There’s no denying that the main objective for any e-commerce sales or retail marketing executive is to maximize the total value of visitor traffic on their site, simply put— turning web browsers into buyers and clicks into cash. Search is certainly leveling the playing field as well, so how do companies stand out from the crowd? And why are some sites still failing to deliver compelling and relevant content to their customer base?

In today’s saturated marketplace, retailers can no longer rely on the traditional marketing techniques and media vehicles to manage customer interaction and drive home sales. In order to achieve greater web interaction optimization, e-commerce and retail sites must recognize the inherent value of social behavioral merchandising and effectively increase the relevance of communications by automatically promoting the most relevant products to each visitor, thereby maximizing conversion rates and average order values.

By making websites more customer-centric via these “recommendation engines,” retailers can essentially optimize customer interaction through improved content and messaging based on a customer’s specific needs and behavioral patterns.

We all know who Amazon.com is. Besides the millions of SKUs at Amazon.com, the site is easy to use and “steers” browsers in the right direction when they need help (recommendations, user reviews, etc.). The addition of recommendations from other customers can build a sense of trust and community between new and returning customers—and probably better than any 17-year old working the floor at Border’s Books.

Given the wide variety of tools available in the market, online retailers must familiarize themselves with the different points of customer contact and approaches towards reaching interaction optimization. The Customer Interaction Cycle, shown below, depicts the many different points—from initial landing page through transaction—where collective intelligence can be applied to maximize value.

Rolf Elmer is CEO of Avail Intelligence

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Behavioral advertising, the anonymous or pseudonymous tracking of online activities for purposes of providing more targeted advertising and content, promises great potential for advertisers and publishers to build more relevant and trusting experiences for their users. But if you are thinking about using social or behavioral advertising because traditional display and email are yielding deplorably low response rates - don’t cross that fine line between creeping in and creeping out. Currently, consumers are unhappy with behavioral targeting practices, and now legislatures are getting involved. The New York State Assembly has plans to impose legal restrictions on the ways in which personal data is collected and used.

In line with the proposed New York State bill, a recent consumer poll conducted by TRUSTe and TNS Global indicates consumer demand for more transparency and user control around behavioral targeting. The survey provides insight into how marketers can make behavioral targeting more welcoming from a consumer perspective. Finding the right balance between wowing customers with superior customization and simply freaking them out will preserve consumer trust and help prevent state and federal legislation from curtailing your marketing plans for 2008.
Much of the evidence collected in the TRUSTe and TNS survey points to a consumer demand for more customized online ads and for an end to irrelevant, untargeted ads most commonly observed today.
• 87 percent reveal that fewer than 25 percent of the ads they see today are of any relevance.
• 72 percent of consumers find online advertising to be intrusive and annoying when ads are irrelevant to their interests.
• 64 percent say they would prefer to see only ads from online stores and brands they know and trust.
• 55 percent would be willing to fill out an anonymous survey about products, services, and brands they purchase in order to limit the online ads they see to those indicated in the survey.

But, according to survey results, two main obstacles threaten the promise of behavioral targeting: 1) the lack of consumer education and understanding, and 2) the lack of transparency and affirmative choice. Consumers indicate a high level of apprehension when it comes to tracking their browsing history and express little familiarity with the term “behavioral targeting.”
• 57 percent of survey respondents say they are uncomfortable with advertisers using their browsing history to provide relevant ads
• Only 40 percent of respondents are familiar with the term “behavioral targeting.”

While advertising based on anonymous information should be embraced by privacy sensitive individuals, there is still significant unease with behavioral techniques. This is not surprising when consumers are familiar with privacy mishaps such as the AOL search data disclosure, which allowed researchers to piece together several pieces of anonymous information to positively identify an individual. Seventy one percent of consumers said they were uncomfortable with third parties tracking their behavior for purposes of serving ads even when it couldn’t be tied with any PII.

Behavioral Advertising Dos and Don’ts

DO
- Matter-of-factly incorporate some disclosure of tracking and targeting as part of your product or service value proposition. Provide a “what is this” button to explain how your customization works.
- Make sure your service providers, agencies, and others are following industry standards for privacy notice and disclosure. The majority of serious complaints TRUSTe encounters are privacy breaches by marketing vendors.

DON’T
- Think you can get away with not giving your customers notice and choice. See Cathryn Harris v. Blockbuster.
- Undermine your investment in building your brand for a few response points. (more…)

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If you’re an events manager with a death wish, invite Jason Calacanis to deliver the keynote address at your next conference. Sure, Calacanis—a serial Internet entrepreneur who made the bulk of his fortune with the sale of his company Weblogs, Inc. to AOL—will deliver an engaging, thought-provoking and sometimes flat-out inspirational talk. But then again, he might just start a riot.

After all, this is the guy who, at SES Chicago in 2006, announced—to a group of search professionals—that “SEO is bullshit!” and compared those engaging in SEO to “snake oil salesmen.”

It didn’t go over well.

Having escaped Chicago, living to speak another day, Calacanis recently addressed a room full of affiliate marketers at the Affiliate Summit West. Apparently unruffled by the flap and furor over his SEO comments, Calacanis explained to the affiliate folks that the rest of the industry saw them as the bottom rung of the food chain, wired to make the quick buck.

There was no standing ovation.

But to be fair to Calacanis, he’s not some sort of egomaniacal misanthrope who gets a perverse pleasure out of standing on a stage and belittling the audience. (Actually, he might just take a little pleasure in it.) In fact, the point he’s trying to make is a valid and intriguing one.

First of all, Calacanis was over-generalizing for effect: he sees value in ethical SEO and understands that there are legitimate best practices to follow in designing, maintaining and promoting a site that will allow it to rank higher in search results. And he certainly doesn’t see anything wrong with the fundamental concept of affiliate marketing: engaging a group of websites to help sell product or generate leads as a sort-of extended sales force.

Calacanis has a problem with those interested in gaming the system to make a quick buck—whether it’s the black-hat SEO firm that exploits a weakness in a search engine algorithm to garner a temporary high rank for an undeserving website (until the search engine closes the loophole and the site plummets off the search results page) or the affiliate who steals content to game the search engines to generate more traffic and commissions, or the marketer who floods blogs, message boards and social networks with paid posts.

According to Calacanis, it’s all borne out of a misguided ethic that has pervaded the Internet since the mid-’90s: if one is technically capable of doing something, then it’s OK.

But he—and others—see reason for optimism. As more and more black-hat marketers exploit the various systems, these systems eventually break down, to be replaced by ones that are more resistant to gaming. Consumers are helping to drive change, too. We leave MySpace to go to Facebook and then to LinkedIn as policing technologies are developed that help eliminate spam or fraud. Sites like Angie’s List—a ratings and reviews site for home-improvement contractors—take off because they are curated to ensure the reviews’ (and reviewers’) legitimacy. In other words, because they earn our trust. Calacanis himself has developed Mahalo.com, a search engine that uses human beings to find and organize the best links for given search terms—and to filter out irrelevant or spam results.

A new ethic is evolving: trustworthiness is good for business.

Tom Dellner is executive editor of Electronic Retailer Magazine and editor of its supplement, Online Strategies

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After Omniture’s acquisition surge last year, the web analytics industry has just been made even smaller by Yahoo’s acquisition of IndexTools. What does it mean when a relatively high-end tool like IndexTools is turned into a free offering like Google had done for Urchin?

Mostly, it means that Yahoo will be able to compete head-on with Google and Microsoft as they offer measured proof that advertising on their properties is a good investment. But how does this shrinking vendor landscape play against growing customer demand?

In these rocky economic times, upper management wants to know that a dollar spent online will result in two dollars earned. The online budget is not getting cut, but it is getting scrutinized like never before. They are looking for all the tools and best practices they can lay their hands on.

As free tools get better, the pay-for-play tools do as well. I look to Omniture, Coremetrics and WebTrends to step up to the challenge and help their high-end clients with even more systems, methods and consulting services. They are incorporating multi-campaign attribution in their tools so more of their clients are learning the ropes. Soon, there will be case studies and best practices.

Until then, I turn to people like Jim Novo and his post on Marketing Attribution Models. I look to Eric Peterson and Avinash Kaushik to keep holding up the lamp so the rest of us can see. I look to the Web Analytics Association to be the collective wisdom of the industry and for the eMetrics Marketing Optimization Summit to be the gathering place, where we can all learn from each other.

Will Google, Microsoft and Yahoo want to play at the enterprise end of the spectrum? Things move fast in this industry. Don’t blink!

Jim Sterne is president of Target Marketing and Chairman of the Web Analytics Association

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In the past few days, Comedy Central has taken a brazen approach to some of the issues we deal with day in and day out. The virtual world Second Life is one of those buzzwords often thrown around conferences by people trying to sound like they know what they’re talking about. Many well-known companies have spent lots of money jumping into Second Life to have a virtual world presence, but I think they were simply jumping the shark.

Second Life, like many other platforms on the Internet, has not taken off quite as expected. “The Daily Show” had quite the time making fun of Second Life. Enjoy the clip below:

A recent “South Park” episode was no stranger to speaking on the Internet’s monetization problems. The boys create a hit YouTube video thinking they’ll rake in some fast cash, only to find themselves waiting in line for “theoretical dollars” at the Department of Internet Money, along with other Internet celebrities. A full list of the episode’s clips can be found here. However, enjoy below Kyle’s closing insights on Internet revenue:

What are your thoughts on monetizing the Internet?

Pat Cauley, eMedia Editor, Electronic Retailer Magazine

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According to ERA’s most recently commissioned paper, Mapping the Path to Purchase, Forrester Research suggests that television drives online sales. Indeed, 44 percent of the study’s respondents went to retail to find a product they saw on an infomercial or home shopping channel and more than one-third of consumers visit engines (eBay, Yahoo, Google, etc.) to compare prices, with more than 50 percent of those making a purchase.

But wait, there’s more; now it’s the consumers themselves who are creating pathways and signposts. It’s interesting, looking at the apparent quick rise of the “consumer influencer.” It seems just yesterday when branding was king and PR, marketing, research and agencies pushed sales. But today, through the power of blogs, online communities, forums, boards, videos on YouTube, Facebook and more, customers are definitely in charge.

I wonder what retailers think about how this will all shake out? How do retailers leverage those consumer influencers?

Sieglinde Friedman is ERA’s vice president of strategy

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“It’s hard to know where to spend your money.” This is a quote from Mat Zucker at Agency.com, an Omnicom Shop from Adweek.

I circled that quote three times over because it optimized the confusion and quandary most agencies have today. They really don’t know. They are not sure whether they should ethically advise their clients to shift major budget to the web or protect their existing bread and butter in print and TV. They don’t know whether to build a microsite, re-build the existing corporate site or build landing pages within social networks like Facebook. They simply are more confused, conflicted and truthfully unable to make good strategic recommendations going forward. So, they guess and pontificate and recommend using old school “push” methods and creative mentality that does not work on the web, costing corporations billions in lost marketing dollars.

There is no reason for confusion. It just takes a little guts to do something new for your client, or if you are the client, new for your company. Find out what your target audience does, where they go, what they like and then use those channels and information to market to them.

Aaron Kahlow is managing partner of BusinessOnLine and chairman of the Online Marketing Summit. He is a regular columnist for Electronic Retailer magazine.

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Were you at Electronic Retailer’s LiveEdit Lab in Santa Monica on January 30th? If not, you missed out! Enjoy a slide show from the event.

Save the date! Electronic Retailer LiveEdit Lab New York: April 30, 2008

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