The B2B Marketer’s (Simple) Guide to Lead Scoring

August 29, 2011 By Leave a Comment

Source http://www.flickr.com/photos/swafo/22892239/

 

By Matthew Heinz of Heinz Marketing

Lead scoring is a marketing method which gives every prospective customer you run into a point value, with a higher scoring customer being more likely to buy your product. You can assign point values in any way you want, but the typical way it’s done is to take the most common characteristics of your best customers and give those a higher value. For example, if your best customers visit your website more than twice a day, then that should get a higher point value than something that doesn’t have any correlation to whether they buy from you, like their age. The end goal of lead scoring is to be able to identify likely customers and target your marketing campaign to get those people to buy into your product. However, more importantly, you won’t have to spend all that money shooting arrows in all directions because you know exactly who your target market is.

All the theory in the world sounds good, but let’s give a simple example of lead scoring. You are the CMO for a car dealership and you are looking to see who your most likely future customers will be. You would want to assign customers who simply walk through the lot just to look around with a score of five points. Ten points should go to the customers who actually come in the show room and ask some questions about a car. If you are able to get the customer in the car, assign him thirty points. The customer taking the car out on the road would be worth fifty points. If you can get a customer from just looking all the way to test driving, that’s ninety-five points. When using the lead scoring method, this is a more likely customer than someone who just looks and then comes in to ask you some questions (15 points).

Building the System

You’re now interested in actually implementing this Lead Score system, right? One of the most experienced users of the lead score system is Steve Gershik, a Vice President of Marketing who has worked at various firms over the past sixteen years. He has five simple tips to help you get started using the Lead Score marketing plan:

1) The actual score doesn’t matter.

I know what you’re thinking – you just killed thousands of pixels to tell me how great lead scoring is, how can the actual score not matter? Well the actual score doesn’t really matter, it’s the ranking that matters. You can differ your values by 1s, 10s, or 100s. It doesn’t matter. All that matters is that the point differential is proportional to its importance relative to other activities.

2) Get rid of your ABC scoring method.

Lead scoring isn’t meant to be a supplement to the ABC method of ranking leads – it’s designed to replace it. Often times “C” leads are ignored but when used effectively, the lead score method can help you just budget less time and money at these leads.

3) Don’t Ignore the Low Scorers.

These aren’t simply customers who are not going to buy your product. If you are in B2B marketing, chances are your customers are just shopping on a whim. They need what you are selling. What a low score tells you is that they are in the early stages in their decision making process. Cultivate these relationships, but don’t help the customer that scores a 10 when you have a 100 point customer waiting on you. You might lose a customer.

4) Start Simple.

If you make things too complicated to begin with, none of your associates will buy into the process. Make sure everyone can understand what you’re doing and why you’re doing it.

5) Don’t Be Afraid to Tweak the System.

If for some reason you find your scoring to be off, don’t be afraid to change it. Remember, all the numbers are relative. If you begin to find that certain actions become more likely to lead to a sale than they used to, then change its point value.

Matt Heinz, President of Heinz Marketing
Matt Heinz brings more than 12 years of marketing, business development and sales experience from a variety of organizations, vertical industries and company sizes. His career has focused on delivering measurable results for his employers and clients in the way of greater sales, revenue growth, product success and customer loyalty.You can read more from Matt on his blog, Matt on Marketing, follow him on Twitter, or check out his books on Amazon.com. (Are You Selling Pants, Or Selling A Dream?, Move The Mouse & Make Millions! and Successful Selling.)

(Photo courtesy of Flickr user swafo)

 

Filed Under: Advertising, Marketing Tools

Marketing to the Veruca Salts of the World

July 19, 2011 By 1 Comment

Veruca SaltLast week, I breathlessly awaited my invitation to Spotify, a new music sharing site and one of the most hyped start-ups to come around in a while. Spotify is a music sharing service, and beyond that, I wasn’t even sure why it was so cool or why I wanted in so bad. More than anything, I wanted it because I couldn’t have it. You see, my behavior makes me a Veruca Salt of Charlie and the Chocolate Factory fame, the brat who made her father seek out one of the few and impossible-to-find golden tickets.

“I want the world. I want the whole world. I want to lock it all up in my pocket. It’s my bar of chocolate. Give it to me now.”

 

Last week, I waited on access for Google+ and two weeks before I was sadly on the outskirts of Turntable.fm as my co-workers were sharing songs several feet away from me. I didn’t even know I wanted in until I couldn’t get in. And then I wanted an invitation more than anything.

It’s simply the law of scarcity. If people to perceive it to be scarce, they perceive it to be more valuable.

So how do companies build the kind of buzz that these online companies have built over time?

1. Make it scarce. This is the obvious first step. If just anyone could have gotten into the chocolate factory, Veruca wouldn’t have probably even bothered going. When I first was invited to Gilt by my co-worker Matt Hessler, I had to wait more than a week to gain access. By the time I finally gained access I was chomping at the bit to buy something. In fact, I even think Foursquare limiting access to select cities when they launched is one of the key factors that helped make Foursquare more dominant than Gowalla.

2. Show off your red ropes. Make your lack of access public. Let the world know that you have red ropes outside your door, there’s a wait list and you’re not letting just anybody in. Like at a Las Vegas nightclub, the kid with sneakers and a startup t-shirt is not getting in.

 

One of the interesting aspects of Spotify is that they opened up access to those with high Klout scores. Although demand was so high on Klout, it was out most of the morning since people really wanted an account.

The Denver Botanic Gardens holds a popular concert series that regularly sells out. They offer first rights to buy to their members helping to significantly increase their members. Hold a sale for valued customers first and let other customers know how they can achieve the status. In fact, when Frederick of Prussia was trying to get peasants to eat potatoes, he was only successful when he put up a fence around the potato garden to keep them out.

3. Help people tell everyone else how much fun they’re having. Tap into people’s FOMO (fear of missing out). As Caterina Fake said about FOMO, “FOMO is a great motivator of human behavior, and I think a crucial key to understanding social software, and why it works the way it does.”

As part of the Spotify/Klout partnership, you could win a free-month trial if five of your friends signed up. So they made it easy to tweet out and post on Facebook. While people seem to really be using Spotify, Google+ seems to be sputtering. In the last two weeks, I’ve seen more people write blog posts about how to use Google+, it’s benefits and how great it is more than I’ve seen people actually interact on Google+. For every twenty tweets or posts I’ve seen on how great Google+ is, I’ve seen one actual interaction on Google+. Which brings us to point number four:

4. Make the experience worthwhile. Nothing is worse than standing in line for a club only to discover upon entrance that it’s half empty, the music is horrible and you don’t actually want to be there. (If you’ve ever been to a party at the PureVolume house at SXSW then you know exactly what I’m talking about.) Same with getting into Google+ (or Google Wave) and being underwhelmed even though everyone made it sound sooooo fun.

What makes Turntable.fm so worthwhile is that it’s a unique experience. It’s cool to hang out with your co-workers who are several and hundreds of feet away and be listening to the same music that they’re picking out.

So are you a Veruca Salt? What companies have used the law of scarcity to make you more interested?

 

Filed Under: Advertising, Social Media

Impressions Aren’t Cool. You Know What’s Cool? Conversions.

May 5, 2011 By 2 Comments
Facebook advertising impressions

Mark Zuckerberg is cool.

ComScore released its Q1 2011 online display advertising market report yesterday, which said that 1.1 trillion display ads were delivered to U.S. Internet users during the quarter. 31% of those ads (346 billion) were served by Facebook. That’s an 8% increase in market share since Q3 of last year. The next closest competitor is Yahoo with 10%, followed by Microsoft at 4.8%.

But before marketers flock to Facebook to start running display campaigns, remember that impression data gives you only one piece of the data, and it’s the least important from an ROI perspective. Impressions should really only be used to help you calculate your click-through rate (CTR). Far more important are clicks and even more importantly, conversions (sales or leads) and their associated costs.

Two things are happening that will cause CTR to decrease and click costs (and thus CPA) to increase. The first is the continued increase in impressions. As Facebook continues to grow ad impressions, your CTR will likely decrease. The best way to combat this is ad freshness. Avoid continually showing Facebook users the same ad over and over again. They’ll simply grow blind to your ad and your CTR will drop. Keep trying fresh images and messages. See what works best and then create new variations of that ad.

The second is that competition for ad space on Facebook is increasing. I continue to hear more and more conversation about Facebook advertising at industry conferences and trade shows. Everyone wants a piece of the Facebook action. As more and more advertisers launch campaigns on the Facebook ad network, competition will increase and so will click costs. As this occurs, expect to see advertisers employ strategies to keep click costs down, much as they’ve done with long-tail keywords on paid search campaigns.

Is Facebook advertising right for your business? You won’t know until you try and experiment with new strategies. But before you do, remember to establish your baseline performance metrics such as CTR, average cost per click, and CPA to determine if your campaign is giving you a positive ROI.

Filed Under: Advertising, Paid Search

As Seen on TV: 5 Lessons from Direct Response Marketing

March 3, 2011 By 1 Comment

I spent the last several days at the ERA Great Ideas Summit. If you haven’t heard of this conference, it’s essentially for the “As Seen on TV” people. All of those products hawked on infomercials and spreads in Parade Magazine make up a huge industry. I know social media peeps such as myself are likely to turn our noses at an industry that has marketing technique such as “Yell and Tells.” But before you turn your nose, remember that this industry is incredibly talented at successful marketing.  Here are some of my takeaways from ERA Great Ideas Summit.

1. Use testimonials. Sure, you probably can’t afford Cindy Crawford to hawk your product, but I bet (hope) you have some customers who think your product is pretty neat. If you look at direct response marketing, nearly every campaign has a testimonial. Some are everyday average users and some are stars whom used to be famous. Famous today, infomercial tomorrow. But don’t worry, the star of your testimonial doesn’t have to be a former child star from TGIF’s Friday night lineup. DR marketing uses 35-year-old mothers who have lost 20 pounds using their products, because they know the viewer can see themselves being able to lost that same weight. Put testimonials on your landing pages and marketing collateral so an SMB owner can see how the solution worked for their peers. Help them envision how it will successfully work for them.

2. Make it measurable. Direct response TV has been using metric-based marketing long before anyone else. They hone in on what sells (cheesy as it might be), and they measure every ounce of marketing dollars applied. They use special URLs or 1-800 numbers to track their marketing campaigns. They know the ins and outs of call centers and how to drive people to call. How do you measure your programs? Do you care if it wins awards or if it sells products?

3. A killer call-to-action. Direct response marketing leaves no question on what you’re supposed to do after visiting their site or seeing a commercial. You’re supposed to call RIGHT NOW and order. And if you do call RIGHT NOW, you’re going to get a value add. Who doesn’t need an extra knife? You can bet an SMB owner with small margins is looking for value add too. What is your hypothetical knife you can offer? A rebate or discount or some way that makes your client feel that they’re getting more for their money.

4. Stop with your buzz words. No really, stop. Have you ever noticed that no one ever operates in the cloud or real-time in direct response marketing? Sure, DR isn’t dealing with complex BtoB offerings or software, but you’ll still notice that no one uses language like, “The Snuggie® is a comprehensive warming unit with real-time warmth for the lackadaisical multi-media viewer.” No way. Their marketing language says, “The Snuggie® Blanket keeps you totally warm and gives you the freedom to use your hands. Work the remote, use your laptop or do some reading in total warmth and comfort! Put an end to those cold days and nights.”

5. Have a clear value proposition. What direct response marketing is incredible at is providing a clear value proposition. If you buy the Snuggie, you can stay warm on the couch but still use your hands. A PedEgg keeps your feet smooth with no mess. Do you have a clear value proposition? If someone is looking at your marketing can they understand instantly how they will benefit from your product or service?

Filed Under: Advertising, Marketing Tools

Crowdsourcing Online Advertising with Video

February 8, 2011 By 4 Comments

Recently we shared Trada’s experiences with YouTube’s Promoted Videos, which is an advertising platform similar to paid search that places a thumbnail of your video along with three lines of text on the page with organic YouTube search results. When a searcher clicks your thumbnail, your video opens on your YouTube channel. It’s an amazing form of online advertising, because:

  • YouTube is the world’s second-largest search engine
  • You don’t need to worry about landing page design – the searcher is delivered right to your YouTube channel, where you can make other videos available
  • The Promoted Videos offering is new, so it’s insanely cheap – for many verticals, it can cost as little as three cents per click to get the first position. And you may find that your video is the only paid result for certain search terms.

But some advertisers may get hung up on a step that comes even before YouTube Promoted Videos. The hefty, time-consuming creative process of making a marketing video may be outside their purview – or simply not a priority. Putting together an effective web video to market a brand or product takes skills. From concept to execution to distribution, you need someone in your company who can: conceptualize a story and encapsulate your brand/product, write an engaging script, shoot, edit, and produce a video, and market it effectively.

Not to mention all the equipment. Lights. Cameras. Action figures for animated fight sequences. (OK… maybe not those).

Hiring a soup-to-nuts video company is pricey. One of the more well-known viral/marketing video companies charges around $50K for a project.

But if we’re seeing crowdsourced online advertising work in other areas (like graphic design and copywriting with 99 Designs and crowdSPRING, or with Trada’s geographical neighbors Victors & Spoils, who’ve taken the crowdsourcing model and applied it to the ad agency), it only makes sense that someone would have begun crowdsourcing video marketing.

Here are two companies who are doing cool things with crowdsourced online advertising in the video space:

Poptent

Poptent calls itself a “social network around crowdsourcing video”. They allow their users – the crowd – to create videos for major brands. Because fans are creating videos for brands anyway, Poptent, has in a way created a way to monetize something that’s already occurring (which some might say is the best business model).

On the Poptent blog you can see some of the commissioned projects: they range from around $10 – $25K (which is pretty reasonable) for web commercials, how-tos, and viral videos.

If you’re the type of brand that has a core group of fans, it may be worth looking into trying crowdsourced online advertising with Poptent.

GeniusRocket

GeniusRocket offers a ‘curated’ approach to crowdsourced online advertising: they claim to take the guesswork out of crowdsourced video production and distribution by hand-managing the brand strategy of clients, then helping to choose artists from their crowd.

This is an interesting idea. I would argue that it’s not truly crowdsourcing, as the value in crowdsourcing comes from the collective wisdom of a crowd – where the great ideas come to the surface through the mechanism of a marketplace. I would refer to this as a community of creatives with an in-house team who manages their projects.

But whether it’s truly crowdsourced online advertising or not, as an advertiser it’s likely to be a more cost-effective system for finding good video work. For one thing, video marketers who work in the GeniusRocket system can stick to what they’re good at without having to find or manage clients (this is similar to Trada’s model for PPC experts). This removes some overhead, as creatives who are able to find work more easily – and in this system, it’s more likely to be the right work – may work for less on a project basis. And a social community offers regulation systems – like historical performance, comments, and connections – that can help you as an advertiser make an informed decision when it comes to hiring a video creative.

The world of crowdsourced online advertising is expanding, and it’s fascinating to see how the wisdom of the crowd is being leveraged. These are just two companies that stand out, but if crowdsourced video proves to be a successful model, it’s only a matter of time before the options become numerous enough to create a marketplace of its own.

Filed Under: Advertising, Crowdsourcing

Metrics Marketing Bootcamp on Feb. 7, 8 & 9

January 19, 2011 By Leave a Comment

Trada is helping sponsor an event called Metrics Marketing Bootcamp in Boulder, CO. Sessions will be held on Feb. 7, 8 and 9 from 5:15 to 7:15 at the Wolf Law Building, CU, Room 204. More information is below, and you can register at MetricsMarketingBootcamp.com. Did we mention it’s free?

The details…

The world of marketing is changing! Marketing can be measured like never before. But what do you measure, how do you measure it, and what are your targets? Come to the Bootcamp and find out!

At this FREE bootcamp you will learn:

  • How to calculate marketing ROI
  • How to apply  relevant metrics to every activity in the marketing department
  • How to accelerate your  marketing skills
  • The top 10 things you’ll be glad you knew on your first day
  • How to prove marketing value to your organization

Agenda (note, please plan on attending all three sessions if you’re coming)

  • February 7th, 5:15 pm, CU – The Basics of CPA, Funnels and Customer LTV
  • February 8th, 5:15 pm, CU – Measurement Tools and Simple Ways to Affect your CPA
  • February 9th, 5:15pm, CU – Measuring Content Campaigns
  • Speakers (we have a lot of them and they’re rad – we’ll be announcing them as we go)

Filed Under: Advertising

YouTube Promoted Videos – the Wild West of PPC

December 10, 2010 By Leave a Comment

How would you like to pay three cents per click to advertise your business on the world’s second biggest search engine?

Here at Trada, we find value in experimenting with different types of marketing. Videos are more effective than we ever would have thought – in fact, the funny little How it Works video we put together back in March when the marketing department was just hatching has proven immensely valuable not only for lead generation,  but also for concisely explaining how Trada helps people with paid search. (I guess I don’t need to mention that a concise explanation can help with lead generation.)

So the video is great when it’s embedded on our website. If someone lands on our “how it works” page the video is right there, and it might turn a visitor who is skeptical about Trada into a potential customer. And we can definitely push out the video to our blog, and of course we post it on YouTube and optimize it for SEO and all that jazz.

But this is still a small pond. How can we get this video – which has proven so successful for us – out to a larger audience? A bunch of folks who need help with paid search – but don’t really know what they’re looking for?

Ta-daa! YouTube Promoted Videos. On the setup end, these work like AdWords and other pay per click platforms – but instead of directing traffic to a landing page on our website, promoted videos appear on a page with the organic search results – as a thumbnail with three lines of text – and drive traffic to our video.

Don’t have you hooked yet? Try this on for size. We pay only a few cents per click.

Still not sure? YouTube is the second largest search engine. It’s bigger than the Yahoo/Bing Search Alliance, which we’ve been suggesting for ages you use in addition to Google.

Wait, you’re really still skeptical? In addition to appearing on YouTube results pages, you may also elect to have your videos appear on AdSense ad units – potentially reaching a massive content network audience.

Now, there is one complicated part. You need a video. The creative process for promoted videos is slightly more involved than with regular old paid search. We’ve moved past building campaigns around our How it Works video and have begun producing “branded editorial videos”, specifically to raise awareness about Trada and how it can help with pay per click advertising. The data we got from our first campaign with How it Works was enough to convince me that this was an avenue worth pursuing – and dedicating time and resources to.

But you don’t need a crack team of videographers to benefit from YouTube’s promoted videos.

If you already have a video for your company that explains what you do, or provides educational value in your space, it’s a good place to start trying to advertise on YouTube. It’s an easy and cheap! way to reach a new audience – and to generate valuable real-time data about your messages.

Here are some best practices to consider when working with YouTube promoted videos. For the sake of focus, we shall assume you have already implemented standard best video SEO practices – which, when followed, can also positively affect your promoted video campaign. For a great article on 14 SEO video practices, check this out.

Remember why you’re promoting your video. What are you hoping to accomplish? If you’d like a viewer to visit your website, use the free Call-to-Action Overlay feature. You can also use the video description box to include information.

Choose a thumbnail – you’ll have three choices – that best represents your video.

YouTube offers data reporting similar to AdWords. Use what you learn to inform your next step – and your other marketing channels. Always use your data!

Create a Call to Action Overlay (they’re free with a promoted video campaign) so that, once you’ve driven potential customers to your video, they know what to do next and can become a customer.

If you have many videos, consider driving traffic back to your channel, where a viewer can peruse your other offerings.

Elect to make your video embeddable. You want people to see it!

Whatever you do – make sure an interested viewer knows how they can contact you. Put a watermark with your URL into the video (super easy with Final Cut, Adobe Premiere, and iMovie), put your web address – first, so it’s above the fold – into the description box.

YouTube Promoted Videos is a relatively new offering – and it’s constantly improving and changing. There will be less competition in your space – and that means better click prices and the freedom to educate yourself by making mistakes. So go! Go and try it!

We did eventually remake the old How it Works video.

Filed Under: Advertising, Paid Search, PPC Tips, Social Media

Why Groupon Would be a Good Idea for Google

December 2, 2010 By Leave a Comment

There has been a lot of speculation lately about a pending purchase of Groupon by Google. A lot of the more recent news recently has focused on all the reasons why this is a bad idea, especially around the purchase price and Groupon’s human-intensive sales model. I wanted to share a few thoughts on this given some of the history of Google, other Internet companies I’ve watched, and the future we’re all looking at.

The Unassailability of Network Effect Leaders
The number one consideration here is network effects. I was stupefied by Google’s purchase price for YouTube when it happened. My first thought was “wow, how can they justify that price”. I’m used to thinking about purchase prices for companies in traditional enterprise software terms where the math is about long-term value of customers, maintenance revenue streams, customer attrition versus upsell. I talked about this a lot when Oracle went on a spending spree and bought PeopleSoft (and thus JD Edwards) and Siebel . In those cases, you could do the math and realize that Oracle basically bought the ERP market at a pretty fair price (since then I think they’ve proven all those purchases were worthwhile).

The question I asked myself that changed my own opinion of the purchase price was “Could Google spend 3 billion dollars in any other way to catch up to YouTube”. The conclusion I came to was simply “no”. Metcalfe’s law is at work every day on the Internet and one of the things about Metcalfe’s law is that once you get big enough, you basically are unassailable until a completely new model comes along. YouTube was, at that point, unassailable. They still are, even though sites like Facebook (and back in the day MySpace) have compelling reasons for people to upload video. They simply paid for the winner, bet on their N^N expansion path, and took their time figuring out how to monetize it. With their recent announcement about their quietly built 3 billion display ad business, they proved the point here undeniably. I still believe there is no way they could have spent 3 billion any other way to now be the leader (remember Google has its own video service still). One could make the exact same argument about 750 million for AdMob, 3.1 billion for DoubleClick (seems like this paid off too), and now Groupon.

Groupon is the breakout network effect leader in the local business deal space. As much as many other services are great, the simply won’t catch up with Groupon. Perhaps ever. If you want to use non-Google examples, consider eBay versus Amazon Auctions or Yahoo Auctions. Or Microsoft’s 6.1 billion counter-purchase of display network AQuantive. Same reasoning there. This is why Google’s in such a bind related to Facebook – Facebook has surpassed the point where they are unassailable in social. Google can’t develop their way out of the problem. While people love to gripe around the edge cases, folks have engaged too far with Facebook to pull back. All my friends, pictures, tagging, etc. – it locks me in. Some have speculated this is why they invested in Zynga – as a way to reverse into a social network built on top of gaming as opposed to gaming built on a social network. Network-effect-based user engagement is the new Increasing Returns. I predicted APIs were the second coming of Increasing Returns , and I think I got that pretty dead on (see iPhone, Salesforce.com, Twitter, etc. etc..). Now I’m predicting NEBUE (network-effect-based-user-engagement ) is the third. You heard it here first.

Local

I’m stating the obvious here but local is going to be big in the next few years. Google signaled this when they moved Marissa Mayer (@marissamayer) over to the local team. They’ve launched a ton of local products (10-pack a while back, Google Places, Street View, etc.). But what they don’t have is a local sales force. Yes, having folks running around strip malls selling services seems pretty incongruous for a company that prides itself on self-service (e.g. AdWords), but to win in local you need to have the biggest and best sales force you can. All the local players from ReachLocal to Groupon to Yelp to Verizon have gotten good at cost-effective local selling. Some of them (e.g. Verizon, ValPak, etc.) have been doing this for a long time and have huge installed customer bases. Local businesses still buy primarily from people. With local ad dollars moving online, there is simply a scale race going on in local sales forces.

Google can arguably afford to make this work much better than anyone else because they are masters of systems, efficiency, and already have a lot of experience doing this with AdWords (Google has a huge sales team for AdWords which few people actually know about). All they need to do is give those sales reps multiple products in their bags to sell, and they’ll become very profitable quickly because most of those products are annuity products. That’s how the yellow pages became so successful so many years ago. In the grand scheme of things, having 2,000 local sales reps (to pick a random number) isn’t that scary when you already have more than 20,000 employees. The trick will be to graduate your customers over time to more self-service products and reduce customer service costs. I’ve never talked to a merchant who uses Groupon, but I’m guessing it’s pretty low-touch by now. That’s the beauty of coupons. You don’t need to integrate into people POS systems, give them printers to print orders, etc. You print a coupon that they can bar code scan and let them worry about it. It works even better because of the likely high breakage (e.g. purchased coupons that never get redeemed). It’s the health club model extended to everyone.


Advertising Distribution
Keep in mind that a huge part of Groupon’s expense budget is display advertising. We all know about Groupon primarily from their flood of advertising around the web. Google has a massive display network and can get incredible breadth, localization and cost optimization by putting them into this stream.

AdSense – The Hidden Weapon
Many times people forget one of Google’s secret weapons – AdSense. It’s been a fascinating and untalked about product for a while. I think it contributes to about 5 billion in revenue a year. What is more important though is that it’s installed on more than a million websites. AdSense has evolved to allow display ads (banners), which are now a big part of Google’s business and could easily be extended to allow affiliate-based Groupon ads. As content monetization heats up in the next few years, affiliate fees will become a viable complement to traditional CPM offerings. Google already has GAN (Google Affiliate Network), and now will have one of the biggest affiliate merchants in the world to offer as another AdSense service (e.g. if I own a blog let Google put Groupon ads on my site and pay me if someone clicks on it and purchases). I wrote a lot about this in another blog on real-time advertising and the future of content monetization. To go all the way back to the beginning, I think Google already has the breakout scale in “being installed” on content sites. With more products (text ads, display, affiliate ads), this will only increase their distribution further as they offer different effective CPM products to various sites.

Right now Google makes it money in two primary ways: CPC advertising (AdWords) and Display (AdSense, YouTube). They are merging the models with YouTube’s new promoted video’s product, which is CPC based [and the increasing effectiveness of search retargeting. If they add a third model — affiliate ads — it becomes an impressive platform for massive growth. Consider what happens if you search on American Apparel, and they can retarget that to a Groupon coupon for that vendor if they have it, rather than a display ad. This is extremely easy for someone like Google to do simply because they have such massive computational scale. So $6 billion dollars for Groupon? Doesn’t actually sound that much to me.
At least that’s what I think, but what do I know.

Filed Under: Advertising

Real-Time Advertising

October 22, 2010 By 3 Comments

Recently I had the pleasure of listening to Greg Maffei (CEO) and Michael Zeisser (SVP Digital) of Liberty Media speak at CU’s Silicon Flatirons Entrepreneurs Unplugged event. While the conversation was broad ranging due to the vast nature of Liberty Media’s holdings, one comment from Michael jumped out at me. The reason that television advertising (in his opinion) has value is simple supply and demand. What he meant by this is that television still has the ability to create aggregated demand (e.g. the Superbowl, American Idol, Jersey Shore – where people actively watch the show at a specific time) while the Internet currently does not. Advertising prices are related non-linearly to demand and thus why a Superbowl ad still costs you $2.3M for a 30 second spot.

Clearly these dynamics are shifting in all directions right now. Television is being watched on-demand on the Internet (thus diffusing its spot-demand properties) and Internet live-streaming companies are becoming very successful. Witness the aggregated audience of 5.3M people that UStream had for the Chilean miner rescue. Setting aside predictions of when the cross-over happens (television aggregates less demand than the Internet), I want to focus on the advertising side of things.

Part of what makes television advertising successful is the predictability of aggregated demand. You know the date of the Superbowl. You know what it’s going to be about, and you likely know the kind of people that are going to show up.  If you’re Coca-Cola or Chrysler, you can have your agency of record (AOR) to get to work producing $2M context- and demographic-specific ad creative with lots of lead time. In the emerging world of real-time aggregated demand, you can’t. So how do you design advertising for a medium that’s totally unpredictable?

Let me give a recent example from an advertising perspective. You can’t predict when an Icelandic volcano is going to explode and thus cause 10,000 of travelers to be stuck in a location where you might have a hotel to advertise. So your AOR is of no use to you. Frankly, you don’t have time to build a bunch of creative and respond to the event anyway. What’s really the solution here? Well I think my friends at OneRiot have a good idea – it’s about content not products.

One Riot LogoOne of the things that OneRiot has innovated is the idea that content itself can be the advertisement. If you’re writing an article about Icelandic volcanoes and how travelers are looking for last-minute hotel deals, why not use a snippet of this content as the advertisement to attract a user to your site? OneRiot basically is making a market between two things – those who have real-time searches (Google, New York Times, etc.), and those who have relevant real-time content.

By constantly pouring over the content that their advertisers produce, they can match it to real-time events and automatically create ad units for you. This all happens without human intervention which is important in the real-time world. Once everyone figures out the price, they’re willing to pay and accept on a cost-per-click (CPC) basis. Now you’re in business. I’ve personally clicked on these “content ad units” because they ARE relevant. Which is why OneRiot sees the click-through-rates (CTRs) of 3 to 4 percent.

But here’s the problem: how do you price the click? The landing page of the ad unit, unlike an ad on AdWords, is the actual content itself. So by definition you’re sending someone into an RPM situation. For those unfamiliar to the term, RPM means Revenue per Mille (1000 in French). In other words, how much money does your site generate from 1,000 visitors. This is only something that most sites have started to think about. To give you an idea of how new this is, RPM doesn’t even have its own Wikipedia entry yet (as of the time of writing this entry).

RPM is important for two reasons. First, the classic way that content producers have thought about revenue generation is through cost-per-impression (CPM) based ads. These are display ads like banner ads and Google AdSense text ads that we have all become used to. Recently a crop of “sponsor-based” ad companies have emerged to simplify the direct-buying process as well. (See isocket as an example which automated the buying process for ads on TechCrunch and others). With more content inventory coming onto the Internet every day, CPM rates are constantly being pushed down, thus making the RPM of the site smaller over time. While readership is growing, content production rates will outpace increased readership rates over time. So the CPM loses in the end.

Content producers will need to start thinking of two things: how to optimize their sites for CPM, and how else to monetize content (more on this below). Second, when you’re playing the traffic game in a CPC world, it quickly becomes all about the numbers. If you have a RPM of $50.00 on your site and your average CPC for a content ad is $0.06, you’re losing money on every visitor. I am sure that CPCs for content ads are very cheap because the market is young. But painfully, the more success content ad units have, the higher CPCs will go due to demand in the market. Therefore, the harder it will be to generate a cost effective CPC based content ad campaign. I think this will force one great thing – for content producers to actually look at their fully loaded RPM and cost and to understand what they can afford to drive traffic. Much like retailers driving traffic to their ecommerce sites, it’s more sophisticated than it first looks. The math I ran above was simple, but it was fatally flawed in two ways – expense and repeat visitors. If your RPM is $50 on your site and it costs you $25 in expense to deliver content to those readers (servers, bandwidth, staff, etc.), you only have 2.5 cents to play with in CPC. But if your readers come back once a month without clicking an ad again because they fell in love with your content, your allowable CPC is really 12 x 2.5 cents or 30 cents. This is very similar to the CPA calculation a lot of retailers go through with CPC advertising. If your buyers are repeat buyers, you can spend more acquiring them up front.

All of my math set aside, the more important topic I want to mention is that content monetization is at a very early stage. Right now, most people think about their primary content monetization strategy as CPM based advertising. But as my friend and colleague Oliver Roup, CEO of VigLink, likes to say, that means you’re only monetizing 20% of your real estate (the top and right of the page usually). What about the actual content itself? VigLink helps companies automatically affiliate any link they have to an external retailer (full disclosure, I am on the board). If you write a piece of content that recommends a camera, the link to BestBuy you put in the content as a convenience to the reader is actually something that can generate you a referral fee if they buy. There is a whole industry around this simple concept; it’s called the affiliate industry. It is a massive one that few content producers know about still (but the smart ones are making tons of money from). The great thing about VigLink is that it costs nothing, and VigLink does all the work for you. In other words, you don’t need to sign up with BestBuy’s program, and Amazon’s and Dell’s and Payless’ – they’ve already done it for you. VigLink is a second generation affiliate technology in the sense that sits on top of all the existing affiliate networks.

We see incredible uplift in RPM for some content sites that have installed VigLink (it’s just a few lines of Javascript embedded on your page like a Google Analytics tracker). I think that as more content sites contemplate CPC content ad units, they also need to contemplate how to raise RPMs. Affiliation will be the next big growth area for content monetization. The infrastructure is already built, it doesn’t cost anything, and like CPM ads, you can learn how to optimize your affiliatized links as you get more data and become smarter about it. A big part of VigLink’s value to content sites is around these analytics.

So all of that is to say that not surprisingly, advertising is once again evolving to meet the habits of the user base and the technologies that support them. It’s not only moving money from one bucket to another, but increasing the audience that will find value from it. To take advantage of this shift, site owners need to think carefully about how they make money, what their costs are and how the equation works out. I wish the best of luck to both OneRiot and to VigLink. I think both of them are creating and developing a whole next generation of content monetization on the Internet. It’s  exciting to watch.

Filed Under: Advertising

Trada Works: Alternative Apparel Paid Search

October 19, 2010 By Leave a Comment

ABOUT…

Alternative is a lifestyle apparel brand at the forefront of the fashion industry. Alternative Apparel exists to inspire authenticity and comfort – both inside and out. Alternative’s mission is about more than just designing clothes that look and feel great: they want their unique community of wearers and supporters to feel comfortable in their own skin, laying the groundwork to inspire others and make a difference with how you live – and what you wear.

Alternative Apparel online marketing campaign

Online, Alternative’s presence on social media (Facebook / Twitter) and the Alternative company blog is rich with this mission. Integrating brand into all aspects of online content is extremely important when executing a successful paid search campaign.

As a clothing company, Alternative has a huge (and growing) inventory. An inventory with apparel and accessories for men, women, babies and toddlers across the United States and abroad, including Canada, Italy, Germany, Australia, Japan, and the United Kingdom.

BEFORE TRADA …

Alternative had done a good job of building a paid search campaign that included branded keywords, but they lacked resources (employees, time, expertise) to build and manage long tail keywords for the range of products offered.

Additionally, when they tried to expand their paid search campaign to include Yahoo! Search Advertising they struggled to generate cost effective clicks and conversions.

Alternative tried running affiliate marketing programs, but weren’t happy with the results; quickly learning banking on just one person’s idea of “the right way” to do paid search wasn’t the best strategy.  Alternative Apparel needed an army of paid search experts ready to write smart long tail and creative ads (enter Trada stage right).

WITH TRADA…

Alternative launched a campaign in the Trada marketplace in September of 2009, just before the biggest season in paid search: holiday. Immediately Alterative began to leverage the wisdom of the crowd with Trada’s certified PPC experts.

Paid search experts working on the Alternative account began to build a long tail keyword focused campaign, generating cost effective traffic on the Google and Yahoo! and Bing ad networks.

Mind you, Trada’s paid search experts don’t just write ads. PPC Optimizers with Trada write ad groups, long tail keywords, and ads on the Trada Marketplace, and after approval from the advertiser (a representative from Alternative in this case) the ads run live on Google, Yahoo! and Bing. All the stats that an advertiser could ask for are then calculated and pushed out onto Trada’s paid search Marketplace. It’s pretty cool and it takes the guesswork out of figuring out what works in paid search.

Today Alternative’s paid search campaign continues to grow, evolve and expand with Trada’s dedicated Optimizers.

After just over a year with Trada, Alternative has almost 8,000 unique long tail keywords and over 300 ads – not including their recently deployed 2010 holiday paid search campaign.  Happy Holidays!

Alternative Apparel online marketing campaign

Filed Under: Advertising
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