In early July 2009, the U.S. Russia Center for Entrepreneurship, with the support of Ernst & Young, held our quarterly St. Petersburg Entrepreneurship Group featuring presentations by successful businessmen who related how they have increased sales by using the new marketing and advertising approaches on the Internet.
Web Marketing
The special role played by the Internet is obvious today. First, its audience is growing not by the day, but by the hour: in the past year, for example, Moscow visitors of the www.mail.ru site outstripped the audience of a number of federal television channels.
In the evenings, as many as seven million people are online in Russia (the St. Petersburg audience is approximately one-third the size of Moscow’s). The number of visitors to the most popular search and e-mail sites, such as www.yandex.ru and www.mail.ru, is around eight million, while about four million people visit www.rambler.ru each day.
An evaluation of all popular advertising vehicles showed that the Internet scores the highest mark and surpassed television, especially in terms of targeting and feedback. Radio, television, the Internet, billboard advertising, targeted distribution of pamphlets, circulation of glossy magazines, and newspapers were tested on five parameters: scope of audience, perception, targeting (singling out of target audience), price for 1,000 contacts, and feedback, which makes it possible to assess the effect of an ad on the consumer. In addition, everything on the Internet can be measured: the initial scope of the audience, the target audience in a specific area, conversion (the number of visitors who have registered, filled out a questionnaire, bought merchandise, etc.). Plus, the price of contact with the client can easily be calculated.
Sergei Kotyrev, the General Director of the Internet advertising agency UMI Studio and the company Umisoft (developer of the website management system UMI.CMS), summarized for the event participants the main points from his course on Internet marketing and sales, “Catch with the Net,” which he gives at the Stockholm School of Economics. In Sergei’s opinion, the Internet now is just another battlefield in the fight to win consumers. From the standpoint of the Internet user, it is a media resource (mass media), a reference, and a service at the same time.
When researching and creating a customer audience on the Internet, one can use the following: media advertising (banners), SMO (social media optimization – a set of measures intended to attract visitors to the site from social networks), PR (texts), and mail distributions. Plus, companies can use advertising on search sites by using SEO (search engine optimization – a set of measures for enhancing the position of a company’s site in the search engine’s list), contextual advertising, and one’s own website.
Search advertising and contextual advertising are most useful when a demand has already been created, as they reach a target audience. Search advertising, where placement is based on the auction principle of ranking sites on search engines (the more you pay for one click, the higher your advertising is placed relative to that of competitors), makes it impossible to concentrate in a well-aimed fashion, but the first few positions are not guaranteed. Contextual advertising also is aimed at a target audience, but search advertising is cheaper than the contextual method.
Both search and contextual advertising are effective mainly for b2b (business to business), where image advertising is not necessary. Both methods enable the customer to pay not for the display of the ad, but for the targeted clicks of visitors to the customer’s website. The downside is the narrow scope of the audience.
The main players in the field of contextual advertising are Yandex Direct (www.direct.yandex.ru), Begun (www.begun.ru), Google AdWords (www.google.ru), and Rorer (www.rorer.ru). Universal services have also appeared, granting access to all sites at once: Blondinka.ru and eLama.ru.
Recent accomplishments in the field of behavioral targeting are of interest both to the advertiser and to the user. Essentially, they are as follows: today, technology makes it possible to record not only the gender, age, and location of the user, but also information about his favorite websites. This already can be observed today: if you’re interested in a three-room apartment on Google, then you also are offered similar information at another site.
“Big Brother,” says Sergei, “is watching you, and in principle this is useful both to the user and to the advertiser. The recognition of the client is based on spy technologies: a robot “crawls” and collects information about the user in various ‘cookies,’ on various websites. Advertising agencies already have accumulated plenty of data on behavioral targeting. Behavioral advertising is the most expensive.”
With regard to Social Media Optimization, one can add that this concept includes both PR campaigns on blogs and social networks, and guerrilla marketing, where you can order a correction of your image with the help of real or virtual people. Now there is already a business that has to do with the creation and growth of virtual characters that look just like real, live people.
To develop a competent media plan, a client must provide the company performing the work with some initial data: a portrait of the target audience, a timeframe, the desired scope of the audience, and the amount of the budget for the ad campaign. It is entirely possible that this will require ordering some additional market research.
Advertiser’s creative abilities are very important. But, clients must rely on certain axioms. One, advertising must work for the customer of today, tomorrow, and the day after tomorrow. Two, it must maximize the target audience within the scope of the assigned budget, or have a minimal price for a single contact with the target audience. Three, the ad must remain in the memory, surprise, and entertain, and it must not be irritating. (For example, an ad is irritating when it interferes with the use of the website: it takes up a lot of space, blinks, requires compulsory interaction, misleads, overloads the channel of access to the Internet or the processor of the computer, or has unpleasant content.)
Let’s remind ourselves that advertising can be image advertising (it acquaints people with the brand, and the company as a whole), product advertising (it acquaints people with the product), or commercial advertising (it points out what and where to buy at a better price). The first type is considered to work better for the customer of the day after tomorrow, the second, for the customer of tomorrow, and the third, for the customer of today.
The Internet, as a space for placement of image advertising (banners), produces results primarily for producers of consumer products or b2c (business to customer). The Internet as a space for PR campaigns with elements of SMO is of interest to politicians, as well as to both large and small companies. The search sites of the Internet are most effective for product and commercial advertising. Search advertising (on search engines) and contextual advertising (in a certain context) yield a particular effect by using SEO. The main advertisers are producers of niche products and b2b companies.
“The semantic core” is the notion used by Mikhail Kisin, Project Director at GoodsMatrix.ru, in speaking about sales promotion by means of search optimization. He suggests that, for example, for FMCG (Fast Moving Consumer Goods), “promoting” them on the Internet with three to five inquiries is senseless. You have to use the semantic core as a guideline: a list of the main key phrases in the inquiries of visitors on the Web. In his opinion, the best strategy for FMCG is to occupy the entire niche of your semantic core, to fill the Internet with references to you and your merchandise. He suggests that a business selling, for example, food products, should join resources for promotion of the merchandise with partners who are not competitors. This interferes with competitors’ use of the Internet and will help lower in-house expenditures on advertising.
Sergei Kotyrev, answering questions about promotion of their own company, said that a certain role was played by its personal ties, but the main thing is time: “After five years of being in the market, we saw that we had zoomed.” At the same time, he suggests that it is helpful to turn to advertising agencies to organize the promotion of your business on the Internet: “You won’t incur additional costs, because a reputable agency surely is a leader in the big Internet site (has 10-15% commissions), and you’ll get additional service. But you can also go to the site directly. . .”
On the Horizon Is Extended Information Packaging
In the opinion of Mikhail Kisin, for successful promotion of a product on the Internet, you first of all must understand the audience, and then thoroughly examine the form in which this audience readily “swallows” information.
The chief distinction of the Internet is the opportunity to classify a visitor as a member of one audience or another on the basis not of social and demographic parameters (as is done, for example, in sociological surveys), but of real behavior and the context of current interests (behavioral and contextual targeting).
Thus, search engines show that people choose the word “work” on Yandex 10 million times per month, “catalog,” 1.5 million times, “search”, 100,000 times, and “palaces of St. Petersburg,” 14,000 times. But people make inquiries related to food products about 30 million times per month. It is important that a portion of the inquiries are from consumers, some from industry professionals, and part from both groups.
Mikhail suggests dividing the audience into three parts. One part is the audience with an already existing demand, made up of people who have come to the Internet, perhaps, for information about a specific brand of juice: these are your buyers. The second part is the audience with overlapping demand: visitors who are interested in other juices, and you must try to intercept them. And, finally, the third part: people who are merely looking to see what’s helpful to their health (group demand) and they also must be attracted to your advertising. As a general rule, the broader the audience coverage, the more expensive the advertising campaign, but the less expensive the contact with each person.
How do you present information about your product? It is already clear that whereas previously a customer looked at information about products on the package in the store, these days he sees it on the Internet. Consequently, you need to know what the Internet audience is accustomed to, and your own children can make suggestions about this.
Mikhail thinks that information for the Internet audience must ensure simplicity in the search for an article (for example, Nokia 3310), and must include:
- exhaustive technical characteristics and advice on making a selection;
- pictures and instructions for use;
- data about the manufacturers and the quality of the products;
- consumer reviews, product ratings, comparison of models and prices;
- list of stores, reviews of the stores;
- the opportunity to place an order through the website.
This results in the special role of Internet merchandising, or: “The better the display, the higher the sales!” Using this logic, the expert sees several general rules:
- you and your products must be easy to find through inquiries that are “honestly” yours (already existing demand);
- you and your products must be found and come across everywhere (overlapping demand, group demand, theme-related demand);
- if they have found you and you came, then visitors must receive exhaustive information, and therefore information must be carefully prepared both for industry professionals and for consumers;
- the products taken as a whole create a large amount of content: we are promoting each specific article, not only a brand, company, or website;
- we absolutely must use barcodes!
Barcodes are a subject unto themselves. These are 13 numbers enabling unique identification all over the world, which are issued by GS1, an international organization for bar-coding that has a membership of more than 100 national organizations. In Russia, the national organization is the Association for Automatic Identification UNISCAN/GS1 RUS (formerly UNISCAN/EAN Russia).
The barcode gives the customer an opportunity in principle to have exhaustive information about merchandise through telecommunication channels (Internet, mobile communications, camera) right in the store. The information on the monitor screen is actually extended packaging with information.
Extended Information Packaging is a concept introduced by the international community and popularized through GS1. It includes information about 30 product parameters: composition, utility, allergic responses, places where it is sold, usage, user reviews, etc.
“In Japan, a new standard for bar-coding has been in existence for five years now: a two-dimensional drawing in the form of a little square takes us directly to the merchandise website, specifically through the Nokia mobile phone. It’s already a different reality,” Mikhail Kisin continues.
Answering a question about promotion of services, Mikhail said that a good reputation on the part of the company offering the service works best of all: “But there are also special technologies. For example, our colleagues (the website “Electronic Job Market” – www.jobmarket.ru) developed a technology for promoting educational services in a distribution called “Informer vakansii” (Info about Vacancies). It’s essentially quite simple: the 2.5 million subscribers to this distribution are a target audience for promotion of educational services in accordance with their professional activities, region of residence, gender, and age. Thus, line advertising from the sponsor of the publication is integrated into the distribution of individually selected information about job openings. The cost of the service is 15 to 20 rubles for one click on a seminar’s website from a message. This kind of technology works well for educational programs, seminars, training courses, forums related to specific industries, professional publications, etc.
New Software Enhances b2b Effectiveness
“Over the past 10 years, the concept of managing a business has altered radically, both at large companies and at startups,” says Andrei Narvskii, Director of “eVelopers.” Ten years ago even big companies still were exchanging orders for deliveries by fax and resigning themselves to the inevitable errors that piled up because of the different data formats, large amount of work done by hand, and the like.”
Today, companies, by interacting through the Internet, have gotten rid of many old problems but acquired new ones in return. For example, every business has its own system of managing and planning production, finances, warehouses, etc., which can be considered the internal language of the specific enterprise. This means that big companies, which perform thousands of transactions a day and have in their warehouses hundreds of thousands of types of articles, require the services of an “interpreter” that must not merely translate the language of the queries but also set up an effective dialog with suppliers and consumers. The expert suggests that such an “interpreter” is the new standard for B2B communication: RosettaNet, created in 1998 in Silicon Valley, which already is used by approximately 2,000 companies. (It is no accident that the standard’s name reminds us of the Rosetta Stone, on which identical texts in Greek and in Egyptian hieroglyphics were hammered out, which made it possible for the hieroglyphics to be deciphered).
The chief advantage of RosettaNet, in Andrei’s opinion, is its focus on processes connected not only with exchanging data but also with setting up a dialog, processing logical errors, etc. Plus, an extremely sparse amount of additions to an enterprise’s management system are required for inclusion in RosettaNet. Finally, RosettaNet is a noncommercial partnership, which frees users from paying for licenses for the components being used.
The cost of introducing RosettaNet (several tens of thousands of euros) corresponds roughly to the expenditures of companies on employees who work on the logistics of deliveries throughout the year. Thus the introduction of RosettaNet is recouped after the very first year of use, while the company management has at its disposal electronic data of a completely new quality, enabling them to search, rank, construct analytical reports, and make managerial decisions. Simultaneously, the new standard makes it possible to replace office furniture stuffed with files of agreements with electronic systems of management (CRM – Customer Relationship Management).
How does this work? A company employee takes a call from a client (at sales companies, there are several dozen calls per day). At the same time, on the employee’s computer, the client’s record opens up, with all the necessary data, since the office telephone system (integrated with the client directory in the CRM system) automatically recognizes the telephone caller. This makes it possible to instantly find the necessary information in the unified electronic corporate repository (depending on the employee’s level of access) and, when the call is ended, to enter a short summary of the conversation in this client’s history. The leadership of the company, through an administrative interface, can easily reassign clients to other salesmen, evaluate the effectiveness of the employees by the number of calls, and set up a “sales funnel.” Even if the employee leaves the company, it’s no disaster, since the entire history of interaction with the client is preserved in the unified data base.
Yet another advantage of the present-day IT world is the “open source” phenomenon – business applications with free licenses for the end user. For example, CRM from www.vtiger.com, control of document turnover and content management from www.alfresco.com, intelligent office telephone systems on the platform www.asterisk.org are open source applications.
When introducing these technologies, the expert advises using professional consultants and subscribing to technical support, but the licenses really are free.
Replying to a question from participants in the event about the presence of Alfresco in the Russian market, Andrei pointed out that of the approximately 600 large introductions of Alfresco, three are in Russia.
Psychological Targeting
Elimination of illiteracy in the field of advertising and customer psychology was the last topic on the program of the meeting. Expert Olga Shurygina’s main takeaway was that the strategy of an advertising company must take into account the four psychological types of customers: the “master,” the “soldier,” the “muse,” and the “gift.” She suggested that such an approach to customer types (or to the social roles of customers, which are connected with their archetypal tasks) has its roots in the work of James Hillman and Carl Jung, and at the present time, particularly in the work of Eva Vesel’nitskaia.
The “master” can be defined as a person whose chief motivation for action is optimization of control, the building of a structure. The “soldier” is defined as a scout, a researcher and explorer, a conqueror. The “muse” is a compiler and spreader of certain ideas. Finally, the “gift” is a person who absolutely has to be the center of attention.
The examples cited by Olga help us gain a deeper understanding of customer psychology. Let’s suppose that an ad on a roadside billboard about leasing an elephant for the “master” might go like this: “The elephant, in a weekend, will bring and move everything and supply you with fertilizer for a year,” for the “soldier”: “Do you want to strengthen your positions among the neighbors? Our elephant is at your service,” for the “muse”: “Take this offer! Not expensive! The elephant was not rented this weekend and it is very sad,” and for the “gift”:
“Chic weekend on an elephant - Only for the chosen few.” All the above permits the construction of a certain algorithm for development of an advertising campaign.
First postulate – develop an advertising company for a customer with a certain type of consumer culture. For the “master,” the priority is sensible saving, economy in personal consumption for the sake of capital accumulation. For the “soldier,” all resources are focused on performance of a specific project. For the “muse”, the key words of motivation for buying are spontaneity, unpredictability, uncertain priorities. And, for the “gift,” imitation of the style and way of life of his or her social group, and a striving to stand out for his originality are important.
Second postulate – evaluate the effectiveness of your advertising campaign, taking into account each type of customer separately for image, product, and commercial advertising. A good image ad for the “master” must contain a message that the company is stable, highly profitable, well known, recognized by the government and society. For the “soldier,” the message must be that that the company is a market leader, has a clear-cut strategy, and is developing dynamically. For the “muse,” that it brings innovative ideas to people and has an integrated concept and clear ideology of development. And, for the “gift,” that the company is the “coolest” in the market, a supplier of new things, and that everyone is talking about it. (For example, the motto of Sony, “Like no other,” can be continued for the “master”: “you’re buying a superior item at a moderate price,” for the “soldier”: “you’ll be free for more important things,” for the “muse”: “you’ll be able to do what you always dreamed about,” and for the “gift”: “you’ll be the center of attention for a long time.”
A good product ad for an item for the “master” must say that the article is of fine quality, acceptably priced, and comes with a guarantee, for the “soldier,” that it is reliable, with only the necessary options. For the “muse,” it must say that there are many versions, with unexpected options, and for the “gift,” that it has an original design, a certain spark, and attracts attention.
Òhird postulate – think how convincing your image, product, and commercial ads will be to the “master,” “soldier,” “muse,” and “gift,” and evaluate this in numbers (in percentages of the total number of customers).
In conclusion, answering a question from a participant, Olga Shurygina acknowledged that the theory about customer psychological types has not yet been backed up by a sufficient amount of test data. Her reply to another question showed that the topic is more complicated than it seems at first glance: every person is a universe and cannot be assigned to one certain type in terms of both temperament and customer culture of behavior. The expert thinks, for example, that at work a person may behave like a “gift,” while at home he acts like a “master,” or vice versa.
© The U.S. Russia Center for Entrepreneurship
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