I-Marketing Interview: Carat Interactive - Part 1

Adobe Systems (Nasdaq: ADBE), Bank of America (NYSE: BAC) and Palm (Nasdaq: PALM) are just some of the companies that have turned to Carat-owned Carat Interactive to plan their online and interactive marketing campaigns.

Founded in August 2000, Carat Interactive specializes in digital messaging programs that are integrated both offline and online across interactive media, including the Internet, wireless devices and interactive television.

In January 2002, the Boston, Massachusetts-based firm acquired emerging technologies guru Lot21 and CRM provider Vizium. Carat Interactive vice president and media director Mark Stephens -- a 19-year advertising veteran -- called the new trio a "marriage made in heaven."

Stephens, formerly of Lot21, recently spoke with the E-Commerce Times about the untapped potential of interactive advertising and the future of integrated marketing .

Interaction Plan

ECT: What advertising advantages does the Internet offer that other media do not provide?

Stephens: The first is that it is very focused. Most other media, with the exception of print, are not a consumer's core focus. Radio and television are in the background. Internet advertising is difficult to miss.

Another advantage is the ability to interact with consumers. That is something no other medium has. If they are ready to purchase something, they can do that. If they want to gather more information, they can go through that process. It allows them to become aware of a product, to go through an evaluation phase and to buy the product. No other medium allows them to do all of this.

ECT: What steps, or series of steps, do you take when planning an online advertising campaign?

Stephens: We go through steps that are very similar to traditional media. First and foremost, we need to understand the target -- who is buying the product and why they are buying it -- including demographics and what their interests are.

That helps a lot in terms of targeting. There are also a lot of tactical things we do, like looking at syndicated research to understand what sites these people go to.

With our research, we figure out different strategies of how we are going to interact with these people. And that depends on the objective of the campaign. If we are trying to build brand awareness, we might look at doing big page take-overs or Eyeblasters.

If it is more of an educational campaign, we might look at doing point-rolls. We figure out the technology and the overall strategy and map that with the overall advertising objectives. In the RFP phase, we put out requests for proposals to the sites where we have already done runs -- the low-hanging fruit.

Unit Prices

ECT: Should an online advertiser choose many sites on which to advertise -- or spend the same amount for a larger buy on one site?

Stephens: It depends on how large the target is and what you are trying to convince them to do. If you are looking for a very specific product category that is a niche, then running on a large site which may not have that degree of targeting might not make sense. It is a trade-off between the targeting and the context and the broad-based availability.

Because we are still not in a standardized world online, the number of sites you run on can make a difference in your overall cost. We have Internet Advertising Bureau (IAB) standard units, but there are still a lot of different ones. And each site has standardized their pages on certain units. You do not want to get into a production nightmare where you are running on 20 sites with all different sizes.

ECT: What process do you use to determine how much of your overall advertising budget is allocated to a particular site?

Stephens: It depends on the type of units the site is willing to run. I am a big believer in the larger units, in the advertising being noticeable -- but not necessarily intrusive. I think the 468x60-pixel banner that became a standard is a bit of a challenge. Most people do not notice them anymore. It is also challenging from a creative standpoint. Most creative people would rather have a larger palette to work with. We tend to look for the larger units that are page-dominant. The reason why sites are getting such low rates right now is because they have so much bad inventory.

Raw Deal?

ECT: What are the biggest challenges of marketing via interactive media?

Stephens: The biggest challenge right now is the lack of standards. It makes the process of launching a campaign more difficult. This includes defining exactly what an impression is, having compatibility among third-party ad servers and standardizing billing processes. Over the next few years, I think the Internet will become the most efficient marketing medium.

Another challenge is that people are just beginning to view the Internet as a serious medium. In a recent IAB study on an integrated campaign, they figured out that if the Internet component had been about 15 percent of the budget -- rather than 3 or 4 percent -- it would have been 20 percent more efficient. We need more data like that in the marketplace.

Because of the dot-com fallout, a lot of people do not view the Web as a viable medium. But when you look at certain product categories, the audience is spending an amazing amount of time online. When you look at household penetration, the numbers are there. All the trends point in the right direction, but the dollars are not proportionate to the amount of time we command out of the average consumer.

Britney Branding

ECT: How well-suited is the Internet for branding campaigns?

Stephens: The Internet has the possibility of becoming the most powerful branding medium. It is not there yet, because we have wedded ourselves to this direct response scenario. But most people do not see an ad and buy something right away. There is a consideration process that goes on, which is taken into account in other media but that fell away from the Internet. On the Internet you can start to quantify that consideration process, which is more difficult to do in traditional media.

Companies like Yahoo! (Nasdaq: YHOO) are leading the way as online branding vehicles with things like Britney Spears page-takeovers. When this is more common in the marketplace, we will start to think about the Internet as a serious branding vehicle. We have the capabilities to run motion videos and Flash movies to replicate the broadcast experience and bring in the emotional impact. Pepsi (NYSE: PEP) and a lot of the car companies are moving in that direction.

ECT: How well-suited is the Internet for lead generation ?

Stephens: From a lead generation standpoint, the Internet is a superior medium. There is a lot of destination surfing on the Internet these days. If someone is looking for something, there are ways to put things in front of them. And the Internet allows us to remarket for pennies, not for dollars. Once we get to the point where we can do closed-loop marketing via the Web, using things like e-mail, it becomes amazing. We are doing things like this for Palm.

Go on to Part 2.