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Join Our Research Team at DMA 2014
May 31, 2006
How To

SPECIAL REPORT: How to Market to Canadians Online – Advice, Data, Legal Info and Useful Hotlinks

SUMMARY: Canada is more wired than the US, and our northern neighbors spend more time online than we do. With a $1 trillion-plus GDP and a strong Canadian currency, it's an online market ripe for picking, if you can get around several obstacles. In MarketingSherpa's Special Report, discover:-> Dos and Don'ts for email campaigns to Canada -> Search marketing stats for Canada -> Two Canadian laws that affect online marketing Plus, creative samples and loads of useful hotlinks:
By Contributing Editor Dianna Huff

With the Canadian dollar trading at an all-time high, “we expect to see Canadians increase their spending with US retailers this summer and holiday season,” says Patrick Bartlett, President Canada Post Borderfree.

The Canadian and US cultures are deceptively similar. Canadians shop at the same retail stores, drive the same types of automobiles and access the Internet for entertainment and information. Like the United States, Canada boasts multiple ethnicities including Asians, Italians, Greeks, Indians and Latinos.

Marketing to Canadian consumers, however, isn’t as easy as setting up an ecommerce Web site and watching the sales pour in. While record numbers of Canadians browse online, the majority don’t *buy* online, choosing instead to complete their purchases at brick-and-mortar stores. Direct mail and email can be effective, but only if you know how Canadians differ from US consumers.



Quick Stats: Canadians Online


Although Canada is second in size to Russia in terms of landmass, it’s a sparsely populated country with 32 million people (New York state, in comparison, has 18 million). The majority of Canada’s population -- 80% -- lives within 60 miles of the US border. 

Despite its smaller population, Canada ranks No. 8 for online populations by country, with 18.9 million people online over age 15, according to recent comScore World Metrix data. Nearly 23 million Canadians access the Internet each month -- over 70% of the population.

“Canadians have always been early technology adopters,” says Brent Lowe-Bernie, President comScore Media Metrix Canada Inc., “and that coupled with the fact Canada built its broadband network long before the US did means Canadians have one of the highest levels of broadband usage in the world.” In fact, household broadband penetration is 80% in Canada while the US lags at 70%.

Canadians also rank high when it comes to spending time online: Canada is No. 10 with 38.4 average hours/month per visitor, according to comScore. (The global average is 31.3 hours with Israel leading the way at 57.5 hours a month.)

“What’s significant about this data,” says Lowe-Bernie, “is that the US and UK didn’t make the top 15 countries list.”



Top 4 Challenges for Marketing to Canada


US retailers have long known of Canada’s potential but were reluctant to pursue Canadian business because of marketing and logistics challenges. Adding to the problems: strict privacy regulations, a bilingual culture and a populace not used to shopping online or by catalog.

Challenge #1: PIPEDA, Do Not Contact & Do Not Call Legislation

All companies (including US-based ones) doing business in Canada must adhere to strict privacy standards, the most critical of which is the federally mandated PIPEDA -- Personal Information Protection and Electronic Documents Act -- which took effect January 2001. According to the Canadian Marketing Association (CMA), the act “sets ground rules for how private sector organizations may collect, use or disclose personal information in the course of commercial activities.”

“PIPEDA continues to impact the Canadian marketplace,” explains Bill Sweetman, VP Internet Strategy MacLaren McCann Direct and Interactive, a Toronto-based agency. “Everything from how we collect names to contests to email ‘forward to a friend’ is regulated. The legislation outlines strict outcomes for companies that don’t adhere to it  -- with non-compliance resulting in large fines.”

Canadian email service providers are especially under the gun. In their RFPs, Canadian companies insert clauses that state all data going into a system must be hosted within Canadian borders, says ThinData CEO Chris Carder.

“PIPEDA mandates Canadian companies safeguard data from intrusion, while the US Patriot Act allows the US government to access and tap into data,” he says. “Canadian consumers are sensitive to this, which is putting pressure on Canadian companies to request ESPs host their data in Canada.”

Note: PIPEDA compliance is an incredibly complex issue. The CMA will advise members, if you’re not, it’s best to start with the Office of the Privacy Commissioner of Canada (See link in resources section below).

Canadian consumers also have the right to opt out of receiving any type of direct mail or email simply by registering via the CMA’s Web site. Once a consumer’s name is on its do-not-contact list, association members cannot market to this consumer via mail, telephone or fax.

The government passed do-not-call legislation last fall, but implementation isn’t expected until summer or fall 2007. The Canadian Radio-Television and Telecommunications Commission is currently developing the rules. Fines being considered range from $1,500 (CDN) for an individual to $15,000 (CDN) for a company that pitches a product to a registered consumer or makes calls outside designated hours.

Challenge #2: Communicating With English- & French-Speaking Canadians

Although Canada defines itself as a bilingual nation, the majority of French speakers live in the province of Quebec (7.5 million of them). Section 52 of Quebec’s Charter of the French Language requires that catalogs, brochures, folders, commercial directories and any similar publications must be drawn up in French (link below).

This means that if a firm has an address in Quebec and its products or services are available in Quebec, its Web site must have a French translation. Fines range into the thousands of dollars for repeat offenders.

“Marketing in two languages is a challenge for Canadians and foreigners alike,” explains Sweetman. “Generally speaking, the cost to execute a bilingual campaign is out of sync with the size of the French market, yet the French market is definitely underserved.”

While citizens in Quebec speak English, they prefer French and will wait until a company offers a French site or they’ll go online to French search engines like Toile.com to find products, services and information in French.

It’s worth the extra work because French Canadians have a higher rate of Internet usage, with 65% of French-speaking Canadians online versus 58% for English Canadians, according to Gino Coutu, President and CEO Networld Media, the only network in Canada for French search, portals and PPC.

“We have a network of 3.5 million users conducting 350 million searches per month. We know 35% are shopping online and that 15% made a purchase in the last 30 days,” he says. “French-language content is key for conversion, yet few French language sites exist -- even Amazon.com’s Canadian Web site is at least three generations behind the main US site.”

Challenge #3: Low Ecommerce Adoption Rates (for Now)

Thanks to decades of thumbing through catalogs, US consumers migrated relatively easily to online shopping. Canadians, on the other hand, have always been “touchy-feely,” meaning they like to see and touch products before they buy -- hence, catalog purchases and ecommerce activity are much lower.

Recent data, however, show the industry is growing at a good clip. According to government statistics, overall ecommerce sales in Canada jumped 38% last year. (Note: In Canada, “ecommerce sale” is defined as an order placed online, whether or not payment is made online.)

The major problem preventing more Canadians from buying via US online is shipping (see Challenge #4: Logistics) goods over the border and, indeed, within Canada itself. And, unlike the US, online/offline fulfillment operations as integrated for shipping and returns.

“Online marketing in Canada has a ‘chicken and egg’ perspective to it,” says Derek Szeto, President Clear Sky Media Inc., an affiliate marketer. Because the consumer market is relatively small, retailers lack motivation to run online promotions. Consumers then can’t find products online and end up going to the store.

Retail affiliate marketing is much less competitive than in the US with roughly 50 Canadian retailer affiliate programs, which is far smaller than a tenth of the US merchants duking it out for affiliates.

However, this doesn’t mean opportunity is lacking. Szeto claims his site, Redflagdeals.com, generates more than $1 million in sales in a single month. The largest site in Canada of its type, it averages 400,000 unique visitors and more than 17 million page views a month. Over 1,200 people are visiting at any point in the day -- usually participating in the site’s forums.

Challenge #4: Shipping Logistics & Duty and Custom Charges

Despite the Free Trade Agreement, moving products across the border represents challenges for US marketers, Bartlett says.

When goods cross the border, the shipper must state what the goods are, their value and country of origin. Many companies have this information in their databases, but the trick is making it available at the border. A cataloger simply can’t list “shirt” on the manifest because the regulations for describing what is being shipped is quite detailed.

The other problem involves the consumer. Joe Smith goes online in Vancouver to buy a shirt and thinks he’s paying $30 CDN because his printed receipt says that’s the price, including shipping.

The retailer ships it UPS or FedEx -- who then charge Smith an additional $35 in Customs, duty and brokerage charges at the time of delivery. When confronted with these charges, Smith often simply refuses the item. If he does accept it and finds the shirt too small, he has a difficult time returning it and getting his money back.

In response to this problem, Canada Post created Borderfree in 2005. Working with US marketers, the service provides a seamless shopping experience for Canadian consumers. Once they visit a Borderfree partner sites or Borderfree.ca and indicate they are Canadian (either by clicking on “International currency” or a Canadian flag icon), pricing is either shown as CDN or is converted at checkout. The pricing shown includes shipping, duty, Customs and any other brokerage or handling charges.


6 Canadian-Specific Marketing Tips

  ->Tip #1: Don’t assume you can recycle your US campaign

Canadian marketers, says Robin Whalen, Group Account Director MacLaren McCann Direct & Interactive, look south for creative strategies, ideas and inspiration. But US campaigns and/or messages can’t be re-used wholesale in Canada. Generally speaking, Canadians are morally conservative and they don’t respond to hard-sell tactics.

“Canadians do not respond positively to any type of patriotic or nationalistic appeal,” adds Alan Sharpe, President Sharpe Copy Inc. “It won’t pay to stick a Canadian flag on the envelope.” Remember, too, that Canada does not have an NRA or a strong gun lobby and that Canada’s thinking is more along the lines of peace-keeping, not warfare.

Also replace images in ads that are blatantly American with more generic street footage.

  ->Tip #2: Make it easier to buy offline

Online sales will happen faster if you promote an ultra-easy, consumer-friendly return policy. This alone, Bartlett says, will bring Canadian shoppers over the hurdle of shopping direct.

If you’re sending discount offers with printable coupons via email, make them valid at Canadian stores, too.

Since Canadians, for the most part, browse online and purchase offline, it also pays to ensure that your site helps foot traffic find stores: where to buy, store hours and telephone numbers, maps, store locator, etc.

  ->Tip #3: Use Canadian spellings and lexicon

“It’s a dead giveaway that a campaign is from the US if you use ‘send a check’ instead of ‘cheque,’" says Sharpe. “Incorporating Canadian spelling into your copy shows that you, the advertiser, know you’re talking to Canadians.” Also know the Canadian lexicon, especially for search and PPC campaigns -- Canadians, for example, search for “homes,” not “houses” and for “trainers,” not “sneakers.”

  ->Tip #4: Price goods fairly and use Canadian currency

Canadians are savvy about the exchange rate. “Because they often comparison-price US and Canadian goods, they’re pretty sensitive to inflated pricing,” says Jay Aber, President Aber Group, an Internet marketing agency. US retailers should be extremely clear about costs and show that stated prices are in line with Canadian retailers, Szeto adds.

  ->Tip #5: Budget for dual-language versions

As noted above, whether you’re doing direct mail or email, your budget should include developing French and English versions of your creative. Offering a French version will significantly increase your response rates because so few companies do it; if your market doesn’t include the province of Quebec, however, you can market in English only. A good list provider in Canada can help determine the need for bilingual versions.

Whalen advises budgeting for a separate campaign directed solely at Quebecers. In contrast to the rest of Canada, Quebec is more liberal and laid-back.

“They definitely have a distinct approach to life,” she says. “The phrase, ‘joie de vie’ embodies their culture. Whereas in the rest of Canada you would market artificial sweeteners for weight loss, in Quebec you probably wouldn’t. Quebecers don’t have guilt the way the rest of Canada does.”

  ->Tip #6: Test like crazy

The advantage US marketers have over their Canadian counterparts is that they test. “Testing and analytics really lag in Canada with smaller SEMs lacking the proper tools or even the initiative,” says Mitch Joel, President Twist Image, a Montreal-based marketing agency.



Dos & Don’ts: Email, Search Marketing and DM in Canada


Email Marketing to Canadians

Like consumers in the US, Canadians use free email boxes provided by the large portals, including AOL and MSN. One of the heaviest hitters is Sympatico/MSN. Canada.com is another huge portal offering a free AOL-based email product.

According to the Interactive Advertising Bureau of Canada’s March 2006 study of 7,000 newsletters over a two-year period, companies measured open rates of more than 55% and averaged clickthrough rates topping 8%.

“Part of this is because we’re marketing to smaller populations,” says The Email Company’s Chief Email Officer Jeff Ginsberg. “Our clients’ lists have 10,000, 50,000 or 200,000 names, not the millions you find in the US.”

Carolyn Gardner, President cardcommunications, an Ottawa-based email agency, confirms that the smaller the list, the higher the response rates. “We routinely see 50% open rates for lists of 1,000 names or less. But even for ‘larger’ lists, such as 9,000 names or more, we see open rates on average of 25%.”

These findings reinforce the need for segmentation, she says, since it will lead to smaller, more targeted lists, which in turn lead to higher response rates.

Although Canada currently doesn’t have a email accreditation program, the major ISPs are discussing it. “If the US plans on insuring deliverability to Canadians, US ESPs will need to have solid relationships with Canada’s ISPs,” Sweetman says.

When developing email campaigns:

DO: Create French and English versions of creative in marketing in Quebec. French copy that drives Canadians to French landing pages is key for higher conversions. Also, don’t forget to post prices using Canadian currency.

DO: Check your broadcast system can support the French language. Some ESP systems weren’t built considering French language requirements, says ThinData’s Carder. Therefore, emails generated to French-speaking Canadians might not display French language accent marks.

DON’T: Send an email to your house list and include Canadian subscribers if the offer’s not good there.

Canadian Search Marketing Advice

Canadians conduct 5.6 searches each time they search vs. 4.7 searches for Americans, according to comScore. For Q1 2006, typical online Canadians conducted 55 searches for any given month vs. 41 for their American counterparts.

ComScore’s Lowe-Bernie cautions US marketers to consider optimizing sites for Canadian spellings and geo-targeting. Google.ca allows Canadians to “personalize” their searches by clicking the “pages from Canada” radio button or to view the search engine in French.

Yahoo.ca offers the same thing, but search results include sites from all of North America, not just Canada.

Like ecommerce, Canadian search pay per click lags behind the US with about half the online spend budget. “PPC in Canada does suffer from a disconnect,” Lowe-Bernie says. “But it’s also a great opportunity for US marketers because of the increase of the Canadian dollar -- it means US companies can offer products at competitive prices.”

French search and PPC, given its relatively small market share, is another viable opportunity depending upon your products and industry. “PPC spending for all advertisers targeting French Canadians is almost evenly split between Networld Media at 45%, Google 50% and Yahoo 5%,” says Coutu, whose company manages 200 French PPC campaigns for various clients.

Our experts recommend the following when considering search and PPC:

DO: Consider ad buys on the major Canadian portals, search engines and directories. In addition to Google and Yahoo, consider buys on Canada.com, Canoe.ca and Sympatico, and Canadian search engines and directories such as Toile.com, Yellowpages and zip411.

DO: Promote your site using offline media. Because search and PPC rates are relatively low, it pays to integrate offline and online tactics. Don’t rely on search or online ads to drive targeted traffic.

Canadian Direct Postal Mail

A thriving industry, direct postal mail accounts for 22.4% of Canada’s marketing spend and is one of the country’s largest grossing industries. Canadian marketers enjoy response rates of 3%-4% according to the US Direct Marketing Association -- perhaps because Canadians receive only 300 pieces a year, less than half what a typical American receives.

A Canada Post Borderfree study found that Canada had 135 print catalogs in circulation in 2005, a 400% increase over 2004.

“Catalogers like L.L. Bean and Lands’ End have been doing incremental catalog business in Canada for over 15 years and have Canadian house files in the millions,” says Canada Post’s Bartlett.

“Direct mail is a great way to reach people. Canada is a big place with few people. You have a far more limited reach with radio and TV,” adds Sharpe.

When planning a Canadian DM campaign:

DO: Doublecheck postal specs. Just as you would when designing a new creative piece in the US, pay a visit to Canadapost.ca for current specifications and regulations. Canada has similar mail classifications (i.e.: First Class, Standard), but rates may not equate to US practices. You don’t want to learn the hard way that it actually cost more to send that package Standard than First Class.

DO: Add an online response option. “Five years ago, we were [only] using a BRC and a phone number. Now, almost all our campaigns incorporate a URL,” says Whalen. “Direct mail, combined with the Web, is a great way to build brand awareness and get people to your site.”

DO: Ensure PIPEDA compliance for all campaign elements. “On contest ballots,” she says, “people check a box specifically stating they’re opting in for a phone call. Most people outside Canada don’t know this is a PIPEDA requirement.”


Useful Links related to this article:

Creative Samples of Canadian Online and Offline Offers

http://www.marketingsherpa.com/cs/mmdi/study.html


Government and association sites:

Canada Post: http://www.canadapost.ca

Canada Post’s Borderfree: http://www.borderfree.ca

Canadian Marketing Association: http://www.the-cma.org

Interactive Advertising Bureau of Canada: http://www.iabcanada.com

Office of the Privacy Commissioner of Canada: http://www.privcom.gc.ca/index_e.asp

The Charter of the French Language: http://www.olf.gouv.qc.ca/english/charter/title1chapter7.html


Top-tier Canadian portals (in alphabetical order):

AltaVista Canada: http://ca.altavista.com

Canada.com: http://www.canada.com

Canoe: http://www.canoe.ca

Google: http://www.google.ca

Sympatico/MSN: http://sympatico.msn.ca

Toile (French-based search engine): http://www.toile.com

Webcity Canada: http://www.webcity.ca

Yahoo Canada: http://www.yahoo.ca

YellowPages Canada: http://www.yellowpages.ca

Zip411: http://www.zip411.net


More useful links:

Aber Group, email: jayaber@sympatico.ca

Cardcommunications: http://www.cardcommunications.com

Cardcommunications' Q1 2006 Email Marketing Trends Report:

http://www.cardcommunications.com/expresso/Q1_06_trends_card.pdf

ComScore Canada: http://www.comscore.com/metrix/mmc.asp

Networld Media: http://www.networldmedia.com

MacLaren McCann Direct & Interactive: http://www.maclaren.com

One Degree (the Canadian marketing blog): http://www.onedegree.ca

Red Flag Deals: http://www.redflagdeals.com

Sharpe Copy Inc.: http://www.sharpecopy.com

The Email Company: http://www.theemailcompany.com

ThinData: http://www.thindata.com

Twist Image: http://www.twistimage.com

 

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