Forget ‘advertising’, think ‘intention selling’
Monday, July 14th, 2008Industry commentators and enterprising developers are predicting that the next generation of Web 2.0 sites will dispense with advertising as we know it and focus instead on ‘intention selling’. In this post I’ll summarise what they’re talking about and what this means for anyone thinking about advertising on a social media website.
Forget advertising
Traditional advertising is essentially attention focused content. To work it must divert the user’s attention away from their current course and onto the advertiser’s product. By it’s very mature it must interrupt what they are doing and substitute this with something that promises and hopefully delivers a greater benefit; although the delivery is seldom included with the offer. Since most users don’t like forced interruptions, engagement rates on advertising are typically around 0.5%, which means 99.5% of users have simply ignored this intruder.
Low engagement might be acceptable if each ad visitor resulted in a sale, but let’s face this is never going happen. Given an optimistic 10% conversion rate, actual purchases linked to advertising take place for less than 1 in a 1000 people exposed to the ad. It doesn’t matter if you buy advertising on a pay per view (CPM) or pay per click basis; you’re still wasting anything from 90% to 99.95% of your money on people who won’t be buying your product.
To compensate for these low returns, publishers significantly discount the user interaction and promise to deliver thousands of users to your ad; while users accept they will be exposed to 1000+ product adverts for each one they are likely to buy.
Up till now this has been the commercial model adopted by every publisher and the vast majority of websites - including all the major social networks … Facebook, MySpace, Bebo, etc. However this may be about the change, and it’s all down to the true nature of web2.0 sites which value user action and intentions above content.
Think intention selling
The best way to illustrate this change is to provide examples of what’s being termed ‘intention selling’.
Let’s consider your next holiday - which just happens to a week long self catering activity break in South West Wales (we can but hope).
As with every holiday you progressed through stages to purchase then enjoy this product, before sharing the experiences with your mates.
First off you were influenced by several factors to lead you to choose South West Wales and a self catering activity holiday. Traditional advertising would suggest you saw a TV or classified ad, web banner, or email and this lead to your decision. Intention selling takes a different view. The email you sent to your mates in June suggesting ‘I need a holiday, where shall we go?’ would have flagged you are a potential holiday buyer. Using this flag, your profile and historic data targeted product links are placed beside your email or within your news feed. Unlike traditional ads these are ‘buy now’ products that match your profile and to which you’re most likely to respond. E.g. We know your own a two year old wetsuit and your last holiday was mountain biking in Spain, so this product could be an activity week that combines kite surfing, sea kayaking and coasteering with easy access to coastal cycle routes.
Having selected the holiday experience the choice is now where to stay. This decision is helped by self catering products (your known preference), linked from your activity holiday profile and once again selected to match your requirements (party size, budget, location, facilities, etc.).
But we don’t stop here … in-fact we’ve only just started. We know where you’re staying and what you’re doing, so the next group of products you’ll see will support these choices. It may be for a new wetsuit, two for one meals in a local restaurant, flights and insurance for an overseas mate who usually joins you, or a contemporary guide book to the local area … the choices are almost limitless. And remember this is not a once off deal, but relates to every transaction you make! In-fact if we look at the figures customer transactions are worth an estimated $60 trillion pa, so there are millions of opportunities to place your product next to related consumer actions and stated intentions.
So what does this mean for advertisers?
The main feature outlined above is that for each planned purchase a range of products, with buy now links will have been pre-selected and delivered to their activty feed. These products will match both the individual’s own requirements and their profile, using the wealth relationship, profile and activity data that they have provided through social network sites. They will also all include ‘buy now’ links to maximise the conversion rates, while the ‘ads themselves’ will probably be placed of a ‘commission plus’ basis; i.e. the seller only pays the publisher when an actual purchase takes place.
So what does this mean for today’s advertisers and social media publishers like WalesCymru?
Assuming a publisher can gain access to this depth of user data (take this for granted … it will happen through integration with Facebook and other social networks), switched on social advertisers will shortly be offered unrivaled access to quality user activity feeds, where they’ll be able to deliver ‘buy now’ products at the time and place the transaction is most likely to take place. Suppliers who can do this will be selected by the publishers and their business will grow; while those who resist this movement or keep their product to themselves will increasingly be passed over.
Tomorrow I’m attending a workshop on ‘the new approach to digital business for tourism in Wales’. The purpose of this event is to set out the aspirations for Welsh tourism over the next six years IF Wales is successful in securing £24m through a European funding bid. I’ll let you know if these ideas find resonance in this group, or if the people leading the debate in Wales are still thinking digital business 1.0.

