SEPTEMBER 2003

How is online consumer behavior different from offline consumer behavior?

SHEINMAN: They're very different. Online consumers are more interested in quicker, faster shopping experiences. They're much more focused on the pure shopping aspect and clearly have an idea of which site they want to go to and what products they want to buy. In the offline world, people are more interested in the leisure and experiential side of shopping, and the full sensory experience that takes place in a mall environment and at the point of sale.

Offline, we've added more entertainment programming to our malls. People are coming to the mall looking for much more than just shopping. They're looking for diversion and the opportunity to be entertained, to enjoy themselves as part of a community. If anything, this phenomenon has grown since September 11th. People are traveling less, they want to get out of their homes and the mall is a great location and destination to accommodate consumer needs and interests.

HOPPER: You can have a lot more dynamic interaction with consumers in an online environment. Through promotional incentives, consumers can be driven online in pursuit of immediate gratification, for example, some form of reward. In pursuit of this reward, a company can encourage these consumers to "opt-in" valuable information in real time, versus waiting for the traditional offline data collection process. By creating an involving, rewarding brand experience online, consumers can be encouraged to actively navigate through a Web site and "sample" other product or service offerings immediately as opposed to the same process “offline” taking days, weeks, months or more.

SMITH: The Internet is really a linear type of medium. It's not a gestalt type of medium the way most advertising is. In advertising, the consumer might be standing on a platform, waiting for a train, and noticing a poster for a Broadway play or something. The advertising is intrusive, but blends into the overall environment. On the Internet, consumers are there with a purpose. They're usually following a series of steps. You don't want to get in the way of that because then you're thwarting the consumer's purpose. So intrusion is never going to work on the Internet the way it can in the offline world.

CONTESS: Online consumer behavior is always active and it's often self-selecting and seeking. If someone goes online, they're usually going online for a purpose. In the offline space, while participation and promotions can be active, often they are passive. They rely on very high relevancy and motivation. In many cases offline promotions rely on intercept. Meaning, I'm shopping and maybe I'll see a promotion at the point of sale that gets my attention and it becomes a "tie-breaker." Okay, I'll buy this box of cereal or that stereo brand or this TV because of some offer that happens to intercept me while I'm in the shopping mode.

What's the best way to integrate online and offline marketing programs?

HOPPER: Marketers need to capitalize on the immediacy of the online medium. You want to make sure that there is a compelling call to action within your campaign’s offline components that drive consumers online, often identifying themselves via an offline PIN code, for example. You need to look at the offline medium as a way to reach the masses and the online medium as the way to personalize it but also deliver instant fulfillment.

A good example is the Hi-C/Miramax Spy Kids Campaign that we did earlier this year. An on-label promotion on a Hi-C drink package featured an AOL keyword, which directed a child or parent to an AOL-hosted Web site. Through an online game, kids could pretend to be SpyKids for a day and win prizes. Miramax promoted the upcoming release of the SpyKids video and there were incentives driving consumers back to stores to purchase more Hi-C, and in turn, play more games. So the brand experience offline was consistent with what was online.

SMITH: First of all, they definitely should be integrated -- but I'm not sure that a lot of people who are doing either one are convinced of that. Unfortunately, many people who do promotions -- or advertising, or direct marketing -- lock themselves into these little specialty fields.

They advise their clients that what they do is the total solution to the problem. You also have that on the client side. They're not always demanding integrated promotions because they are in charge of say, direct marketing, and don't look at the big picture. So it's not so much a question of whether or what's the best way, it's even a more fundamental question of whether to or not!

CONTESS: We have to focus on the consumer and think about the online and offline channels as just that -- different channels, different ways of reaching consumers with different kinds of messages, information and offers. Whether the consumer is touching this brand in an online or an offline environment should almost be immaterial. Now, when you get down to execution and tactics, you don't want to take offline tactics and just bring them online in a straight translation because usually that doesn't work. But you do want one strategy against the same customer.

SHEINMAN: It takes a lot of effort to ensure that what takes place online matches the physical, offline environment. And there has to be an important element of cross promotion. People shopping the offline space clearly need to know how to utilize the online extension of the mall. Similarly, online users need to know about the connection back to the mall.

Our best customers are using all available channels -- whether it's the retail experience at the mall, the online opportunity platforms, catalogs or other shopping activities. The best retailers and merchants offer their products for sale across all these platforms -- and only for sales.

They also use the unique capabilities of each platform -- whether it be online for more specialized ordering functions or offline for pick-ups and try-ons. The smartest marketers understand each of the platforms and how they complement each other. It all points to the importance of education: The consumer needs to understand how each one of those platforms can be utilized.

Which types of online marketing programs, promotions, do you think will be the most popular over the next twelve to twenty-four months?

SMITH: Many of the bricks & mortar retailers offer the best examples. They're a success because they are good marketing integrators. They have etched on our minds what Eddie Bauer stands for, or what J. Crew stands for. Through all the zillions of dollars they have spent in direct marketing and general advertising, they've created these wonderful brand images.

So, once I'm at their Web site, because of general advertising and everything else that’s happened over the years, I'm predisposed to buy from them. I may be put off by their prices, which are not low, but I'm there because of their perceived quality. Madison Avenue delivered that image and therefore delivered me to them. So the bricks & mortars -- if somebody were giving out Emmys or Oscars for integrated marketing campaigns -- those guys would take first prize.

SHEINMAN: What you're going to see moving forward is much more precise marketing with offers that truly are relevant and provide the right value proposition to the consumer. This is all the result of CRM tools becoming much more sophisticated in helping marketers design and build databases, and target specific audiences. So once consumers believe that somebody has really thought about them and not just inundated them with a mass mailing or a mass delivery, then they'll see the value and they'll want to utilize the offers more and opt in on a more regular basis.

The automotive category is already making major strides in this area. They have a very sophisticated process of targeting consumers, either as existing car buyers, brand loyalists or somebody who has another automotive relationship but is a potential target as a lease turnover.

CONTESS: The real action over the next couple of years will be marketing programs that drive, build, and maintain relationships with customers -- programs that are dialogues not monologues. There has been a lot of talk about CRM. It's not a new concept to build ongoing relationships with customers to get them to buy more, to purchase more and remain loyal. What has changed, and what has really brought CRM to the forefront today, is that the technology now exists to be able to make the principles of CRM a reality.

Marketers now have the ability to draw information about a customer down from a database -- wants, likes, dislikes, tendencies, prior purchase behavior, etc. -- when we're trying to develop an offer that's going to motivate a specific customer. As the technology and the principles of CRM become more pervasive, the offers that we put in front of customers are going to be much more personalized and customized based upon what we know about them. The promotional efforts that are placed against those customers, in that more personalized, customized manner, are also going to be longer-term focused.

HOPPER: Delivering instant gratification is one of the many unique benefits versus offline mediums. Whether it's an online experience -- such as downloading music, collecting online trading cards or simply a valuable certificate you can print-out -- online delivers instantly and inexpensively, giving both the consumer and the host company value. In fact, instant gratification promotions are growing at a substantially faster rate than the traditional sweepstakes.

We’re also likely to see growth in hand-held technologies, especially among younger, technology-savvy audiences. Imagine a high-tech company sponsoring a blackjack game online so that IT professionals who are on the road can wager bets, play against the dealer and even win a prize. Then, they’d simply sync up their PDAs and be given a Web site to retrieve their prizes. This gives companies yet another means to forge dialogues with consumers, ask for further data and ultimately begin a valuable customer relationship.

How do you do all that without compromising consumer privacy?

HOPPER: The beauty of online is that you can provide a brand experience that, if enjoyable, will encourage consumers to opt in to provide more information before they leave the site. For example, manufacturers now have the ability to team up with state lotteries and leverage their databases. Simply by being a second chance prize partner, a marketer can interact with lottery players and gain valuable data, which before was unavailable based on lottery privacy rules. So, by leveraging a consumer's behavior -- i.e. lottery playing -- a smart marketer can identify a valuable user base, and reward them for "opting-in" important information.

CONTESS: Obviously you have to get permission from the consumer. This is where promotional marketing could be key, because if you want to have a relationship you have to have a conversation. The way you start conversations, oftentimes, is with a promotion. If the consumer finds the offer highly relevant and motivating, then oftentimes they will give that permission as a means of getting at the offer. Then you have the opportunity to continue making offers as the dialogue evolves. At that point, privacy really isn't an issue.

SMITH: It's a matter of marrying the science database marketing to the art of promotion. You create things of value that you know your consumers want because the data tells you so. But you don't stick your foot out to trip them as a way of making them buy it. You don't sell, but rather promote, the sale of your product or service by offering valuable information. It's like what Shell did thirty-some years ago with the Shell Answer Man. That was terrific because the Shell Answer Man was telling you when you should rotate your tires and change your oil. It was useful information. In the process, the consumer was getting a subtle message to use the sponsor's products. That's exactly the kind of thing consumers are looking for on the Web.

SHEINMAN: With the explosion and proliferation of email offers and the implosion of a lot of dot-com businesses, there's a high degree of mistrust between consumers and online businesses. However, the dot-coms that are still standing will, if they survive, have an opportunity to start to rebuild trust with consumers. Once the trust is there, then you'll see more and more consumers opt in. Most consumers respect it when the marketer has made the effort to customize its communications. In many cases, they'll respond much more favorably because of it.

What will the future of online marketing look like?

SHEINMAN: The future is pretty much what we always expected it would be -- online marketing is just another natural extension of other communication platforms. It becomes another communication platform with greater capabilities for one-to-one communication with consumers. From the consumer's perspective, it's just another way of interacting and engaging with a particular brand or company. The reality is that that's good news for the consumer. There are very few businesses that will survive if they're one-dimensional. They're going to have to have some model of convergence between what happens online and what happens in the offline physical space as well.

CONTESS: The future of online marketing in some respects is going to be based on relationships, conversations or dialogues. It certainly is going to be rooted in customer knowledge and information -- meaning data, and the management of that data. But ultimately it's going to find its place as a channel in the mix of marketing communications tactics that plays an important, integrated role with everything else the marketer is doing out in the marketplace. Its role is becoming more defined and more focused, and it will be largely data driven.

SMITH: Marketing people will wise up that most people go to the Internet for information. So, you need to add value with helpful, informational brochures and the like -- electronic brochures. That's the future. Paper, printing and postage for promotions are so expensive and getting more and more expensive. Those increasing expenses will be the unseen hand that will make the Internet infinitely workable for marketers in the years ahead.

HOPPER: Online marketing is going to start converging many more platforms than we see today. We’re going to see the convergence of the Web with WAP technologies, cellular Palm-based technologies and kiosks -- all providing manufacturers with a whole host of touch points to dial out to consumers. For example, a consumer watching a hockey game on TV could be driven online to predict the results of the game. If the consumer wins, we can push out a notification that they’ve won through their cell phone, Palm Pilots or other digital platforms. The future of online marketing is not just the Web, but rather the convergence of all of these different digital platforms and closer integration with offline efforts.