Katie Delahaye Paine's Measurement Blog: The originial HITS = How Idiots Track Success Speech

For those of you who love history, I thought it would be interesting to post the original speech that I gave to the Networked Economy Conference in 1997 . That was the first time I used the phrase HITS = How Idiots Track Success.

The Business of News, Advertising & Marketing: Media Method & Madness in the Networked Economy

Today we are going to speak about the forces of chaos and control on news, advertising and marketing. And since I felt more than a little chaos as I began to prepare for this talk, I thought I’d gain a bit of perspective and started looking into what was being said about television in its early days. As it happens I have every issue of Fortune from the 40s and 50s...and so I stumbled across this fascinating comment: In a 1951 article in Fortune magazine, RCA’s renowned TV pioneer V.K. Sworkin stated that “25 years ago we never dreamed of Howdy Doody on Television. We always thought television would find its highest value in science and industry.” A year later, Fortune’s then managing editor Ralph D. Paine (yes, a relation) gave a speech to the Ad Club of St. Louis in which he stated that “Unless television executives can figure out a way to prove its effectiveness it will not survive...”

While it would be fun to devote an entire session to the incredibly naive statements made about television in the 50s, there are two points that I’m trying to make with these quotes.

1. The first is a lesson in humility.

Whatever we say today our children and grandchildren will no doubt read with similar disbelief and wonder at our naiveté...no matter how erudite and impressive my fellow speakers are.

2. When dealing with an entirely new market force be careful what you predict.

Today the Internet has wrought a revolution in marketing far beyond the scope that even the most foreword thinking magazine editors might have imagined. I don’t use the term “revolution” lightly. It is a remarkably precise term. Because in truth, the consumers are in the process of revolting against, and seizing power from the marketers. As a result, the more we try to control this new society, the more chaos we will find.

Mitch Kapor has described the Internet as the “ultimate democratic society”—a truly chaotic universe. In truth it represents the unleashed raw will of millions of consumers.....My advice to those of you seeking to exercise your control, chaos may already be winning. More importantly this ultimate democratic society, is not only unfettered by rules (no matter how hard Congress may try), it is more accurately ruled by chaos. Chaos and confusion is the norm and many companies
will succeed in business helping companies make sense of it. Others will try to control it and will fail. Face it guys. The genie is already out of the bottle, and she’s not going back in.

Let’s look at a few examples:

News

Fortune launched the business of writing about companies as news in about in the forties. Once a month you could get an update on the business of business by reading a heavy, glossy publication delivered by mail. In 1982, people scoffed when CNN began delivering news 24 hours a day to TV sets around the world. Today news releases show up on my desk every hour. Thousands of press releases and wire stories fly around the world and into people’s consciousness every minute--- sounds pretty chaotic doesn’t it...? But all of this “news” is purportedly controlled by the networks or the companies or the reporters or the editors that put them out. In reality, the consumer exercises his or her control by ignoring the news or limiting his or her focus to his or her own industry and the competition—so who’s reading all this stuff? Most likely your competitors and your vendors. As our ability to communicate and disseminate news to an ever-widening audience, faster than ever before has been increasing, the news organizations were hatching a plot to ensure that we would NEVER get caught up on our reading by essentially doubling the number of publications we had to follow.

In our naïveté, a few years ago we thought, oh—those on-line magazines are just repeats of the print versions. That lasted about a month. Now at Delahaye, along side the folks that are reading every issue of CRN as soon as it arrives in the mail to see what it says about our clients, their on-line counterparts are surfing CMP on line and guess what ... surprise surprise the content is entirely different. That’s what happens when you have separate editorial staffs. So all of a sudden to follow an industry or a company or just know what’s going on, you have to read twice as much.

So just when we were about to drown in all this chaos, enter “Web casting” in which they want to push even more news and information at us. Well guess what? The consumers remain in control, either by deselecting the topics or using a filter like Individual or a service like Delahaye’s to “filter” out all the news that isn’t interesting and only deliver that which he or she is interested in. No longer does the New York Times decide what constitutes “All the News that’s fit to Print” the consumer selects “All the News that fits into my lifestyle.”

And then there’s the real chaos … the Newsgroups ...

And that’s only the “official” news, screened, reported and edited by traditional news organizations. What about all the “unofficial” news and rumors that floats around the newsgroups, user groups and chat rooms. Many companies dismiss all that chat as “rumor” or only the mad ramblings of a few “geeks” who spend too much time in Cyberspace. My neighbor, Pat Jackson who runs a PR firm in Exeter, NH will tell you in his speeches that he believes that church suppers have more impact -- probably the folks at Nexis did too until their business was brought to a halt by the number of phone calls it received after rumors about the content of their database offering started circulating ... or the auto parts store that saw a decline in customer traffic because of negative postings in an auto enthusiasts forum ... or the printer company that sees a direct dollar connection between the chat in the printer forums and calls to its tech support line … or the networking company that can track its stock price to chatter on the investment forums.

Delahaye is currently analyzing some 10,000 postings a month and our analysis shows that it is not “geeks” or crazies, but consumers and potential consumers. And we may think less of them because they have edu or aol.com next to their names, but you can’t ignore them. The question is what can you do about them? Is any control possible?

1. As in any society, the society itself will control itself.

A University of New Hampshire Graduate Theses entitled “ Conflict and Control in Virtual Reality” by Jason Good states that “ What we commonly refer to as “Cyberspace” is not, as some seem to claim, a quilt of esoteric and cryptic symbols, intelligible only to the highly trained.. It should instead be understood simply as a Web of modern human communication. Cyberspace represents an effort by various groups of people to overcome a collective communications problem (isolation) and is therefore a social location that maintains its own unique culture. “ The same thesis goes on to describe how deviance, stratification, rebellion and conflict—all normal human social elements—are present and eventually dealt with in Cyberspace—the conclusion being that Cyberspace society is exactly the same as any other society—it will enact its own controls. And our experience proves that out. Blatantly false statements or truly outrageous rumors may exist, but are given little credence by main stream users and frequently an authority will step in to correct inaccurate information.

2. You can influence if you don’t try to control.

Several of our clients have hired outside individuals to monitor chat rooms and post accurate correct information when blatant falsehoods are posted or to simply solve user problems or direct them to the right information. To the extent that it is possible, they are in fact bringing some control to the chaos.

And by the way, a similar chart for Novell yesterday showed a sharp spike upwards on Eric’s news.. Some 98% of all postings were favorable towards his leadership.

Advertising

Now lets turn to Advertising and see if I can really alienate some people. No offense to all those nice people who support CommWeek and its sister publications. I would argue that Advertising is one of the forces of chaos in the marketplace. If advertisers hadn’t come along and tried to make the Web into another television we’d all be concentrating on effective one to one marketing and not being distracted by chest beating Webmasters claiming five gazillion “HITS”—by the way you do know what HITS stands for don’t you ... How Idiots Track Success ...

The problem is that Madison Avenue has been behind the eight ball for a long time—they got blind sided by the growing importance of sponsorship and public relations and they allowed Corporate Communications, PR and MarCom to make huge inroads into their power-base within corporations and as a result millions and millions of dollars have shifted away from traditional media and advertising and into other areas. At the same time, Ad Agencies were admittedly behind the eight ball in terms of technology—many of them only adopted networks and computers in the last couple of years. So the Web comes a long and by god they’re not going to be behind again. So they jumped into the arena, figuring it’s just another medium like television that they could control.

Wrong byte breath.

It’s not a medium, it’s a marketplace. A marketplace, not a medium.

It’s not like television or radio or “like” any other media out there. Its much more like a giant medieval bazaar... a place to buy and sell things, and yes, one of those things might be advertising, but it certainly isn’t a major one. Of the 488,000 Web sites out there, only 900 accept advertising—that’s just a little over one one hundredths of a percent. But you wouldn’t know it from all the hype.

In 1993, Ragan’s Interactive PR postulated that Nortel with its “Rapport” systems would be the Nielsen of the Internet—anyone heard of that one? In 1995, The New York Times ran a piece featuring half a dozen companies all contending to be the “Nielsen of the Internet -“ including Nielsen itself. And even in 1996 Who will be the “Nielsen of the Internet?” was asked at least once a month in some publications or other. Well last week one of those products Interse was gobbled up by Microsoft to be bundled up as part of Back Office, (anyone want to place bets on Nielsen vs. Microsoft?) many of the initial players have laid off staff, or been forced to regroup because of the chaos in the marketplace. The reality is that there’s still no Nielsen of the net. And why not? Because the net doesn’t need a Nielsen. Because the Web isn’t a “medium” that can be measured like television or newspapers or radio. It’s a market, a wide open bazaar where people will come to buy and sell their wares, whether those wares be information, goods or services.

First of all in the early days of television there were a limited number of “networks” who controlled all the content and marketers had limited choice in what they “sponsored.” Early TV executives were selling time on three networks and had only 24 hours a day to sell in one country—and they were only competing with radio and movies. Even 500 channels of television is still a far cry from half a million Web sites from virtually every country in the world competing for share of mind and time with TV (cable & network) radio, video games, CD-ROMs and all those other non-electronic priorities, such as children, school and your personal trainer. I applaud those sites out there that are actually attracting and selling advertising. But the smart ones—Procter & Gamble and its peers, have realized that Web advertising is not about exposure, it’s about getting potential consumers to your site—and ultimately knowing who those consumers are and changing the way they perceive your brand or your product. So the idea of an intrusive advertisement or bit of information is being “pushed” onto your computer from a controlling company like a network is another attempt to force fit old paradigms into the networked world.

Again let’s come back to the idea of the Internet as a marketplace rather than a medium. The various stalls in a bazaar put their wares up as advertisements. The people selling those wares don’t need to know the “reach” of the market, because the market will come to them. (Maybe driven by advertising, maybe by word of mouth maybe through a search engine). They’ll know far more than the “reach” they’ll know the individual buying habits—and probably the sleeping habits of their customers. Pundits would have you believe that the Internet is this great “unmeasurable” but in fact it is the most measurable of all markets.

So the first thing we have to remember is that the rules by which Nielsen played, no longer apply.

The second thing to remember if you’re trying to measure your success on the Web, is that there has to be a purpose behind any Web presence. Why is it that most ad programs have clearly stated objectives but when it comes to the Web, you ask people why they’re there and they say “because we have to be.” Yes, I know that in this day and age you “must” have a site, that your corporate reputation depends on it, and you will be perceived as outmoded as the 8-track tape if you don’t.

But more importantly, what do you hope to accomplish with the site?

· Do you hope to attract enough traffic to sell advertising?

· Do you want people to subscribe?

· Do you want people to buy your products?

· Do you want people to buy your stock?

· Do you just want a way to communicate a bunch of information cheaply to those who are looking for it?

Again if I may quote from another of my father’s speeches that he gave in 1962:

“I am not against research, or anything else which contributes to a better understanding of a market, a media or to the improvement of the (of communications) but I think we do a lot of research which doesn’t prove very much of anything , or which proves something which any experienced person already knows...” Perhaps the key word is “prove” We all crave certainty. If we can put a man into orbit, why can’t we demonstrate—at least to a client’s satisfaction—precisely what his advertising budget is going to buy? No computer can do it—and I doubt very much that any ever will. The reason is simple and perhaps, therefore, a little old-fashioned: people, human beings with a wide range of choice. Unpredictable, cantankerous, capricious, motivated by innumerable conflicting interests, and conflicting desires. No machine is a match for man. Only man is a match for man.”

Which is precisely why things like “Hits” as well as visits, impressions etc. are a huge step in the wrong direction. We’re dealing with people here, not ciphers or computers or “servers” or “client.” We are talking human beings...This is the perfect marketing environment where you can get all kinds of direct communications going between the individual and the marketers, which will provide far more and better measurement than we’ve ever had before. and we’re trying to reduce it all down to some bits and bytes. This isn’t just wrong, it is unconscionable.

But that’s the state of the market. For the past year we’ve been talking to dozens of companies a week, offering them full pyschographic profiles of their Web site visitors based on a simple registration scheme. Give me a name and a phone number or a name and an address and a minimum of 6,000 visitors and I’ll tell you what kind of cars your visitors drive, the kind of music they like and the kind of flowers they plant in their garden. But no, most of the Webmasters out there would rather count HITS—because I’ll give you an example of how awry the system has gotten. I approached a publications booth at a recent trade show because they were promoting their new Web site. I asked them how they were measuring its effectiveness. The Webmaster stepped in and said that in fact they had designed their own system that was counting visits and that they were getting 5,000 a month. I asked them if he had any demographic or pyschographic information on them. He said yes, he’d been gathering it in a database since the site started. At this point the VP of Sales jumped in. I explained that I was very interested in reaching a particular segment of their market I wanted to know where I could do that most effectively—on their Web site or in their magazine. He gave me some standard information about his subscriber base and I once again asked how it compared with the Web visitors. He said he didn’t know. So there his Webmaster stood—or rather sat—on top of the very information that would have helped make the sale and improved the effectiveness of my communications and my business - and the people who needed it lost a sale because they couldn’t answer my questions.

That’s the state of Web advertising today and why it is doomed if it doesn’t reinvent itself very quickly. What the Internet needs is not a “Nielsen.” It needs the best information technology that money can buy that measures the success of a company’s Web efforts against that company’s objective—not against an arbitrary and possibly false standard.

Marketing

It is in the area of marketing that the greatest revolution is taking place. For years marketers have bombarded the consumer with advertising, direct mail, telemarketing and a hundred other things that he or she has little control over. Now the consumer is back in control. It is the consumer that is going on line, searching for information, ignoring what is not interesting and buying what he or she needs. And despite millions of dollars spent on Web sites, the lessons learned in the first few years have been that if you post it they WILL NOT come, unless it is relevant.

There are three major aspects of this marketing revolution,

1. The first is the democratization of marketing. In Cyberspace, just as there is no skin color or ethnic background, so too a consumer can’t tell the difference between a small company and a big one. What this phenomenon has done is raise the importance of brands far higher than accountants and marketers ever thought possible. In the chaos of the market that is the Internet, -- and it is truly a market, a bazaar—the biggest flea market ever imagined—the chaos is tempered by brands, reliable, familiar, and credible. Just as those shoppers at the bazaar come back to the same stalls week after week because they get good value and friendly service, so too consumers will return to sites that provide useful information and friendly service.

2. Secondly, is the “smart agent” developments—those “personal shoppers” programs that search the net and find the cheapest price. Anderson Consulting is already doing this with its xxx for CDs and the like. When such xxx are available on a large scale, the market will be once again reduced to price and reputation. But decisions will speed up, buying cycles will be shortened, and the mad pace of society will only speed up further.

3. The third major aspect is that all hype aside, the Web is the marketers dream. Imagine people buying directly off a Web site --- no brochures, no sales calls, no telemarketing. This aspect of the Web is truly the single most compelling reason that marketers—particularly those in certain industry segments—will ... MUST... begin to shift significant resources and make Web marketing their highest priority. Forget advertising, forget public relations, forget news, it is one on one direct marketing that the Web will have the greatest impact on our economy.

Once again, of course, the consumer is in control. The consumer or prospect has a need and finds a solution on the marketers Web site or somewhere else on the Web. The important thing to remember is that the Web isn’t about exposure (i.e. advertising) it’s about contact and interaction. So the truly effective marketers don’t hesitate to use registration schemes to capture information about the consumer, information that the consumer doesn’t mind providing, because presumably they’re interested enough in the marketers product. US Air has done this brilliantly. You register on their Web site and they send you weekly updates on cheap flights targeted to your region of the country via e-mail. But the consumer remains in control. If they’re not interested in traveling that week, he/she deletes the message.

So where’s the “but”—the downside to this era of one to one marketing. To paraphrase Mr. Roosevelt—all we have to fear is ourselves. If we as marketers continue to try to seize control or “over-market” to the consumer, they will punish us with boycotts, or worse still, they will ignore us. The second downside is the spread of viruses, and crime that is the devil lurking in our collective closets. We all fear it, but the possibilities offered by the net so endless and so exciting, that we chose to ignore the dark side. But when Web casting and e-messages bring viruses and hackers into our systems, our enthusiasm will soon fade—just as pick pockets, bandits and highwaymen were the scourge of the bizarre. In the middle ages, the answer was a benign ruler and a long-lasting peace and commerce flourished. Today, if we can talk congress into being benign, and if marketers can actively work on the solutions to these problems, it should be a very prosperous 21^st century.

Thank you.