The following is an excerpt from “The Art & Science of Multichannel Fundraising,” the new 131-page report from DirectMarketingIQ. It includes 9 chapters, from leading fundraisers, on channel selection, messaging, direct mail, email, mobile, social media, multichannel renewal, multichannel testing and more. It also features 8 multichannel case studies on successful campaigns.

There’s no “one size fits all” set of best practices when it comes to direct mail programs. So much depends on the size of your budget and what type of program you’re managing. Programs with heavy use of free gifts and premiums are wired very differently from those with few or no premium offers, for example.

That said, whether you have a really small direct mail program or a multimillion-dollar behemoth to manage, there are some things you should do regardless. Innovations in the tools and technology we use may give us new and better ways of fundraising, but human behavior is more of a constant and fairly predictable. Good marketing can always be counted on to move people to give and take action, and good donor care helps keep them with you.

So, How Are Your Manners?

It’s appalling how few organizations quickly acknowledge gifts or do it well. How long does it take you to cash a check? How long after that until you send a thank-you? Commit to getting your gift acknowledgment process down to days, not weeks. You have a limited window in which to tap in to your donors’ good feelings about making a gift, and the longer it takes you to thank them, the more you jeopardize getting another donation.

If you have a back-end premium offer, how long does it take you to get those items into your donors’ mailboxes? What can you do to speed up that process? If it takes you three months to fulfill your promise, by then the donors’ glittery good feelings about giving you their money are long gone.

Periodically, make sure your timeline remains realistic. Have people make donations and report in on their experience. You might be surprised at what you find. Retailers use “mystery shoppers” to monitor the quality of their customers’ experiences and you should do the equivalent. It’s a good way to discover where problems are in your program and gives you actionable information.

Acknowledge gifts sent by mail with mail. An email or text thank-you for online and mobile gifts is a no-brainer, but test the impact of following it up with a second appreciative expression of your thanks in the mail.

Go the distance for your high-dollar donors. Pick up the phone and call people who make large gifts to thank them, in addition to sending acknowledgments in the mail. One organization found that thank-you calls doubled subsequent giving for certain donor segments. If your direct mail program is so big you can’t manage thank-you calls in-house, contract a telemarketing firm.

You need to determine what dollar amount triggers a call, but it’s worth testing and should certainly be de rigueur for high-dollar donors.

Kimberly Seville  provides comprehensive freelance creative services from concept to execution for a range of fundraising agencies and nonprofit organizations. She can be reached at kimberlyseville@yahoo.com. She authored chapter three in the new report, “The Art & Science of Multichannel Fundraising,” published by DirectMarketingIQ.

Keep in mind too that all communications media leave a carbon footprint. Making a CD or DVD, both of which are difficult to recycle at best, generates around 300 to 350 grams of CO2 per copy9, while printing a 100-page four-color annual report releases about 80 grams.10 Even Web-based communications have a carbon impact—both in terms of the electricity needed to power the computers involved and the metals, plastics and other materials that go into their construction.

Burning a CD produces 4 times as much CO2 as printing a single annual report.

Then there are data centers built to handle the rising flood of e-communications around the world. The power needed to heat, cool and power a data facility is enormous. According to the New York Times, data centers around the world consume more energy in one year than the entire country of Sweden. From 2000 to 2005, the use of electricity by data centers doubled, and the increase shows no sign of abating. Expansion of Internet businesses, along with new data retention and compliance agreements, new accounting standards and other trends, fuel the demand.

There are other, less-obvious drawbacks, too. E-communications have not really created the paperless office as many would assume. In fact, it often seems to promote the spread of paper use. Even in today’s age of the Blackberry® and iPhone, people like to print things out—many just find it easier to read and easier to navigate on paper. But converting e-communications to print is often very inefficient. Imagine the number of times a 50-page PowerPoint presentation is printed out and distributed, when the information would probably be better boiled down and produced as a print-on-demand brochure.

Electronic media have no tactile feel, and communication materials residing there continue to draw electrical power as long as they are in the system. And even today, not everyone is computer savvy or has access to a computer. For example, if your a local arts center, you may see enrollment drop off if you replace your paper catalog of course offerings by an on-line only version—because the older members of your client base are not used to operating that way. An integrated marketing strategy that includes both print on-line components spans preferences and generations, allowing all to get the message.

Spam emails sent annually, have the footprint of driving a car around the globe 1.6 million times.

Then there’s spam. It’s not just a nuisance—many see it as a major source of global climate change. It is hard to measure, but some calculations say that each spam message, including the energy required to delete the message, represents the energy equivalent of driving three feet. Multiply that by yearly volume and it is equivalent to driving around the world 1.6 million times.11

9 http://www.finsbury.com.au/NewsDetail.aspx?p=15&id=64

10 http://www.printnet.com.au/verve/_resources/AP_NOV_p42.pdf

11 Source: McAfee, The Carbon Footprint of Email Spam Report

via All communications leave a footprint – Ed #13 Balance – Ed Lives Here.

A new report by Blackbaud’s Target Analytics, a global provider of software and services for nonprofit organizations, shows that direct mail remains the source of most charitable donations.

The 2011 donorCentrics Internet and Multichannel Giving Benchmarking Report features research on nonprofit online giving in the context of an integrated direct marketing program.  This year’s analysis covers 15.6 million donors and more than $1.16 billion dollars in revenue. Select findings:

Although multichannel giving has become a popular objective of not-for-profits as a way to build constituent support, it is not widely practiced, the study finds. The majority of gifts are received through direct mail.

The typical organization receives more than three-quarters of its total gifts through direct mail and only 10% of its gifts online.

Direct mail acquisition is also responsible for three-quarters of all new donors. Over the past several years, the number of donors acquired online has increased though, the study notes.  In 2010, 16% of new donors in the benchmark groups studied donated online. The authors note that the non-profits in this study have larger online programs than similar nonprofits. Percentages of gifts and donors coming in online are smaller for the industry as a whole.

The report found that large numbers of new donors acquired online switch to direct mail giving in subsequent years (eventually, just under half of all online-acquired donors convert entirely to offline, primarily direct mail giving).  The reverse is not true, however; only a tiny percentage of mail-acquired donors give online in later years.

In aggregate, online-acquired donors have much higher cumulative value over the long term than traditional mail-acquired donors. However, long-term value varies depending on the donor’s origin gift level, and the substantially higher gift amounts given by online-acquired donors can mask issues with retention.

“The Internet is becoming an increasingly important acquisition channel but has not proven to be as effective for retention,” said Rob Harris, Target Analytics’ director of analytic products and a co-author of the study. “It is the ability of online-acquired donors to use another channel – that is, to start giving through direct mail – that significantly boosts the long-term value of this group of donors.”

About:  The report data comes from the most recent transactional data available for the 28 organizations includes transactions for over 15 million donors and more than $1 billion in revenue.   The organizations participating are prominent national nonprofits covering a range of sectors, including animal welfare, the environment, health, human services, international relief, and societal benefit.

Source:  Blackbaud, 2011 donorCentrics Internet and Multichannel Giving Benchmarking Report, accessed June 2, 2011 and AdvisorOne, Web Is Good at Acquiring Donors, Not Retaining Them, June 1, 2011.

via Print in the Mix: Fast Fact – Direct Mail Drives Charitable Donations and Retention.

As found on:  Ad Age.

1. “Social media accounts for one out of every six minutes spent online in US.” (Journalism.co.uk)

2. “Seventy-seven percent report that they use social media to share their love of a show; 65% use it as a platform to help save their favorite shows; and 35% use it to try to introduce new shows to their friends.” (TVGuide.com study via TVNewsCheck.com)

3. “Facebook users are overall more trusting than non-internet others. Pew reported, 43% of survey participants were more likely than other internet users to feel that most people can be trusted.” (Pew Internetvia Social Media Club)

4. “22% of all grandparents in the UK are using social networks, according to Mashable. The study, which collected results from 1,341 grandparents from the UK, showed that 71% of grandparents who use a social network use Facebook, 34% are on Twitter and 9% use the business social network LinkedIn.” (Mashable viaSocial Media Today)

5. “In the first four months after its January 2010 launch in Russia, Facebook use grew by 376%, and today more than 4.5 million people use the site regularly.” (comscore.com via Mashable)

6. “The ‘Weinergate’ scandal caused a significant drop in tweeting politicians. According to VentureBeat, after the scandal ‘the number of tweets by Republican members of Congress dropped by 27 percent, while those of Democrats dropped by 29 percent.’” (VentureBeat via Marketing Pilgrim)

7. Instagram “currently has a user base of 4.25 million in only seven months, with ten photos being posted a second.” (prsarahevans.com via TechCrunch)

8. “It only takes 20 people to bring an online community to a significant level of activity and connectivity.” (Ning via TheNextWeb)

9. “Nearly twice as many men (63%) as women (37%) use LinkedIn.” (Pew Internet via prsarahevans.com)

10. “In the last election Google was the largest player — the Obama campaign directed 45% of its online campaign dollars to the search site.” (Advertising Age)

11. “59% of adult Facebook users had “liked” a brand as of April, up from 47% the previous September. Uptake among the oldest users appears to have been a major factor in this rise.” (eMarketer)

12. “In 2010, 29.3 million readers read some 270 million pages of Post journalism each month, a record forThe Washington Post. Of that, 28.1 million did so online and, while [Washington Post] brought in 4.2 million new readers on average each month compared to the previous year, [they] also lost some 35,000 print subscribers in 2010 alone.” (Forbes)

13. “25% of hotels [are] still ignoring social media.” (TravelClick via Econsultancy)

14. “Businesses are paying Twitter $120,000 to sponsor a promoted trending topic for a day. [...] That’s up from $25,000 to $30,000 when the feature was launched in April 2010.” (via Poynter)

15. “AOL’s newsroom is now bigger than The New York Times’.” (Business Insider)

16. “Mobile is one of the fastest-growing platforms in the world. With 40% of U.S. mobile subscribers regularly browsing the internet on their phone and a projected 12.5% of all e-commerce transactions going mobile by the end of the year, it’s a channel that you need to be aware of. According to Google, mobile web traffic will surpass PC traffic by 2013.” (60 Second Marketer)

17. “Twitter is 6-7 times smaller than Facebook.” (via Social Media Today)

18. “There are now 54 million active Mac users around the world.” (AllThingsD)

19. “130 million books have been downloaded from iBooks.” (AllThingsD)

20. “Users say they’re more likely to buy if a business answers their questions on Twitter.” (NYTimes.com)

21. “Nearly half (42%) indicated that if they’ve already allocated a portion of their marketing spend to social media, they would increase this spend over the course of the year. Only 8% of those surveyed indicated that they would decrease social media spend.” (The Next Web)

22. “13% of online adults use the status update service Twitter, which represents a significant increase from the 8% of online adults who identified themselves as Twitter users in November 2010. 95% of Twitter users own a mobile phone, and half of these users access the service on their handheld device.” (Pew Internet)

23. “According to HubSpot, small businesses plan to spend 19 percent of budgets on social media vs. only 6 percent in larger businesses. A similar gap is shown for blogging with 10 percent of budgets for small business vs. just 3 percent for large.” (Hubspot via ClickZ)

24. “33 percent of its worldwide traffic is inside the United States.” (Problogger)

25. “Facebook has three times as many accounts as Twitter, and 20 percent of Twitter’s users produce at least 80 percent of the site’s content.” (Problogger)

26. “In early March, Google removed from its Android Market more than 60 applications carrying malicious software. Some of the malware was designed to reveal the user’s private information to a third party, replicate itself on other devices, destroy user data or even impersonate the device owner.” (Network World)

27. “Groupon is on track to bring in between $3 billion and $4 billion in revenue this year alone. Facebook’s 2010 sales were reported to be only around $2 billion in its sixth year of existence.” (Knowledge@Wharton viaMSNBC)

28. “A study of 24,000 consumers across the 16 largest countries found that those who are most connected, living on the cutting edge of social media tend to be more ‘prosocial’ than average, being more likely to do volunteer work, offer their seats in crowded places, lend possessions to others and give directions.” (TheNextWeb)

29. “99 percent of Android devices are vulnerable to password theft.” (MobileCrunch)

30. “Recent estimates put less than 10% of the population using Twitter, far less than other social sites.” (Advertising Age)

31. “More than 3.34 million mentions were recorded over a one-month period of people making social asks.” (PRsarahevans.com)

32. “David Poltrack, CBS Corp., announced that, based on a new research study, ‘age and sex don’t matter when it comes to increasing TV ad effectiveness.’” (Forbes)

33. “An average of 40 percent of the traffic to the top 25 news sites comes from outside referrals, the study found, with Google Search and, to a lesser extent, Google News the single biggest traffic driver.” (via AFP)

34. “Almost one-in-four South Africans use social media as a tool to look for work, but are concerned about the potential career fallout from personal content on social networking sites.” (Kelly Group viaBusinessReport)

35. “The percentage of US parents who allow their children between ages 10 and 12 to use Facebook or MySpace more than doubled from 8 percent a year ago to 17 percent now.” (via NY Post)

36. “33% of Facebook posting is mobile.” (Dan Zarella)

37. “Fully 69% of visitors to news.google.com ended up 3 places: nytimes.com (14.6%), cnn.com (14.4%) and abcnews.go.com (14.0%).” (Journalism.org)

38. “85% of media websites now use online video to cover news.” (SocialTimes.com)

39. “”Social media advertising spending will increase from $2.1 billion in 2010 to $8.3 billion by 2015.” (BIA/Kelsey via Direct Marketing News)

40. “Facebook is approaching 700 million users and Google handles over 11 billion queries per month. World-wide there are over 5 billion mobile subscribers (9 out of 10 in the U.S.) and every two days there is more information created than between the dawn of civilization and 2003.” (via Lee Odden, TopRank)

41. “Twitter reported that the network saw more than 4,000 tweets per second (TPS) at the beginning and end of Obama’s speech [re: death of Osama Bin Laden]” (AllTwitter)

42. “65% of all social media related to the royal wedding has come from the U.S. in the past month [April]. The U.K. has been responsible for just 20%.” (USA Today)

43. Re: the Royal Wedding: “911,000 wedding-related tweets were tracked in the past 30 days. That’s about 30,000 per day and accounts for 71% of all social media.” (USA Today)

44. “According to NPR’s internal usage data covering January 1 through mid-April, users who request audio — maybe a station stream, a national newscast, or NPR Music content — view twice as many pages as those who only read the apps’ content. On average, audio streamers rack up 4.2 pageviews per visit versus 2.4 for the text-only crowd.” (Nieman Journalism Lab)

45. “Twitter penetration rates in Canada are among the highest in the world, according to new data from online tracking firm comScore Inc., which suggests that nearly one in five Canadian Internet users over the age of 15 regularly visit Twitter.” (via Financial Post)

46. “Traffic from social media has highest bounce rate. [...] If you’re looking for ‘hyper-engaged’ readers, those that click through five or more pages on your site, forget the guy who came from Twitter. A link from another content site is three times more likely to be engaged, and someone coming in from search, is also above average.” (Marketing Pilgrim)

47. “”Digital services accounted for an estimated $8.5 billion (28%) of the $30.4 billion in 2010 U.S. revenue generated by the 900-plus advertising and marketing-services agencies that Ad Age analyzed.” (Advertising Age)

48. “Total Facebook spent on lobbying, Q1 2010: $41,390. Total Facebook spent on lobbying, Q1 2011: $230,000″ (Huffington Post)

49. “Nearly seven in 10 tablet owners reported spending at least 1 hour per day using the device, including 38% who spent over 2 hours on it. And while just 28% consider it their primary computer, 77% are spending less time on desktop or laptop PCs since they got a tablet.” (eMarketer)

50. “According to a Network Solutions survey, the use of social media among SMBs has grown over the years, rising from 12 percent in 2009, to 24 percent in 2010 to 31 percent currently.” (Search Engine Watch)

———–

On her social media and PR blog, Commentz, Sarah Evans and her staff compile a lot of stats. She cherry-picked the most relevant for marketers to share with Ad Age.

Direct mail, 2010—myths and trends.

In these times of new channels and changing communication preferences, it’s important to point out a few misperceptions of direct mail that persist among many.

Myth 1:  Forests are being destroyed to produce catalogs and mailers. Readers of Ed #13 know that in the United States and increasingly worldwide, trees are a truly renewable resource. In fact, thanks to sustainable forestry practices, the amount of U.S. forestland has actually increased over the years. There are more forests in the United States today than 50 years ago and roughly the same acreage as 100 years ago7.

Myth 2: Catalogs and direct mail are difficult to recycle. In 2007, direct marketers received approval to include “recycle please” graphics on catalogs and mail pieces. Discarded catalogs, classified as “old magazines,” are valued for their long, strong fiber content and are used widely for recycled content in office paper and newsprint. NewPage uses old magazines to make deinked pulp for groundwood paper used in new magazines and catalogs.

81% of American households open direct mail. 

Myth 3: Americans throw away most of the direct mail they receive, unopened. A 2006 USPS Household Diary Study8 found that only 16 percent of American households choose not to open direct mail. The vast majority, 81 percent, open and read or at least glance through the direct mail they receive.

Okay, that gets the myths out of the way. Here are some interesting trends:

A USADATA Special Report9 reflects increased sophistication and technological advances in data mining. Data enhancement is growing, with the addition of deeper demographic information, including age, gender, marital status and lifestyle interests, as well as ethnic background. The result is more detailed data that supports more precise targeting.

Even saturation lists—also known as “occupant” lists—are becoming more targeted. Traditionally used by companies to cover entire cities, counties or zip codes at a reduced rate, this approach now has new selection options that include median home value and household income, or can be focused on specific carrier routes.

The USADATA report also found that companies are increasingly integrating direct mail into other forms of marketing, particularly Web-based—such as a printed marketing piece that provides a personalized Web address (PURL) designed to deliver targeted information.

DMNews points to improved print and production technology as another force in the direct mail environment. The shift to digital printing represents a major change in the production of direct mail campaigns, providing greater flexibility and customization, faster turnaround, less waste and reduced inventory, which reduces both cost and environmental impact.

via Direct mail, 2010—myths and trends. – Ed #14 Getting Personal – Ed Lives Here.

The Influence of Print, Digital and Social In the Purchase Decision

July 2011 — Shopper Sciences, IPG Mediabrands’ research and shopper marketing consultancy, conducted a national study commissioned by Google to explore how the changing world of media is influencing shoppers’ move from undecided to decided as they move along the path to purchase.

Conducted in April 2011 among 5,000 U.S. shoppers across 12 diverse shopping categories, from groceries to cars to financial products, the research analyzed the role of more than 50 different media sources—including traditional advertising, internet search and display, mobile, online social and retail store channels.

The research divided potential forms of influence into three areas:

“Stimulus” — marketing efforts that spark the consumer’s awareness and familiarity with a product or service;

The “Zero Moment of Truth” — research and fact finding activities about a product or service directly undertaken by consumers;

The “Final Moment of Truth” — the moment at the shelf, before purchase, in the retail store.

According to the study, today’s shoppers are digging up more information, from more sources, before they buy.  The survey reveals that the average shopper uses 10.4 sources of information to make a decision in 2011, up from 5.3 sources in 2010.  Those 10.4 sources range from TV commercials and magazine articles, to recommendations from friends and family, to websites, ratings and blogs online.

Survey participants were asked, “When you were considering purchasing [PRODUCT] what sources of information did you seek out to help with your decision?”

The top marketing sources delivered by the three forms of influence mentioned above:

N=5,003  Source: Google/Shopper Sciences, Zero Moment of Truth Macro Study, April 2011.

Analysis shows that 82% of 18-34 year olds cited “stimulus” mediums on the path to purchase, roughly 5% higher than 35-49 year olds (77%), and 10% higher than 50-plus year olds (72%).

N=5,003  Source: Google/Shopper Sciences, Zero Moment of Truth Macro Study, April 2011.

Nine out of 10 (91%) 18-34 year olds turned to research and fact finding (“Zero Moment of Truth”) mediums on the path to purchase, compared to 85% of 35-49 year olds, and 79% of 50-plus year olds.

N=5,003  Source: Google/Shopper Sciences, Zero Moment of Truth Macro Study, April 2011.

The study data showed that 81% of 18-34 year olds relied on “at the shelf” (Final Moment of Truth) mediums before purchase, compared to three-quarters of 35-49 year olds and 50-plus year olds.

“Pre-shopping before buying has become a huge, huge part of customer behavior.  In the past, it was pretty much confined to big-ticket items like cars, or expensive electronics or homes.  Now people engage in discovery before shopping on very small things.  It’s crossed all categories of shopping behavior. It’s just the way people buy today,” Bob Thacker, Gravitytank Strategic Advisor and former CMO of OfficeMax is quoted as saying.

Source:  Google, ZMOT: Winning the Zero Moment of Truth by Jim Lecinski, accessed July 6, 2011.

via Print in the Mix: Fast Fact – The Influence of Print, Digital and Social In the Purchase Decision.

Nielsen: Shoppers Prefer Paper

July 5, 2011 — New research from Nielsen examining the benefits of print and digital inserts and other forms of retail advertising were presented at the Nielsens U.S. Consumer 360 Conference.

Research findings shared:

Shoppers prefer paper. Close to 70% percent of shoppers from a recent Nielsen survey say they look at printed paper material either mailed to the home 67% or in newspapers 69% at least once per week in their quest for sales and promotions.The only digital tactic that matches printed paper’s weekly reach is email 67%. Far fewer people are looking to sales and product information from digital methods like social media sites 45% or from smart or mobile phones 39%.  Nielsen states that while consumers prefer print, the weekly usage conversion rates from digital are strong.Shoppers Want Print and Digital In the FutureNearly 90% of consumers say they want their print advertising in the future, more than 70% want email and traditional websites, and about one-third are interested in social and smartphone advertising applications.

Source:  Nielsen, Consumer 360 presentation Print and Digital Challenges Facing the RetailerNielsen goes on to say this about the challenges facing print and digital advertising, “Today, printed circular response promotion lifts are less effective than five years ago, delivering about a 20 percent return on investment in 2010, compared to a 28 percent boost in 2005,” and, “For many brick and mortar retailers, figuring out how to effectively draw people to online offerings and then determining what contribution online efforts are having to offline sales is a challenge.  In fact, few of these retailers get more than 20 percent of store shoppers to visit their site, despite the fact that the majority of shoppers spend 25+ hours per week online.”  View Nielsens recommendations for optimizing the marketing mix.Source:  NielsenWire, Browse All About It! The Evolution of the Circular, July 5, 2011.

via Print in the Mix: Fast Fact – Nielsen: Shoppers Prefer Paper.

Surprise—direct mail is alive and well.

With the success and increasing use of electronic and online media, there have been rumors of the impending death of direct mail.

So it may surprise you to hear that direct mail is continuing to prove itself as a means for reaching customers and prospects, especially as part of an integrated multichannel strategy.

Direct mail users, including leading e-tailers, point out that not all customers respond the same way to communications and everyone has his or her preferred way to get information. They refer to growing evidence that direct mail is a very effective way to drive people to Web-based marketing.

One study: Websites supported by catalogs generate 163% more revenue than sites that aren’t.

In fact, Deliver magazine says direct mail catalogs are more relevant than ever, citing a Key Catalog/Multichannel Issues Survey conducted by Vovici EFM4 in which 96 percent of respondents agreed that a printed catalog generated online sales. More than 60 percent said catalogs influenced half or more of their online sales, and better than half saw a 20 to 50 percent increase in online sales immediately after a catalog drop.

Research commissioned by the U.S. Postal Service (USPS)5 showed that consumers receiving direct mail and catalogs were more likely to buy online than those who received nothing through the mail, and those shoppers tended to buy and spend more—the study’s results indicated that websites supported by catalogs generated 163 percent more revenue than sites that weren’t.

Zappos.com, one of the world’s leading e-tailers, would concur. A few years ago this popular Web-based seller of shoes and accessories began publishing a glossy catalog, Zappos Life, and were pleasantly surprised to find that the average catalog order amount was double that of the typical online transaction.

Print catalogs are now a highly productive sales channel for leading e-tailer Zappos.

Since that time, Zappos has been steadily expanding the print catalog program with more drops each year and focusing on specific segments such as fashion, skate/surf, running and a number of other possibilities that include bridal, western and housewares.

A USPS study in the financial services industry6 further bolstered the view that there’s a tie between direct mail and Web-based success. When compared with consumers who received only online communications, those receiving both direct mail and online messaging made more than 70 percent more visits to the site; tended to view more pages and spend more time there; were 31 percent more likely to visit the site in the future and were 34 percent more inclined to recommend the site to friends and family.

4. David J. Mastervich, Deliver Magazine, Vol. 5, Issue 5 (10/09)

5. David J. Mastervich, Deliver Magazine, Vol. 5, Issue 5 (10/09)

6. U.S. Postal Service, “Why Financial Web Sites Should Invest in Mail,” 2007

via But wait—surprise—direct mail is alive and well. – Ed #14 Getting Personal – Ed Lives Here.

I found this great article this morning, well worth the read:

From Mashable:

Marketers have built a temple that needs to be torn down. Demographics have defined the target consumer for more than half a century — poorly. Now, with emerging interest graphs from social networks, behavioral data from search outlets and lifecycle forecasting, we have much better ways of targeting potential customers.

The rise of mass-produced consumer goods also brought the rise of mass-market advertising. In the 1950s and 1960s, the goal of television was to aggregate the most possible eyeballs for advertisers. In order to convince consumers that an advertising message was relevant to them, consumers had to buy the idea that they were just like everyone else.

Marketers created that buy-in by bucketing people into generations. When you lump 78 million people into one group called “Baby Boomers,” it’s much easier to sell them stuff, especially when consumers accepted their generational classification.

But now, that entire system has broken down. The year that someone was born will not tell you how likely he is to buy your product.

Fragmentation is now the norm because the pace of change is accelerating. Generations have been getting smaller because there are fewer unifying characteristics of young people today than ever before:

With the recent rise of the social web, people self-select into groups so small, so fragmented, and so temporal, that no overarching top-down approach could be successful at driving marketing performance.

Marketers have responded by adding more demographic information to the mix, but even that is a losing battle. I worked with one client who was introducing a technology product, and had identified a target market of “connected consumers.” Connected consumers were 34-55, had a household income over $120k, and read technology publications regularly. This target market represented 14 million consumers.

They were targeting 14 million consumers to sell 50,000 units — that means they were hoping for 3.5 sales for every 1,000 people with whom they connected through their marketing.

What if, instead, you could get 500 sales from every 1,000 people you marketed to?

It’s possible through psychographic profiling. Psychographics look at the mental model of the consumer in the context of a customer lifecycle. Amazon.com has long been a leader in this space, through innovations like “recommended products” and “users like me also bought.” Its algorithms have learned to predict its users, and what they are interested in. And now, there are a number of tools that any business can use to leverage psychographics.

Here’s how a psychographic profile might look different from a traditional marketing profile target for a childcare provider:

Psychographics provide much more useful information about users. There are multiple data sources making this possible today. Social profile data, behavioral data and customer lifecycle data can now finally be leveraged to contact people who are ready to buy.

Social Profile Data

Profile data from social networks consist of all the fields users grant permission for brands to use on their behalf. Most things that users track on social networks can be leveraged to create a closer relationship with a customer. Fields like relationship status, alma mater, interests and occupation can all be managed through social profile data management tools.

Social profile data is the critical cornerstone of psychographic insights. The level of nuance and insight provided by social data, when compared to standard demographics, is the difference between performing surgery with a scalpel or a butter knife. Previously unimaginable questions are now routine:

• Are customers who kayak more likely to buy water shoes than those who canoe?
• Who is more likely to spend over $100 on an order: Seattle Seahawks fans or Seattle Mariners fans?
• Are your customers more likely to purchase when they move across the state or across the country?

In addition, companies such as GraphEffect are measuring purchase intent by doing semantic analysis on Facebook status updates. This type of qualitative analysis can move users into specific marketing funnels from their very first online experience with your brand.

Behavioral Data

Retargeting advertising messages is gaining popularity among marketers, but its very success has jeopardized its effectiveness. Ads that follow users around the web have been implemented — usually poorly. Every ad network quickly incorporated the ability to place cookies in users’ browsers, and display specific ads to them any time they visit a site that’s part of their networks.

The next generation of ad targeting will focus more on telling the customer a story over time, based on specific behavior triggers. That means ad networks and clickstream data aggregators will work together to trigger when a customer moves forward in a mental model toward a purchase event.

Site content and product recommendations will also be informed by clickstream analysis. Companies such asRichRelevance, Certona, Baynote and Monetate all offer the ability to personalize information to specific visitors based on their behavior. Leveraging those alongside a payload of social profile data can turbocharge those services from the first moment a new user visits a site.

Customer Lifecycle Data

Social profile data can also be used to predict customer lifecycle. Imagine knowing not only if a customer has children, but the exact ages of those children. In addition, key indicator purchases, like buying diapers for the first time, indicate a customer entering a new lifecycle. Other key indicators, like shipping address changes, first purchases of furniture, or first purchases of substantially higher-value goods can all indicate the start of a new customer mentality and behavior pattern.

These patterns are predictable, so you know the future behavior of high school seniors by looking at the current behavior of college freshmen. By using demographics alone, all high school graduates would be marketed to identically. Using psychographics, we know who is likely to be interested in specific product or content recommendations at a specific time — such as when they actually start their first day of college.

This vision is starting to gain traction among serious marketers. At the 2009 Internet Strategy Forum, Xerox’s VP of Interactive Marketing, Duane Schulz, said that a 1% clickthrough rate was a huge failure — even though it is 10 times the industry average. In his mind, a successful campaign would never waste 99% of its impressions. Using psychographic data, you don’t have to waste any impressions.

We have seen a similar upheaval in marketing before. In the 1960s, marketers who embraced the power of television, broad-based insights into psychology and demographic data created world-class brands and billions of dollars in value. At that time, if you didn’t advertise on TV, you lost. Today’s new tools offer a similar choice: Build a deep understanding of your customer, or risk irrelevance.

Image courtesy of iStockphoto, porcorex

Jamie Beckland is a Digital and Social Media Strategist atJanrain where he helps Fortune 1000 companies integrate social media technologies into their websites to improve user acquisition and engagement. He has built online communities since 2004. He tweets as @Beckland.