Keeping ahead in the digital space

The Independant - 26 January 2006

New Zealand marketers have fallen behind in the digital space as consumers and technology have moved ahead.

Steve Shearman, founder of digital marketing company Touchpoint, says while Americans are well ahead in many areas, technology is not the issue. It’s a question of marketers catching up.

“It’s not about 20 year changes anymore. It’s about 5-10 year changes.” Shearman says.

Industries starting to move fast online include finance, he says. The last industries to go online will be those with low value products such as FMCG (fast moving consumer goods).

However, some FMCG categories have made effective use of the internet by running promotions.

Shearman started a company called Webmasters in 1995, selling it in 1999.

“We realized that for marketing to really take on the new channels, you needed to sell technology that worked for marketers rather than for the IT infrastructure people,” he said.

“Touchpoint was set up to help marketers market through through digital channels.”

Today, Touchpoint is a leading provider of the boring backend stuff” for digital marketing. Shearman says.

“With the way the market is structured, those are not the skill sets you would find in an agency or a marketing operation.”

At the AdTech conference in New York City, the 8000 attendees indicated strong interest in digital channel marketing, such as email campaigns or website advertising of text messaging.

“Everyone is scrambling to get their heads around it,” says Shearman, who attended the conference. “The thing that is scariest is the consumers have moved already and everyone is racing to catch up with new digital marketing approaches.”

“In some ways New Zealand is very innovative but in other ways we don’t do a lot of things because there isn’t the budget or we don’t get a lot of return on it.

“ I would say that a year ago, marketers in both the US and here were treating the digital space as, “I need to experiment and see if I get a gain.” This year it is, ‘consumers have already moved and I have to get across there as fast as possible.”

Shearman says Americans moved faster than Kiwis because they have systems in place to measure cost per response, “so it’s easier for them to jump on the easy opportunities. There’s the traditional models like online advertising and direct such as email advertising that are very easy for marketers to understand”, he says, “ But there are new opportunities opening up such as ‘paid search.’

With paid search, ad appears on a page if the keywords match, but advertisers pay only if the viewer then clicks on the ad and is taken to the advertisers website.

Advertisers bid at auction for keywords.

It’s a completely different model for marketers to get their heads around, but one that ties back to real business because usually a retailer can measure the value of a person visiting your site.He says Americans are well ahead of New Zealand because they’re not measuring a campaign on how much an advertiser pays per click.

Instead they measure the traffic through to purchase and how much has been spent on advertising per sale.

If you know you can afford to spend 10% of your sales on marketing a $100 sale equates to $10 for marketing. If you are spending less than $10 per sale you know you are doing well, Shearman says.

Online marketing is becoming even more sophisticated with new systems designed to work out “lifetime value”.
These predict how many purchases any single online shopper will make during a certain period.

“Advertisers can then say ‘if you buy this keyword, you’ll get this customer who buys three times during five years and if you buy another keyword, you might get more people at lower cost, but they only buy once.” Shearman says, “You compare that with New Zealand online marketing and they’re still getting their head around page impressions.”

A page impression is the number of times a page is viewed.

In the United States, converging technologies are delivering new opportunities. For example free to air channels are now being delivered on broadband networks.

“The next big thing will be broadband, mobile and TV all coming together, but it will all be too late for many businesses because the ones that haven’t moved will be left behind.

He says the travel industry is an excellent example of online business doing well, while those not online are struggling.

The same marketer who will book his flight and accommodation on the internet still doesn’t often get it that his own customers are doing it to them in their own space.”