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Focus
Marketing: An Alternative to Shotgun Music Marketing
The arguments supporting maximum exposure are, on the face of it, indisputable. The most significant barrier to independent artists and labels reaching a broader audience has been the lack of avenues to expose and sell their music. Radio won't play it, MTV won't show it and let's not even speak of getting shelf space beyond your local music shop. This leaves indies relegated to back-of-the-van & gig retailing. The Internet, however, has turned the tables, providing an infinite number of marketing outlets, distribution channels and points of sales options. Wouldn't logic dictate maximizing upon these new opportunities?
Jean-Marc's firm relies on a golden rule of business and marketing: the 80/20 Rule. The basic premise is that a limited number of consumers/prospects (20%) account for a disproportionate (80%) of a business' sales & profits. While the ratio may change from industry to industry and from product to product, the concentration effect always remains true. We can readily observe this concentration effect at any active listserv or bulletin board where an inner group of users contribute a disproportionate amount of online activity. Same goes for file sharing, distribution of pay-for-play payout at MP3.com (when it still existed) and, most importantly, your fan/customer base. The drawbacks to 'maximum exposure' thus becomes obvious: you are potentially wasting 80% of your time, effort and resources reaching prospects likely to generate little to no return for that investment. "On a macro-level, things fall through the cracks without focus," noted Darren Feldman, Director of Direct Marketing & Promotions for Guitar Center. "Resources are spread too thin by trying to do too much. On a micro level, you are not as cost effective as possible and do not achieve maximum ROI [rate of return]."
Jean Marc explains that part of the problem for the music industry is a lack of accountability and metrix to measure the impact of various marketing campaigns on sales. A major label may splash millions for radio, music videos, magazine advertising, etc... with little understanding of which was the most effective investment, ie., the most effective in reaching their top 20% prospective customers. "What intrigued me most about the music industry were the similarities with other businesses I have witnessed in the grips of a decline." One size fits all... Push product strategy... Lack of information-driven decisions... Massive distribution and exposure in support of global advertising... By attempting to do and be all things for its artists, major labels have not only been saddled with over 90% of new releases being unprofitable, but a growing inability to give fans want they want, deepening sales declines and competition from alternative entertainment products."
The problem is that most independent labels are ill-equipped to actually identify their top 20% target, often lacking even the most basic data let alone the analytical tools. The result is that critical business decisions, from what radio stations to pitch to what towns to tour, are based on unfounded assumptions and guesswork. "When you consider the 80/20 Rule, information is the power but you need to know how to obtain and interpret that 'data' in the right way." Jean Marc provides an all too familiar example of guesswork trumping information-driven decision making. "We're currently working on the launch of a new artist that the label had initially planned on promoting in the traditional top 5 metropolitan markets. We started with an analysis leveraging Soundscan data and some unique methodology that we have developed to start refining the focus. We looked at both absolute sales volume and performance indexes for specific artists that were "large" enough to avoid bias linked to concentrated promotions or localized performances. The exercise led to a very different outcome as the label revised the list of markets to focus the artists' marketing and sales pitch."
I caught up with Jean Marc at IMC2003 - where he was presenting the workshop "Whys and Hows To Focus In Your Music Career" - to learn more on how Focus Marketing applies these concepts to the music industry. [Eric de Fontenay] Let's start at the beginning. How would you start identifying an artist or label's core customer base? Jean-Marc Rejaud: You have two possible situations: either the artist has an existing fan base or not. In the latter case, Focus Marketing works with the artist and/or label to identify other successful artists that resemble in genre and style to the artist we are working with - let's call them the 'proxy' artists. Once we've identified those proxy artists, we engage in analysis at both the macro level through various data sources such as Soundscan reports and at the music purchaser's level to identify where sales are most likely to be concentrated. Of course, the more history those artists have, the greater the ease in identifying the concentration effect. We will also compare through our methodology the results to the US population and the overall music purchasers population to assess where are the biases. The stronger the bias and the higher the volume behind that bias for a particular artist, the more likely that artists' core target will look parallel to that bias. We can also develop some more sophisticated predictive models, but to do so you need a lot of observations. When you have the ability to do so (and we can say to our clients if they can or not), you could end up with a very powerful tool that will make your marketing activities, through direct marketing in particular, very effective. If the artists already has a fan base, the logic is the same but we do not need of course to work with proxies and we can look potentially at a more personalized data set on the artist's fans. [Eric de Fontenay] Clearly with the Internet, we have an ability to acquire data in a manner that's just not possible with other mediums. But this also presents the problem of information overload and determining which data is relevant and which is not. How are you able to cut through the clutter and derive some meaningful results?
Secondly, predictive models are available to do just that type of cleaning job. For example, a predictive model can help detect which variable(s) (age, income, etc.) has the most influence on specific actions such as CD purchasing for a specific artist. [Eric de Fontenay] While tapping the top 20% will play a clear role in an artists' success, where does that leave the remaining 80%? Don't they also have any meaningful role such as word-of-mouth and viral marketing? How can an artist cost-effectively capitalize on that broader base? Jean-Marc Rejaud: I will start by saying that one size doesn't fit all. In other words, someone who today is not in your top 20% may become a top 20% customer as your career evolves. So it is important, while not forgetting what was learnt, to be open minded to new developments. The key is always to try to find that sweet top 20% spot but this spot can change over time. Now if someone is not in your target, don't waste time on that person. The outcome of the 80/20 rule will dictate who is in your top target... and I am sure that this will always be a large enough base to keep your days pretty busy because the key behind making your focus a success is to "hit your target" as hard as you can to insure that they react. Furthermore, if you already have a customer base and can profile your top 20%, it is highly likely that you will have many more prospective fans fitting that profile in other markets in the US and around the world through the Internet... leaving you with huge growth potential.
[Eric de Fontenay] In the business world, developing various success metrixes to measure the effectiveness of an overall campaign and its components is key. How does Focus Marketing assess whether the label's top 20% was properly identified or the strategy implemented a success?
But I attach a lot of importance to relative performance. How did the campaign we developed based on our analysis perform as compared to the promotion before we entered the picture? The key is the incremental business generated by the new campaign as compared to the old campaign, in addition to its incremental profitability in the absolute and compared to the incremental cost of the new campaign. If your new campaign leveraging the Focus Marketing approach outperforms your previous marketing approach and the incremental business is in itself profitable... this means that you sell more and make more profit. [Eric de Fontenay] All this data and analysis is fine, but what does it mean concretely for the artist? Jean-Marc Rejaud: I'm glad that you asked that question as the Focus Marketing methodology is in some ways pretty new for the music business. The way it translates itself is in fact very simple. By knowing your top fans you can use key factors in your decision making process, ranging from determining the cities/areas you should be touring to planning your email and viral marketing campaigns to selecting the type of music store you should stock your music in. Of course, Focus Marketing helps its clients in that area through its access to various databases or data sources and directly engaging any marketing actions to venues, radio stations, etc., through its affiliations, to make the focused marketing plan a reality.
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I
was invited to speak on the "Digital Delivery... It's here!" panel
at the Independent Music Conference 2003 (IMC2003) held late this
summer in Philadelphia, where the CD Baby digital distribution contract
was among the issues debated. What struck me most in the discussion,
though, was the perceived benefit among indies in the audience of
having their music accessible from Apple's iTunes and a potential
host of other lesser digital distributors such as BuyMusic & Roxio's
soon-to-be-released Napster. It reminded me of a recurring question
which would always rear its head at such events: should I try to
get my music on as many sites as possible or focus my marketing
efforts on a select number of sites? And again, I would find myself
the odd man out as my co-panelist advocated "maximum exposure."
