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Traditional Marketing Versus Inbound and Digital Marketing

Traditional Marketing Versus Inbound and Digital Marketing
[lead]Traditional, interruptive advertising is becoming less and less effective as time and technology progresses. The root cause of this shift in sales and marketing lies with an empowered consumer.[/lead]

If you’re over the age of 30, you likely recall this scenario from the 1990s:

Setting: Dinner time, 7pm, Full House reruns on in the background

*Ring* *Ring*

“Hello?”

“Is Mr., uh, oh-no-ario available?”

“Speaking.”

“Hi Mr. oh-no-ario, I have a new product that you will be excited to own. It’s a …”

“I’m having dinner. I’m not interested.”

“Wait, if I can just tell you the great benefits of … “

“No thank you.”

*Hangs up*

Telemarketing is still big business in the United States. However, it has seen its annual revenue shrink 14.6% from 2008 to 2013 posting $18 billion in revenue. The scale of the decline cannot be underestimated. By the mid-1990s, the industry saw $90 billion in total revenue resulting in $280 billion in telephone sales. By 2000, the top 10 telemarketing companies in the US were able to produce 1 million phone calls per hour.

Perhaps not astonishing was a public opinion poll commissioned in 2000 that saw a staggering 93% of consumers respond negatively to telephone marketing (staggering in that I wonder who those 7% are).

The Consumer Gained Control

The telephone marketing industry is in a steep decline because the sellers have lost control. And it can be attributed to one small device that every average American household had by the late-1990s: Caller ID. Currently, every smartphone manufactured is equipped with Caller ID. And if you’re like me, an unknown number, especially of the 800 variety, goes to voicemail.

Bell Atlantic was the first company to bring Caller ID to the marketplace back in 1988. And that movement, however small it may seem in hindsight, changed the game for marketing and sales forever. For the first time, the consumer was in control of content. They could choose to answer the phone not based on time or situation, but based on who was calling them – a monumental shift that saw intelligence move from the seller to the buyer. Now, the seller doesn’t have a complete monopoly of intelligence. They have to fight against an empowered consumer and for the first time.

Telemarketing is withering on the vine which is a glimpse into the future of traditional, interruptive advertising. Buyers don’t want to be sold to. They want to be communicated with. And the digital space gives sellers the tools to have meaningful dialogue with their buyers and it’s rarely a hard pitch.

The Shift From Traditional To Digital Advertising

Traditional advertising has seen its dominance shrink since widespread adoption of the world wide web. In fact, marketers are now planning on splitting their budget evenly between traditional and digital mediums for the first time. We’ll continue to see a positive outlook for digital channels and a continued negative trend for traditional methods in the coming years. Has Don Draper been shown the door?

Not yet. But the trend isn’t favorable for the Mad Men. The principles that have shaken the core of the traditional channels are the same ones that have given birth to inbound marketing. Inbound marketing is a philosophy by which a marketer appears on the scene at the same time a consumer’s problem arises.

Traditional (Interruptive) Marketing

The traditional model relies on broadcasting a message to a wide audience in hopes of attracting the small percentage of people who may be most in position to buy the advertised good or service. Think TV commercials, radio ads, billboards, and print ads. Now how many who are reading this have a favorable opinion of TV commercials or radio ads? If you raised your hand, you probably work in advertising.

People simply don’t like to be sold to, but that’s precisely what traditional forms of advertising do. That’s not to say that these mediums are ineffective or not worth time or effort, but consumers are provided a litany of technological tools and information to overcome the slickest of ad spot. More on that in a minute.

Digital (Inbound) Marketing

The digital space gives marketers a tremendous amount of ability to micro target their audience to an incredible degree. If you’ve noticed that the advertisements you see as you browse the web seem to know your interests – well you’re probably right. They do. Advertising is becoming more helpful to both buyers and sellers alike. Buyers are provided truly contextually sensitive promotions while sellers are able to target not a wide audience – but a targeted, meaningful audience.

Content In The Digital Age

Content now rules the marketing game. And it’s now more complicated than coming up with snappy slogans and jivy jingles. It’s about responding to a need in the marketplace. We’ve gone over how people don’t want to be sold to – they want to be communicated with. It’s less about hard sells and more about educating. “Sell by helping” is one of my personal favorite slogans. O3 isn’t comprised of salespeople, we’re comprised of educators that help you understand your needs and the needs of your target audience. If we do our job of educating and informing during the early phases of the buying process, we’re much more poised to have a relationship that yields revenue coming into our firm.

If you’re like me, I love the car buying process (ok, I don’t know too many people who enjoy that process). The reason why I love it is that I have an infinite amount of information at my finger tips about cars. Everything from Consumer Reports, to inventory, to manufacturer’s costs, to rebates… I own all of that information. Before I step foot in a dealership, I know the exact car I want, whether they have it or not, and what price is fair.

When a car salesman sees me come in with 50 pages of documentation – it’s perfectly clear that there will be no wool pulled over any eyes. Before the Internet, a good car sale was one where both the buyer and the seller felt good about the deal. Given the monopoly of knowledge that the car salesman once had, that could mean a wonderful commission check on the back of grandma who more or less felt good about the transaction. An informed buyer is typically a nuisance to a seller – if they’re living by the old traditional model. And if you get taken at the car lot, well, that’s your fault.

This transfer of knowledge has been so potent that some old school business models, including auto dealerships, have sought increased government regulation to stop it. Tesla, a relative newcomer to the luxury car game, sells direct to consumers in a hand full of states while other states have actively banned the direct sales model after pressure from the auto dealerships and their lobby. In the states that don’t prohibit direct sales, the same Tesla can be sold to me, an informed consumer, and to the grandma, an assumed ill-informed consumer, for the exact same price. The auto dealerships aren’t scared of Tesla and their microscopic marketshare. They’re scared of the model. If it works for Tesla, then what stops Toyota, Honda, GM, Chrysler, and Ford from doing the same thing? Nothing. And direct sales will eventually be the preferred method of vehicle purchasing. It will simply take time for this to take hold.

Tesla is a perfect case study on this movement. They inform their consumers 100% about the car they’re buying and will sell the same vehicle to anyone for the same price. They equip their buyers with the tools and knowledge of the car and the deal and let them make the choice to buy – from the computer instead of a pressure packed back office sales room. Too bad that you don’t get the free popcorn and water.

Lessons Learned In This New World

Auto dealerships could start behaving a lot like Tesla. And they would be smart to do so although I have my doubts whether they will or not. The traditional marketing and sales model is full of holes and taking on water. Buyers simply don’t want to be advertised to. That’s why we’ve seen cord cutters run rampant on the cable television marketpace. While cable subscriptions have steadily dropped, Netflix, Amazon, and Hulu have seen astronomic increases in their marketshare. On-demand, at times advertising free mediums, are what people are seeking. Not the “you must be in front of a TV at 8pm to see your show” model that the DVR has worked to help, but is ultimately helpless to remedy. Blockbuster, once king of movie and game rentals, killed itself by not responding to market demands. Redbox as well as streaming services, which Blockbuster was very well positioned to emulate, simply ate their lunch while they were asleep at the wheel.

What does this mean for you? Take a look at your marketing plan. If you include demographics of the 18 – 55 year old variety, then this is a mandate. Look to pivot if you’re still sending mailers and broadcasting on TV and radio. Start small and work within the tactics of content marketingSEO, and social media. Have a conversation with your audience. They will appreciate it without knowing that they do. Sell by helping. Inform your buyers. Don’t talk at them.

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