Highly Targeted Marketing on the Web

The Web continues to change at a pace so fast it has to be measured in dog years and in ways that make it more interesting and potentially culture changing than even the most wild-eyed Internet visionary of two years ago could have predicted. While privacy advocates were sidetracked with the idea of governments controlling encryption, ingenious ad agencies and smart marketers have figured out how to use the Web as a direct marketing tool that will soon make the billion dollar junk mail business seem like a panty-waisted 97 pound weakling on a beach full of sand kicking bullies. The privacy issue is significant. However, the business possibilities are so huge that the privacy part of the issue is likely to be smashed into a smear of mud beneath the stampeding feet of big business.

But this article isn’t about privacy. This is about how big and small business will make big money from the new abilities of the astute Webmaster to determine exactly who is coming to their Web sites.

It used to be an amusing truism that “on the Internet nobody knows if you’re a dog.” For better or for worse this simply isn’t true anymore—not only can a Webmaster now figure out if you’re a dog, he can find out what you’re favorite brand of dog food is and find out if you’ve ever been to obedience school. As an astute Web site manager I can use information gleaned from your cookie files, reverse DNS lookups, couple that with information stored in proprietary databases to learn quite a bit about you. If you are kind enough to fill in a registration form when visiting my Web site (or other cooperating sites), I can probably determine if you are a short haired dog or a long haired dog and offer to sell you the best type of brush for you particular doggy coat. And the brush will be at your door tomorrow via FedEx.

This is a moment of fundamental change in the world. Think of some of the great developments in the history of man that changed the way we lived and compare them to the times we live in today. The information explosion, the explosion of the Web, is in many ways as significant as the taming of fire, man learning to sow crops and stop being hunter-gatherers and build villages. The renaissance, the invention of the printing press, the women’s suffrage movement, the harnessing of electricity, the telephone, the invention of the car and the airplane, the summer of love in San Francisco—these events are similar in importance to the communications, information explosion we are living through today.

I describe myself as a techno-suit. I’m a big-time Web propeller head. I love computers and the Internet. I’m an enthusiast. My opinion is not to be trusted. I’m too close to the forest to see the trees. Is the Web really as big a deal as I say it is in the previous paragraph? Or is that just how it looks from my strongly biased viewpoint?

In a recent survey in a popular magazine available at grocery store checkout stands everywhere, people were asked to pick the recent inventions that they could least live without. What were the most vital technology tools in their daily lives? What people picked most were the car, the light bulb, the telephone. Computers barely made the list. A few items down after the telephone, people picked the blow dryer—and they picked the computer AFTER the blow dryer. So most people who read that magazine (admittedly perhaps a not particularly techno-savy bunch anyway) would give up the effect computers have on their lives before they would give up their hair dryers. Scary thought. And here I quit a perfectly good job at an engineering company and went to work for a computer company. This kind of survey tends to bring us back to reality a bit.
But I still think we’re going through a very special time: there were more emails sent last year than US mail sent. There were more PCs sold than TVs sold. Presumably the people that responded to the survey the magazine are not the people buying computers and sending email. The Web is becoming a mass market and, as bandwidth so enables, and big business so invests funds, its usefulness will draw even more people to Web, bringing even more big business dollars. Big entertainment dollars are being drawn to the Web as the interesting, highly targeted marketing possibilities are being realized. A combination of the Web mass market with big business dollars and big entertainment will make for the self fulfilling prophecy of an even bigger mass market. The tail is definitely wagging the dog here but the dog is liking it and starting to wag along with the inevitable force of the irresistible wagging rhythm. Once the Web starts dancing to this commercial beat it just “can’t stop dancing! can’t stop dancing!” The Web is not just for geeks anymore.

Why is this Web thing changing the world? What makes it so important? We’ve had computers for decades—we’ve had personal computers for years. What’s different now? Why is the Web as important as a development as airplanes or even blow dryers?

Let me steal a metaphor. Imagine a brand new Mercedes Benz dropped down out of the sky into the Amazon rain forest—right in the middle of the jungle, out of nowhere. Imagine one of those long lost jungle tribes stumbling across this Mercedes sitting in the middle of the jungle. What would they think of it? What could they think of it? They would almost certainly think it’s really cool. The shiny new car would provide protection from the elements—rain. It would have heat, cooling, lights—all at the flip of a switch. There would even be a horn to scare away the jungle creatures. And they would find the luxurious Mercedes a nice and useful tool for them. But they would not realize that the value they were getting out of the car was only a fraction of the value of that car if it was connected to a road. They would have no idea that the real intended benefit of that car is only found when it is sitting on a network of roads. Although they would find the car to be quite cool, they would miss the whole point of it. The Amazon tribesmen would probably all like to have cars. Not to use to go visit grandmother in Carbondale but because they’re better than the leaky huts they’re used to. And that’s fine. I don’t think we can fault them for that. I’d rather live in a Mercedes than a leaky bamboo hut myself.

Imagine the desktop computer we’ve been using for the last decade or so as being like that Mercedes in the jungle. Until recently we had no roads to drive it on. We’ve been quite happy using it for writing reports and memos, cranking our gnarly spreadsheets and using its horn to frighten away the jungle animals. And who can deny it’s been really cool? Just now, now that we finally have desktop computers connected to each other in a World Wide Web of connectivity, can we begin to realize the real value of the desktop PC.

Two types of forces have been at work driving the Web into becoming a mass market. The little guys and the big guys. The technology is easy. Anybody can put up a Web site. My dog has a Web site (http://SassyDog.com) for crying out loud. The little guys started the Web and really got people thinking about how cool it could be. Almost the biggest attraction was that anyone with a very little basic knowledge could put up a site and let the whole world see what they’d done. That’s still true although it’s hard for my dog to do all the snazzy multimedia stuff the big corporate Web sites with multi-million dollar Internet budgets are doing. I hope the little guys always have a big place on the Web—what they do on the Web is at least half the attraction of it.

My dog’s site is an example of the little guy, or little dog, putting up a Web site. But, for better or for worse, what’s really making the Web what it is today is the large commercial interests.

As the Web grew the whole thing became fun. A crowd gathered. And wherever a crowd gathers, hawkers appear. A new force began to shape the Web. Money. Greed. Great Minds have been involved with the Internet since its beginning. But what stimulates Great Minds more than the idea of Great Money? Huge commercial interests have moved into the Web in a huge way, buying the Great Minds and throwing great gobs of money at solving the problems of the Web and making it a place for the great unwashed masses to do business.

You used to hear a lot of people saying things like “the only people making any money on the Web are people selling Web tools or Web site building consultants. No one is really making money off it.” I don’t hear that kind of talk as much anymore. And I can tell you without hesitation that several companies I have been involved with are profiting heavily from the Web. Companies with multi-million dollar annual budgets are definitely making multi-million dollar profits from the Web.

If the Web is really going to boom and change the planet, a few things need to be figured out: security, bandwidth, and the economics of it all—who’s going to pay for it. I’m going to skip over security and bandwidth pretty quickly because I think the big money is going to take care of those issues pretty quickly. They will be the subjects of future diatribes. The crab-basket squabbles over standards indulged in by Microsoft, Netscape and their ilk will also be the subject of a future rambling harangue.

Security. The whole security “problem” on the Internet is a creation of the press. They’re the ones to blame for making the security on the Internet issue an issue. Thanks to normal cautious fears seized upon by the press to sensationalize and sell papers, my mother firmly believes that if she ever passes any of her credit card information over the Internet or even AOL, a hacker will steal that information and use it to charge an atom bomb to her American Express card. I suppose it could happen. But she has no problem with putting her credit card information, along with a check, into a paper-thin envelope and putting it into an unlocked tin box by the side of the road (with a red flag up so anyone passing by will know something of possible value is inside) and trusting the thing to the US government! She also has no problem giving her credit cards to scuzzy, crack head-looking waiters with nose rings and other unusual body piercings in restaurants. The big money interests have perhaps nudged this whole scare along in the hopes of being able to soon lucratively provide a solution to this non-problem.

Bandwidth. You’ve probably heard about somebody or other’s law that states PC processor power doubles every year. Well I propose Morris’ law: bandwidth shall double each year. ISDN is a flash in the pan. It’s simply not worth the trouble. Anything less than full T1 is of no consequence in the long run. Interesting copper technologies represented by a bewildering set of new acronyms will offer splendid bandwidth advances. In the long run optical, satellite, or wireless technologies offers perhap the most powerful possibilities. In the short term I believe cable modems will steamroller over everything in their immediate vicinity simply because everyone already has cable. Interestingly, in Australia the cable TV companies , whether accidentally or with great foresight, installed optical lines instead of coax. Just like the security issue—the big money has already zoomed in on the bandwidth “problem” like the proverbial duck on a june bug.

Whose going to pay for it? Why should this new mass communication medium be much different from existing ones? I hear a lot of talk about the Web needing a new business paradigm, but I don’t think the Web is so new and different that it can’t suffer under the same business model that print, radio, and TV have managed to flourish under.

A subscription-based business model doesn’t fit radio in particular but works quite well with print. And premium TV subscription services may end up dominating that medium before long. I think subscription services will always be a part of the Web. Micropayment systems are under development that may end up working something like calling 900 telephone numbers work. Charging by pennies per minute for access to information or premium areas of Web sites seems a workable model.

But I doubt subscription or micropayment schemes will be the dominant way of funding Web sites. Plain old advertising has worked for centuries in other mediums and will work quite well on the Web. But here’s the most important part of this whole harangue: the Web offers new, extremely cool targeted advertising techniques that no other medium has ever been able to offer. The highly targeted advertising possibilities on the Web haven’t really sunk in yet. Hang with me just a bit longer and we’ll get to the meat of it.

You have probably heard about companies offering free email service. And a company in Japan is offering totally free Internet access for email, Web browsing, or whatever. All you have to do is view the ads that are somehow sandwiched in with the email viewer or Web browser. The advertisers are paying the freight with this system and it’s not a bad idea. This sounds really cool. Free Internet. Basically these companies are paying you to read their ads. This advertising model may enjoy some level of support but I think if someone has to be paid to read my ad—that’s not an ad—that’s a minus. OK I get my ad in front of a bunch of people cheap. The price paid for the advertising has to be attractive so it is effective for the ad buyers. This isn’t much different from regular TV really. Just like TV, if I buy ad space for Pampers, the vast majority of people that see the ad are simply not in the market for any brand of disposable diapers much less Pampers. But the cost of the ad is low enough so that I will reach enough people in the thundering herd that are in the market for disposable diapers so that my ad purchase pays off for me. But the Web can be an almost indescribably better marketing tool. Let me cover one more non-optimal Web advertising model before we get to the good stuff.

If I want to sell Pampers it makes more sense for me to buy an ad in Baby Magazine than in Sports Illustrated. Bride Magazine would make a bit of sense too. You can reach a targeted demographic by buying print ads and, to a lessor extent, TV ads, in a magazine or on a show that caters to people that closely match your products target demographics.same on the Web—if you’re selling scuba equipment you can buy ad space on a scuba oriented Web site. But this is no wowser. I doubt if any scuba oriented Web sites reach as many people as Skin Diver magazine does. And how many Web sites are targeted at people in the market to buy Pampers?

Direct mail is possibly the best way to reach a very specific demographic. As anyone who ever gets junk mail knows, there are some very scary databases out there that let junk marketeers know not only when you buy a new car but when you’re expecting a baby. If I was ever balmy enough to buy a subscription to Bride Magazine, I can guarantee you I’ll be receiving junk mail offers for catering services, photographers, cake makers, and the whole lot of other types of outfits that offer services to the bridal/wedding market within days of mailing in my subscription card. The act of sending in that subscription card got me and my associated demographic information sold to the highest direct mail database bidders. Whenever I am so dull as to fill out and mail in one of those blown-in “bingo cards” that falls irritatingly out of every magazine I open, even more is known about my tastes and buying habits by the demographic database gods.

These database gods are sharp. They know what size shoes I wear. They know what type of magazines I like to read. They know what type of car I drive and whether or not I went to college. If I use my credit card to buy groceries they could even know what kind of cereal I like to eat for breakfast. They know where I live and the more unscrupulous among them know how much money I make and the state of my health. The database gods sell this information to people and those people use this information to try to sell us stuff! I’m not sure whether this is good or bad but I do know that at times it is quite irritating. As we all know, linking Web sites to databases offers some unique functionality. Take one of these scary consumer marketing databases and the ability to recognize individual visitors to a Web site and you’ve now got the most targetable direct marketing tool ever devised by man.

The deal is that if someone comes to my Web site and I have them in my scary consumer marketing database, I can serve them up a custom designed page based on their particular demographics. If my server recognizes the visitor as being someone interesting in scuba diving, I can serve them my regular information-filled Web site but peppered with ads for scuba merchandise and vacations to tropical dive spots. If my server recognizes the visitor as being someone that has been purchasing baby equipment and supplies I’m going to shower them (pun) with ads for—you guessed it: Pampers! If they bought Bride Magazine nine months or so ago they’re going to get the Pampers ads along with the usual good stuff that lured them to my Web site to start with. The possibilities boggle the mind.

A smart company can now pay to show ads on the Web only to exactly the type of people most likely to be a fruitful prospect. And only pay for those people to see the ads. Why pay for a bunch of over 50s to see my add if I’m in the Pamper business? I can now arrange for my ad to only be seen by lawyers in Chicago that own BMWs and only between the hours of 8 to 6 CST. And I don’t have to pay for everyone to see the ad—I’m getting much more bang for my advertising buck.

A crafty Webmaster can use this targeting ability to write to keep track of you when you come to their Web site and remember what you did when you were there. The next time you visit the site, the server can tell you’ve been there before and perhaps offer you customized pages based on the pattern of your previous visit. If you visit a computer company’s site and spend time checking out their new laptops and return a day or two later to check them out again, the crafty Webmaster may offer you a special based on the realization that you have been hanging around sniffing after their laptops—you would quite likely be an excellent sale prospect. “Welcome back to the Big Ass Computer Company Web site, Mr. Morris. We couldn’t help but notice you seem to be interested in our new line of laptops. Today, just for you, Bruce, we are offering a special sale! $100 off if you buy now!”

I‘m not so sure this is whole ad thing is bad. I might want to see these ads. When I buy Computer Shopper I do it more for the ads than for the articles. To me they are adds, not minuses. I hope it never happens but the time could come when I would really like to know all about the absorbent properties of Pampers and would welcome Pampers-type ads.
I don’t think it takes much imagination to think of some cool ways to use this targeting Web technology. The big money has already decided that the size of the Web audience is big enough and interesting enough to spend several hundred million on Web advertising this year.

The last roadblock between the Web and the great unwashed masses, is ease of use. When (in a year or two) the Web becomes just another channel on granma’s TV with the mass market associated with TV, how much will be spent on Web advertising then? But what will the Web look like then—what will TV look like then? If targeted on the Web is so cool surely people are thinking about doing the same thing on TV. Here’s the convergence thing I keep hearing about. It may really happen this time. I understand there are already cellular phones with IP addresses so why not TCP/IP TVs?