RE: UKNM: Fast Summit

[Ross Sleight]

Tony Coyle wrote:


>Our definition of one to one marketing is different.  Your argument that

you need a large database to filter/segment in >order to one-to-one market

is wrong on the net.  One-to-one is recognising and understanding an

individual, their >purchasing preferences/history, browsing habits,

anticipating their needs/wants, and intelligent dialouge that is

>personalised not just in terms of address details but also in terms of the

factors just described.


Tony - our definition of one to one is the same - I don't think that we

disagree here (e.g. http://www.1to1.com/).  Hypothetically - you are

tenuously right, but it is my belief that we can no longer work in

hypothetical situations with clients in this medium and have to relate them

back to business realities.  One to one is not some new idea that has come

along with the web, it is a tried and tested marketing strategy prevalent

throughout mass consumer marketing  all the way to business to business.

What happens with the web as it *can* (but not necessarily should) touch and

effect every part of the sales cycle and thus hypothetically the web is the

most powerful medium for one to one marketing.  


What I do believe you have missed is that there is a cost effective argument

here as to why one to one marketing can never be effective unless you start

with a large database.    Now there are two reasons why I think that true

one to one cannot work online at the moment:


(i)	Cost - this is by far the largest problem.  Cost of setting up a

database, making sure that db is current, making sure its clean,

personalising to the individual, having to have fulfilment that doesn't let

you down, having to build complex datamining skills, constantly updating and

reviewing research patterns for the individual's needs - the list goes on.

Its a huge investment to market one to one.  And this is what I believe you

have missed.  My argument is based that a return on this investment would be

impossible for a low margin (3-8% profit) FMCG producer to justify on a

single user basis.  That's why One to one marketing doesn't happen in the

real world unless a mass database can actually be segmented - it simply

doesn't show any return on a small scale. I believe that it can show return

when applied to a larger number of consumers through moving towards

identification of larger trends - what I would call one to few marketing. An

example here - if a retailer looked at one to one marketing and saw that a


user bought organic food more than traditional food, then in one to one

marketing he/she gets more Organic options, offers etc.  Result undoubtedly

is a happy customer but to provide these offers in this manner could never

be seen as cost effective.  But if you can see a trend in several thousand

customers buying into more organic food, then you can supply them all with

certain offers cost effectively, and change your product mix as a retailer

in order to provide a greater choice to all your users. Result - cost

effective way of marketing and being more personalised than normal whilst

ensuring that you see a bigger picture and get benefit from this as well

through identifying a purchase trend.  Looking at individual buying patterns

is useless in attempting to see the wood from the trees.


(ii)	Retailers and Product manufacturers, unless in niche fields, simply

do not have the structure (and I believe desire)  for one to one marketing.

I firmly believe that the structure of organisations, production,

distribution, transaction environment and after sales service are as

relevant online as offline - and most manufacturers/retailers are not going

to change their model if they only see 3-5% of their traditional retail

sales moving online - why upset the other 95% of the (offline) retail?

Retailers and manufacturers do not want to talk to individuals on a one on

one basis really as they do not have the resources to do so - it would be

far too expensive in support and sales to do this, and I would anticipate a

dilution of the brand the more the individual the dialogue becomes.  They

*do* want to get closer to their customers though by personalising and

providing a better level of service in order to provide greater added value

in their transaction process, in a way that is most cost effective and hits

the bottom line.  Thus I believe that one to few marketing should be the aim

of the web as cost efficiencies can be built up -but only from a mass

audience to begin with.

               


>On the web you don't need an audience of a thousand, a million or more to

do this, you can do it with one individual.


Yes at a prohibitive business cost.  Lets be real here and not hypothetical.


>Show me a case of true one-to-one marketing that has been sustained over

time?  Even Amazon.com admits it has terabytes of >data on it's

users/vistors habits etc, but it has so much it can't use it effectively or

even try and get close to one2one >- yet.


Because it is cost inefficient for Amazon. I don't know if you saw a very

good business report on Amazon by ICE Group - which has caused a lot of

kerfuffle - but only really around accounting procedures for disagreement.

One of the reports conclusions is that "Based on the numbers provided,

Amazon.com's average order costs the company $40.81 to process, yet its

average order size is $35.59--essentially creating a loss of $5.22 for each

Amazon.com order processed."  This is because "most computer users

believe--incorrectly--that online merchandise orders are cheaper to process

than those placed through traditional distribution channels."  (see


http://www.news.com/News/Item/0,4,25516,00.html for a summary or


http://www.icegroup.com/ to download pdf of their report)  Amazon cannot

afford true one to one marketing - christ they look like they have a few

problems with their standard business model to begin with!

   

Back to one of my original assertions:


>>Voila Parenttime.com - a clear example of an FMCG client using the web for

what it is good for.  Once they have hit an >>audience level that they can

begin to segment and understand buying patterns then they could (as an

extreme) retail direct >>as the products in question are bulky and are in

constant use 


Your reply:


>You are saying you have to get a certain number of eye balls before they

can segment and understand buying patterns - >rubbish, and exactly my point,

P&G is pushing their tried and true marketing/advertising formulae onto the

net.  That isn't >one2one marketing - that's mass marketing.  If they

understood one2one they could build a net presence that communicated on >a

true personal level.  That can happen with one person alone, and not need

millions of eyeballs before it does.


Your hypotheticals are great - but cost effectiveness still remains my

argument here.  And I don't see why mass marketing is wrong online according

to your definition. As I said above - one to few remains my best possible

case study for mass marketer FMCG brands.  In sectors they can personalise

where that sector is niche - but they still need to drive awareness and

brand which I'm sure we all agree the net can do. I don't believe that

ParentTime is mass marketing at all - but I don't want to cloud an issue

over definitions.


I don't believe that you understand the real business mechanics driving the

decision as to how far you go down the line as to where cost efficiencies

can kick in or costs build to make it unprofitable for individuals to be

targeted.  My stab is as follows:


mass marketing <---------/--------------------------> one to one marketing

				one to few

>>P&G will never actually be able to target individual products to small

groups of people.


Bit of a misquote here. What I said was: "Without mass market databasing

efforts, P&G will never actually be able to target

individual products to small groups of people"    


>I completely disagree. We are currently working with two of P&G's biggest

competitors doing exactly that. And my other >point.  There are ways to do

this using the unique qualities the net has.  Maybe an unfair comment given

the generalities >we are talking but perhaps P&G and yourself just haven't

figured it out yet.


I'm pleased that you are working with this with P&G's competitors - so are

we.  But I expect that after experimentation you will begin to see where

business realities do lie and why one to one marketing in mass sectors

becomes one to few in traditional marketing offline.  I am not against the

principle of one to one marketing - it is powerful and possibly the most

effective marketing - but I do not believe it can be implemented cost or

time effectively for true mass market FMCG brands not operating in niche

supply sectors (e.g. babycare, organic food etc).



As to P&G and me not figuring it out?  Well strike me down and call me a

moderate but I just recognise reality.  And from 6 years FMCG experience on

and offline, and everyone I've spoken to and read about with regard to FAST,

P&G are certainly approaching this with eyes open - and a careful look at

bottom line at the same time - exactly the way that they should be.


My last words on this?  Well I believe that we should stop preaching the

hype elements of what the net can and can't do and start looking at how we

can help businesses gain the maximum return from it.  Vision is an all

important quality as long as we are focussed on the elements that really

matter for our clients.  


Ross