Consumer Segmentation?

Two weeks ago I published an article with the title “The death of Consumer Segmentation?” in AdAge. I argued primarily that quite a few marketers don’t balance sufficiently their focus between an increasing sophisticated consumer segmentation approach and the enablement of self-segmentation by consumers. A lot of marketers are wasting investment dollars by trying to micro-segment their consumers in smaller and smaller clusters without realizing that today’s consumer are tougher and tougher to be identified within one particular stable segment for a longer period of time. 

The article got quite a few reactions, a lot of positive comments but also a significant amount of negative comments. The negative comments focused on three main areas:

1. The title of the article was misleading, since the article itself did not postulate the end of consumer segmentation but rather some of its limitations. My reply is that the question mark in the title was a true question mark. The answer to the question: “Is Consumer Segmentation dead” is “No, but…”. It’s amazing how many marketers fall into a knee-jerk reaction of defending their age long efforts in consumer segmentation work without reflecting sufficiently on its limitations in today’s world.
2. I supposedly misunderstood what Consumer Segmentation is trying to do. I don’t think that this correct. I did not argue against building Consumer Clusters based on similar geo-demographic, attitudinal, needs-based, psychographic, or behavioral dimensions to better design segment specific products or services or even tailor communication against these segments. I did argue against the tremendous expense into huge database solutions that allow for targeted communication against smaller and smaller consumer clusters without immediate application. I did not speak against behavioral targeting that builds real-time or near-real time insights that can be leveraged against the needs of a particular consumer. But this approach has less to do with consumer segmentation and more with executing 1:1 marketing based on individual, non-aggregated consumer behavior.
3. Some comments claimed that I have not done any real consumer segmentation in my professional life. I am always amused that the blogosphere is a favorite domain of disrespectful and unprofessional comments. I always believed that the loudness of one’s voice (which is in the blogosphere equals the usage of insulting and derogatory terms) has an inverse correlation to the soundness of the argument. The first segmentation project in which I participated was one for a large automotive brand in the early 90ies, later on I was fortunate enough to co-lead the Lufthansa Miles & More program for which we did regular member segmentations against a member base of close to 10 million members. All together I was able to witness or lead over 50 segmentation projects, some very successful, some wrongly designed, some with moderate impact. I definitely learned quite a bit over the years. And I am still learning. 

The role and function of consumer segmentation will continue to be an interesting one in our marketing discipline. Consumer segmentation is not dead, but its usage and its application will continue to change dramatically. And it will be more and more challenged by consumers who defy any true segmentation methodology and who prefer to self-segment themselves.

SEM misperceptions

Please read one of my articles that got published today at Marketingdaily about the frequent misperceptions of SEM.

Getting the message out

In yesterday’s NYT Magazine Virigina Hefferman described Obama’s administration as the “YouTube Presidency”: Why? His administration is at least (or maybe even more) focused on communicating its goals and controlling its image by bypassing wherever possible the traditional political journalists. The administration is attempting to communicate as much as possible directly to the public. It distributes vehemently Obama’s own produced video footage on YouTube, the government websites, embedded in the ongoing campaign emails, etc. It focuses more on this strategic shift to “non-traditional” communication vehicles than on influencing the normally so influential White House Press Corps. 

It seems to me that what the White House Press Corps is for Obama is for most brands nowadays the TV networks and cable stations. Clearly one needs to address the demands of great TV spots but equal (or maybe even more) weight has to be put against the creation and distribution of visual content in any other accessible (and possibly free) medium. Not too many people might see Obama’s press conference on CNN, or C-Span but easily a few million people might watch a well shot and designed Obama clip on YouTube and other websites. 

It is less about necessarily trying to control the brand message outside of the journalistic realm but to utilize every “free” communication channel to populate it with well created and relevant material. Brands can learn a lot from Obama’s ongoing campaign and attempt to have a more direct and unfiltered access to the public. His administration uses usually four major communication channels:

• Its own Government and campaign websites
  
•  A well managed and constantly updated presence on social networking sites
  
• Regular outbound messages via eMail, textmessage, etc to the millions in Obama’s campaign database
  
• The distribution of well produced videos on YouTube and other well visited video sites. 

This focus on unfiltered and better controlled communication definitely helps Obama. And it can help any brand. Visual brand messages will less and less be only contained to the TV medium; it will proliferate to any visual outlet. Brands might spend more money on the production of these material but they will save on the costs for placement on traditional media. 

Behavioral Targeting within Social Media

In a very recent meeting with Paul Banas (check out his very well written blog at www.insightbuzz.com ) we discussed the latest trends and concepts within the Web Analytics space. In the midst of the discussion we came upon the synergy of using the methodologies of Behavioral Targeting in the Analysis of User Generated Content (UGC). Huayin Wang, one of the truly innovative minds in this space, described the concept of this application as a four step process and methodology. He suggests calling this kind of approach “Micro Analytics”, where one performs analysis on an individual level-type data versus “Macro Analytics” where one is looking purely at aggregated data elements:

1. Treat UGC as the raw gold of data information. Find the right methodology to score the individual UGC pieces by relevance and relationship to each other. This kind of quantitative exercise will enable one to decipher patterns within the large universe of UGC, either on Flickr, YouTube, on blogs, etc.
2. Identify the right UGC content clusters to understand marketing opportunities. This will enable one to isolate potential opinion leaders within a certain content grouping as well as unveil unleveraged perception spaces for a particular brand.
3. Build a persuasion platform that uses the different attributes of each UGC element for an interactive program, all based on the principles of behavioral targeting.
4. Analyze the modified UGC landscape after a sufficient period of time to understand if the interactive marketing program has created any positive impact for the brand. 

Over the last year the whole Web Analytics space has moved so fast from the pure measuring of Web Metrics into a much more complex and interesting area of mining and influencing the ever increasing and changing landscape of consumer intentions, either in form of UCG, Search Behavior, or expressed written opinions. 

I expect that this sub domain “Social Media Analysis” within Web Analytics will get further attraction and go beyond purely trend and insights reporting. The core challenge will be of how to combine Behavioral Targeting principles within Social Media Analysis to create successful marketing programs. 

Information or what?

For some strange reason I was looking up the etymology of the word “Information”. It surprised me. Let’s quote Wikipedia: 

“ The English word was apparently derived by adding the common "noun of action" ending "-ation" to the earlier verb to ‘inform’, in the sense of to give form to the mind, to discipline, instruct, teach. ‘Inform’ itself comes (via French) from the Latin verb ‘informare’, to give form to, to form an idea of. Furthermore, Latin itself already even contained the word ‘information’ meaning concept or idea, but the extent to which this may have influenced the development of the word information in English is unclear.

As a final note, the ancient Greek word for form was ‘eidos’, and this word was famously used in a technical philosophical sense by Plato (and later Aristotle) to denote the ideal identity or essence of something. ‘Eidos’ can also be associated with thought, proposition or even concept.” 

“Information = Giving form to the mind, to discipline, instruct, teach.” It seems that our daily usage and understanding of the word “Information” likes to forget that “Information” has a strong sense of personal subjectivity. It implies a conscious act of the mind that transforms a piece of observed data into something that we call “Information”. 

Be aware of the traveling distance between data and information. It’s much longer, tedious, and dangerous than most of us believe.