Seth Godin comes by his views on permission marketing honestly. His early efforts to apply traditional marketing methods to the online medium were not gaining the expected results. Instead, he discovered that what he calls "interruption marketing," in which marketers compete for consumers' attention, was not as effective among online consumers as it is in other media.
Instead, Godin began to embrace the concept of "permission marketing"--an alternative approach in which consumers are actually asked whether they want to be marketed to or not. Recently, Godin has spelled out his theory in a highly readable book, Permission Marketing Turning strangers into Friends, and Friends into Customers.
To traditional marketers accustomed to using television, direct mail and other forms of mass-market advertising, Godin's theory may seem as though it has been dreamed up by a visitor from Mars. But Godin points to the sheer volume of marketing messages, an average of 3,000 per person per day, that overloads consumers today. Is it any wonder that consumers are opting out or that marketers are finding it difficult to reach target audiences? After all, how many people rush home eagerly anticipating junk mail, or look forward to a three-minute commercial interruption during a favorite television program?
Consumers are suffering from an "attention crisis." There are so many messages bombarding them from all directions that marketers are forced to resort to even more advertising to cut through the clutter. The end result is an ever-increasing cacophony of commercial white noise.
And even those direct marketers that employ database technology to collate and cross-reference a database of names, create finely tuned mailing lists, and send targeted messages are doomed to hear their voice shrink to a whisper as the general babble increases. "Database marketing is a weapon available to any marketer, so like all trends in interruption marketing, this one will soon lose its edge. When others jump in, the clutter will catch up," Godin says.
The upshot is that it is becoming increasingly difficult to attract consumers' attention. But Godin points to the principles of permission marketing through niche media as a "fundamentally different way of thinking about advertising and customers." His theory outlines five principles (see boxes) that, he claims, harnessed to technology, can result in a company's marketing message being read by 70 per cent of prospects, with a phenomenal 35 per cent responding.
Playing the game
Godin transformed his company, Yoyodyne, into an online permission marketing operation, before selling it in 1998 to Yahoo, where he now occupies the position of vice president for direct marketing. At Yoyodyne, an online system using the principles of permission marketing was built around the idea that people love to win things. By offering prizes, the company gained permission from consumers to be marketed to. For example, the company had a difficult brief from H&R Block. However, there were three major hurdles: few people had heard of the company in the first place; learning about a new tax service doesn't rank high on most people's list of priorities; and H&R was unlikely to spring to the minds of the upper-income target group.
Rather than take out a series of ads in targeted publications, Yoyodyne suggested using banner ads on the Internet, offering people the opportunity to have their taxes paid (up to $25,000) if they played a game. Fifty thousand people enrolled and twice a week for ten weeks these participants were sent an e-mail about the game. People were also driven to the H&R Web site to seek answers. Each e-mail averaged a 36 per cent response rate, far above the average two percent direct mail return, and the outcome was that traffic to the Web site massively increased as consumers visited it to seek answers. The raising of the company's profile from a nonentity was inevitable. Permission played a huge part; each e-mail was personalized, and consumers were tempted to open the message because it contained a personal score. The next step is to motivate consumers to start shopping.
Implications of technology
Godin believes the Internet is changing the way business operates and it will eventually sound the death knell for traditional ways of marketing. He points out that even the Direct Marketing Association no longer ignores the Web and actually devotes its time and energy to conferences expounding its virtues.
He believes that the world of interactivity has already arrived, and the technology has produced two major implications for businesses. Firstly, because consumers increasingly have faster access to information, marketers are finding that their products are becoming "commoditized" and margins are being squeezed. But, on the other hand, technology can empower a business, because it can engage customers in one-to-one dialogues developing stronger relationships over time, something old-time business owners used to do before the advent of mass distribution and mass-media advertising.
But those companies that stand in the way of change, or don't embrace their own Web operations, face friction and trouble. "My feeling is that companies need to learn that they can't fight the Web, and if they get in the way of their new business units, their competition will eat them alive," he says.
As an example of successful permission marketing, Godin points to a discount card program offered by grocery chain Catalina. In more than 80 percent of its supermarkets, it has placed computers that monitor codes of every purchase made by consumers in the store. It also notes the barcode on an individual store discount card and, by using a special printer, produces a string of coupons designed for that shopper. Product points are tailored to shoppers depending on their purchases. Once the discount card is used, information about the shopper is revealed: who they are, where they live, how much is spent in the store and what is usually bought. Offers can then be tailored and personalized and points can be altered, based on home address and how much is spent.
Efficient use of the Web
Such successes are increasingly common in traditional retailing, but Godin is deeply skeptical about the efficacy of current marketing practices on the Web. He worries that many companies view the Web as if it were just another network through which to channel their messages. That's unrealistic when you consider that there are 2 million corporate Web sites in operation, which cost about $1 billion a year to build and maintain. But on any given day there are only 50 million people surfing, an average of 25 people per site per day.
Both media companies and technology providers have a vested interest in ensuring that the current trend continues, he asserts. Media companies are keen to push the Web as a broadcast medium, not a direct medium, as their traditional sources of revenue come under increasing pressure by marketers switching agencies as they look for more striking methods of interruption marketing. Technology providers need a never-ending demand for "cooler" Web sites to drive the adoption of new technologies.
Godin argues that rather than build a site which has masses of content, but is rarely viewed, it would be far more efficient to build Web sites with only a few pages of content that is directly relevant to consumers, and then make prodigious use of e-mail. The first step, he says, is to offer the prospect an incentive for volunteering and then put in place the remaining four steps of permission marketing. But don't spam, he warns. It is like shoplifting, because it costs the recipient a few seconds of time to open and is a theft of time and irritates people.
Here's a sampling of other advice from the permission marketing guru: Offer the potential customer an incentive to volunteer for marketing information
Using the attention given by the potential customer, offer a curriculum over time, teaching the consumer about the product or service
Reinforce the incentive to guarantee that the consumer carries on giving permission
Over time, leverage the permission to increase consumer profitability
Godin's theories may fly in the face of conventional wisdom about the Web. Godin began his career marketing early computer adventure games, working with such notable science fiction authors as Arthur C Clarke and Michael Crichton. And some of his critics would claim his ideas are from the realms of science fiction. But a chord is being struck and industry thinkers are in agreement that the permission concept is worth exploring further.