Bridging the Gap between Online and Database Marketing
David M. Raab
Information Management
May / June 2010
Database marketing is based on sending messages to known individuals. This has always been in sharp contrast to conventional mass media, cure such as television and print advertising, ailment where the marketer did not know exactly whom they were reaching.
But the introduction of online marketing has blurred this distinction. Online marketers often know a great deal about the people they interact with, diagnosis even when they don’t know their actual name and address. This means that they can gather, analyze and react to data in ways similar to database marketers. But without personal identifiers, online marketers cannot integrate this data into the individual profiles that are the heart of a conventional marketing database.
One result has been a surprising separation between online and database marketers. Even though both rely heavily on technology and apply disciplined analytical approaches, each has developed its own universe of service and software vendors. Database marketers rely on marketing services agencies and marketing automation systems whose core competency is building and managing customer databases. Online marketers rely on search marketing, Web analytics and Web site development vendors who are skilled at attracting traffic and tailoring Web treatments to visitor behaviors.
Email and ecommerce are exceptions: online activities dominated by database marketing vendors and techniques. But they merely prove the rule, since both face situations where personal identities are known and it’s possible to build a conventional marketing database.
Another result has been continued fragmentation among online marketing subspecialties. Search engine optimization, paid search marketing, site personalization, Web display ads, mobile marketing, downloadable applications and social media are usually managed separately, even though they rely in part on traffic statistics from same Web analytics systems.
Some fragmentation is inevitable. New varieties of online marketing appear so quickly that marketers must rely on internal or external specialists for quick deployment. But this fragmentation, as well as the separation from conventional database marketing, imposes extra costs and prevents consistent treatments for individual customers.
Of course, if it were easy to integrate online with offline data, the database marketers would have been doing it all along. Social media can help by providing an additional source of personal identifiers that can link individuals across sources. But what’s really needed is a change in attitude: one that recognizes it’s worth centralizing information even when it cannot be tied to a specific individual.
This is a radical switch for database marketers who have spent their careers looking for better ways to identify individuals. But they (and the rest of us) need to adjust to a concept of “semi-anonymous” marketing, which means being able to reach individuals who share certain characteristics even if you don’t know who they are.
To bring home the importance of this concept, let’s look at the types of information available in online marketing channels.
– cookies are the primary means of tagging individuals who visit a Web site. By itself, a cookie only identifies a computer, but it can be linked to additional information that’s either observed (e.g. pages visited) or provided by the visitor (e.g. registration). This data can be stored within the cookie or, preferably, in a database linked to the cookie ID. This means you can use a cookie to, say, show an ad with a discount coupon to someone who previously discarded a shopping cart, even if you don’t know who that person is. In other words, even anonymous cookies let you put people into identifiable marketing segments and send them appropriate messages.
– IP address (showing where a user has connected to the Internet) and other information provided with each Web visit (browser type, operating system, etc.) can sometimes act as a proxy identifier for individuals, since many systems keep their IP address over time. However, this is controversial in privacy circles and not wholly reliable. Yet even discarding this approach, IP address can often be traced to a corporate account owner (this works for business computers, not for home computers which typically connect through an IP address registered to a phone company or other Internet service provider). And nearly all IP addresses can be mapped to a geographic location, which in turn can be linked to geo-demographic databases such as Nielsen PRIZM clusters. Again, this information can be used to target messages to unidentified individuals.
– mobile phone location is known to the phone network operator, although how much they share with marketers depends on privacy and commercial considerations. It’s certainly possible to target messages to people within a certain geographic area, either in network-based advertising or through user-downloaded apps. More advanced but still semi-anonymous applications, such as targeting based on whether someone is outside of their usual territory, are possible but demand more data retention.
– social media support many kinds of marketing, including advertising based on member profiles and groups, direct messages where a prior relationship exists, monitoring public activities by usernames, and linking usernames to email and other personal identity information. The opportunities depend on the particular medium and the operator’s terms of service, but the general point is it’s worth building a history that may later become useful even if you can’t market to it directly today.
As marketers centralize their online information, technical demands will increase. Marketing databases not only become much larger, but they will hold more kinds of information, much of it less structured than the traditional customer and transaction records. There will be increased opportunities to use sophisticated matching techniques to associate specific individuals with semi-anonymous information, although this can raise privacy concerns.
But even if an addressable individual is never identified, marketers will gain by integrating information across channels at the level of the semi-anonymous segments themselves. This will allow them to identify similarities in interests and behaviors, which in turn will lead to coordinated messages and clearer understanding of results. The ultimate impact will be to help unify the marketing departments themselves, ending the fragmentation that detracts from business performance.
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David M. Raab is a Principal at Raab Associates Inc., a consultancy specializing in marketing technology and analytics. He can be reached at draab@raabassociates.com.