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Tom Stein, President, Stein Rogan + Partners
Wednesday, February 6, 2002, 4:00 - 5:00 p.m. EST

<moderator> Welcome. Anyone have a question for Tom?
<tstein> Hello. Don't be shy. Fire away.
<kme211> How do you suggest a website makes use of a community feature to nurture their relationship with their customer?
<kme211> I know that was a kind of broad question...
<kme211> but really I'm just looking for any caveats you may have on using this feature / strategy
<tstein> Community is one of the most important features of the Web, from an information, communications and marketing standpoint. The key, I think, is to provide a good content foundation with true relevance and to facilitate community interaction. It's not easy to get this right.
<tstein> In terms of caveats, some sites and categories are simply not right for community. There has to be a real need for community based interaction.
<kme211> what about reviews on amazon.com...do they have the right idea?
<tstein> reviews on amazon are great, but that's not really community.
<kme211> could you give me an example of a well executed community development?
<tstein> Here's a great category for community -- video game players. Gamers we call them. They love to share information, tips on playing, "cheats" -- sites that cater to this in an authentic way add real value to the consumer experience.
<kme211> But sharing information with other readers by means of customer reviews isn't the same thing?
<tstein> Here's another great example -- the parenting category. Parents, especially moms, have a tremendous need and desire to share experiences with each other. Community functionality on parenting sites enables them to do this.
<kme211> oh ok
<tstein> Reviews kind of are the same thing, but I don't think they go deep enough. It's a nice, interactive, involving thing...but not community.
<kme211> so what could they do to take it to the community level?
<tstein> hey, I'm an agency guy. I can't be giving Jeff Bezos tips for free
<tstein> seriously, it probably has to do with defining communities of interest -- say people who love mysteries, and building segmented communities within the overall amazon experience.
<kme211> okay...you're right...sorry I'm a student who is trying to figure out the community
<shannon> Tom, can you tell me a little about what you do, what your role is in Interactive Marketing?
<tstein> OK. I'm president of an ad agency that does lots of interactive (and traditional) marketing for consumer and b2b brands -- blockbuster, the new york times, technology companies, etc.
<amy> Do you think banner ads are obsolete?
<Amy> If so, what will replace them?
<tstein> Banner ads are obsolete and increasingly irrelevant. They are being replaced everyday by all sorts of formats. Larger sized, fixed place units. Flash and DHTML units. Streaming. Skyscrapers. Shoshkeles.
<Amy> What about pop-up ads?
<tstein> pop-up ads will go away. they are kind of effective. But research is showing that, whole click rates are higher, consumers' perceptions of brands that use pop-ups decreases -- because they are so annoying.
<kme211> what career path did you take to get you where you are now?
<tstein> I started as a copywriter. When I turned 27, I decided I was smarter than my employers and started an agency. Here I am, a bunch of years later.
<kme211>If I want to get into account management would you suggest going agency side or client side?
<kme211> where do you get the best experience?
<tstein> agency side.
<kme211> so I should try to get an internship agency side?

<tstein> sure. Get an internship agency side agencies are always looking for smart, eager interns, we have one now that I'm thinking about bringing on staff full time in account management.

<Shannon> What exactly do you mean by interactive marketing? To me, I think of that to mean Internet marketing which at first impression can be annoying because of the use of banner ads, etc, (which I'm glad to hear are going out of style)... but the companies you mentioned aren't notorious for those methods, so what type of work do you do for them?
<tstein> we do a lot of work for companies that's interactive -- but almost no banners. We do a lot of permission-based email marketing. We develop approaches and formats for advertising that are fun, entertaining, relevant and add value to the consumer experience. We shun the crap.
<kme211> I read in adweek that the response rate for permission-based email marketing can be as high as 30% have you experienced this rate of success?
<tstein> we have experienced that rate of success. But it is uncommon, especially as email marketing has matured, people are more used to it, so response rates go down. We see anywhere from 1% to 5-7% -- higher for promotions and sweepstakes.
<kme211> how many people work in your agency?
<tstein> about 30. a year ago it was almost twice that. We got slammed by the economy and 9/11. 2001 was the toughest year in the agency business that I have ever experienced.
<Shannon> What other types of interactive marketing do you come up with, or is it more tailoring a mix of methods for each company, rather than inventing new methods for each?
<Amy> With all these low response rates, is Interactive adv. considered successful?
<tstein> Shannon, it's a bit both. We continually try to use existing methods/techniques in refreshing, relevant ways. And we try to bust through using new technologies or approaches that literally have never been used before.
<tstein> Amy, depends on whom you talk to. Generally, interactive is considered successful. But many marketers have had less successful experiences, probably because they don't understand the medium
<tstein> There was a very interesting study released today about the efficacy and efficiency of online advertising vis a vis other medias. Anyone see it?
<tstein> we're doing some very interesting work right now for the IAB -- Interactive Advertising Bureau -- about the evolution of interactive marketing among traditional companies. Anyone interested in that?
<Amy> What portion of their adv. budget do traditional companies spend on Interactive adv.?
<kme211> where is the study?
<tstein> Amy, it varies a lot. The average is 2%. what's interesting is that online represents 12-15% of people's media consumption; yet marketers are underspending in the medium based on that metric.
<tstein> go to msn.com and click on the advertiser section
<Amy> Has it increased over the years?
<tstein> It is holding steady as a percentage. The real need in the industry is to have it take its rightful place in the mix, at a far higher percentage of spending.
<kme211> the IAB also has a 7 page spread in ADWEEK this week which was interesting
<kme211> it really raised my awareness of the IAB and what they do
<tstein> yes. Interesting. That's about measurement, which is a very complicated and important key to the growth of online.
<tstein> Groups like IAB are critical to the future of interactive advertising
<Shannon> I am not familiar with the IAB, what is it?!
<tstein> The Interactive Advertising Bureau -- www.iab.net
<kme211> you can download some of their reports on their website
<tstein> Yes. Good stuff. And a great background on the prevailing issues pertaining to the interactive marketing category.
<tstein> Any of you guys planning to pursue interactive on the agency or client side?
<kme211> yes
<kme211> I am taking an internet marketing class right now
<kme211> and it is really interesting
<tstein> It's a tough time to bust into the ad world right now. Hopefully that will change in the months to come. But interactive skills/knowledge are key.
<Shannon> So people are using the Internet more as a news resource, etc, but marketers still aren't capturing it. Do you think they're wary of annoying the public in the way that banner ads did, partly as you mentioned, because they don't really understand the possibilities?!
<tstein> I think they don't understand the possibilities -- the ways to connect and interact with target audience in a very deep and immersive way.
<Shannon> I have an Internet Service background, which is why the interactive stuff interests me, but I'm a bit wary of the creative aspects of advertising...
<tstein> In what way Shannon?
<Shannon> My marketing class never really got into the interactive segment.
<tstein> Are you wary in that you haven't been exposed to it?
<Shannon> My thinking is that to be involved with advertising you need to be creative, which makes me question my own skills, to determine what I could really bring to it. I think there are a lot of issues involved that have to be taken into account when developing advertising of any kind, but that this world, and this country, rush through things, etc. Plus I tend to want to be involved in many aspects at once, and I think that it would be hard to focus in on any one specifically.
<tstein> Shannon, you may be cut out for account management or perhaps media. Every function in advertising is to an extent creative, but these other areas have to do with focusing on business objectives, planning/analysis, client liaison and the like.

<kme211> is your agency exclusively e-marketing?
<kme211> or do you also cover traditional methods?
<tstein> no. we do both e-marketing and traditional -- print, broadcast, direct, etc.
<kme211> how much marketing research do you deal with?
<kme211> or is that more client side?
<tstein> a lot. We continually evaluate 3rd party research. And we continually conduct our own. Research is a hugely important tool for strategy development and ultimately even creative development.
<Amy> do you think there is a growing need for Websites targeted to minority groups?
<tstein> Probably, Amy, although there are no lack of these sites. What we do know is that minorities -- African-American and Hispanic -- are embracing the web very quickly. The penetration rates are very high -- much higher than other groups.
<kme211>I heard the statistic that on average people spend 10 seconds per homepage...if this is true, and people just want to go to the homepage to get somewhere else, wouldn't it be a good idea to place advertisements on a page where the viewer is likely to spend more time?
<tstein> That's a new statistic for me. But many people go to a home page, know it well, and use it purely to navigate deeper to content they're interested in. Advertisers place ads on those deeper pages. These are much more valuable ads, because they can be more closely aligned with consumers' interests, we call this affinity.
<kme211> are these ads more expensive?
<kme211> to purchase?

<tstein> Yes, these ads are considerably more expensive.
<Amy> What about gay websites?

<tstein> Lots of gay sites out there. Always room for good sites, though. We have certainly not maxed out on good web sites. The good ones are relatively few.
<kme211> do companies advertise their own products on deeper pages frequently so that they can take advantage of the customers on their site?
<tstein> do you mean their own products on their own sites?
<kme211> I mean if someone is purchasing something does the company frequently push another product on a pop=up ad?
<kme211> or is that too pushy
<kme211> aside from amazon
<tstein> It sometimes is done. But again, you don't want to do anything that might distract a purchaser from completing a purchase. That would be self defeating. What a lot of advertisers do is deliver a pop-up once the purchase is completed.
<esohe> Do you think pop-ups or pop-unders are really effective in getting an ad campaign across? Or do most consumers find them annoying?
<tstein> They are annoying. In a lot of cases, they are also effective. What the advertiser has to weigh is whether the effective response rates are concealing consumer annoyance and dissatisfaction that rub off on their perception of the brand/company.
<kme211> but isn't the click through rate close to 0%?
<tstein> Not on pop ups and pop unders. The CTR for banners on average is about .2-.3%
<kme211> oh okay
<esohe> but would you find an eyeblaster or superstitial is more effective in actually measuring the effectiveness of a campaign? or are they the same?
<tstein> Depends on how you are measuring the campaign, what your objectives are. EB or Superstitials will deliver better response rates. They also are considerably more costly. So they have to really deliver high response rates to justify themselves on an ROI basis.
<esohe> I see
<esohe> what is ROI
<tstein> Return on Investment.
<esohe> ok
<tstein> Further, you also have to measure residual, beyond-click value. People may act later and not by clicking. There may be positive impact on brand awareness, recall and purchase intent.
<esohe> so the most important thing it sounds like is that the ad gets out there---regardless if you know how effective it really was?

<tstein> wrong. The most important thing is that the advertising is effective. That you set realistic goals, and work to achieve them
<kme211> how do you measure the effectiveness?
<kme211> such as the brand awareness that it generates?
<tstein> you measure effectiveness based on the campaign objectives. Is the objective to sell product. To generate awareness. To move people from interest to consideration/trial. To implement a sales promotion.
<kme211> but how do you really measure the 'awareness' of the customer as a result of your ads
<kme211> surveys?
<esohe> exactly
<esohe> that is my question?
<tstein> you conduct pre- and post-campaign research. It's quite easy to ascertain awareness.
<esohe> how do you REALLY know how effective your ad is/was?
<kme211> does your agency do that or do you outsource it?
<tstein> We do some of this, but mostly we outsource.
<esohe> can you recommend any books/classes people should take to better familiarize themselves with the terms for online advertising?
<tstein> the IAB has a terrific glossary of terms. Get it at their web site -- iab.net
<esohe> thank you
<kme211> thank you so much tom
<tstein> you're welcome
<moderator> Thanks for joining us.



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