Permission Marketing : Turning Strangers Into Friends And Friends Into Customers
The man Business Week calls "the ultimate entrepreneur for the Information Age" explains "Permission Marketing" -- the groundbreaking concept that enables marketers to shape their message so that consumers will willingly accept it.
Whether it is the TV commercial that breaks into our favorite program, or the telemarketing phone call that disrupts a family dinner, traditional advertising is based on the hope of snatching our attention away from whatever we are doing. Seth Godin calls this Interruption Marketing, and, as companies are discovering, it no longer works.
Instead of annoying potential customers by interrupting their most coveted commodity -- time -- Permission Marketing offers consumers incentives to accept advertising voluntarily. Now this Internet pioneer introduces a fundamentally different way of thinking about advertising products and services. By reaching out only to those individuals who have signaled an interest in learning more about a product, Permission Marketing enables companies to develop long-term relationships with customers, create trust, build brand awareness -- and greatly improve the chances of making a sale.
In his groundbreaking book, Godin describes the four tests of Permission Marketing:
1. Does every single marketing effort you create encourage a learning relationship with your customers? Does it invite customers to "raise their hands" and start communicating?
2. Do you have a permission database? Do you track the number of people who have given you permission to communicate with them?
3. If consumers gave you permission to talk to them, would you have anything to say? Have you developed a marketing curriculum to teach people about your products?
4. Once people become customers, do you work to deepen your permission to communicate with those people?
And in numerous informative case studies, including American Airlines' frequent-flier program, Amazon.com, and Yahoo!, Godin demonstrates how marketers are already profiting from this key new approach in all forms of media.
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Simon & Schuster
February 04, 2007
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Excerpt from Permission Marketing by Seth Godin
Chapter One: The Marketing Crisis That Money Won't Solve
You're not paying attention. Nobody is.
It's not your fault. It's just physically impossible for you to pay attention to everything that marketers expect you to -- like the 17,000 new grocery store products that were introduced last year or the $1,000 worth of advertising that was directed exclusively at you last year.
Is it any wonder that consumers feel as if the fast-moving world around them is getting blurry? There's TV at the airport, advertisements in urinals, newsletters on virtually every topic, and a cellular phone wherever you go.
This is a book about the attention crisis in America and how marketers can survive and thrive in this harsh new environment. Smart marketers have discovered that the old way of advertising and selling products isn't working as well as it used to, and they're searching aggressively for a new, enterprising way to increase market share and profits. Permission Marketing is a fundamentally different way of thinking about advertising and customers.
THERE'S NO MORE ROOM FOR ALL THESE ADVERTISEMENTS!
I remember when I was about five years old and started watching television seriously. There were only three main channels -- 2, 4, and 7, plus a public channel and UHF channel for when you were feeling adventuresome. I used to watch Ultraman every day after school on channel 29.
With just five channels to choose from, I quickly memorized the TV schedule. I loved shows like The Munsters, and I also had a great time with the TV commercials. Charlie the Tuna, Tony the Tiger, and those great board games that seemed magically to come alive all vied for my attention. And they got it.
As I grew up, it seemed as though everyone I met was part of the same community. We saw the same commercials, bought the same stuff, discussed the same TV shows. Marketing was in a groove -- if you invented a decent product and put enough money into TV advertising, you could be pretty sure you'd get shelf space in stores. And if the ads were any good at all, people bought the products.
About ten years ago I realized that a sea change was taking place. I had long ago ceased to memorize the TV schedules, I was unable to keep up with all the magazines I felt I should be reading, and with new alternatives like Prodigy and a book superstore, I fell hopelessly behind in my absorption of media.
I found myself throwing away magazines unopened. I was no longer interested enough in what a telemarketer might say to hesitate before hanging up. I discovered that I could live without hearing every new Bob Dylan album and that while there were plenty of great restaurants in New York City, the ones near my house in the suburbs were just fine.
The clutter, as you know, has only gotten worse. Try counting how many marketing messages you encounter today. Don't forget to include giant brand names on T-shirts, the logos on your computer, the Microsoft start-up banner on your monitor, radio ads, TV ads, airport ads, billboards, bumper stickers, and even the ads in your local paper.
For ninety years marketers have relied on one form of advertising almost exclusively. I call it Interruption Marketing. Interruption, because the key to each and every ad is to interrupt what the viewers are doing in order to get them to think about something else.
INTERRUPTION MARKETING -- THE TRADITIONAL APPROACH TO GETTING CONSUMER ATTENTION
Almost no one goes home eagerly anticipating junk mail in their mailbox. Almost no one reads People magazine for the ads. Almost no one looks forward to a three-minute commercial interruption on must see TV.
Advertising is not why we pay attention. Yet marketers must make us pay attention for the ads to work. If they don't interrupt our train of thought by planting some sort of seed in our conscious or subconscious, the ads fall. Wasted money. If an ad falls in the forest and no one notices, there is no ad.
You can define advertising as the science of creating and placing media that interrupts the consumer and then gets him or her to take some action. That's quite a lot to ask of thirty seconds of TV time or twenty-five square inches of the newspaper, but without interruption there's no chance for action, and without action advertising flops.
As the marketplace for advertising gets more and more cluttered, it becomes increasingly difficult to interrupt the consumer. Imagine you're in an empty airport, early in the morning. There's hardly anyone there as you stroll leisurely toward your plane.
Suddenly someone walks up to you and says, "Excuse me, can you tell me how to get to gate seven?" Obviously you weren't hoping for, or expecting, someone to come up and ask this question, but since he looks nice enough and you've got a spare second, you interrupt your train of thought and point him on his way.
Now imagine the same airport, but it's three in the afternoon and you're late for your flight. The terminal is crowded with people, all jostling for position. You've been approached five times by various faux charities on your way to the gate, and to top it all off you've got a headache.
Same guy comes up to you and asks the same question. Odds are, your response will be a little different. If you're a New Yorker, you might ignore him altogether. Or you may stop what you were doing, say "Sorry," and then move on.
A third scenario is even worse. What if he's the fourth, or the tenth, or the one hundredth person who's asked you the same question? Sooner or later you're going to tune out the interruptions. Sooner or later it all becomes background noise.
Well, your life is a lot like that airport scene. You've got too much to do and not enough time to get it done. You're being accosted by strangers constantly. Every day you're exposed to more than four hours of media. Most of it is optimized to interrupt what you're doing. And it's getting increasingly harder and harder to find a little peace and quiet.
The ironic thing is that marketers have responded to this problem with the single worst cure possible. To deal with the clutter and the diminished effectiveness of Interruption Marketing, they're interrupting us even more!
That's right. Over the last thirty years advertisers have dramatically increased their ad spending. They've also increased the noise level of their ads -- more jump cuts, more in-your-face techniques -- and searched everywhere for new ways to interrupt your day.
Thirty years ago clothing did not carry huge logos. Commercial breaks on television were short. Magazines rarely had three hundred pages of ads (as many computer magazines do today). You could even watch PBS without seeing several references to the "underwriter."
As clutter has increased, advertisers have responded by increasing clutter. And as with pollution, because no one owns the problem, no one is working very hard to solve it.
CONSUMERS ARE SPENDING LESS TIME SEEKING ALTERNATIVE SOLUTIONS
In addition to clutter, there's another problem facing marketers. Consumers don't need to care as much as they used to. The quality of products has increased dramatically. It's increased so much, in fact, that it doesn't really matter which car you buy, which coffee maker you buy, or which shirt you buy. They're all a great value, and they're all going to last a good long while.
We've also come a long way as consumers. Ninety years ago it was unusual to find a lot of brand-name products in a consumer's house. Ninety years ago we made stuff, we didn't buy it. Today, however, we buy almost everything. Canned goods. Bread. Perked coffee. Even water. As a result, we already have a favorite brand of almost everything. If you like your favorite brand, why invest time in trying to figure out how to switch?
We're not totally locked in, of course. It wasn't too long ago that cake mix was a major innovation. Just a few years ago we needed to make major decisions about which airline was going to be our supplier of frequent flier miles. And today, if you're going to get health care, you've got to make a serious choice. But more often than not, you've already made your decisions and you're quite happy with them.
When was the last time someone launched a major new manufacturer of men's suits? Or a large nationwide chain of department stores? Or a successful new nationwide airline? Or a fast-food franchise? It can be done, certainly, but it doesn't happen very often. One of the reasons it's such a difficult task is that we're pretty satisfied as consumers.
If the deluge of new products ceased tomorrow, almost no one would mind. How much more functional can a T-shirt get? Except for fast-moving industries like computers, the brands we have today are good enough to last us for years and years. Because our needs as consumers are satisfied, we've stopped looking really hard for new solutions.
Yet because of the huge profits that accrue to marketers who do invent a successful new brand, a new killer product, a new category, the consumer is deluged with messages. Because it's not impossible to get you to switch from MCI to Sprint, or from United Airlines to American Airlines, or from Reebok to Nike, marketers keep trying. It's estimated that the average consumer sees about one million marketing messages a year -- about 3,000 a day.
That may seem like a lot, but one trip to the supermarket alone can expose you to more than 10,000 marketing messages! An hour of television might deliver forty or more, while an issue of the newspaper might have as many as one hundred. Add to that all the logos, wallboards, junk mail, catalogs, and unsolicited phone calls you have to process every day, and it's pretty easy to hit that number. A hundred years ago there wasn't even a supermarket, there wasn't a TV show, and there weren't radio stations.
MASS MEDIA IS DEAD. LONG LIVE NICHE MEDIA!
Technology and the marketplace have also brought the consumer a glut of ways to be exposed to advertising. When the FCC ruled the world of television, there were only three networks and a handful of independents. Networks made a fortune because they were the only game in town. Now there are dozens -- and, in some areas, hundreds -- of TV channels to choose from.
The final episode of Seinfeld made media headlines. Yet thirty years ago Seinfeld's ratings wouldn't have made Nielsen's list of top twenty-five shows of the season. With an almost infinite number of options, the chances of a broadcast, even a network broadcast, reaching almost everyone are close to zero.
Even worse is the World Wide Web. At last count there were nearly two million different commercial Web sites. That means there are about twenty-five people online for every single Web site...hardly a mass market of interest to an Interruption Marketer.
Alta Vista, one of the most complete and most visited search engines on the Internet, claims to have indexed 100 million pages. That means their computer has surfed and scanned 100 million pages of information, and if you do a search, that's the database you're searching through.
It turns out that in response to people who do searches online, Alta Vista delivers about 900 million pages a month. That means the average page that they have indexed in their search engine is called up exactly nine times a month. Imagine that. Millions of dollars invested in building snazzy corporate marketing sites and an average of nine people a month search for and find any given page of information on this search engine.
This is a very, very big haystack, and Interruption Marketers don't have that many needles.
Marketers have invested (and almost completely wasted) more than a billion dollars on Web sites as a way of cutting through the clutter. General Electric has a site with thousands of pages. Ziff-Davis offers a site with more than 250,000 pages! And a direct result of this attempt to cut through the clutter is the most cluttered, least effective marketing of all.
THE FOUR APPROACHES TO KEEPING MASS MARKETING ALIVE
A quick look at the newsstand at Barnes & Noble will confirm that the problem of clutter saturation isn't limited to electronic media. There are enough consumer magazines (ignoring the even larger category of trade magazines for a moment) to keep a reader busy reading magazines full-time, twenty-four hours a day, seven days a week.
Obviously the mass market is dying. The vast splintering of media means that a marketer can't reach a significant percentage of the population with any single communication. That's one reason the Super Bowl can charge so much for advertisements. Big events are unique in their ability to deliver about half the consumers watching TV, so they're the perfect platform for Interruption Marketing aimed at the mass audience.
Other than buying even more traditional advertising, how are mass marketers dealing with this profound infoglut? They're taking four approaches:
1. First, they're spending more in odd places. Not just on traditional TV ads, but on a wide range of interesting and obscure media. Campbell's Soup bought ads on parking meters. Macy's spends a fortune on its parade. Kellogg's has spent millions building a presence on the World Wide Web -- a fascinating way to sell cereal.
Companies have seen that a mass market broadcast strategy isn't working as well as it used to, especially when targeting the hard-to-reach upper-income demographic. As this lucrative audience spends less time watching TV, marketers are working overtime trying to find media with less clutter, where their interruption techniques can be more effective.
Marketers hire Catalina Corporation to print their coupons on the back of receipts at the grocery store. They buy ads on the floor of the cereal aisle. There are ads atop taxis in New York City and on the boards around the rink at the hockey game. Fox even figured out a way to sell the rights to the small area over the catcher's shoulder, so TV viewers would see the ad throughout an entire baseball game.
2. The second technique is to make advertisements ever more controversial and entertaining. Coca-Cola hired talent agency CAA to enlist topflight Hollywood directors to make commercials. Candies features a woman sitting on a toilet in its magazine ads (for shoes!). Spike Lee's ad agency did more than $50 million in billings last year.
Of course, as the commercials try harder to get your attention, the clutter becomes even worse. An advertiser who manages to top a competitor for the moment has merely raised the bar. Their next ad will have to be even more outlandish in order to top the competition, not to mention their previous ad, to keep the consumer's attention.
The cost of making a first-rate TV commercial is actually far more, per minute, than that of producing a major Hollywood motion picture. Talking frogs, computer graphics, and intense editing now seem to be a requirement.
A side effect of the focus on entertainment is that it gives the marketer far less time to actually market. In a fifteen-second commercial (increasingly attractive as a cost-cutting way to interrupt people even more often), ten or even twelve seconds are devoted to getting your attention, while just a few heartbeats are reserved for the logo, the benefit, and the call to action.
Take the interruption challenge! Write down all the companies that ran commercials during your favorite TV show last night. Write down all the companies that paid good money to buy banners on the Web during your last surfing expedition. If you can list more than 10 percent of them, you're certainly the exception.
3. The third approach used to keep mass marketing alive is to change ad campaigns more often in order to keep them "interesting and fresh." Tony the Tiger and Charlie the Tuna and the Marlboro man are each worth billions of dollars in brand equity to the companies that built them. The marketers behind them have invested a fortune over the last forty years making them trusted spokesmen (or spokesanimals) for their brands.
Nike, on the other hand, just ran a series of ads without the swoosh, arguably one of the most effective logos of the last generation. Apple Computer changes its tag line annually. Wendy's and McDonald's and Burger King jump from one approach to the other, all hoping for a holy grail that captures attention.
In exchange for these brief bits of attention (remember the hoopla when they replaced Mikey on the Life box?) these marketers are trading in the benefits of a long-term brand recognition campaign. It's a trade they're willing to make, because Interruption Marketing requires it. Without attention, there is no ad.
4. The fourth and last approach, which is as profound as the other three, is that many marketers are abandoning advertising and replacing it with direct mail and promotions. Marketers now allocate about 52 percent of their annual ad budgets for direct mail and promotions, a significant increase over past years.Of the more than $200 billion spent on consumer advertising last year in the United States, more than $100 billion was spent on direct mail campaigns, in-store promotions, coupons, freestanding inserts, and other nontraditional media. Last year alone Wunderman, Cato, Johnson did more than $1.6 billion in billings for its clients (folks like AT&T).
The next time you get a glossy mailing for a Lexus or enter an instant win sweepstakes at the liquor store, you're seeing the results of this trend toward increased direct marketing efforts. Advertisers are using them because they work. They are somewhat more effective at interrupting you than an ad. They're somewhat more measurable than a billboard. Best of all, they give the marketers another tool to use in their increasingly frustrating fight against clutter. After all, there are only five or ten pieces of junk mail in your mailbox every day -- not 3,000. And another few feet of shelf space at the supermarket can lead to a dramatic upturn in sales.
DIRECT MARKETING BREAKS THROUGH THE CLUTTER, TEMPORARILY
Even though they work better than advertising, these techniques are astonishingly wasteful. A 2 percent response for a direct mail campaign will earn the smart marketer a raise at most companies. But a 2 percent response means that the same campaign was trashed, ignored, or rejected by an amazing 98 percent of the target audience! From the perspective of the marketer, however, if the campaign earns more than it costs, it's worth doing again.
Of course, just as suburbanites learned when they fled the city to avoid the crowds, if a strategy works, other people will be right on your heels. That bucolic countryside fills up rapidly with other people looking to get away from it all. Correspondingly, as each of these promotional media becomes measurably effective, every smart marketer rushes to join in. Finding a unique approach that cuts through the clutter is usually very short-lived.
Virtually every supermarket now charges a shelving allowance, for example, which manufacturers pay for if they want more shelf space for their products. Every liquor store is already jammed with promotions. Every mailbox in the country is brimming with catalogs for clothes, gardening equipment, and fountain pens.
Direct marketers are responding to this glut by using computers. With access to vast amounts of computerized customer information, marketers can collate and cross-reference a database of names to create a finely tuned mailing list and then send them highly targeted messages. For example, a direct marketer might discover that based on past results, the best prospects for its next campaign are single women who are registered Democrats, who make more than $58,000 a year, and who have no balance on their credit card. This information is easily available, and marketers are now racing to make their direct marketing ever more targeted.
Of course, database marketing is a weapon available to any marketer, so like all trends in Interruption Marketing, this one will soon lose its edge. When others jump in as well, the clutter will inevitably catch up.
The last frontier of Interruption Marketing appears to be exemplified by the movie Titanic. James Cameron showed the world that outspending any rational marketer will indeed cut through the clutter. Hollywood has jumped on this bandwagon with marketing campaigns for Godzilla and other films that at first glance can't possibly bring in enough ticket sales to justify the expense.
Nike uses the same approach to sell sneakers, and now this radical overspending strategy is being used by others, especially on the Internet. The thinking behind it is based on an all-or-nothing roll of the dice. Basically, because clutter is so pervasive, anyone who can successfully break through and create a new mass market product will reap huge rewards. And betting vast amounts of other people's money on that breakthrough is one way to play.
Of course, once there's a proven pattern that big spending can win, others in the category will jump in as well. The bar will be raised yet again, and the only winners will be the media companies that sell the airtime and ad space in the first place.
WHY AD AGENCIES DON'T WORK TO SOLVE THE PROBLEM
What about the ad agencies? With so many talented people, why aren't they working to solve this problem?
Unfortunately the clutter wars are taking their casualties at the agency side as well. The big agencies, the ones that could afford to take the lead in this challenge, are faced with three dismal problems:
1. First, clients are giving the agencies a much shorter leash. Leo Burnett used to keep clients for twenty or thirty years. Levi's stayed at FCB for sixty-eight years. That's so long that not one person at either company was probably born when the account work was started on Levi's.
Today, however, it's not unusual for a marketer to change agencies after two or three years. Companies that fired their ad agencies in the last year include Bank of America, Compaq, Goodyear, and many more.
2. The second problem is that the stock market has been conducive to agency consolidations. The best way to make money in advertising today is to buy ad agencies and take them public. As a result, some of the best minds in the business have been focusing on building agencies, not brands.
3. Last, the commission structure that every ad agency was built upon has been dramatically dismantled. Traditionally agencies were paid by media companies. They got to keep 15 percent of all the ad money the client spent on ad space in the form of a commission from the magazines and TV networks where they ran their ads. This meant that big clients could generate huge profits for the ad agencies, which funded work on new approaches to advertising as well as the innovative ads for new, smaller clients. But now the big guys have decided to put a stop to this subsidizing, and it's rare to find an ad agency that still gets a straight 15 percent commission on media buys for their big clients.