January 2010 – Cover Story: Rabbi, Professor, Online Marketing Guru

Ice.com’’s Pinny Gniwisch on Digital Marketing Booms and Busts, Emerging Opportunities in Social Media and the Future of E-commerce

By Tom Dellner

Spend a few moments with Pinny Gniwisch–either one-on-one or by attending one of his popular presentations at an industry event–and you”ll never forget him. Warm, blunt, self-deprecating and disarmingly funny, Gniwisch is also one of the industry’’s great thinkers and speakers, and one of its foremost experts in social media.

Gniwisch–together with his three brothers, all rabbis–founded Ice.com (originally buyjewel.com) and is the company’’s executive vice president of marketing. He has led the business to 30 percent year-over-year growth for nearly a decade. A sought-after speaker, Gniwisch has appeared at every industry event worth attending and has been quoted frequently in The Wall Street Journal, The New York Times, Forbes, Fortune and many other business and financial publications. A consultant to companies like BestBuy, Target and Victoria’’s Secret, Gniwisch is also a professor of e-commerce at Canada’’s renowned McGill University.

Online Strategies recently sat down with Gniwisch for a fascinating–and far-too-short–discussion about e-commerce and social media.

Online Strategies: What initially attracted you to e-commerce? Do those same characteristics of the industry still motivate you today, or have they changed as the online marketing world has evolved?

Pinny Gniwisch: Good question. What initially attracted me to e-commerce was the feeling that we were spearheading the Internet. It was the Wild West and nobody knew where to go or what to do, so we had the freedom to test and experiment and to be on the forefront of history, in a way.

And coming from rabbinical school, to find an opportunity in marketing and in entrepreneurship would have ordinarily been very difficult, given my educational background. But starting in a totally new industry where I was on par with everyone else, I had an opportunity to get in there and see what worked and become as good as–or maybe even better than–many of the people out there.

And these characteristics of the industry are still there for me today. There’’s so much innovation. The industry changes every single day. There are new technologies coming out all the time, and if we can stay on the cusp of these technologies, we can continue to succeed.

OS: You”re a veteran of e-commerce and a keen historian on the topic. From your unique perspective, what are the most significant, watershed moments in digital commerce that have allowed the industry to thrive and that have shaped it into what we see today?

PG: There was a period early on when the industry was out of whack–getting eyeballs to your site was considered important, but little emphasis was placed on conversions. The bursting of the bubble associated with that era was crucial to the growth of the industry; it was a painful, but absolutely necessary lesson that had to be learned.

In Biblical terms, we went from the seven fat years to a period of famine–from doing deals with AOL for $32 million for exclusivity to AOL giving you CPA deals the next week. But it was a correction the industry needed. We had to be reminded that yes, we have to make money, conversions are important and we need to have a viable business model in place.

Another key moment occurred when social media began to play a big part in our business; we went from marketing “one to many” to marketing “many to many.” In other words, we learned the power of harnessing our customer base to spread our message via word of mouth. People have always purchased products based on others” recommendations, but on the web, you can actively listen to the conversation and take steps to enable its growth, to influence it to an extent and to begin to truly harness its power at scale.

OS: Some online marketing platforms emerge out of nowhere and catch fire. Others are discussed at conferences for years, with brilliant experts in the field touting their benefits, yet never really take off or are forgotten as new ones emerge. Can you give us a few examples of online marketing platforms that have surprised you for either reason (unexpected success or failure)?

PG: I am surprised that companies have taken to product reviews to the extent that they have and are now using them to further their business models. A few years ago, one would think that companies might take a closed-door approach to reviews, rather than embracing them. Companies like BazaarVoice have emerged as leaders in this field and have hundreds of clients, which I never would have expected. It’’s all a result of companies realizing and understanding that transparency is a requirement of today’’s marketplace–and that’’s a beautiful surprise.

Second Life’’s failure to take off caught a lot of people by surprise, although that is something that I expected. It had been touted for quite a while and many companies jumped on board. But all the companies that went there are not there any more. There were millions of virtual “dollars” being spent on Second Life to purchase virtual goods, and the thinking was that this would somehow wash over to the real world, but people simply didn”t take that step.

An interesting technology on which the jury is still out is Twitter. Industry experts are touting the technology from a marketing or customer service perspective, but there are still very few success stories (Dell and Pizza Hut are two examples)–certainly not enough yet, in my opinion, to convince me that this platform is truly viable.

OS: How would you counsel a marketer that understands the importance of embracing new technologies (and taking a leadership position in these areas), but who is wary of chasing every new shiny object and wasting money on sexy-sounding new technologies and platforms that may eventually fizzle?

PG: Some new platforms simply can”t be ignored. When you think about Facebook, for example, no one has really figured out exactly how to make money on Facebook. But they have figured out that Facebook fans click through and convert three times better than those on your e-mail list. And when you consider that it’’s at 350 million people and growing every day, this is a platform that can”t be dismissed as a fad. You need to find a way that your company can play in that ballpark.

Gniwisch’’s Ice.com enjoyed 30 percent year-over-year growth for almost a decade.

At Ice.com, we look at the data until we”re confident that if you work a particular platform correctly, you”ll succeed. Then we take away lessons from those who”ve done it correctly, and apply them to our business model. For example, Ford blogs incessantly about green issues and it’’s working for them. The broader lesson is that blogs are an interesting way to help your SEO efforts and to show a different angle of your company. So we created a blog more appropriate for our business model–celebrity fashion was our angle, and we match the jewelry the celebrities wear to products we offer. We”re now getting 30,000 uniques a day, a big boost to our rankings, and we”ve done a few hundred thousand dollars in sales.

It’’s a matter of observing trends, learning from those who are doing it right, and applying the technologies and best practices in a way that’’s appropriate to your particular business model.

OS: On a one-to-10 scale, how mature do you think social media is right now?

PG: I would think that today we are at a three. When you listen to the futurists talk about social media and its potential, you realize that we”re really just crawling right now.

OS: How do you see social media evolving in the next three to five years–and what are the implications for online marketers?

PG: Regarding companies that embrace social media, the organic make-up of their websites and of their businesses as a whole will be far more integrated with social media. People will be going to Facebook and shopping with their friends in real time, on retailers” sites that will exist on Facebook.

Technologies like Google’’s Sidewiki–which allows people to make comments regarding websites and products that subsequent shoppers can read and react to–will continue to develop. So we”re all going to be working as one, so to speak, in our shopping environments. People will be increasingly posting about what they like and what they”ve bought, as they do on Facebook Connect.

But imagine using Facebook Connect and being able to navigate to a retail site and having the ability to purchase a product, all within Facebook Connect. And then while you”re shopping, your shopping-related searches can come up on your Facebook page in real time so that your mother or sister can participate and collaborate. The potential of this sort of social shopping is nearly limitless.

OS: While you”re looking into your crystal ball, are there other developments you envision outside of the area of social media?

PG: I think you”ll see CRM software make big improvements. Little glitches like the one where you type in your order number and then call a company and the first thing they ask you for is your order number–all of these will quickly disappear. Site search and collaborative filtering techniques will continue to improve, as well.

Mobile commerce will certainly undergo dramatic developments–the ability to shop via your smartphone will be greatly enhanced as more and more companies follow industry leaders like Pizza Hut and 1-800-Flowers into m-commerce. Companies that jump into this arena, experiment, test and optimize will be well ahead of the curve when this shift in purchase behavior occurs.

OS: In your opinion, what are a few emerging areas of opportunity for intelligent, enterprising online marketers?

PG: For the last five years, if you were an online entrepreneur and you wanted to make money, you opened up a search agency. I think that field is now covered. I believe social media companies–made up of smart people who are listening carefully to conversations that are occurring online–will emerge, helping brands begin to participate in, and ultimately monetize these conversations. I think that will clearly be an area where we”ll see a lot of action over the next three to four years–agencies looking to connect social media with commerce.

OS: You”re an e-commerce executive, an in-demand speaker and now a professor at an acclaimed university–where do you think you will focus your energies in the coming years?

PG: I would like to write down my ideas regarding the future of e-commerce. As an industry veteran and someone recognized as having a somewhat unique voice, I would like to think that that voice should be heard. So my hope and dream is to write a marketing book on social media and e-commerce over the next six months or so.

It astounds me that e-commerce hasn’t melded into the traditional business world more than it has. For example, the MBA program at McGill–where I am a professor–has just instituted an e-commerce course. It’’s crazy, when you think about it, that an educated marketing person from an outstanding university might not have had an understanding of one of the most crucial aspects of marketing, where the lion’’s share of dollars are going to be spent in the future. The traditional marketer needs to know about the potential of this world and not be so apprehensive about it.

As evidenced by this image, Gniwisch’’s speaking engagements are quite colorful.

OS: As a professor of e-commerce, what are two or three of the most important lessons you hope to convey to aspiring e-commerce professionals?

PG: Transparency will be the mantra of the marketing director. Understanding that is essential to future success. “Target markets,” “hit projections” and other terminology will have to change, and the consumer needs to be on an even playing field with you, as a marketer, in order to create products that they will want to pull, rather than ones you will need to push.

Also, I encourage people to fully utilize the tools that are out there that enable you to test and optimize your online marketing efforts. This will help you understand the levers that really drive your company’’s success, and the crucial data you need to know in order to correctly manipulate these levers.

Finally, I think it’’s crucial to use the valleys in your business’’s performance to develop the techniques and technologies that will propel you at the peaks. And when you”re at a peak, don”t stop testing new ideas.