QR Codes could be a big part of direct marketing in the future

As postage rates continue to rise, paper grows more expensive and customer response continues to drop - traditional direct mail as a business and marketing channel continues to shrink. Most people refer to this as "junk mail" but in the past, even a 1% response to junk mail was enough to support a business. Today, that isn't the case.

A few traditional DR companies have made the jump - most of them major catalogers like JCrew and Pottery Barn - and are now very sucessful eCom companies. Their web business makes up the bulk of their revenue. But there are many others who have not yet shifted to a more digital model and continue to rely on the USPS and paper based marketing messages. The reasons are many - most of them have to do with the customer demographic or product specifics.

Can a QR code help bridge the gap?

A QR code is a digital bar code. When a user takes a picture of it, a text message is usually sent in return with promotion or product information. But it can do many other things like communicate with an app and delivery further information about a product or service. And of course, the link between marketer and consumer via mobile is established.

I know there are a lot of people who think QR codes won't be adopted in the US. I'm betting that they will and if implemented creatively could be help many large DR companies.

Google is betting on the same - Google now automatically generates QR codes with a URL extension.

You can't force change

There is a law that every action has an equal and opposite reaction. This applies to almost every new marketing campaign - sales go too high and you run out of stock (I remember once an email from our sourcing dept claiming "unexpected over-performance of a marketing campaign has led to significant stock shortages" - nice that even when you sell out it can be a bad thing). New designs almost always have some backlash against people who were used to the old one. New site layouts cause confusion, etc.

Here is a good one dealing with the distribution of computer vouchers. The studies proved the vouchers were used but time spent on the computer went almost exclusively to playing computer games. Math scores for the group receiving the computers actually went down!

Try try as hard as we might. . . .

Unintended effects of programs are impossible to predict. This is one of the things that makes change so difficult - - "look, we gave away computers and they played games on them instead of doing their homework."

The only way to really effect change is to convince people that they must change - you saw this a few years ago when the price of gas spiked to >$4/gallon. Hummer is out of business now and smaller more fuel efficient cars are in our future. Everyone knows that price is coming back soon. Enticing or goading people to change never works. Change is personally difficult and most people won't succumb unless they feel the pain of NOT changing is worse than the change itself.

Ad Spending by channel - relevancy and measurement counts

An overview of 2008 vs. 2009 advertising spending by category via techcrunch.

Across the board, ad spending dropped 12.3% or about $1.5-billion.

Out of the 20 or so categories, only two saw y-o-y spending increases - Internet display and FSI, up 7.3% and 3% respectively.

Newspapers, Local Magazines and Spot TV were clobbered by >20% drops.

When you compare the Internet Display and FSI to Newspapers, Local Magazines and Spot TV, you can the importance of ad relevancy and measurement.

Internet display, while generating less than 1% click can be highly targeted with both niche categories and user behavior as the basis. This results in higher click rates and higher conversion (i.e. give a golfer a golf ad and he's more likely to click it....). Obviously, tracking performance can be done fairly easily in this channel, so a clear work/didn't work can be done quickly. Spending can be controlled based on what the results say.

FSI's are an interesting channel because they can also be highly targeted. An advertiser can select the newspaper or magazine to insert the FSI and then can take a customer selection, such as new customers, retained customers or specific geographies or zip codes. FSI's are often coupons and this type of promotion has seen a resurgence the past two years - so its an excellent vehicle for delivering these types of promotions and discounts. Since they are redeemable, FSI's are also a great way to measure the effectiveness of a campaign,

Newspaper ads, local magazines and spot TV all are too general. The only one you could argue with is the local magazines because they can be quite niche, but the readership for these has dropped dramatically in the past few years, so their reach is no longer very impressive. Newspaper ad effectiveness if very hard to measure. Spot TV ads are difficult to control and the advertiser usually has no say in when or where the commercial is aired.

Advertising continues to get more relevant. The channels that support this idea will be the ad channels that survive. Channels that support ad control and measurement are also going to "win". Over the next few years there will likely be more convergence between direct marketing and advertising.

Albany needs leaders and not politicians

I live in New York and the state, like many others, is in "financial crisis." Sounds cliche and most people are often distant from the impacts, but not this time. Severe cutbacks have caused the state to stop payments to school districts. In my district alone, for instance, the payment was about $1,000,000/yr. This means the school tax, already going up 5% will have to go up another .5%. Cutbacks are falling right down to the citizens the state is supposed to help.

It doesn't help that the Governor of our great state is about to be thrown out due to ethics violations and has already decided not to run for re-election. Talk about being involved . . . .

Things are so bad, they have dug up Lt. Gov Ravitch to come up with a blueprint plan on how to "solve this crisis." Ravitch was famed for helping NYC out of its financial woes in the 70's when Mayor Dinkins tried his best to wipe NYC off the map.

Ravitch has put together a well thought out plan. It calls for, in particular:

• significant spending cuts and abolishing much criticized Albany spending practices.
• forcing lawmakers to account for how they are spending money
• forcing balanced budgets in order to float more debt (i.e. operating expenses are paid for from operating cash, not debt)
• limit borrowing to 1%-2% of the budget

Wow - sounds like a real stroke of genius. Spending cuts. Abolishing spending practices that have "plunged" the state into debt. Limit borrowing.

And the Democratic response - “It’s not D.O.A.,” said Mr. Silver, the Assembly speaker.

Our government leaders have really failed their constituents. When the most basic of fiscal responsibility is met with "its not DOA," people should run for cover.

What this shows is that leadership without accountability is hard to track success. Being fiscally responsible is not the #1 priority for elected officials, but making sure our tax dollars are accounted for and are spent responsibly is of primary concern. To reject these measures is to reject accountability.

All leaders need to be held accountable and balanced budgets do that. Next time you hear someone not wanting transparency or tracking, be wary - I guarantee they are very poor leaders.

What is your company's DNA?

Every company has a DNA. Its what makes it special - what make it tick. In cases where a company is a category killer, the DNA is a real competitive advantage. Some call them "moats" that competitors can't cross.

Kodak was a good example of this. HBR did a great case study on them regarding corporate re-inventions. For decades they were all about film processing. I can't remember the exact process they mastered, but it obviously had to do with 35mm film. Way before digital cameras, Kodak was all about processing. They became masters at it, so good in fact it was hard for anyone else to jump into the film industry. Fuji tried but never really took much market share.

Then, digital cameras came out. What do you think happened to Kodak? They obviously didn't embrace digital photography - they fought it. So throughout the 90's and into this past decade, the company shrank - - -first slowly, then quickly. It took years for the corporate DNA to change.

Yahoo is having this identity struggle right now. It needs to switch from being a search advertiser to a network and content advertiser. Looks like they are having trouble at it. Check out this quote from their CEO, Carol Bartz during a recent interview about Yahoo's regrouping strategy.

For an industry that’s based on creativity and inspiring people, I don’t know why it’s so afraid. I don’t think it should be afraid to just try some crazy new stuff. But when I talk to people about online marketing, they just seem to freeze. … I thought this was going to be a much racier industry that wore black and got out there and rock and rolled and I see it being a little shier. I mean, I’m the crazy lady.

Yahoo doesn't have a "crazy new stuff" kind of DNA. This will likely take years to change. With 164-million visitors per month. It will be interesting to see how many they lose before they make the transition.

When is consumer research bad?

Consumer research is the bedrock of many companies and it makes sense. You want to know how your product or service stands up against competition and its good to hear about it first hand.

But when is product and consumer research bad? Nice post here from Dan Pallotta about leadership and consumer research.

Research is bad when you have a new product that breaks the rules. New products and services go through the typical lifecycle - innovators, early adopters, early majority, etc... If you don't have enough innovators in the research the idea will not pass muster.

Research is bad when you are attempting to position a product. Is it higher priced, lower priced, more upscale? No two people have the same view. A company has to figure out its branding and stay true to it. I was at Conde Nast the other day and I was talking to one of their group managers about the dip is sales. If you hadn't heard, ad-sales dipped about a billion dollars last year (ouch, yes $1-billion). They have been getting blasted in the business trade over this. The group manager shrugged and said, "we're a private company and live for our brands. We didn't lower our rates. The New Yorker never goes on sale. Every other publisher does. Thats how we remain special." Now that is staying true to the brand! You can't focus group that. Leaders just do it.

I used to have a boss that always said, "customers are stupid. They don't know what they want." He didn't mean to insult our customers but make the point that customers would say one thing in a research meeting but sales data proved they did otherwise.

Think about it . . . who would have thought Mini-Cooper would outlast Hummer 5 years ago?

Is your strategy malleable?

Good post here from the HBR. As with most HBR articles that are free, they tend to be obvious but contain a few bits of wisdom that you can take with you.

Here, HBR is talking about when you think your company strategy is wrong.

I think the best part of the article highlights that no strategy is perfect. Having pieced together online strategies for the past several years - where you start and where you end up are usually strangers. Companies and organizations need to adapt to what is working. Yes, there needs to be an end goal in mind but how you go about achieving success can remain hidden for a long time. Almost all strategies are built on assumptions. Those built of empirical data may seem more grounded but still require some assumption of what the data means.

This is perfectly illustrated in the short case sample provided in the article. Just because you think its a niche, there really needs to be a need. In this case, clients want great copy - they could care less if it came from stay at home mom's. Here, maybe the strategy is low cost one as stay-at-home mom's might cost less in overhead (no insult intended, I'm only implying they work PT).

This happens a lot with technology companies who believe their technology fits one thing or solves one problem, only to find out it can be used creatively somewhere else where there is a need.

Case Study #1: When the competitive advantage is a disadvantage
In 2005, Laura Casela (some details, including her name, have been changed) joined a strategic communications firm started by two former consulting colleagues of hers. Laura was brought in as the Director of Business Development to help grow the year-old firm. Laura was excited about her new role and about the company's future. The firm was founded on a unique premise. Most communications firms rely on freelance writers to do a lot of their work and clients have little knowledge about who these writers are. Laura's colleagues decided to change that by hiring stay-at-home moms who had left the industry to have more time with their families; they felt this was an untapped and experienced resource and if leveraged appropriately, could be a competitive advantage for the young firm. They built their brand around this hiring approach and had success with it in their first year in the market.

However, soon after taking the job, Laura discovered that the leads she was pursuing were not turning over. She was able to capture referrals but when new leads went to the website, they seemed to lose interest. She asked a few would-be clients what turned them away and they explained they weren't looking for a business of stay-at-home moms. Many said it just didn't feel like "a right fit." Laura realized that "clients wanted the best writers they could get and they were hiring a communications firm to do the hiring for them. They didn't care who did the work, as long as the work was great." Laura was conflicted; she believed in the brand and like the founders, thought it would help them stand out in the crowded New York market. But the evidence showed something different. Laura shared what she learned with her colleagues and explained that despite how much she believed in the principle, this was an angle they should drop. The founders were surprised; but they were open to what Laura had to say, primarily because of the evidence she provided, including client feedback and emails. Laura's speaking up had a huge impact and the firm's founders, together with Laura, are now working with a strategy consultant to rethink their branding.