Google, Online Vendors, and Accountability

For all of the e-commerce and multichannel executives who follow my commentary, I am curious what you think of Google.

For those of you who spent your formative years in the catalog industry, you know the vital importance of a partnership with the USPS, with your merge/purge house, and with your printer. Without these partners, your catalogs didn't get delivered to the homes of your loyal customers. If the catalogs didn't arrive, you didn't generate sales.

Today, the e-commerce ecosystem has replaced the USPS, Experian and Quad Graphics with your ISP, a myriad of e-mail vendors, and Google.

Do you view your ISP, e-mail vendors and Google as strategic partners? Do you apply the same level of pressure on them that you applied to Quad Graphics about image quality, Experian about duplicate names, or the USPS about delivering your catalog two days late?

Can you prove that 194,381 valid customers clicked on your sponsored link on Google? How do you hold Google accountable? How could you ever hold Google accountable?

Does the Direct Marketing Association lobby as hard for your online issues as they lobbied for postal reform?

What are your thoughts? Are you letting Google and others off the hook, compared with the other vendors you work with?

Measuring Advertising Effectiveness, Early Feedback

Lots of good feedback so far on the exercise to find a way to measure advertising effectiveness, and on the dataset of ten thousand simulated customers. Several vendors have volunteered to attempt to find a solution, and I received feedback from several data mining experts that they want to take a crack at the exercise.

If you know of good analytical folks, or you work with good vendors willing to try to solve something for the good of the catalog/online industry, send them this link. Entries need to be submitted by January 31, 2007.

Williams Sonoma: Incremental Online Sales and Matchback Analysis

Williams Sonoma always does a nice job of sharing fun facts with the public. In their third quarter earnings release, they state that "55% of online revenues are generated by customers who recently received a catalog."

This is always an interesting topic of debate in the database marketing world. Williams Sonoma does not specifically state which of two popular analytical methods they use to measure this metric.

Most popular, and most vigorously argued against by the analytically adept, is the method of attributing every online order to the catalog channel, if a customer recently received a catalog. The theory behind this technique (often called a "matchback analysis") is that the catalog inspired the order. Many vendors promote this methodology, and for good reason. The technique can overstate orders attributed to mailed catalogs, and vendors have a vested interest in promoting paper as a viable means of profitable marketing. Critics will argue that if you mail your entire housefile, this methodology will cause you to attribute every single online order to the mailing of the catalog. Critics will also argue that if you mail every housefile name a catalog, and send every housefile name an e-mail, the methodology completely breaks-down, rendering the analysis useless.

Less popular is the method of an "A/B" split. The marketer randomly splits her mail list into two halves. 50,000 customers receive the catalog, a like group of 50,000 customers do not receive the catalog. Several weeks after the in-home date, the marketer measures total sales in the mail group and control group, in both catalog and online (and, where applicable, retail) channels. This method tends to provide much less-optimistic answers than the "matchback analysis". Critics will argue that this methodology cannot produce reliable results due to sampling error issues.

Which methodology do you believe is more appropriate for allocating online orders to the marketing channel that drove the order?