The Next-Generation Database: Making the Leap from Demographics to Behavior

Bill Mickey – www.circman.com

IDG launched IDGConnect three years ago in an effort to build a centralized customer database and lead-generation business fed by the databases of the various business units of the $3.2 billion tech media company. It represents a next-generation database in the sense that it achieves continuous growth not just by customer growth, but by combining behavior and laser-targeted content delivery to derive more revenue from an existing base.

This is a strict departure from a demographic database model. The focus on behavior and engagement opens up a whole new world of marketing opportunities.

That it was forged in a decentralized environment is no small task, and it operates under a variety of principles that champion content optimization, behavior and engagement intensity metrics, user-generated content and, critically, an unbreakable connection to the brands that feed it.

It’s a business that leverages every possible way a customer touches content, whether at the article level or a vendor-supplied asset. So far, the five-million name database has contributed to 100 percent business growth for IDGConnect over the last three years. Frank Cutitta, the division’s general manager, took Audience Development on a tour of IDGConnect’s operation. 

AD: Tell us how and why the database was built.
Frank Cutitta: We started IDGConnect to consolidate all the databases across IDG. It would be an aggregation of the databases that we have against our media companies, and also our exposition company, and then bits and pieces of other databases that are floating around the company.

IDG operates in a painfully decentralized environment and we’ve had to reach agreement among our individual business units that there was some kind of return on investment for aggregating these databases and then selling an audience database in addition to selling the individual databases on their own.

Our job is to compliment the database sales that our individual business units have with a pan-IDG audience sell. So we’re taking swatches of all of those databases and selling cuts of those audiences across the board and selling them to information technology companies that want to generate leads. It’s a cost per lead (CPL) model.

AD: The database, however, isn’t just filled with demographic information. Talk about the behavioral component and how this departs from what we might call a traditional database model.
Cutitta: The lead generation/rich database model gives traditional circulation folks a much deeper understanding of their audiences. It moves them from a demographic mentality to a behavioral mentality. Demographics only permit you to send ancillary products to people who have filled out qual-card data that matches. Behavioral circulation permits you to send ancillary products and messages based on what people have actually done, or a series of behavioral events that paint a certain picture.

I think of this as the ‘Bradley effect’ people talk about during the election. When polled, people say they will vote for Obama, but will their behavior match that in the voting booth? Using behavioral polling (i.e., circulation methods), you can have an assurance of the person’s proclivity to do something rather than just a supposition.

AD: What was the catalyst to start this?
Cutitta: In the media world the business has changed dramatically and performance-based advertising has become king. People are looking for more tangible ROI on their advertising and marketing investments.

So the model was there, and more of our competition was getting involved in that. In fact, some of the competition was just starting from scratch with a database model. They never had the legacy or baggage of print and really just went into online. We were pretty much the “Big Dig,” as we say here in Boston, where we had all this infrastructure that we had to change and it’s been this way for decades. Whereas some of the competition came in and never had that—they were the Chunnel, they just built the tunnel directly across.

We had to find a business model where we could bridge our dedication to decentralization and yet come up with something that had a distinct competitive advantage. Based on our brands, the advantage of this is that this amalgamated database has, as its first select or criteria, an affinity that somebody has for an IDG brand. That’s huge compared to some of the database farms that just aggregate names with absolutely no affinity to anything other than the fact that it seems to be a person that a marketer wants to reach.

So the whole branding aspect of this database was enormous. The fact that we had the individual brands in addition to the reputation of the IDG brand gave us a very strong selling proposition out there in terms of competitive positioning.

AD: How has your revenue growth been?
Cutitta: We’ve grown at about 100 percent over the last three years. It’s been a very successful proposition and it operates in the model where we’re not only generating revenue from IDGConnect, but we’re also getting revenues from the same names that are coming through our business units. The revenue has a multiplier effect because people want to send mail out from InfoWorld or ComputerWorld and they also want to send mail out from IDGConnect as well. So we’re able to deal with clients on both a business unit and a global basis.

It’s also very profitable because the names have been generated by the individual business units and we’re repurposing those for our own uses. There are no development costs for what we’re doing.

AD: Describe what you think a next-generation database looks and functions like.
Cutitta: The key in this business—unless you have the ability to scale your database and double it every two years—is to be able to use your database more efficiently. This means you’re sending less mail out but you’re sending mail out to the people that have the highest propensity to do the things that you want them to.

Next-generation databases are much more driven on the propensity of people to do things because they did things previously—like whitepapers or Webcasts.

Next-generation databases also deliver content to people as they want to get it. So it’s not just fishing with a net, it’s fishing with a hook. And having people opt-in not only to get information from you but opt-in for more specific things that they want to get from you on a more regular basis. So as we increase the amount of information that we get in this database we have the ability to be much more surgical in terms of the way that we send mail out to people. And there are things that we can extrapolate that customers probably would like that are next-generation in their own world, because they liked this previous generation stuff.

AD: What specific programs are you running off the database for your clients?
Cutitta: Our bread and butter programs typically have been people supplying us with a whitepaper or a Webcast and they give us the kinds of selects that they want. And when we mail to subsets of our lists that would best serve those demographics, it increases the response. And every lead that comes in is priced anywhere from $50 to $250. It could go higher depending on how laser-focused they are. A very detailed select where it’s, say, companies of 10,000 or more and they have to have this state, this address and we start getting into geographic information, gets into a very expensive CPL.

AD: How do engagement and behavior factor in?
Cutitta: Engagement and behavior come together as people relate to these various assets that we either have or develop for them. We create behavioral profiles of what people have engaged in and what they like, and we can use subsequent engagements—if you like this whitepaper, people also liked this Webcast—and try to move people through a curriculum process so they move through various degrees of difficulty. By the time they get to the top they’re very interested in a product.

It’s more like a value-added tax. The more you move people through the process of engaging with more value and content, the price goes up. This relates to how we scale our business. Anybody doing this has to scale their business and there are two ways to do that. You can either go out and find 300,000 more people to add to your list—and we all know how expensive and tiring that is to do—or you can take the existing names that you have and add value to each name by having them engage more. So when you send the lead to the client it goes from a $50 lead to a $250 lead.

AD: How are you drawing people through this curriculum?
Cutitta: Our research shows that the number-one reason people come to our Web sites is that they want to learn something about a product. What we’re doing is taking more of the knowledge-driven approach and we’re offering people things in smaller content bundles, but more of them. So if they like part one they will want to get to part two and three. And by the fact that people, through their own self-direction, move themselves to the next one because they like it—just like you would through a curriculum in college—we’re delivering content in a much more logical and educational way. We’re not doing it in ‘random acts of content.’

It’s kind of like clapping with one hand as they say in the Zen world. You have this database, but unless you’re optimizing the content you’re sending out and sequencing it with the demographics of the people you’re sending it to, you’re clapping with one hand. When you put those two together, the sequence of knowledge-based events with the people that did them, and you append those files so that you know who those people are, it becomes a very attractive lead.

And you’re not tricking them into this behavioral thing like they do on consumer Web sites where they’re watching their movements. This is all self-directed. People want vendors who call them to know that they’ve engaged in certain kinds of content.

AD: How are marketers warming up to this?
Cutitta: The ironic part is a lot of people don’t even care about knowing how these people engage with these $60,000 investments that they have for each of these things. They just want the lead. Okay, that’s $45, thank you very much.

So in addition to educating the people that are going through this curriculum, our biggest form of education is teaching marketers how to go from a pure marketing strategy to an education-marketing strategy. It’s a whole new world, and 9 out of 10 people that we present this to get it right away.

AD: Talk about your engagement intensity index.
Cutitta: We’re a database company, but our critical asset is optimizing the content that people use in order to get high-quality leads. You give crappy content, you get crappy leads. Or you don’t even get the opportunity to get a crappy lead. So we’re taking content assets—whitepapers, Webcasts that people have developed—and we’re determining the attributes of those content assets to build the equivalent of a SKU that you’d see at the grocery store.

Most people have no clue when they develop their content where it fits into the buying cycle. We have a guy that takes the content and does a physical on it and builds that into the SKU.

So every time one of those assets is downloaded, it goes across our registration form system and it maps the attributes of that content asset to the person who’s downloading it. So it’s saying the person downloaded this asset and it scored a 9 on intimacy, it fit into this stage of the purchase process, the degree of difficulty was 8, and so on. We have this long list of attributes that we can check off. So every time that goes in, based on what the client feels the priorities are in their attributes, we’re able to weight those characteristics and build that into the algorithm of the engagement intensity index. So things that have a very high level of attributes that the sales staff for these companies feel are important for people that are getting close to buying something are weighed very heavily.

AD: What is the range of pricing for leads on the engagement intensity index?
Cutitta: It all depends on the number of attributes, it can go above $1,000 per lead. It’s all a matter of patience – it’s an engagement intensity index. Depending on how compressed or extended the intensity factor is we encourage people to do this for a 60-day period if they can, because the more engagements you get the more graphic and vivid the picture is of the person. If you do an engagement intensity index that only lasts two weeks you’re limiting the number of engagements, so unless somebody is on a feeding frenzy within two days, you don’t get a full sense of engagement.

AD: How many customers do you have in the database?
Cutitta: We have about 5 million in the database itself, but in terms of names we can send emails to, we have a couple million that are clean any given second that you can mail to.

AD: How else do you examine how people interact with content?
Cutitta: We can take some of the registration information that we have on people by title and map that up against content by taxonomy – CIOs that are looking for virtualization software, for example, and who like to read these kinds of things.

We want to look at how people on our database engage with content and what that sphere of content was and how other people connected with that. It also helps with collaborative filtering – people who read this also like this, which we do on our thank-you pages – so  that we’re constantly moving people to things that other people in their peer group are reading. The reason we do this is no matter where you are in the world, the number-one way that people make purchase decisions is based on their peers and colleagues. And if their peers have read a commercial whitepaper, then it adds a level of credibility, it’s not going to smack of commercialism.

AD: What is your email volume?
Cutitta: We have access to about a million and a half names that we can send at any one shot. We can mail three times a week, so we can send five million pieces of mail a week. And that’s just my unit. Across IDG we have mailing rules that govern how many times you’ve mailed to certain people, so there’s nobody that in a typical week can get more than three pieces of mail from IDGConnect.

AD: How are you coping with list fatigue?
Cutitta: That’s a major occupational hazard. This business is an opiate. When you get into it, it appears to be a license to print money because you’re using bits and bytes and sending email out and people like you. But you forget how many people are sending mail out from other companies that you normally don’t see. You realize that there are only four and a half hours a week that people really get to spend with content from all their sources. So you lose perspective, and the natural tendency is to think the more I send the more money I’m going to make. It’s a very precipitous drop when you hit the wall and people say, ‘No more.’

So we have pretty strict rules of mailing here both at the IDGConnect level and at the business-unit level, and we very closely synchronize what we’re doing across business units because we’ve got the opportunity of sending a tremendous amount of mail to people. And if they drop off ComputerWorld’s list, they drop off my list too. We realize how precious each name is and so our number-one priority is making sure we reach the sweet spot of how much mail people tolerate.

AD: How do you find that sweet spot?
Cutitta: We’re monitoring opt-outs or unsubscribes by the second. We can tell when we make a mistake and there’s been a little too much. We also can tell if there’s not been enough when we’re getting too low on the opt-out side. In some ways, you have to do it in order to see what the tolerance is. You’ll never know what the sweet spot is unless you go a little bit too far.

But once you see that unsubscribe count tick up you’ve just got to learn to pull back and take a long-term view. Some people don’t pull back at all and actually crank it up more, and would rather take the unsubscribes and get the money. But in terms of long-term approach, when it comes time to replace those names it’s an enormous investment.

AD: Out of the various business groups you compile data from, which one is the toughest fit?
Cutitta: If you had to pick a category, we tend to find that events groups within the business groups tend to be more proprietary about their information. Audience develop¬ment for events is a completely different animal than generating leads off of whitepapers. It’s getting butts in chairs. In the industry in general, it’s the number-one challenge that people in the events business have. So we understand that events are a little bit different in terms of the amount of information we get. They might have attended an event, but the exact information about the registration from an event could be a little bit different. Events are a very unique subset of this business in terms of audience development as we know it. And we do a lot of event promotions for companies and internally, but it’s very competitive out there.

AD: Describe the role of the brand in all of this.
Cutitta: The brand and the content are inseperable because the content is the reason the brand exists. We play a role of connecting the various brand relationships in the business units and creating this mosaic of content that represents the best interests of the customer. We have a unique ability to say if you like this ComputerWorld whitepaper you’d also like this NetworkWorld Webcast. We’re operating as your navigator through a sequence of brand/content events that reinforce the positioning of those brands and gets somebody to where they’re going in the educational process at the same time.

So we’re very cautious because we feel the power of the company is in the underpinning of the brands that go into this big database. We have the ability to take audiences and do swatches of them but we are reinforcing that those audiences are built on a variety of different brands.

The ROI on global brands is the fact that they can command a premium price. So if you just want to be in the $15 CPL lead business then you have to make no connection and have to do nothing in terms of being a brand champion any longer, because that’s the price point you want it at. But we want to make sure we keep our prices at a premium level because our customers know these people are real IT people.