Mr. Wunderman, who sits on several dot-com boards and consults with direct agencies such as Hanover Direct, is serving as worldwide director and chief scientist for Impiric's new Marketing Lab. He also recently co-founded a database company, I-Behavior.com, with his daughter-in-law. Marketing Lab will conduct marketing and customer relationship management research for Impiric clients, create a Web-based marketing information center through a "Thought Leadership Exchange," and start an incubator to provide marketing help to developing companies.
Mr. Wunderman spoke with Advertising Age Reporter Amanda Beeler recently about his plans for Marketing Lab and the challenges of using the Internet as a marketing tool.
AA: Since you stepped down from the top of Wunderman in 1997 and become chairman emeritus, what's the biggest change you've seen in direct marketing?
Mr. Wunderman: The Web has to be the change, but I was part of it before I stepped down. I was part of the group that helped advise the government on policy regarding the Web in the early '90s. I was aware of it quite early. I subsequently had the opportunity to be on boards of some Web-based companies and got to see the world from the other side, not of the agencies but the companies themselves. That gave me a great appreciation of what potential the Internet has and what it wasn't yet doing and perhaps it could never do.
AA: What isn't it doing?
Mr. Wunderman: For the moment the Web is not -- despite all news to the contrary -- the Web is not a great shopping medium or a great browsing medium for shoppers. It's a great medium and works well if you know what to buy. It doesn't work nearly as well as if it's a browsing site. You can do better browsing in a catalog or get a closer feeling about merchandise in a store. But the Web is the easiest way of ordering anything ever invented if you know what you want. The Web is a great place to get it. That is what stimulated the success of say, an Amazon. It was a great order vehicle . . . but the Web is not yet a great medium of persuasion.
AA: Can it be?
Mr. Wunderman: Maybe with convergence. The Web is informational, it's not emotional, and persuasion is facts that are emotionally edited. . . . So much of advertising and salesmanship and marketing is persuasion, and the Web has not yet taken its place among the major vehicles of persuasion.
AA: Where does e-mail marketing fall into that? Is it more persuasive?
Mr. Wunderman: Well, it makes an argument. E-mail marketing is effective. But you don't read e-mail for its emotional impact. You read it for information. Some of the visuals and stunts that are available in tactile direct mail are unavailable. . . . The Web is misunderstood, and the reason so many people think its potential hasn't been fulfilled is because it's not a wonderful medium for advertising. Banner advertising has been a disappointment. Banner advertising is simply not as effective as TV commercials with the reach. They're static. There are other uses of the Web. The Web will change the way people shop and will eventually have an enormous impact on both branding and purchasing -- but not the way it's currently being used.
AA: When do you think that will occur?
Mr. Wunderman: In the next five years. Part of the problem is the fact that marketers have accepted [the Web] as another medium -- as if somehow this has been added to the media portfolio -- instead of thinking: "This is something different, this is something special and this is part of the revelation in marketing; let's take a look at how it represents our times and represents the state of our economy and our production economy and consumption economy rather than how it represents communication."
AA: So to people who say the Net is just another channel, you would say they're too nearsighted.
Mr. Wunderman: What [the Internet] is, is a direct, ongoing, interactive connection between people who are using the medium. What it does that no other medium ever did is put the consumer in charge. . . . Michael Dell understood that he was talking to consumers one at a time and therefore had the opportunity to mass-customize products and sell to consumers one at a time. The other phenomena that the Web has bred is dynamic pricing: variable pricing through auctions. The fact that you are again negotiating price brings us back to another time in the market when there were no fixed prices because there were no mass-produced goods.
AA: How specifically?
Mr. Wunderman: The structural underpinning is changing. The industrial revolution is over. The industrial revolution was mass production, organized products sold through a layer of distribution that left the consumer no option except between products. The creation of the supermarket was the most competitive arena for the products because all that competed were boxes. Consumers were totally dependent on the advertiser to know what was in that package and what the virtues were and, because prices were posted, everybody paid the same price. And when there were sales, they weren't sales for specific customers, they were sales for anybody who bought the product.
AA: And now?
Mr. Wunderman: Suddenly you have a post-industrial society. You have a medium that's one-to-one, you have the ability to at least tailor both your messages and your product. . . . People are giving information about themselves, which allows a seller, whether it be a manufacturer or a retailer, further contact. If I went into a supermarket and bought something, that store couldn't find me or know if I came back. Now I can go to a Web shop and buy something and they can communicate with me again. Now we have the possibility of selling [again] over time. It's a whole new thing that nobody has explored.
AA: Can you give an example?
Mr. Wunderman: The only way I get the branding effect of Crest toothpaste is to use it. I'm not going to get a cavity this week whether I use it or not, but I need to use it all the time. But they have no method of selling it to me over time. Suddenly we're beginning to look at the promises of brands -- which actually cannot be fulfilled in the retail marketplace as we've created it -- that can potentially be fulfilled on the Web. . . . If I automatically replenish, then brand loyalty is going to become the rule rather than the exception. Therefore, I might be selling to people over periods of time and might price it differently because if I knew you were going to buy it over the period of a year I might charge you a different price than if I had to sell it to you once then twice.
AA: How do you see the research endeavors you're getting involved in as exploring marketing opportunities in the post-industrial economy?
Mr. Wunderman: One of the things I want to do with Marketing Lab is influence lifetime value [of customers]. When you talk about lifetime value, marketers can calculate it but they can't influence it. People talk about relationship marketing, but they don't know how to create relationships because that goes on over time. They can't do any selling consistent with that relationship, and I think we can. . . . Why can't we begin to approach people with a product or a service differently based on the length of time they've been a customer? You have a discount for cash, why can't you have a discount for a relationship? So without going into all of it, there's so much to be explored. Then there's the whole matter of channel conflict, which has got to go away. Someone wants to have products wherever they choose to shop and that will dictate other forms of distribution.
AA: How big do you envision the Marketing Lab becoming?
The potential is enormous. We're not at the moment disclosing areas of research.
AA: Do the dot-coms that are doing direct marketing understand the things you're saying about what's not explored yet on the Net?
Mr. Wunderman: Well, I hope the ones I'm working with do. I'm trying to persuade them. The companies that have not invited me on their boards could perhaps benefit more than the ones who have. The big, old, established companies should have someone like myself to shake up what they're doing. Even at my age my thinking is young. I'll quit. I'll retire the day I no longer think my mind is young.