Running the A/C with Your Windows Open

Often it takes a striking or controversial statement to get people to address an overlooked need.  For a minute, I want to talk about step 2 of an acquisition campaign.  We often focus on the clicks or calls driven by a campaign, but ultimately we are interested in a conversions. Let’s take a second to remind ourselves that there is a step in between interest and conversion.  Advertising can get someone to the doorstep, but they have to walk through it themselves.  So the first thing they see or hear is critical.  Offline on TV or in Print, for example, it is the call script or IVR message.  In the web world, this means landing pages.  Why spend all the money and energy driving someone to click but then show them a sub-optimal LP?  Doing PPC without LP optimization is like running the A/C with your windows open.

For specific help getting started, see my post on Google Optimizer.

DRTV – It Really Comes Down to the Media

I have run across the same challenge in pretty much every organization I have encountered that advertises on television.   But here is an insight that I have seen rocket companies – most notably Rosetta Stone, who aggressively executed DRTV – to the next level.  The natural belief is that your best chance of success is to air your spot at a place and time when your target audience is sure to be tuned in.  It makes sense, so it’s hard to convince people that there is another way to look at it.  But there is.

The fact is, there are many types of media out there – the most expensive of which is guaranteed on a particular network and time.   Let’s just do the math, comparing two different media buys:

	MEDIA BUY 1	MEDIA BUY 2
NETWORK	CNN	AMC (Remnant)
TIME	Wed 8pm	Sat 11am
DURATION	60 Sec Spot	60 Sec Spot
COST	$7,000	$150
CALLS	100	15
CONVERSION	10%	7%
AVERAGE ORDER	$250	$175
REVENUE	$2,500	$184
ROI	0.36	1.23



As is shown here, a much stronger ROI can be achieved on significantly weaker performance, as long as the media cost is low.  This is not a fictitious example, but a real life case of two specific media buys.  Now, your business might be very different.  You may not have a one step sale, but are instead capturing leads that you hope to convert at a later date.  Or you may have a much higher average order size.  But in the end, the concept holds.  Even though it may be counter-intuitive at first, when you can buy media at a fraction of the cost, it may not matter whether it hits your target demo all the time.  The math of remnant media is very compelling.

The Powerful Relationship Between TV and Search

Search (or Pay-Per-Click) advertising tends to be one of the most efficient advertising channels for companies.  If you have a good product, people are finding you online.  And when they do so by Googling your brand name, they often convert well.  This is because they are already a few steps down the path.

TV advertising is usually thought as the antithesis of this.  People are often unaware of your product or brand when they see the commercial, and its cost is substantially higher than that of a Search ad.  So companies often find it hard to justify spending on TV.  But if you have felt this, let me point out one important – and often overlooked – effect of TV…

TV advertising raises awareness of your product and brand. Just to be clear, I do not mean this in a fluffy brand awareness sense, but in a direct response sense.  Let me explain.  Say you are maxing out on your “branded” search campaign.  This is likely your best performing ad group.  As in all advertising mediums, you can’t buy any more inventory than is available.  However, in Search, it is possible to create inventory! How?  You guessed it – TV.  When a spot airs, you drive people to the web to learn more about your product, and they will do it using your brand name.  So although TV can be expensive, one of it’s benefits is that it creates media in what is likely your cheapest and most efficient channel – Search.

The Next Evolution of Print?

People have been predicting the death of print for years.  Publishers responded by creating online versions of their content, and helped offset some of the loss in ad revenue by spooling up different forms of ads next to their web content.  Well now, thanks to Apple, they might be able to get back to something much closer to their comfort zone.  According to a recent study, iPad owners who purchase magazines for the device are likely to opt for an iPad subscription to those magazines.  What’s more, instead of exhibiting “banner blindness” and irritation with ads next to web content, readers apparently value advertising alongside content on their iPads.  Of course, iPads are very new and many of their owners are early adopters.  But it will be interesting to see if this trend extends to the broader market, possibly creating a significant new advertising option for companies.

(Google) Instant Challenges for Small Business

Google Instant has been out now for a couple weeks, and it is still sinking in.  Most are reporting insignificant change to performance of their search campaigns, but this could simply be due to people not yet fully embracing the new technology.  If it takes hold, this new technology could significantly impact performance and require businesses to adjust to a new norm.  Some will benefit from this, but I worry that small businesses and new products will suffer.

The main functionality of Google Instant is to offer refreshed search results as the searcher types each successive character.  In other words, you will get results before you are finished typing your query in.  In some instances, Google will locate what the searcher is looking for faster, but in others, the searcher will get diverted from their search with something else tangential or perhaps even unrelated.  Regardless, my sense is fewer long tail queries will be executed.

This is bad news for small businesses.  Anyone who has logged into AdWords and executed a campaign, is aware of how expensive clicks are these days.  Established companies and brands, having history and resources, tend to dominate category head terms.  Thus, newcomers can often only effectively compete in the realm of long tail terms.  That has been a fine strategy, as the searchers locating those sites found a product or service that was much more aligned with their specific needs than what a category head term would deliver.  And with the significantly lower cost, small businesses can afford them.  Sure, impression volume is dramatically lower, but a smaller operation wouldn’t need the same volume to stay afloat.  Unfortunately, if Google Instant does to search what some predict, it will further hamper small businesses from getting noticed and send more volume to the established companies and products.

Large companies will not remain unaffected by Google Instant either.  New search strategies around concepts like the order of search terms in a phrase or partial keyword bidding could require them to optimize their campaigns all over again for this new landscape.  As well, some key metrics will now be skewed.  Impression volume will rise as in-process searches register views, and this will by definition affect KPIs like click-through-rate (CTR).

So Google Instant has kicked off an adjustment period where businesses must re-evaluate their search strategies and experiment with approaches.  If it is adopted widely, there could be significant work ahead for all of us.  Now, it’s not necessarily a bad thing to occasionally have a shakeup that requires the players to prove their worth, but I do worry that this will disproportionately hurt small businesses.

Wow, Google Instant!

Have you heard about “Google Instant”. If you haven’t yet, Google it and you will see lots of dialog out there. Here is a link to a video of the launch event (the actual launch begins at 9:30 in the video, and the demo begins at 15:17).

Good or bad – only time will tell. But this is definitely a fundamental change to search, and will affect what people ultimately locate and click on. And that will pose new challenges to businesses trying to identify and attract potential customers. I will explore Google Instant more soon, but will leave you with one parting thought: Google makes its billions by getting searchers to click. Efficient businesses don’t want every click.

For Startups: Do Your Math and Start Out Small

I will be participating on a panel this Friday at Digital Capital Week in DC on a topic entitled Search for Startups. Given that, I thought I would do a post directed at those of you at startups or considering starting something.

There are many ways to drive potential customers to your web site or call you, but the truth is you will never know which will work – or how well – until you try it. Sure, you can look at a competitor’s efforts or a campaign you did in another medium to get an indication, but that will still simply be an educated guess. So my advice to you is:

1. Test many things
2. Start small
3. Prove effectiveness first
4. And only then…scale

This may sound obvious, but too many first timers get blinded by the concept of driving hoards of traffic – seemingly easily – by setting up a simple AdWords account.  And once they have blown their budget, they start to realize they should have been more disciplined.  Don’t make that mistake.  I have run hundreds of campaigns, and I am still sometimes surprised when I see the results. That’s the point. You really can’t know for sure, so test it and tread cautiously.

But just as important is doing your homework first. Before you even contemplate spending that first $200 on pay-per-click or a newspaper ad, lay out your funnel to see if there is even a snowballs chance that you will see a positive return.  How? Start with the size of your audience or impressions, then walk through clicks or calls, then conversion and finally average purchase amount. Begin with industry standards for conversion, and be conservative with your assumptions around clicks and purchase amount. (There are tools for this too, like Google’s Traffic Estimator).

This exercise will produce an estimate of the cost vs. the revenue of a campaign – your ROI. Of course this will be wrong, but hopefully it is in the right ballpark – and it will dissuade you from doing something foolish. Note: for those of you in recurring revenue or repeat purchase businesses, there is more room to work with because your initial sale does not need to be ROI positive, but you should definitely model in repeat purchases. Just be conservative in your assumption.

There’s plenty of time to dial things up once you find a winning formula. For now, focus on getting a little in-market data while not losing your shirt on your maiden voyage. Good luck!

Stepping Into Broadcast Advertising

Your business is growing steadily. Things are going well. You started out on Google bidding 50 cents here and $1.30 there and built a stable channel in PPC. You then branched out to the affiliate world and navigated that questionable lot to find some good partners and grow your business even more. Then you took a leap and placed your first print ad, and held your breath for 2 months until you learned that it worked. And today, although you have a solid base of advertising in these vehicles, you still want to grow. But you pause before you take the next step because that is a whole different beast – broadcast advertising.

Broadcast advertising doesn’t have to be scary, but there are some important considerations before jumping into it. I am going to weigh the pros and cons of Direct Response Television (DRTV) and Direct Response Radio (DRR) here, but these principles apply even in the brand advertising world.

So your first question may be, how do I ease into this? This is the first pro for radio. Production for a radio spot is minimal, as it simply involves people speaking and a few sound effects. Even with numerous takes, it requires minimal time in the studio. Just make sure you get someone good to write your creative, because it will definitely impact performance. Next, you need to place some media and test the channel. This is again a positive for radio versus TV. For the price of one to two full pages in a monthly you can test radio and get a decent read.

Based on this, you may be thinking that radio is the obvious way to go. However, that may not be true. Yes, it will cost you significantly to produce and test a TV spot. But TV has the potential to change your business – as it has for Rosetta Stone and many others. Radio has done that for a handful of companies, but more times than not, it is an average performer in a company’s advertising portfolio. There are several reasons why, but the two biggest are 1) lack of focus and 2) difficulty scaling. What is a lack of focus? Think about when you listen to the radio versus watch TV. Usually you are doing something else while listening to the radio (driving, cleaning, working). This makes for a less attentive audience, and one that may not be able to write down a phone number or web address while driving. But the second reason is even more significant. On TV, there are maybe a few hundred networks. If you whittle those down to the big networks that have significant media available, we are talking dozens. But with radio, there are literally thousands of stations. Centralizing, managing and aggregating data for all those stations is a bear. There are a few agencies out there who do this, but not many good ones.

TV, in spite of its high hurdle of initial investment, can be a game changer. Now, it’s only for companies that have the cash, are patient enough to see it through (no spot hits it out of the park on the first go), and are able to handle real growth. As well, TV really only works for certain types of products. But if all these things come together, it can be an amazing medium. Just make sure you pick the right agency, because another downside of TV is, there are dozens of players that will all tell you whatever they think you want to hear. They get compensated based on the media you buy, so their interests may not be fully aligned with yours. You should be very critical when interviewing agencies.

What’s With All the Junk Mail?

If you are like me, you regularly hear people complain about all the “junk mail” they get. They get unsolicited “junk”, as well as continuous mailings from companies or organizations they have transacted with. Why do these companies waste all this paper when I just gave them money?, I often hear. But instead of commiserating with them as most would, I answer their question. What do I tell them? They make money from it! That’s right, even though you just gave a donation to that charity a month ago, they will still make money on average by sending you another solicitation. Rest assured, enough people are responding that it is profitable for them to do the extra mailing.

Ok, so then why do I get catalogs from all kinds of random magazines? Well, the rumors are true; your name is on a list somewhere – actually many. But what you may not appreciate is that you have also been modeled and have been identified to fit the targeted demographic, buying pattern, etc. It is definitely not some random process of placing mailing labels on catalogs – direct mail is too expensive to be.

Now don’t get me wrong, I also get annoyed over all this excess paper being “wasted”. But maybe understanding that it is not an accident or random will make you less annoyed. Or maybe not. In that case, maybe this will. Precycle is a service that will reduce the “junk mail” you receive and plant some trees to boot.

Unraveling Multi-Channel Marketing

If your company advertises, chances are you are a “Multi-Channel Marketer”.  Buzzwords aside, all that really means is that you try and reach customers in several different ways (for example, Google AdWords, magazines, direct mail and email).  So why all the fuss about Multi-Channel Marketing?  The fuss is not about the concept, but how to measure and optimize it.  That means answering questions your management team has likely asked, such as:

With us advertising in so many different ways, isn’t there wasteful spending going on?

or

If we hit the same customer several different ways in the span of a month, will they convert better?

This is the billion dollar question in advertising today.  The truth is, optimizing your mix is very challenging and there is no one single way to do it.  I have heard numerous agency presentations on how to do this, and have rolled up my sleeves and tackled it myself.  The approaches are varied, but there are two that are the most common.

The first is to conduct an in-market test, identifying like populations and isolating different media into a series of test cells.  I conducted my first of these analyses at Dell in the early days of marketing analytics in 2002.  It was an enlightening exercise, and yielded some powerful recommendations.  Of course, not every company has the resources (or patience) to execute a test like this.

That brings me to the other common approach, which is a mathematical exercise.  Data from all your efforts are entered into a database and correlations, etc. are run to determine what happens as your different media fluctuates over time.  This approach may yield interesting results, but it is certainly not a silver bullet.

After nearly a decade of trying to answer this question, where I net out is that there are several approaches to improving multi-channel effectiveness, but each situation is unique and thus each approach must be as well.  I don’t believe an outsider can come in, plug your data into a computer and produce the answer.  Instead, the approach that has worked for me is to take the time to understand what really makes the business tick.  Each business has its quirks, and I have learned that this path will lead you to a better solution.