Everything You Wanted to Know About Customers

    September 18, 2007

The purpose of marketing has always been clear—to facilitate customer acquisition—but one of the most important things that a marketer can do is help his or her company learn more about its customers.  Who are they?  What do they read?  What do they search for?  What do they shop for?  And what’s the maximum we’re willing to pay to acquire their business?  There was a time when very little of this was really knowable. 

Now, much more of this data is available.  The next generation of media buying will allow advertisers to bid on acquiring customers based on the answers to all these questions, plus one more crucial question.  Who is my customer friends with?

Skeptics in the marketing world probably wonder why it matters who my customers’ friends are, as long as I know what my customers read and search for?  The simple answer is the old cliché, birds of a feather flock together.  Most of my friends have many things in common with me.  We’re at a similar stage in life, with a similar income and more or less the same professional status.  If I own a mobile email device, it’s highly likely that many of my friends own one too.  So if I search for a new device, read a product review, or otherwise announce to the advertising world that I’m in the market for a mobile email device, chances are that many of my friends are or will be in the market for one as well.

The same is true of anything else I’m shopping for online.  If I shop for an Ohio State University sweatshirt, many of my friends would probably also be interested in paraphernalia from that highly venerable institution, since many of my friends went to the same school.

I’m going to go out on a limb here and say that the likely candidate to lead us into the next generation of data-driven media buying is neither Google nor Microsoft.  It’s their much maligned, often ignored, underdog rival Yahoo!  With its two recent acquisitions of BlueLithium and RightMedia, Yahoo! has brought on board highly targeted ads and dynamic, auction-based pricing, two key components of this next generation.  With the development of SmartAds technology, Yahoo! has taken a step towards dynamic creative generation to tailor individual messages to individual users. To really rule this space, however, Yahoo! needs to combine all these with socially targeted media.

I’m not saying Yahoo should up and buy FaceBook, or give 25% of its own company (roughly $7.1 billion) for MySpace, as Rupert Murdoch offered.   But Yahoo may be on the right track with Yahoo! Mash, which includes features common to Facebook and Myspace. Yahoo recently also signed an exclusive agreement to sell UK traffic with social networking site Bebo.

Also note the exclusive advertising deal Yahoo has with Ebay. This is just another very powerful pipeline of users’ shopping and bidding behaviors.

The big task for marketers is always going to be figuring out how much each of these potential customers is worth to their business.   Intuitively, a search retargeted impression is worth more than a behaviorally targeted impression, which in turn is worth more than a socially targeted impression.  Then again, if Yahoo were able to use the SmartAds technology to deliver socially targeted dynamic messaging, it might have a strong impact.  If I saw an ad with an image of an Ohio State sweatshirt and the creative said, “Your friend _________ likes this sweatshirt,” I might click on that and look around.  That’s the kind of data-driven media lots of advertisers would love to buy.

The bottom line is that all these ideas are shaping up to be an incredibly powerful, leading edge tool for marketers and businesses.  As with all emerging media and technology, the early adopters and savvy agencies will have the upper hand as they gather data and fine tune campaigns at a lower cost.  Once larger spenders enter the fray, it’s going to become increasingly difficult to keep up.

Just to recap, the formula is:

Dynamic Bidding + Behavior Technology + Social Networking Data + Content Data + Search Data + Shopping Data = Everything I Want to Know About My Customers

Make sure that you, your team, and your agency (if you have one) are ready to join this next generation.