Beware of Tech Partners Trying to Exploit a Niche in the Online Market

Gambling on an Untested Company Is Costly If It Can't Deliver Solid Data

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There's a Taoist saying: "Be as careful at the end as at the beginning." These are wise words for digital-marketing companies right now. While we're not at the end of the migration of brand budgets to a mostly online presence, we are at an inflection point. Consider recent announcements of major partnerships for online and offline data and the flow of stories around big brands moving larger chunks of their budgets online. Here's where we need caution. As the budgets show up, so will advertising-technology companies that want a cut. Just as brands were cautious in picking their initial technology partners, they need to be equally as prudent in choosing their new ones or re-evaluating existing ones.

Last year eMarketer predicted a 20% online spending uptick for CPG brands for 2012. Announcements from the biggest brands show this to be in full effect. In late January, Accenture and comScore found that visitors to CPG brand websites are valuable and frequent buyers of the brand in retail stores, completing 41% more transactions than non-visitors to their respective sites. These sites are attracting heavier-than-average brand buyers, who spend 37% more on the brand in retail stores than non-visitors. It's proof-positive that driving traffic to the right sites and the right customers results in real profits.

Now is hardly the time to overcomplicate; yet we are. Consider an observation from a Feb. 27 IAB (Interactive Advertising Bureau) panel on the online advertising ecosystem, from MediaOcean CEO Bill Wise, who can certainly speak from a position of knowledge: "If discrepancies were a company, it would be a multi-billion-dollar business." He's right. For every success and every million dollars that crosses the offline-online budget border, there seem to be 10 new tech companies with a hundred new solutions. Marketers should be wary of these offerings of shiny new toys hungry to take a bite out of each campaign dollar, and of established companies trying to recast themselves as the acronym of the hour.

Complicating the process might result in costs outweighing the reward. It's time for caution over carelessness -- proven results over marketing jargon. I have witnessed brands tempted into signing on to a technology provider on mere curiosity. If you decide the gamble is worth a shot, I recommend that you keep the whole value chain in mind. Does your path through the tech landscape match to your goals? What is your company receiving in exchange for the increased risk and a piece of your budget?

Keep the following four criteria in mind as digital-media spend accelerates:

Differentiation. You learn it in every MBA program. A stalwart like Prof. Philip Kotler, from Northwestern University's Kellogg School of Management, will tell you that "Features, Quality, Performance and Conformance" differentiate any product. Now is not the time to ignore such sound advice. Any marketing measurement, targeting or data product has to measure up to these four benchmarks. If they don't, your company is wasting valuable time, at the very least.

Comprehensive solution. One of the trends in any market expansion is bound to come from companies looking to exploit a niche. Buyers, beware of such companies, as this could represent unnecessary complication. The digital marketing and targeting business moves at warp speed. Only companies with comprehensive data solutions that have been in operation for a while and proven themselves can match its speed.

Technology integration. Key questions: How much time is your company going to spend integrating and adopting a new partner, platform or solution? Is that time going to be profitable? I would expect to see great detail in those answers.

Data. It all begins and ends with data. Customer data, whether it is behavioral or purchase-based, doesn't come without an investment in time, process and personnel. It takes a lot of sweat equity to have a secure and reliable data platform. You pay a lot of dues to be compliant and efficient.

Be as careful at the end as at the beginning. Sage advice for very exciting times.

ABOUT THE AUTHOR
Jeff Pullen is CEO of AudienceScience.
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