Monday, June 9, 2008

Value-Added or Valueless Marketing: The Experiential Marketing Continuum

I posted some facts and observations about Gen Y's changing media habits and increasing spending power, and in the post I said, "The marketing challenge of the next few years... will be how to engage consumers and provide real value." My friend Josh posted some great thoughts, including, "I'm not sure I agree that marketers should be trying to provide 'value.' That seems outside the scope of a marketer's mission. But perhaps I misinterpret 'value.'"

I think the idea of "value-added versus valueless marketing" is worth exploring in more depth because this is a vital mind shift for marketers and their enterprises. The gap between marketing that provides value consumers recognize and marketing that does not is what separates what is working and what is failing in both traditional and new media. It's the difference between experiential marketing and mere advertising, and understanding this gap is at the very core of what I believe will define success in the increasingly transparent, social, and consumer-controlled marketing landscape.

When using the term "value" in this context, I am speaking about the value consumers perceive to themselves. Marketing tactics can be defined on a continuum based on this perceived value.

On one end of the spectrum are tactics that consumers find so intrusive as to have negative perceived value. In fact, consumers' disdain of these marketing tactics is so great that people will change their media habits and even pay to avoid them; or worse yet, they turn to their elected officials to constrain marketers' options. Examples of this sort of unwelcome marketing include telemarketing (legally constrained), email spam (legally constrained) and mass media advertising such as television (avoided using DVRs) and radio (avoided using satellite radio, subscription services, and MP3 players.)

In the middle of this continuum are marketing channels that consumers welcome. These tactics do not elicit negative feelings, and consumers don't strive to avoid these forms of marketing. For example, unlike unsolicited email, most consumers don't mind the unsolicited admail they receive. Similarly, other than unrestrained billboard clutter, Out-of-Home advertising otherwise doesn't elicit negative feelings in consumers.

The other end of the continuum is where you'll find marketing that is not only welcome but actually desired. Consumers perceive these tactics as providing something of value, so these approaches earn consumer attention and are used, appreciated, and shared with others. Types of desired marketing include advergames, viral videos, fun or informative branded content, interactive and well-targeted microsites, product sampling, timely email and SMS alerts, life-enhancing tools, and personalized premiums. Specific examples abound, such as:
The chart below illustrates the Experiential Marketing Continuum. Admittedly, there is no science behind this chart. You may place the various marketing tactics in different spots than I, but my guess is that your instincts about what consumers find valuable and not probably aren't substantially different than my own.

The Experiential Marketing Continuum isn't intended as a set of rules to guide marketers' media mix but instead is a conceptual point of departure to explore how consumer perception can and should impact a brand's marketing strategy. For example:
  • No one channel is best. Even channels that tend toward the unwelcome side of the spectrum will remain very valuable components in the marketing mix because they excel at solving particular marketing challenges. Diversifying media has always been a best practice, as a very recent study shared on confirms.

  • Consumers' perceived value of a tactic or channel is just one factor that affects the effectiveness of any particular campaign or effort in that channel. Using a value-added or desired tactic doesn't guarantee ROI; likewise, unwelcome or valueless tactics can provide positive ROI.

  • We know that consumers are more in control of the marketing conversation than ever before. They will continue to screen ads in and shift attention out of less welcome channels, so marketers will need to shift strategies to meet consumer expectations and to match their evolving media consumption habits.
  • Marshall McLuhan's old adage, "The Medium is the Message" is certainly no less true than it was in 1964. Brands that only talk to consumers and that rely on less welcome channels will risk being perceived as indifferent, traditional, unapproachable, and narcissistic (or, worse yet, out of touch and not pertinent).

  • Marketers must be cognizant of how weary consumers are becoming of our advertising-saturated society. According to a 2004 Yankelovich Partners poll, 65% of Americans say they are "constantly bombarded with too much" advertising and 61% think the quantity of advertising and marketing they are exposed to "is out of control." The way to overcome this backlash is to focus on the sorts of channels and tactics that encourage acceptance within consumers.

  • As my friend Josh noted in his comments to my last post, "As marketing and consumer communications become more about conversation and relationships, it's logical to expect smaller businesses to thrive, as they're fundamentally better equipped to deal with such a change." He's right; the days of relatively few brands commanding relatively few media channels are over. As marketing turns ever more conversational and marketers use the Internet to leverage the "long tail," smaller brands don't need mass media to thrive; they can succeed by using more experiential, one-to-one, and consumer-welcome tactics to reach profitable consumer segments .

  • It is also important to note that while this chart distills each marketing practice into a single point on the continuum, any marketing tactic can be made more or less valuable and welcome to consumers. We'll explore this in more detail in a future post, since the application of value-based marketing concepts can positively impact any marketing tactic.
The most important (and I think interesting) implication of concentrating on value-based marketing is that this requires more than just a change to the marketing mix; it's a fundamental mind shift for marketers and their entire organizations.

If a brand creates its own online sitcom, is this marketing or entertainment? If a brand monitors Twitter for negative Tweets or complaints and then immediately responds, is this marketing or customer service? If a brand maintains a Facebook profile to raise awareness and have dialog with consumers, is this marketing or PR? Raising brand awareness or preference in a way that consumers welcome will require marketers to influence across organizational boundaries to a great extent.

In some respects, the shift to value-based marketing is an exciting return to the concept that marketing isn't a defined corporate function but is the essential business of business. The visionary Peter Drucker eloquently expressed the breadth and place of marketing over 50 years ago in his book, The Practice of Management:

“The business enterprise has two and only two basic functions: marketing and innovation. Marketing and innovation produce results; all the rest are costs.”

The more conversational, the more experiential, and the more value-driven marketing becomes, the bigger, broader, and more important the role of marketing will become.

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