Analysis and the Internet: Caveat emptor

Colin Tener is president of Tener Solutions Group, a customer relationship management consultancy based in Toronto....

Colin Tener is president of Tener Solutions Group, a customer relationship management consultancy based in Toronto.

One of the more powerful aspects of the Internet is the ability to customize a truly one-to-one message for each prospect or customer who visits your Web site. The technical ability to push back Web content in the form of banner ads or a customized home page has revolutionized the way organizations think about the messages they can send. But if the technological problem is solved, the bigger challenge remains. Exactly what should the message be?

There are a number of software products that are designed to analyze clickstream data and match appropriate Web content to observed interests. These solutions are driven by the Web pages you’ve visited as well as the way you navigate around a site, coupled with whatever personal information you have provided about yourself in the process. By analyzing this information, patterns are identified that indicate what types of messages will be most relevant. And since these messages are more relevant, they lead to repeat visits and higher sales.

At least that’s the story the vendors tell.

As we’ve seen with other so-called software revolutions, however, caveat emptor should prevail. Many of us went through the "neural net" period a few years ago, where vendors essentially told us not to worry our little heads about hidden layers and other complicated matters and just focus on lift. The problem is that marketers actually do want to know why a particular action is recommended.

Unfortunately, many vendors of Internet analytics are reluctant to reveal the engine behind their selections. What’s behind the black box? Is it a predictive model? A neural network? Using what measure of success? If you don’t know what the process is trying to predict, how do you know if you’ve got the right decision rule? Should we be predicting banner ads that are clicked, selections that are placed in the online shopping basket or only those items that are actually purchased? How do we know that the algorithm worked if we don’t match Web-page selections back to transactions with the proper test and control protocols?

Of course, lots of low-hanging-fruit opportunities exist without getting into sophisticated statistical analysis. If someone just purchased a book on Italian cooking from your site, then maybe they would be interested in another one. Or perhaps they might like a book on Italian wine. How about travel books on Italy? And what about information on an online grocer that guarantees next day delivery of fresh, gourmet ingredients? At some point in this sequence we move from the obvious to the not so obvious, at least in terms of likelihood to buy. And at that point, the need for analytical rigour arises.

Faced with potentially thousands of choices of messages to send, we need an analytical process that will identify those with the highest potential for success, whatever that may be. Because that raises another issue altogether. What if the key message we want to send isn’t cross-sell at all? What if we suspect that this customer is planning to switch to a competitive Web site? This situation is no different than our "old economy" banking clients, for example. They want to have the results of predictive algorithms loaded into call centres so that when a customer calls in, the most likely products are displayed along with supporting scripts. But if the customer is showing signs of cancelling either specific products or their entire relationship, then they want that information highlighted to the customer service rep and appropriate dialogue initiated.

Because of this need to both tailor and control the message, I am convinced that black box Internet solutions will have a limited lifespan in the marketplace. Users will want to be able to develop their own algorithms and decision rules, since that is part of their sustainable competitive advantage. If they can’t open it up and see how it works, they will not be able to tailor it to their needs. Sooner or later, they’ll look for a solution that is more open.

Stay tuned. Next month we’ll discuss the Holy Grail: combining real-time clickstream data with offline data captured in the data warehouse.

Colin Tener can be reached at (416) 585-2900 or by e-mail at tenerc@tenersolutions.com.

In Brief: The Garden picks CDs to take on daily creative leadership

Plus, Naked names two new leaders of its own and Digital Ethos comes to Canada.
TheGarden_FL

The Garden promotes two creative directors

ACDs Lindsay Eady and Francheska Galloway-Davis have taken over responsibility for day-to-day creative leadership at The Garden after being promoted to creative director roles.

The pair will also help develop the agency’s creative talent, formalizing mentorship and leadership activities they have been doing since joining the agency four and three years ago, respectively. In addition to creating the agency’s internship program, the pair have worked on campaigns for Coinsquare, FitTrack and “The Coke Challenge” campaign for DanceSafe.

Eady and Galloway-Davis will continue to report to The Garden’s co-founder and chief creative officer Shane Ogilvie, who is stepping back from daily creative duties to a more high-level strategic role, allowing him to focus on client relationships and business growth.

Naked Creative Consultancy names new creative and strategy leadership

Toronto’s Naked Creative Consultancy has hired Yasmin Sahni as its new creative director. She is taking over creative leadership from David Kenyon, who has been in the role for 10 years and is moving into a new role as director of strategy, leading the discipline at the agency.

Sahni is coming off of three years as VP and ECD at GTB’s Toronto office, where she managed all the retail, social and service creative for Ford Canada. She previously managed both Vice Media and Vice’s in-house ad agency Virtue.

Peter Shier, president of Naked, says Sahni’s hiring adds to its creative bench and capabilities, as well as a track record of mentorship, a priority for the company. Meanwhile, Kenyon’s move to the strategy side, he says, makes sense because of his deep knowledge of its clients, which have included Ancestry and The Globe and Mail.

Digital Ethos opens a Toronto office

U.K. digital agency Digital Ethos is pursuing new growth opportunities in North America by opening a new office in Toronto.

Though it didn’t disclose them, the agency has begun serving a number of North American clients, and CEO/founder Luke Tobin says the “time was right to invest in a more formal and actual presence in the area.” whose services include design, SEO, pay-per-click, social media, influencer and PR,

This year, the agency’s growth has also allowed it to open an office in Hamburg, Germany, though it also has remote staff working in countries around the world.

Moray Hickes was the company’s first North American hire as VP of sales, tasked with business development in the region.