DMNews Interviews Chris Paradysz on Marketing Trends for 2010

DMNews recently interviewed Chris Paradysz, CEO, PM Digital, and asked him to elaborate on the some of the key trends he saw for direct marketers in 2010.  The original DMNews interview can be found here.

DMNews: Search marketing continues to command the lion’s share of online budgets. How will we see that channel evolve this year?

Chris Paradysz: Consumers have radically improved their search and online sophistication as a result of having less cash but still buying what they need to live, feed and clothe their families, pay their bills, enjoy their passions and manage their health.  Search phrases are more targeted because they know more about how to get what they’re looking for.

DMNews: Does that make it more competitive for marketers?

Chris Paradysz: Definitely. Consumers are only willing to pay for the value they perceive and no more.  If they don’t like what they’re offered, they click away to a place where they can get it at the price they want.  From better targeting at the shopping engines to features like private sale sites, the top retailers are adapting. At the same time the squeeze is on consumers, the search engines have brought enormous changes to their technologies.  With the newly released Google Caffeine, for instance, posts from YouTube, Facebook, Twitter and other social media are getting instant, top billing bringing an even more urgent real-time experience to searchers.

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The Outlook for 2010

The facts, the stats, and the true in-the-trenches business experiences from 2009 now tell us a lot about what to expect for 2010.  Below is a quick review of some of the key things online marketers should look for in the coming year.

A Slow Recovery

There will be continued slow recovery in US consumer spending, especially for large purchases due to a lack of discretionary cash (not income, per se), increased savings rates and a general adjustment to this new “now”.  2008 changed buying behavior to a “no”-first shopping mindset and 2009 cemented a value-only, thrifty approach.  2010 won’t change this.  Unemployment, under-employment and slow-growth for the private sector are the engines that are choking back substantive improvements in consumer confidence.  While there are certain job sectors re-igniting hiring, most industries will only begin to replace the attrition they forced during the lean 2008 and 2009.

Pent-Up Demand from the Jet-Set

For the super-wealthy demographic, expect that luxury items will be back in vogue as pent-up demand for jewelry, cars, homes, boats, fashion, at today’s reduced costs, increases.  Unfortunately, this is unlikely to offset the dramatic fall-off seen from the much larger affluent group that accounted for much of the demand growth during the run-up to the recession.

Personal Fulfillment for the Rest of Us

The definition of discretionary has changed relative to consumer purchases and buying behavior.  Where, pre-recession, this meant items people didn’t need but wanted, the recession and its epic duration have people focused on their hobbies and passions to relieve stress and to add back pleasure in their lives.  No longer considered discretionary, these hobbies and their related items and services have become part of the indispensable.  I anticipate revenues from home improvement, home-based interests like gardening and exercise, and passion hobbies like crafts, music, fishing, etc. stay in vogue and continue to capture wallet share.

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Last Minute Thoughts on Holiday Online Retail

The major snowstorm on the East Coast on Saturday and Sunday lifted online sales for 67% of PM Digital’s retail clients an estimated 10% vs. what they would have seen for the weekend without the storm.  For the apparel category, specifically, this lift affected 71% of PM Digital clients.

The strong weekend results for online sales is icing on the cake to a strong overall holiday season for ecommerce.  As has been reported by comScore and others, online sales are up year over year in 2009 vs. 2008, so there is a lot to celebrate.

Some of the key drivers in lifting sales this year in particular were 1) promotions; 2) gift cards; 3) egift cards) 4) accurate forecasting (running budgets high on the best days and scaling back on lower-converting days), and 5) taking advantage of best practices in search strategies.

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A Final Holiday Prediction for Online Retail

Significant marketing opportunities remain during the final shopping days of 2009.

Using this year’s performance data, including clicks, conversions and sales, combined with the current demand run rate versus forecasts, I anticipate a rapidly accelerating online growth curve beginning on December 16th and 17th and growing through that weekend. And, the last-minute burst on the 21st to beat the shipping cutoff is going to be unprecedented. There’s a big opportunity to get ahead of this with promotions, search copy and even bid management so retailers can capture the demand and take a little pressure off the order influx.

There have been significant buying pattern shifts all Holiday season, particularly during the Black Friday to CyberMonday run-up. Consumers who have been waiting it out for better promotions will be rewarded as they have been now for the past two seasons. We believe we’re going to see progressive growth starting this weekend, and that this year’s high-water mark could surpass CyberMonday.

Ready For a Cuppa?

Google Caffeine’s obsession with speed will bring tremendous opportunities for marketers in 2010 – but you’d better get moving now.

Anyone who knows me knows that I am mildly obsessed with coffee. I savor it, gulp it, glory in it. But really, it is all about the caffeine. Caffeine makes me feel alive. Caffeine makes me engaged. Caffeine makes my heart purr along at 600 beats per minute. Caffeine is essential. Google shares my love for the caffeinated lifestyle. They are obsessed with speed. They want their servers chugging along like they’ve spent the afternoon with 400 of their favorite baristas. Google is ready to rock Caffeine, their new internal search architecture.  Google Caffeine is ready to roll out after the holidays.

What Does Google Caffeine Mean to Marketers?

Fundamentally, it doesn’t change your current search positions a lot. The essential algorithm that Google uses to determine which sites are relevant for particular terms isn’t really changing that much in the near term (but look out…big changes are coming…more on that before Christmas). But there are nuances that are becoming evident:

1. Indexing - Caffeine is all about indexing speed for Google. How many more pages can Google add to its index and how quickly?  Caffeine represents a significant change in Google’s housekeeping. This is good for Google. They are speeding up the indexing because the web is exploding in its growth. (See my Here Comes The Flood for more info on the whats, whys, and wheres of the explosions).  Google needs to get faster so that it can keep up with the deluge of new information and links. The takeaway for marketers is that you can expect to see your newer pages show up in the index (but not necessarily well ranked) sooner. Speed of indexation is good, but a bigger index means that you have even MORE work to do to keep yourself visible. You will likely have to do less work to become seen by Google, but more work to be visible to searchers.

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