By Dennis McCafferty
This article appeared in the June 2005 issue of Web Host Industry Review magazine. Click here to subscribe for free.
One day you’re spending a fortune for banner ads at one particular site with scarcely a new-customer click. Then you discover that you’re shelling out a relative pittance on another site that’s generating a ton of traffic to your hosting operation. You have to wonder if you have the right tools to access cost-per-click rates in real-time, or to make e-marketing spending decisions on the fly.
If you don’t, then you may be falling behind the competition. There’s a wide wild world of e-marketing analytics tools out there that measure almost everything imaginable when it comes to online ads, spending and consumer behavior. And some are supplemented by solutions such as pay-per-click fraud management, which turns up fraudulent clicks that could have been generated by a competitor.
Online marketing has a key advantage over traditional print, TV and radio ads: visitors are on an e-commerce site because they want to buy things, says Gregg Freishtat, CEO of Atlanta-based sales software firm Proficient Systems (proficient.com). That doesn’t mean, however, that investment plus marketing equals a slam-dunk sale.
“While consumers could buy nearly anything online because of enabling technologies, it didn’t change the reality that certain products are sold, not bought,” says Freishtat. “One of the drivers of the Internet boom was the belief that the Web would make everything ‘self-service,’ and companies could sit back and collect while consumers reserved airline tickets or bought books on their own. But after racing to build big, expensive Web sites, many vendors of complex or big-ticket items discovered that consumers are reluctant to purchase online. Self-service tools such as interactive FAQ’s and the ability to interact with a customer representative online didn’t identify which customers were most receptive and had the highest propensity to buy. Arming the right sales person with the right information for the right customer makes all the difference.”
Among hosting companies and other e-commerce players, Proficient Systems has remained relevant by coming up with real-time data mining applications that compare Web site visitors against a company-specific statistical model, enabling site operators to predict which customers would be most likely to transact and how valuable each customer is to the company. Its products dig deep into consumer behavior, able to tell a host, for example, that if a potential customer clicks on a pricing or servicing link, that 7 of 10 will complete a sale if they spend 10 minutes or more reviewing pricing plans.
And Proficient is not alone. The demand for such solutions is high, as more marketing, promotion and ad campaigns turn to the Internet. Consider that Pepsi One launched an online-driven campaign that had no television component, opting to focus on a Web site called Oneify. Nearly two years ago, Pepsi-Cola North America also turned to the digital download generation for a major promotion, teaming up with Apple to give away 100 free iTunes songs to Mac and Windows PC users.
But clearly there are limits to online consumer patience. As online campaigns become more complex, the challenges of online advertising become more pronounced.
Spend your money only in places where you’ll find likely buyers, says Scott Nelson, vice president and COO of TruEffect (trueffect.com), a Broomfield, Colorado-based ad-serving and measurement company. When the Web accounted for only 1 percent of a media budget, the need for complex analytics tools was non-existent. That is no longer the case. Tracking the effectiveness of e-marketing is a far more complex process than the tracking of traditional campaigns ever was.
“Unlike television, radio and print, online advertising generates a log file for each and every transaction for each and every consumer,” Nelson says. “Often, the events are recorded in multiple places ? with the Web administrator, the Web analytics firm and the third-party ad server ? all tracking the same site visit behavior of one browser. Then there’s media evaluation, sales compensation, inventory management and production forecasting. Despite the development of technology that won’t break from the volume, marketers continue to struggle to convert the data into information, the information into knowledge and the knowledge into action.”
Marketers were promised the equivalent of the Holy Grail in the mid-1990s, Nelson says. They were told the Web would let them reach out and touch upon consumer behavior anywhere, anytime, find out what they’re choosing ? and why ? and make the right adjustments in real-time.
“Unfortunately, this exciting microcosmic view of a unique customer’s online experience proved to be very difficult to recreate on a macro scale,” Nelson says. “Synchronizing back-end transactional databases with front-end marketing decision engines became a monumental task. Despite the phenomenal increase in computing power, storage capacity and bandwidth across every node in the network, effectively connecting a consumer’s online purchase this morning with an email or banner advertisement this afternoon is still a challenge.”
All of the attention on e-marketing analytics has grown along with the level of detail available about the user. At the point where demographic, psychographic and other details of Web traffic became readily available, the opportunity to deliver specific audiences to advertisers arose, says Mark Bradley, vice president of services shopping and category management for NexTag, a San Mateo, California-based analytics company.
“Once the ability to identify and reach specific audiences manifested,” he says, “the need to measure the effectiveness of those communications efforts drove additional evolution at the campaign tracking and management level.”
As a result, those who can effectively track, monitor and react to the information have gained a sharp edge on the competition.
“Analytics have enabled e-marketers to become smart marketers by providing accountability for campaigns,” says Danay Escanaverino, marketing manager for Plantation, Florida-based Global Resource Systems (grscorp.com), an interactive marketing and advertising agency. “You can plan a campaign based on real data showing impressions, clicks and conversions. You find out where visitors go, when they leave, why they leave and any other metric that can assist in marketing strategy.”
Like other hosts, Boston-based Miller Systems (millersystems.com) not only uses marketing analytics tools to evaluate its own strategies, it markets them as a potential add-on service for customers. So the company has invested much time pursuing the most effective analytics tools to focus upon user experiences and conversion metrics. At one point, choosing the right Web analytics tool was akin to purchasing something like Microsoft Office, says Seth Miller, CEO and founder.
“You installed it on your desktop machine, fed it some logs, and it spit out fancy things like page views and hits,” he says. “Then the dot-com bubble burst, and people actually needed to justify and measure ROI for campaigns. This required the toolset to become more powerful and, therefore, much more complex to implement. Today, a set of good analytics tools takes expertise and experience with the analytics tools themselves, along with Web development skills to deliver properly. The customers are not yet adjusted to this way of thinking ? they still think a day or two should be more than enough time to get meaningful analytics delivered to them by a consultant. This is generally unrealistic unless you’re talking about very small, static, transaction-less sites.”
But the more Miller and his employees discover about what’s out there, the more manageable the need has become. “Integrating user-experience metrics with customer-relationship management is now a much less expensive endeavor than years past, and can be presented in dashboard-style metrics for campaigns,” Miller says. “The data collection methodology for Web analytics and the adoption of metadata as a configurable and critical data point has made very understandable, integrated analytics a reality.”
Miller favors solutions such as WebTrends SmartSource Data Collector and similar technologies that allow page experiences to be self-descriptive, as well as user-experience measurement solutions such as WebTrends SmartView. Miller finds that a host can better serve customers if it approaches them with an integrated line-up of such services. Still, there are plenty of packaging and people-related issues that could trip up a smooth transition.
“This is not necessarily an easy service for traditional hosting companies to offer,” he says. “Typically, the hosting company has a menu of a la carte services at fixed prices ? defining the number and nature of reports is a much more consultative type of service. Partnering with consultancies would be the most effective way for hosts to deliver meaningful analytics. Having even one or two experts on hand in-house would also go a long way. But unless those individuals were cross-trained in other hosting services, they could be looking at a lot of bench time.”
These are not the only tools out there, of course. Because online marketing technology is a critical and rapidly evolving service, essential to the e-commerce business, a collection of companies that provide proven tracking tools have emerged as the leading players.
When it comes to marketing technologies, New York-based DoubleClick’s (doubleclick.com) DART suite of online ad management solutions ? for banner and other display ads ? provides Web publishers with both a hosted solution and a software package designed to efficiently manage, serve and report on online ads. (The solutions are also sold to advertising agencies and marketing firms.) Founded in 1995, DoubleClick also provides solutions for email marketing, data management, search marketing, affiliate marketing, campaign management and database marketing. “Given the complexity of the business operations of online publishing ? managing dynamic inventory including premium versus ‘remnant’ inventory, on-the-fly ad targeting, complex sales proposals and more ? many publishers are challenged to improve the efficiency of their business engines,” says Doug Knopper, senior vice president and general manager of ad management at DoubleClick. “In this next year, publishers should reap the rewards of a healthier ad industry and make great strides towards improving the effectiveness and efficiency of their business models with the technology solutions that are now available.”
Well over half of Internet households have moved beyond dial-up and access the Web through an always-on household device with broadband connections, says Knopper. Rich-media advertising has evolved with broadband access, and now those dynamic formats ? as well as online video advertising ? will be on everyone’s radar. Online video ads wield approximately twice as much branding power as online advertising in general, according to Dynamic Logic, a New York-based market research firm. And all of this will put a company like DoubleClick in a strong position to roll out additional applications for online ad management.
Last year, for example, DoubleClick introduced its Motif Streaming Video to provide marketers with high-quality “instant-on” video, to execute and track the performance of high-impact rich media campaigns. The solution offers automatic bandwidth detection and streams video directly to the user’s browser without cacheing. Its reporting system includes video plays, video completions, pauses, stops, restarts, mutes and average video view time.
Seattle-based Atlas’ OnePoint (atlasonepoint.com) is a popular pay-per-click bidding tool that helps manage and automate the bidding process. For small to mid-size hosting operations and other small businesses, Atlas OnePoint provides solutions that manage keywords and bids on more than 30 search engines, helping users to reach new customers, increase site traffic and sales and rank all visitors, sales and conversions. All of this has helped the Atlas Suite emerge as a top online campaign management and third-party ad serving system among digital marketers, selling more than $60 million last year in product and expected to sell up to $77 million this year. No small accomplishment, given that Atlas launched only four years ago.
The idea that e-marketing, conversion-tracking analytics tools can be bundled into a ‘dashboard’ system is taken for granted by now, and Urchin Software has been one of the marquee names in this niche for several years. Its customers include the US government, NBC, Procter Gamble and AT&T. Recently acquired by PPC advertising giant Google Inc., Urchin provides its products as a hosted service, as a software package or via large hosting providers. With its new Urchin 6.2 package, e-marketers can identify campaigns that are producing repeat buyers; segment visitors by city, language, campaign and 17 other factors in real-time; and add, delete or modify filters and conversion goals. Google intends to open these products up to Web site owners and marketers to increase ROI and Web site effectiveness, according to published company statements.
Even with top players like these delivering needed tools, there are other companies offering their own takes on market-tracking technologies. Birmingham, Michigan-based InterSight Technologies (servicereps.com) has compiled an impressive list of clients that rely upon e-marketing tools. These clients include the NBA-champion Detroit Pistons, Major League Baseball’s online property mlb.com and Coast Hotels and Resorts. In March, it introduced iMatter, which allows hosts and other companies to cost-effectively manage personalized, direct customer communications and build an intelligent database of customer profiles. It can aggregate customer attitude and behavior over multiple direct channels, such as Web chats and email.
The attempt to measure marketing effectiveness with page views and unique visitors was a relatively traditional media approach, and solution-providers such as InterSight are taking the position that the Internet is far from a traditional media form.
“Marketers knew that this electronic channel provided a unique opportunity to address their customer base and [they] began spending significant amounts trying to address the opportunity,” says James Tisdel, president and CEO of InterSight. “The first generation of tools missed the ability to understand the customers’ attitudes and behaviors, and addressed the ‘traffic’ of a site. The results from this approach were poor. Marketers now know that they need to engage the customer in self-help or direct communication at their decision points. The ability to make this engagement for information or purchase is a powerful ability ? providing value to the customer and the business. Moving from the Web page and to the customer need is what we are providing to hosts and other companies.”