Sizing Up ZIP, Household Data

BECAUSE CIRCULATION DIRECTORS can’t live by list rentals alone, Analytical Technology, the data services division of list firm Paradysz Matera, has released its 2001 modeling case study. The report offers solid arguments for both ZIP-code-level data modeling and household-level segmentation.

Minneapolis-based Analytical Technology built its study from mailings done by 66 of its clients, including publishers, nonprofits and catalogers. Thirty used ZIP code data models, 30 used household information models, and six employed both.

The results of applying ZIP modeling varied widely depending on how deeply marketers had to mail into their available universe. Those that were able to satisfy their mailing quantity needs from the top decile saw an average 34 percent rise in response rate. But even those that had to mail to 80 percent of their universe due to limitations in the number of names available experienced an 8 percent lift.

Marketers that went with household-level modeling saw even greater increases: Those targeting the top decile achieved a 47 percent jump in response. Meanwhile, offers made to eight out of every 10 names modeled realized a 13 percent gain.

ZIP code models aggregate whatever a marketer wants to use as its success criteria, such as response rates, at the ZIP code level. Marketers can then make future list rental decisions based on high-yield ZIP codes, which can be submitted to list managers as if they were any other select.

For household models, Analytical takes a sample of the names from recent mailings and overlays more than 250 attributes from compilers.

By identifying common attributes of both those who responded and those who didn’t, Analytical isolates which overlaid data indicates a household’s propensity to respond. Each relevant bit of data is then assigned a weight, or level of importance. The resulting formula of attributes and weights is unique to each marketer.

While running the household model may be expensive, it’s often more stable. ZIP codes can change as frequently as every two years, but according to Analytical’s president Jeff Clement, the household model is more likely to be stable if the offer or target market remains the same.

Prospects Come Out in the Wash

Direct Lease Corporate Finance’s solicitation mailer contains a brief description of its equipment leasing plans and a reply card. A simple package, perhaps, but there’s more to it than that. By adding iMarket’s Zapdata.com business information to its prospect list, the company has upgraded the targetability of these mailings.

How much of an improvement has it seen? In spring 2000 the Portsmouth, NH firm mailed 4,000 lease solicitations to a list of industrial laundromats provided by a laundry equipment manufacturer. That campaign, which ran shortly after Direct Lease began using geographic mapping and industrial classification data to pre-qualify its leads, pulled a 3.9% response.

Last month Direct Lease sent out 6,000 pieces. Based on early results, the firm believes it will double last year’s response rates. This would be due in part to Zapdata’s online appends, which provide fresh data to Direct Lease’s records in the time it takes to download the information.

For the laundry equipment maker’s prospect list, adding fax numbers and verifying and refreshing phone numbers allowed Direct Lease’s sales team to make follow-up contacts in a more personal fashion. While Direct Lease marketing manager Robyn Gault allows that the initial reply card could have asked respondents for the fax information, “We like to make it as easy as possible for [a prospect] to say it might be nice to get a lease.”

Direct Lease, which before using Zapdata mailed half a million pieces per month, has trimmed its mailing levels by 80%.

What started as a strategic relationship became much more in late March, when Dun & Bradstreet acquired Zapdata’s parent iMarket. The purchase has allowed a seamless flow of information and small-market prospects between these once-separate companies.

Everything I Need to Know I Learned From My Data Warehouse

IN THE PAST FEW YEARS, several people have written books about their belief that everything they need to know they’ve learned from their cat, or Sunday school, or television. I don’t doubt that this is true for them. But for me, everything I need to know I learned from being part of a team that built a 5-plus terabyte customer data warehouse for a large financial institution. It was a long, hard road, but there was success at the end and a lot of learning in between.

In one respect, we were very lucky. The impetus for the data warehouse came from representatives of the three primary functional groups in the organization — finance, risk and marketing — and not from information technology. We decided it was time to use our operational databases to build a central depository of data. With it we could answer questions that would allow us to increase profits, reduce costs and improve productivity. In other words, the “dream” and the “drive” for the warehouse came from involved “businesspeople” who were predisposed to making good use of it. (I really dislike using the term businesspeople, but I need to distinguish those working in marketing, finance, etc. from those working in IT.)

I offer you what we learned from our experience in the hope it may help you in the future.

• Go ahead and dream, but be realistic about the future. Before we actually began to build the data warehouse, we set aside some time to do as much dreaming as possible. We decided to involve all constituencies from the very beginning. We added representatives from operations, customer service, legal, human resources, and, of course, information technology, to the steering committee.

  We then discussed each of these functional areas. After explaining what we were trying to build, we encouraged everyone in the groups to imagine the possibilities. And they did. They dreamed dreams far beyond the existing state of technology — or even the then foreseeable future.

  After those sessions were complete and we’d scoured the available literature and gone to the appropriate conferences, we realized we needed to rein ourselves in and focus on what we actually could do. We talked with people at corporations that had data warehouses and noticed an interesting pattern. When we questioned the IT people, their excitement about their warehouse was boundless — it was the eighth wonder of the world. When we talked to the businesspeople from the same company, it seemed as if they were working with a very different warehouse. It wasn’t fast enough; the data model was inadequate; it was too difficult to access. Most of the time, only a few brave, persistent souls were using the warehouses at all.

  Finally, we all agreed on about 40 high-priority business questions that needed answering — everything from “Who are our most profitable customers?” to “What are the best offers to increase sales?”

• Our eyes ARE bigger than our stomachs. Forty was way too high a number. And some of the questions demanded an investment in technology that the corporation was not prepared to make. At meetings our IT partners would shake their heads — not as naysayers, but as the only realists in our group of dreamers.

  We did some quick calculations to estimate probable profit and likely costs for answering each of the proposed questions. Most were quickly discarded. Finally, we agreed on one marketing question: “Which marketing programs are the most profitable?”

• Take care of the small stuff, and the big stuff will take care of itself. As the data warehouse was being built, the team’s business members were quite impatient and couldn’t always understand why the warehouse was taking so long to complete.

  First, there was the data review — long and tedious to us then, but as we now know, an extremely important activity. It was meticulous. Data had been duplicated across the organization, and we needed to identify the best sources.

  Then there were numerous sessions focused on collecting application and data requirements. For example, the marketing, finance and risk departments all defined an “active account” differently. We had to decide which data field we would use in the warehouse. Our solution took us in a different direction and accommodated all the definitions.

  In addition, there were intensive sessions dedicated to developing the logical and physical data models. And we took our consultants’ advice and made sure one of our IT partners was assigned to metadata development and production. (Simply put, metadata acts as a description of other data.)

  All of this took time and a great deal of attention to detail, but it really paid off in the end. The foundation was sound and the warehouse that resulted was well worth the trouble.

• Stop talking and start listening. Many marketing people are talkers — “big picture” people doing their thinking out loud. Many IT people are more introverted — thoughtful and good with details. It’s not an easy marriage, but we had to make it work or the warehouse would have been nothing but a dust collector.

  Discussions got to the point where marketers were saying, “They just don’t get it. They’re trying to throw roadblocks up. They don’t really want this to happen.” The IT people were saying, “They just don’t get it. They have no idea how long it takes to get things done. If they don’t start seeing it our way, the warehouse will never be built.” It was time for drastic measures.

  Sometimes we forget that we’re all very different people with very different skills and interests. That’s why we work together. We can’t accomplish much alone.

  Our egos get in the way and, more significantly, our values. We and our co-workers may use the same words to get our respective points across, and yet we’ll each have different intentions.

  While we were building our data warehouse, we needed to learn to listen to one another, to put ourselves in our co-workers’ shoes. Marketers not only had to understand more about the technology issues, but also about how their IT partners approached problems and what they valued. On the other hand, IT team members had to understand that the technology was a means to an end and that everything they did was to serve that end goal of a profitable marketing program — not the end goal of building a warehouse.

• If you don’t know what you’re doing, it’s best to admit it and find someone who does. Even now — five years later, in the era of data warehousing, data marts and data stores — it’s dangerous to assume that somehow first-time warehouse builders will muddle successfully through all the necessary, unfamiliar tasks. And in many IT departments, “outsourcing” is a dirty word. It must, however, at least be considered as an alternative to building a warehouse “inside.”

  We decided to tackle the problems inherent to building a data warehouse internally, with the advice and aid of experienced consultants. In the long run, it was a very good decision. No short-term cost savings could replace the experience and the learning.

  The business side doesn’t think less of its IT partners if they bring in experienced consultants to shore up their knowledge gaps; quite the contrary. If the consultants can truly work as partners with the warehouse team, if the business and IT people can learn from them and make their own contributions, then it’s worth the expense — and probably, in the end, much cheaper. A consultant can be especially effective as a neutral third party conducting joint business/IT sessions, for example, to develop the logical data model.

• Baby steps, baby steps… Almost every how-to article on data warehousing says it, and it’s true, true, true: Start small with a focused business application. Don’t try to swallow the whole thing in one gulp.

  Believe me, our 5-plus terabyte warehouse was very different from what we had thought it would be at the beginning. A warehouse is a dynamic thing: it evolves. We started with a 1% sample of our data. We learned from it and built on it. This “prototyping” has another great advantage in that it provides a proof-of-concept exercise that can be invaluable in convincing the higher-ups for funding.

• Even when we’re all grown up, we still need plenty of attention. The day our data warehouse with all the data came online, we celebrated. Everyone breathed easier; the first very small SAS query took only 13 seconds to run. Shortly thereafter, people who had been working on the warehouse, in both the business and IT areas, were assigned to other projects.

  But the need for those people’s ongoing involvement did not dissipate. For example, the database administrators continued to learn a great deal about loading time and auditing those data loads — and the necessity for application development didn’t cease. We’d focused so much on “the box,” we had neglected some critical software and staffing issues.

• You can’t put the genie back in the bottle. The business needs and demands didn’t stop: Now there were calls for better tools and more space. Originally, we didn’t know how much space we’d need to develop and run our statistical models. We definitely underestimated that need — our plan for the space was far short of the 100 gig required. The good news: Space has gotten much cheaper than it was in the early days of our warehouse.

• You can’t get quality cheap. Another requirement we underestimated was staffing. For example, both the business and IT areas needed to hire experienced SAS and SQL programmers. As in any large organization, adding employees was a big issue in itself. In our case, this issue was coupled with the fact that such experience was hard to find and, consequently, didn’t come cheap. After much denial, anger, bargaining and depression, the firm finally had no choice but to give in.

  Even with great technology and incredible data, people make the real difference — people to take advantage of the great systems, people to translate data into information and people to turn information into action.

• Don’t try to change people; change yourself. In the mid-’90s, visions of the brave new world of data warehousing included happy executives blithely pointing and clicking their way to amazing business decisions.

  Didn’t happen.

  We did give the executives tools they could use to slice and dice summarized data. When we showed these tools to them, they were delighted, but most used them infrequently at best.

  The good news was that executives could ask insightful, precise questions. The bad news was that these questions could only be answered by using SAS for queries or building a model — a bit more time-consuming but usually worth the effort.

  So the analytical group had to change. It had to develop processes and views of the data that would allow for quicker, easier access.

• Promises…promises…promises. Several query tool industry vendors promised we’d be able to use their tools and enjoy easy access to the data. I believe they were sincere. Most, however, had never come up against databases as large and complex as ours. Often, sales reps promised capabilities the tools just didn’t have.

  The truth is that the perfect one-size-fits-all tool just doesn’t exist. What users really wanted was a Vulcan Mind Meld Interface. As one person on our team said, “If the user really knows computers, he won’t be happy with any tool. If he knows the data, he doesn’t want to change to accommodate the idiosyncrasies of a new tool. If the user is a businessperson, he has the tool but never gets around to using it.”

  Most organizations probably will require more than one tool to get the work done. The tool industry, however, is getting better and better and many useful products can be found for data warehouses — especially those smaller than ours.

• Man plans and God laughs. It took a lot longer to build the data warehouse than we thought it would, and at every turn there was a surprise — a new, seemingly impregnable difficulty to surmount. Yes, we found problems in our legacy systems. Yes, hardware didn’t arrive on time. Yes, there were data problems. But we persisted.

• Win-win is the only way. In large organizations, choosing the area that has responsibility for querying the data warehouse can be a very touchy issue. Should it be in marketing or some other business area? Should it be the responsibility of IT? Or should there be a third, independent, intermediary group designed to assist the business in its use of the warehouse?

  It really doesn’t matter. What does matter is that the group be relentlessly customer-focused, committed to fulfilling the information needs of the business decision-makers. In order to do this effectively, the group has to be at meetings and discussions of the business issues. It has to be in a true consultative relationship with its business partners — and be accountable to them. The group must bring new users up to speed and be responsible for evaluating new query tools. It should be able to create data marts and data dictionaries, manage space, monitor usage, and make adjustments to the warehouse when necessary. The group has to be so in tune with the business that it can suggest useful queries before its business partners think of them. It has to see the patterns in the data and make innovative suggestions. It needs strong analytical skills and the ability to make recommendations that can be acted upon.

  The line between business analysts and IT analysts is blurring. And that’s not bad at all.

Donna Arnold Ialongo is senior consultant, analytical services at Nykamp Consulting Group in Downers Grove, IL.

Destination Everywhere

Thomas Cook evolves its brick-and-mortar business into an integrated multichannel operation

Since 1841, when its founder suggested his fellow temperance society members might like to take the train to a nearby meeting, the Thomas Cook brand has been synonymous with travel in all its forms. Over the past 160 years, the company has developed strong U.K. and worldwide retail operations, delivering vacations and financial services to its mostly British customers.

Building a New Channel

Since Peterborough, Cambridgeshire, U.K.-based Thomas Cook returned to private ownership in 1972 (it was previously owned by British Rail), it has changed hands a number of times. In 1999, Thomas Cook subsidiary JMC was formed, becoming the U.K.’s third-largest tour operator and airline business, combining the former operating brands Sunworld, Sunset, Flying Colours, Inspirations and Caledonian Airways. Most recently, Thomas Cook Holdings itself was acquired by German firm C&N Touristic AG, creating the second-largest travel group in Europe and the third-largest travel group in the world.

Thomas Cook is now moving into the online channel in a serious way, and is aiming to build a unified customer database that will help it compete effectively with established rivals like Thomson and dot-com travel companies such as lastminute.com. In 1997, Thomas Cook On-Line (www.thomascook.com) was launched, making it the first U.K. retail travel agency to offer customers a way to request flight availability and buy vacations, travelers checks, foreign currency and travel guides over the Internet. Since then, thomascook.com has become a business in its own right.

“In March 2000, we made the decision to strategically invest significant sums of money and build a true online business unit,” says Paul de Laat, director of customer services at thomascook.com. “We have two call centers and two main targets: to deliver online ticketing and fulfillment, and to concentrate on customer retention through initiatives like e-mail campaigns and our Thomas Cook credit card.”

To support these goals, the online division needs to take in customer data from the other business units and combine it with online information to gain a comprehensive understanding of how its customers gather information and buy across multiple channels.

Given the different databases in existence, moving to a single customer view is a major operation.

“We looked at different packages in the market,” says de Laat, “and had to make the decision: Do we want best-of-breed or do we want one package across the whole company? We decided to buy packages as business units, but with the aim of moving toward a central customer database.”

To this end, thomascook.com is implementing the E.piphany analytical CRM package, running on an Oracle database. The system takes feeds from the two thomascook.com call centers and the Web server, and will communicate with existing databases in the retail divisions. A simple database is being built with IT suppliers ICL and Rubus to be used as a staging area where the data is deduped and verified before being piped to the E.piphany/Oracle system. This project is the forerunner of what will eventually be the CRM platform the company will use across all functions to hold and analyze customer data.

“The diverse nature of our operations — such as the joint venture between Thomas Cook Holidays and British Airways — makes it difficult to achieve one single view of the customer,” says Mike Nalder, head of CRM for Thomas Cook’s U.K. Travel division. “Our ultimate goal,” he says, “is to build a common customer database that all our customer-facing staff can access, though this is some ways off.”

The retail division has a longstanding relationship with E.piphany partner Harte-Hanks — it started using the vendor’s proprietary Personal Customer Information System (PCIS) product back in 1996, and also uses the Desktop Direct campaign management system and the Trillium data cleansing and integration tool.

“Every night we have to identify customers who transact in our 700 retail outlets,” says Nalder. “This means we have 700 different files coming in. We use Trillium to integrate the data and append it to the appropriate individual customer on the database.”

Nalder’s team of analysts can already take a single view of customers from a transactional perspective; what is missing is a unified history of inbound and outbound communications with individuals. The PCIS system now holds all bookings from the past three years across all business units, covering 8 million customers. These are fed from the company’s data warehouse, which holds bookings dating back to 1980.

“Interrogating our data warehouse would be like going on an archaeological dig,” says Nalder. “We’re only really interested in customers who’ve booked in the past three years.”

Making It Scalable

Following the company’s interim strategy of building separate databases on open platforms that can migrate to the E.piphany system, the JMC division selected GB Information to build and host its customer database. GB Information has also been approached to build a database for the Thomas Cook Holidays division; this will be the company’s fourth separate customer database.

Nalder’s analysis team works across all divisions, accessing the E.piphany system through the company intranet and using ISDN to remotely interrogate the JMC database in Chester. The GB system uses an Alterian front end for analysis work, and GB has also appended sociodemographic data to the files to aid in profiling work.

“You capture a lot of data in travel, so you don’t need to add so much external data,” says de Laat. “We analyze based on products and geographical regions, as well as looking at data that we collect through questionnaires and so on.”

The analysis team works directly on the in-house PCIS system and uses Desktop Direct to generate lists for the mailings and telemarketing activities each retail branch carries out. SAS Institute’s statistical software is also used for ad hoc analysis of samples from the PCIS system.

“A big problem with autonomous business units is the question of who owns the customer,” says Nalder. “We’ve gone beyond that by facilitating access to shared customer data. This means all areas can access the customers of all divisions, subject to rules of engagement that are agreed between the marketing heads of the different business units. So thomascook.com can communicate with those who book through retail and vice versa.”

A companywide segmentation strategy is in place, with the Thomas Cook Privilege Club reserved for the top 400,000 individuals. Selected using RFM techniques, these customers receive the Thomas Cook magazine three times a year and are rewarded with various benefits, such as commission-free foreign exchange. This will soon be extended to online customers. In addition, a Thomas Cook credit card was launched in April 2000. By spending on the card, customers can earn “travel pounds” they can redeem against the cost of future travel or vacation purchases through Thomas Cook.

Customers are also scored into tactical segments based on gender, lifestage, affluence and motivation — GLAM methodology — introduced by Nalder. The variables are used to help select appropriate offers and incentives for the different groups. “You can define lots of differentiated segments to understand behavior,” says Nalder.

For the online operation, de Laat sees the customer as the best one to indicate how they should be treated. “The whole point is to treat different customers differently, and put them in control. They should be able to register on the Web and choose topics for the e-mail newsletter. From that you can find out their interests.”

De Laat is also hot on the topic of permission marketing, preferring to use above-the-line ads, banner advertising on affiliate sites and direct mail to existing customers to drive traffic to the Web site. “We are part of Thomas Cook and they can come to us via the retail outlets,” he says. “That’s our strength. Very few people have implemented this kind of cross-channel service, sales and marketing operation.”

Building for the Future

The E.piphany system is currently being used for outbound e-mail, but will eventually replace the PCIS system. In effect, the online division is being used to prove the whole company’s e-CRM strategy. In the meantime, the PCIS system remains central to the operation, with Harte-Hanks’ Blender tool allowing more frequent incremental updates of customer data.

More and more propositions — as opposed to products — are offered on the Web site. This means instead of offering vacations, visitors can choose whether they want sun, snow or flights, for example.

Personalization is the next big step for the online operation. According to de Laat, the company “needs to understand what the customer needs now. We need to decide whether or not we will use collaborative filtering. I believe using the questions customers put to search engines is the best way to personalize the experience.”

He adds: “Our objective is to link all that infrastructure to the call center and the Web. Then it becomes real time. Next year, we want to link it to the shops. It’s a pure concept but a phased approach.”

“Lastminute.com will never be a fully fledged travel agent because it can’t offer products across different channels,” says Nalder. “We need to recognize how customers want to hear about offers from Thomas Cook. We’re not like the banks — we don’t want to railroad them into lower-cost delivery channels. All communications should be through the customer’s preferred channel.”

Nalder sums up the company’s overall strategy and the reasons for following it into one simple sentence. “If you can’t recognize valuable customers at the different touchpoints,” he says, “then you won’t be able to deliver on the CRM promise.”

James Lawson is editor of U.K.-based Database Marketing magazine (www.dmarket.co.uk).

Jumping Off the Page Marketers add life to print ads with Internet links designed to drive readers online.

For a few years now, most marketers have included Web site addresses within their advertising copy to give readers the option of accessing more information than is provided by a one-page, four-color glossy.

Problem is, tagging URLs on ads is a pretty passive connection that requires motivation on the reader’s part to go through the process of switching mediums, logging onto the computer, typing in a site address, waiting for a home page to load, then searching for information. In fact, URLs have become a fairly unnoticeable piece of ad copy in a short period of time.

Help is on the way. New technology stripped from the world of scanner-based category-management may soon give magazine readers easier online access – turning static advertising into direct links to promotional offers, and giving advertisers a means of collecting data on the readers they’ve been trying to motivate all these years.

New products from at least two technology companies are luring both marketers and magazine publishers into giving “interactive” print advertising a try. This summer, ads in several magazines began carrying small bar codes and imbedded watermarks consumers can swipe with special electronic code readers. Activating the codes sends them straight to an Internet site where they can view additional information, order products, and engage brands.

Digimarc Corp., Tualatin, OR, licenses its new MediaBridge Internet linking service to publishers, who in turn sell the feature to advertisers. Digimarc has already recruited more than 150 magazines from such publishing giants as Time, Inc., Ziff-Davis Media, Primedia, and Hearst Corp.

Computerized “watermarks” are embedded into magazine ads during the pre-printing process. Once readers install the Digimarc software into their computers, they can hold the watermarks up to a PC camera. The software recognizes the mark and takes consumers to a preprogrammed site.

“This is about instant gratification,” says Lori Tilly, Digimarc’s director of marketing. “Consumers no longer have to get to a site on their own, then hunt for information. Research says if consumers can’t find what they’re looking for quickly, they give up.”

Getting Wired Conde Nast’s Wired Magazine became the first publication to test Digimarc, debuting the service with its July 2000 issue. Since readers didn’t have the hardware needed to use it,Wired and Digimarc gave away 25,000 digital cameras to readers who participated in a household survey that polled them on what they thought of the concept. The magazine charged advertisers an additional $1,500 to equip ads with watermarks.

Popular Mechanics introduced the service to readers in August, sending Digimarc-equipped cameras to 3,000 subscribers who likewise participated in a survey. Eleven advertisers joined the program, including Sears Diehard Batteries.

There has been at least one quantifiable result so far: Detroit-based Ford Motor Co. says it sold a Ford Explorer through a watermark that connected Popular Mechanics readers to ford.com. (Ironically, it was Ford that caused a furor in the magazine world last year when it announced a plan to divert a large portion of its print advertising budget to Internet initiatives.) Ford’s ad was indistinguishable from a typical print ad, save for a “D” printed in the lower right corner.

“We’ve only done the one ad, [because] we were intrigued by the technology,” says Ford spokesperson Caroline Brown. “But we don’t have any plans to try it again at this point.”

Popular Mechanics associate publisher Bill Congdon admits MediaBridge is still very much in the experimental stage, but believes advertising clients will eventually accept it. The lack of digital cameras in use by consumers isn’t a large barrier, since “camera penetration is building fast.” (Digimarc claims that declining costs will eventually make the cameras a standard feature of PCs, laptops, and personal digital assistants.)

While a few magazines have been willing to take on the expense of distributing the equipment to subscribers, most haven’t. To compensate, Digimarc has signed agreements to bundle its software with digital PC cameras from manufacturers 3Com, Logitech, Ezonics, Xirlink, and PAR Technologies – which represent 60 percent of current market sales, according to research firm PC Data, Reston, VA.

Writing on the Wall In similar fashion, Dallas-based DigitalConvergence’s CRQ software works with a digital pen called a CueCat. Readers who scan bar codes in print ads jump to advertiser Web sites. The devices are being manufactured by Cross Pens, Lincoln, RI, and distributed free by San Antonio, TX-based RadioShack to shoppers at all of the chain’s 7,000 stores. (PROMO tried. We walked into a local RadioShack, asked for a CueCat, and were handed a package – no questions asked.)

DigitalConvergence has recruited some magazine heavyweights including Forbes, Wired, and Parade for its pilot test. Forbes was the first client onboard, and debuted the technology in its September “Best of Web” edition. CueCat will also appear in issues of Forbes FYI and Forbes ASAP this quarter. The company is sending complimentary “convergence kits” with software and pen to 800,000 subscribers. To motivate readers to install the software, Forbes launched a “swipestakes” last month that will give away hundreds of prizes including Jaguar automobiles and BMW motorcycles.

Business-to-business publisher BPI Communications’ Adweek Magazines division, New York City, also signed on with DigitalConvergence for use in its Adweek, Brandweek, Mediaweek, and Marketing Computers titles. Subscribers receive the convergence kits with issues this month.

Newspaper insert Parade introduced CueCats to its 80-million strong circulation base through a column in its Aug. 27 issue. The magazine initially used the technology to hot-link stories in the publication to related information online, but is now phasing in an advertiser program. “Our tagline is `A Conversation with America,'” says Deborah Armstrong, vp-marketing and business development. “This is a way to extend that conversation.”

Starting in November, Parade will herald the new tool with a Digital Makeover sweepstakes offering DVD players, digital TVs, and computers. Readers enter by swiping CueCat-enabled ads. Early advertising adopters include Cross, Buena Vista Home Video, Bristol-Myers Squibb, and Unilever. “There’s a RadioShack store within 10 minutes of 90 percent of consumers, and DigitalConvergence [projects] 50 million CueCats will be in circulation in a few years,” says Armstrong. “I think we’ll hit critical mass fairly quickly.”

DigitalConvergence has also impressed non-magazine media outlets. TV network NBC, New York City, took a 10-percent investment in the company. A.H. Belo Newspaper Group, Dallas, TX, invested $42.5 million, and will link CueCats to its Dallas Morning News, Riverside Press, and Providence Journal publications.

CueCat infomercials are already running on cable explaining the device to consumers and hyping its expansion from magazines to direct-mail pieces, television, and even product packaging. The infomercial says the Cat is now linked to 80 million bar codes.

Next Step Or Next Casualty? Bar codes and watermarks linking readers directly to the Web are being introduced in the name of convenience, but it’s only convenient if end-users have the right technology. If and when they get it, it will be up to marketers to provide compelling reasons for them to use it. Web sites that offer little more than a lengthier pitch probably won’t cut it.

“These are clever technologies, but I doubt current incarnations will reach critical masses,” says Dan O’Brien, senior analyst for media and entertainment research at Forrester Research, Boston. “Yet there is a need for print publishers to connect to the Web.”

And marketers have an even bigger need to connect to customers.

`Netting Consumers Don’t have a strong database of prospects? An online promotion can virtually solve the problem.

Whether or not the Internet ever lives up to its hype as a sales channel, its unprecedented prowess as a data collector already cannot be denied.

The medium has proven so successful at gathering information on potential customers in an efficient, cost-effective, and relatively non-intrusive fashion, that data capture has already become a standard component of almost every online promotional campaign. Marketers can pinpoint not only detailed demographics of potential customers, but also anticipate their buying habits – thereby laying the groundwork for future targeted campaigns.

“[Building a database] exists as a primary function for almost everything we do,” says Bill Carmody, chief marketing officer at newly formed agency Seismicom, San Francisco. “It’s the smart move to use the campaign not just to close the sale, but as a regeneration tool.”

“That’s the typical evolution,” adds Steve Caputo, a partner at Promotions.com, New York City. “Clients want to know about acquiring names [first], then transferring them to sales.”

Loosening Lips The trick, of course, is to make the offer enticing enough to make consumers willing to divulge personal information. The give-and-take concepts of sweepstakes, product giveaways, and content dissemination have all proved effective, provided that marketers don’t scare off people by asking for too much, too soon.

“For almost all online promotions, we ask [respondents] to give their e-mail. Then we can ask a more specific question about the sponsor,” says Caputo. “A registration form is too intimidating to hit them with right away. If they hit `continue,’ then we ask them to register. We can also deepen the profile each time they come back.”

Online promotions can hit critical mass very quickly. “A typical promotion will draw 20,000 to 50,000 entries in four weeks. But if you have heavy advertising on radio or television, you can triple that,” says Carmody. “We’ve had some efforts draw 500,000 entries in a month. If you consider that the cost is usually $10,000 to $15,000, that’s a lot of value.”

In a Shop, Click & Win effort for San Francisco-based Visa that ran this spring, Seismicom developed a scratch-off game consumers could play when shopping at any of seven partnering online merchants, including Beyond.com, CDNow, Bed Bath & Beyond, and Martha Stewart. After completing their transaction, shoppers could enter the game from a link on the “Thank You” page, whereupon they registered to receive a gamepiece. To do so, they were required to submit both their e-mail and home addresses.

More than 50,000 consumers signed on, a 10-percent response rate. In addition, participants received a second chance to play if they forwarded the game to a friend. “We were very pleased with the viral marketing component. That’s something we plan to increase in future efforts,” says Gerry Sweeney, vp-marketing at eVisa, San Francisco.

The campaign also gave Visa feedback it normally isn’t privy to. “Up until now, member banks held the information on the consumers. Visa didn’t really know anything about the cardholders themselves,” says Carmody. “This enabled them to collect some personal information.”

Focused Eyeballs The Internet can produce impressive response numbers. But while the number of impressions may be the primary yardstick in other media, the Internet’s biggest benefit may be in attracting qualified audiences that add more value to a database than just names.

“We did work for an automotive client that didn’t draw the numbers of some other efforts,” says Caputo. “But 73 percent of visitors opted in [for more information], and when asked if they’d be in the market for an SUV over the next year, 63 percent said yes.” While the client’s database wasn’t exactly bursting at the seams, a small, interested audience beats a large, predominantly apathetic one every time.

NeoPlanet, Tempe, AZ, is a software company that offers an enhanced browser with a built-in instant-messaging service. In order to gain permission from potential customers to begin targeted marketing pitches, the company ran a summer sweepstakes developed by Seismicom that gave away a trip to Aruba. Visitors to the NeoPlanet site who downloaded software were asked to provide information concerning their demographics and interests.

“We got data that was actionable,” says NeoPlanet marketing manager Bob Olson. “We were able to ask what age groups people were in and build a profile on what interested them.” The campaign exceeded expectations, according to senior vp-marketing Robert Dunoff, and the company is about to launch a new campaign offering visitors the option of registering to win a trip to Cancun or a new computer.

Data-gathering promotions can provide marketers with useful information about consumer perceptions as well. One major newspaper publisher designed an e-mail program with BigFoot Interactive, New York City, to test both a hard-sell and soft-sell approach for its online efforts. The company sent an e-mail to prospects offering a chance to win a PalmPilot, and encouraged participants to forward the offer to friends. The e-mail also asked a handful of questions about reader preferences.

“Readers said technology was what they most wanted to read about, and that came as a big surprise,” says Kate Leahy, BigFoot’s director of marketing. “As a result, our client started including more [content] focused on technology.”

Keep Them Coming Back One potential drawback to using promotional offers for data capture is the possibility of obtaining names interested in the offer alone. Most marketers are hoping to use the Internet to build continuous dialogue with customers.

Blockbuster, Inc. has adopted new technology to do just that. Using a service offered by ValueFlash.com, New York City, the retailer is mailing card-carrying Blockbuster members CD-ROMs containing software with full-motion video and digital audio capabilities, Internet hyperlinks, and an electronic-messaging application that links them directly with the chain. Recipients load the software onto computers, then send Blockbuster their e-mail addresses and entertainment preferences.

“This is when our dialogue begins with them,” says Greg Smogard, president of Blockbuster Marketing Solutions, Dallas. “Based on their responses, we send messages about multimedia entertainment experiences that might include video clips from feature films, game demos, special offers, and e-mail links.”

Of course, it doesn’t hurt to have customers who are just as interested in you as you are in them. “We have a loyal, rabid fan base,” says Victor Pupo, marketing manager at the World Wrestling Federation, Stamford, CT, which has been a pioneer in Internet marketing. “They don’t feel like they’re being hammered with marketing [because] they want to know what’s coming up.”

One of WWF’s most successful online strategies is ThingWorld.com, a Web site at which fans can download content and merchandise such as screen savers. The site has signed up 600,000 members, each of whom filled out a registration form listing their interests, and most of whom are more than willing to hear the latest promotional offer. That’s a marketing smackdown for sure.

Free information can sometimes be as great a lure as free product, and is often better at developing ongoing relationships. The WWF circulates three opt-in newsletters – Full Body Plus, Shopping Network, and the wrestler-specific The Rock – to a combined circulation of 1.5 million. It sends regular e-mails about upcoming pay-per-view events and other offers to all subscribers, and is now using the lists to drum up interest for its new XFL football league.

In the online world, successful promotions need not be overly hyped extravaganzas giving away a six-figure grand prize. In a campaign for NBC, New York City, Promotions.com designed a watch-and-win effort around the TV network’s 21 game show that dangled a mere $500. Viewers received clues at the end of each commercial break during the show, along with a URL they could visit to enter the clues and register for the prize. The promotion tallied more than 500,000 entries. “It doesn’t take a lot to motivate people, but if you’ve got an engaging story to tell and it’s fun, they’ll be interested,” says Caputo.

They might even provide a little information, too.

ABI Brass Hints at New Moves AMERICAN BUSINESS INFORMATION, Omaha, NE, has completed a bond offering that allows it to retire $80 million in debt from its Database America purchase in 1997-and have $35 million on hand to boot, ABI chairman, founder and newly appointed president Vinod Gupta and ABI CFO Steven Purcell said in an interview with DIRECT Newsline. Coupled with a recently inked $75 million revolving line of credit from a syndicate of banks, the information company is poised to continue its acquisition spree. Recent purchases include direct marketing service firm Walter Karl, list broker/manager JAMI and Acxiom Corp.’s Pro CD subsidiary, which publishes reference materials on CD-ROM. While no specific acquisition candidates were cited, Purcell indicated likely targets would have annual revenue of between $5 million and $20 million, and be priced between $7 million and $40 million. Gupta noted the shareholders of the company voted to change its name to InfoUSA come early August. He indicated that his role would increasingly focus on acquisitions and sales, while the existing properties would be run by group executives who would report to him.