts tend to end up in multiple regression models and I often see them met with great disbelief from sales managers trying to hit their targets. This disbelief will inevitably increase when more pressure is put in the system. As a result more and more focus will be placed on pure transactional – highly trackable and efficient vehicles.

2. Search: A necessity for marketers in a depressed economy.

Ramsey promotes the idea of shifting towards direct response and underlines the importance of search as one of the digital era’s most effective marketing tools. He points to four key advantages:

• Search provides a highly measurable ROI.
• Search garners click-through rates that exceed all other forms of on-line advertising.
• Search offers the potential for immediate sales on-line as well as for on-line an offline sales at a later time.
• Search can even enhance brands.

Ramsey provides some clear evidence suggesting that advertisers not doing search will give business away to competitors that are. He continues to make a case for search growth (both mix wise and in absolutes) where most advertisers are planning to increase spend. Finally, latent effects are mentioned where in North American B2B sales 80+% of respondents found a vendor on-line (and then purchase either off or on-line).

Problem with search in an on-line mature industry is that every one is there. The opportunities to shift mix into search are highly dependent upon bidding levels and most of all available “headroom”. This transparent and highly effective auction model leaves little room for asymmetric pricing opportunities. The fact that money is pouring into this channel will further increase competition.

In addition, I would suggest to view ROI numbers from search with a grain of salt. To my best knowledge, the ROI numbers extracted by search marketing fail to take into account click behaviour (5-7 clicks narrowing down a search to the overrepresented brand term) and more importantly meta effects from display advertising on-line and all other marcom. Even Ramsey shows data that supports the necessity (point 3 below: “if marketers only do search they are missing 70-80% of their market opportunity”) of combining consideration/brand communications with search to optimize ROI.

I am pretty sure that there is an emerging risk that decision making will be too short term and transactionally focused – all disguised as “effective”. Bottom line: I would rather move toward a balanced marketing communications mix with a healthy brand component than max out mix on search.

3. Beyond search: Do not ignore the power of branding on-line.

Ramsey highlights three key developments:

• Grow brand advertising on-line (vs. offline).
• Measure on-line branding efforts.
• Integrate metrics.
• Use display/ branding to leverage on-line shopping.

On the first point, Ramsey points to clear evidence that brand advertising on-line is growing (mix and absolutes) despite strong indications that it will be negatively impacted 2009. I am not certain whether he suggests an increase in display advertising (mix) but he provides evidence that there are clear multiplier effects when combining search with display advertising and vice versa.

Moreover, he presents a handy score card where on-line “branding” can be split into a number of KPIs. Finally he continues to suggest that standalone KPIs don’t offer a good overall view – the merely reflect “the last ad clicked”.

A few things come to mind. First and foremost, I am kind of surprised that Ramsey’s article completely omits one of the real fighters in economic downturn namely the cost per action (CPA) model. I am especially thinking of the affiliate model.

In practice, it is virtually impossible to get senior level buy in on brand spend in this environment. In my view, the best levers to pull at this very time are the affiliate and email levers (in fairness Ramsey mentions email in his forth reco: Stay close to customers). I have previously commented on some interesting aspects of the CPA model in times of recession.

It is important to point out that the CPA model typically contains elements of search (in that some affiliates are search engine marketers). Still from a pure linear cost per order view, the affiliate model is arising as the most efficient – more efficient than search. It is traditionally less managed than the search words and I believe the model is suffering from a very low end product mix with many retailers, which in turn drives decisions based on false assumptions.