All Things Must Pass – Blogation Has Gone to Heaven

About six years ago I wrote my first blog post on Blogation. You can read it here. I’ve had a lot of fun writing this blog – almost 500 posts in total. But as they say, “Things change, people change, hairstyles change, interest rates fluctuate.” When I started this blog, I was an employee of a fast-growing (and equally fast-impoding) dot com. Today, I’m the founder of a fast-growing (and hopefully not imploding) PPC agency. That means more responsibility and thus less time to write blog posts. Oh, and it is also probably worth noting that since I started the blog in 2005, I now have a wonderful wife and two cute kids under 3.5. Even less time to blog.

There is, however, a silver lining to all this. I’ve been really fortunate to surround myself at PPC Associates with several insightful, experienced team members who also happen to be incredible writers. Translation: while Blogation is going away, I’m excited to announce a bigger, better blog, where you can not only get my posts, but posts from a great team of SEM gurus. The link to the new PPC Associates blog is here.

In the next week or so, I’ll figure out how to make Blogation re-direct to the new PPC Associates blog. I hope all of you will follow me over there – trust me, it will be worth your time.

I truly appreciate everyone who took some time to read my posts for all these years (special props to Steve and Jeremy, Blogation super-fans!). So long, and thanks for all the fish!

 

Facebook to Spruce, AdParlor, Nanigans, TPG, etc: Share Your True Margins with Your Customers, It’s the Law!

A little birdie told me about a change to Facebook’s ads API development policy recently which reads as follows:

“You must, upon request, provide advertisers with a report on their ad spend, and your report must itemize how much advertisers spend on Facebook ads and fees for your service.”

There are several very successful Facebook advertising companies (most of which I named in the headline of this post) that charge clients on a cost per action (CPA) basis. In other words, they guarantee a conversion/sale/sign-up for a flat-fee and hope to make money on the difference between the amount they actually paid Facebook for the conversion and what they charged their client.

Depending upon how savvy the client is, this difference can be massive. Consider this hypothetical scenario: if a client buys 50,000 sign-ups at $5 CPA and each sign-up actually only cost the agency a $3 CPA, the agency is netting $100,000 a month in revenue from this client on spend of $150,000, or a 66% management fee! These days, a management fee of 15% is hard to come by for most agencies and anyone trying to charge 66% would probably be laughed out of a meeting.

My guess is that a lot of these CPA deals on Facebook have very high margins like this. Facebook’s policy now requires these Facebook agencies to disclose this margin – if requested by the advertiser – to their clients. Granted, few clients are likely to know that this policy exists (unless everyone who reads this post spreads it far and wide . . .), but any client that actually does make this request might be shocked – to the point that they either cancel their relationship with the CPA company or immediately demand a major discount off their CPA.

Facebook could decide, of course, to be much more aggressive with this policy and require agencies to disclose the differential between the CPA and the actual cost to acquire a customer, though I’m not sure how they would really enforce this. Who knows, this initial change in the terms may just be a first step. Facebook realizes how much money they are losing to these agencies – forcing agencies to disclose this info will likely result in lower margins for the agencies, which means a higher percentage of overall marketing investment going to actual Facebook advertising over agency profit.

 

Shunned Again from Speaking at a Conference, So Allow Me to Whine About It

I’m at SES right now, listening to the Advanced Paid Search Tactics session. I applied to speak on this panel (I spoke on it last year and I felt I did a pretty darn good job). This year, I got rejected from the session. Well, more specifically, I never received any notice from SES other than confirmation that they had accepted my request to speak.

Naturally, I was curious to know who made it on to the panel in my stead. Here’s the list of panelists, and the moderator who organized the panel:

• Moderator:
  Mikel Chertudi, SES Advisory Board & Senior Director of Marketing, Adobe
• Speakers:
  Ben Brutsch, Sr. Manager Marketing, Adobe Systems
  Matt Van Wagner, President, Find Me Faster

Of these three folks, I only really know Matt, and he’s a darn bright guy who is a good, well-prepared speaker. I don’t know Mikel or Ben, but it does strike me as strange that Mikel decided that the best “panel” for this session was to have himself, one of his team members, and one other guy. It seems to me that having two people from the same company on the same panel is not the best way to advance advanced paid search marketing.

For the record, after my diatribe against SMX earlier this year, I did return to and speak at SMX Advanced (with Matt Van Wagner as the moderator), and I was truly impressed with the preparation that Matt put into the panel (though, for the record, some of the panelists never bothered to send in their presentations in advance or deign to participate on a pre-conference call). So perhaps my accusations of cronyism and laziness are now unwarranted for SMX. SES, it appears, may still have some issues.

Am I the best person to speak on an advanced SEM panel? Well, of course I think so, but I could also accept participation from many great SEM minds (Brad Geddes? George Michie? Frequent Blogation reader Terry Whalen?). Having two people from the same company and a three person panel – c’mon people, you can do better than that.

 

DUI Lawyer Needed for Friend in Trouble

I usually don’t post personal, non-SEM related pleas on my blog, so apologies in advance for this post. I have a good friend who got in a car accident last week. He was driving about 25 miles over the speed limit in a residential area and he was wasted. I think his breath alcohol content was close to .2, more than double the legal limit here in California. He rammed into the back of a car full of teenagers. Though none of them were killed, two of them are still in the hospital with broken bones and head trauma.

This is his first time in trouble with the law and he’s freaked out. The DA has said that he is going not going to give any mercy because my friend is a first-time offender, which means the sentence could be up to 10 years in jail if convicted. I abhor drunk driving as much as anyone, and there is absolutely no excuse for driving drunk, but this guy is a genuinely good citizen. He volunteers for charity, he’s well-liked, he’s got a stable job. Frankly, he doesn’t deserve to rot in prison for ten years – it would be a disservice to society.

Since he knows that I’m a law school grad, he’s asked me for help in finding him a DUI lawyer. I’ve thought this through and I think I know the profile of the type of lawyer he needs. Please read the profile carefully and if you know someone that fits this description, send me an introduction:

• Must be a very smart person
• Must be hard working
• Must be inexpensive – no top guns that are going to charge $300/hr, I’m thinking that perhaps a recent grad or even someone who is still in law school will fit the bill
• Specific knowledge of DUI law is a nice to have, but not a necessity
• Courtroom or trial experience is also a nice to have

If you know anyone that fits this description, please email me ASAP.

Now, before you accuse me of being a bad friend, the above story is completely fictional. 100% made-up. I don’t have a friend with a DUI charge, and I don’t need a lawyer. And if I did have a friend in trouble, the last thing I would do would be to try to find him an inexperienced, non-DUI expert to represent him in what might be the most important moment in his life.

And yes, in the SEM world, this is apparently the attitude of some people looking for SEM help. If you don’t believe me, just take a read of a recent blog post over at Search Engine Land. Here are a few the key points the author makes in support of his argument that you don’t need SEM experts to run your SEM campaigns:

The right person for PPC management on your team does not necessarily have to be an expert in PPC. I have found that it is better to have personnel with the right skills sets (strong copy writing, math, analysis, and research skills) which broadens the job pool and decreases expert leverage for salary requirements.

I have hired three people to do PPC management for my large campaigns. None of them had PPC experience. There is a learning curve, of course, but it worked out better and saved money in the long run.

I responded to the author in a comment (well, actually several comments) on the original thread. In relevant part:

The thing about SEM is that it *looks* easy. And, in fact, just adding keywords, negative keywords, ad text, and basic bidding are easy. Its the rest of the stuff – the stuff that can actually drive huge profit – that isn’t easy.

Poker is an easy game to understand and learn. Trying going up against a pro and you’ll understand that a game that seems “not that complex” is anything but. But every day in Vegas folks come in for the weekend convinced that their mad skillz they’ve perfected playing their buddies in the basement are going to make them big bucks in Sin City. Usually doesn’t work out that way.

Its the same thing with SEM. There’s a lot of ‘dumb money’ on AdWords – completely mismanaged campaigns by folks who have read the AdWords Learning Center and are convinced they know all they need to know about SEM. They may even make a little profit too, assuming they are either in a low competition vertical or happen to have a very cool product that sells itself.

For the most part, however, they are 25-40% under-optimized. Google makes a lot of money that way. Again, not saying that this is you, but I am saying that true SEM experts can crush anyone who thinks SEM is straightforward and can be handled by a bunch of smart, non-experts.

No one would consider hiring a “smart amateur” to represent them in court, perform surgery on a loved one, or dispute an audit with the IRS. Google, however, has done an amazing job of convincing laymen that AdWords management is an exception to the rule that hiring professionals is necessary for great results. No doubt this makes money for Google, in that it encourages more advertisers to try their luck at SEM, and it also pushes dumb money into the system. A side effect of these advertisers is increased costs for smart advertisers, as dumb advertisers over-bid and/or spend money on keywords they shouldn’t be buying at all.

A lot of life is admitting that “you don’t know what you don’t know.” I’d never sell myself as an SEO expert, even though I think I know quite a lot about SEO. For that matter, despite going to law school (and graduating with honors, thank you very much!), I’d never pretend to know enough to represent someone in court. Tons of experience, expertise, and intelligence is what turns someone into an expert. And a good expert is worth every penny, which is why they tend to charge a lot. So if you want to save money, go ahead and hire that recent college grad to manage hundreds of thousands of dollars for you on AdWords. Oh, and if you are planning to go skydiving any time soon, I hear you can get some great deals on slightly defective parachutes at the outlet mall!

 

We Are Liiiii-ving in a Services World, And I Am a Services Guy

America is a service-driven economy. By that I mean that the number of factory and agricultural jobs are decreasing and the number of service jobs are increasing. Recently it occurred to me just how many service-providers I hire in a given year, for personal use. The list (off the top of my head) includes:

• Babysitter
• Gardener
• House cleaner
• Nanny
• Massage therapist
• Taxi driver
• Valet
• Accountant
• Doctor
• Lawyer
• Dentist
• Car detailer
• Business coach
• Graphic designer
• Handyman
• Painter
• Realtor
• Mortgage broker
• Fishing guide
• Banker
• Mechanic
• Tow truck driver

This doesn’t even include some of the everyday service people I use, like waiters, baristas, BART drivers, and janitors. And I’m not including business service providers, like HR, payroll, etc. The bottom line is this: if you think about how much you use service providers, you’ll realize how important this sector of the economy is!

You’d think that anyone in the services business would be responsive, friendly, and organized when it comes to attracting new business, but I’ve recently been amazed at how pathetic many service providers are at the basic of good sales. A few examples come to mind (all of these in the last two months):

• Being asked for a proposal and not providing one for six weeks!
• Scheduling a demo and then forgetting to actually show up!
• Scheduling an in-person meeting and then canceling five minutes before the start of the meeting!
• Receiving a request for pricing and never bothering to respond!
• Running a sales call from a loud street or with a lot of noise in the background!

I could go on and on. It goes without saying that a service person/company that can’t even provide good service during the actual sales process is unlikely to do much better when it comes to the actual “service” part that you’re buying. For me, a lack of professionalism in the sales stage is a very easy way to eliminate a potential service provider from contention for my business.

I should note that this happens both in personal and business settings, but it’s even more amazing when it happens in the business world. My agency is not the 800 pound gorilla of online marketing (yet), but our clients collectively spend between $50 and $70M a year on online marketing, so it’s not like we’re chopped liver. And yet, I routinely run into shocking incompetent sales organizations that seem to go out of their way to prevent me from giving them sales.

I don’t really know why this is the case. Obviously there are lazy and inept people in the world, so that explains part of it. There are also some companies that are just in really high demand and apparently this means that their salespeople can take a laissez-faire approach to selling. But a lot of the examples I discuss above don’t seem to fall into either of these categories; the salespeople seem smart and savvy and the businesses seem to be doing well, but not so well that they can just drop sales left and right.

What am I missing here?

 

Know Any Great Senior SEM Folks? A Trip to Thailand If You Do!

Despite the potential for global economic collapse in the next week or two, Silicon Valley is booming. As such, my online marketing agency – PPC Associates – now has a high-class problem – we might not have enough staff to handle the influx of new clients! That’s where I’m hoping you can help. I’m looking to hire for multiple positions and I hope you might know someone who could be a fit.

In addition to the warm fuzzies you’ll get from helping out a friend, for every new hire you help me find, I’ll fly you and a friend to Thailand, put you up in nice hotels, and even pay for meals. More on this below, but first, here’s the types of people I’m looking for:

– Senior SEM Account Managers: Generally at least 3 years of SEM experience. Location can be anywhere in the world – we offer 100% telecommuting! Agency experience a plus, but not required.

– Display Media Buyer: Someone with experience on DSPs, ad exchanges, Google Display, ad serving, creative briefs, media buy negotiation and ad creative testing. 1+ years of experience. Location preferably in San Francisco but will consider telecommuters if they are, like, totally awesome.

So now back to the Thailand trip. Here’s a description of this amazing vacation that I want to buy you:

Even the most sophisticated travelers long to visit Thailand, with its beautiful beaches and islands, fascinating culture, exotic architecture, and ancient ruins. This tour showcases some of the highlights of this magnificent country, including the bustling capital city of Bangkok, the ancient city of Ayutthaya, and the historic River Kwai—all for an amazingly affordable price, despite the huge fluctuations in exchange rates between the U.S. Dollar and Thai Baht that have caused tour prices to Asia’s favorite destination to skyrocket. At prices this low, you can be sure that this tour will sell out quickly, so hurry to reserve your space soon!

– Round-trip airfare from Los Angeles via China Airlines including fuel surcharges
– Intra-Thailand transportation and transfers
– Accommodations at Superior First Class hotels
– Full buffet breakfast daily and 1 dinner
– Sightseeing tours
– Professional, English-speaking tour guides
– Optional extensions to Angkor Wat and Phuket Island

This trip has a retail value of $2300! Note: I’ll actually give you the $2300 and you can do whatever you want with it, but I figured it would sound more enticing if the incentive was a trip to Thailand.

If you know anyone great, just email me their resume at david at ppcassociates.com or make an intro!

Thanks,

David

 

Obnoxious Doesn’t Begin to Describe This Ad

 

An Economic Model to Determine the Price of A Marketing Consultant

Last week I wrote a post questioning a deal from Startups.com. The offer was for 45 minutes of marketing consulting for $39, which represented “98% off” the regular rate. As I noted in the post:

Now I wasn’t a math major in college (and actually, I typically got a lot of C’s in math in high school), but if 45 minutes for $39 is 98%, that means the actual cost would normally be around $2700/hr. Assuming a 200 day work year, that works out to an annual rate of $5.4M. I’m pretty sure you could combine the annual salaries of the CMOs of Amazon, Google, eBay, and Microsoft and their salaries wouldn’t exceed $5.4M.

Josh, the founder of the marketing consultancy in this deal, recently responded to my post, which you can read here. To summarize his comment, he notes that he actually spends far more than 45 minutes on every client (thus reducing the per hour cost from $2700 to closer to $333) and also adds that he provides tremendous value, thereby justifying the cost of his service. He has also written a blog post on his own site about the value of marketing services in general.

My post today is not really a response to Josh, but I’ll add two quick points (speaking directly to Josh here!). First, I still believe the offer by Startups.com was disingenuous, because it implied that the $39 was for 45 minutes of time at 98% off. So the fact that you actually spend a lot more time on each client (which I commend you for) doesn’t actually make the advertisement any more factual. If anything, you should have said $39 for three hours of consulting, or something like that! Not blaming you here, mostly criticizing Startups.com. Second, I am sure that you do add a lot of value through your services. I don’t know you personally, but I do know a member of your team and I know him to be a quality, smart guy.

A more interesting issue here, however, is determining the true value of marketing services. As Josh writes in his post:

Ultimately, there is no such thing as the RIGHT price, especially in services businesses, but there is the right match for you. Expense is relative; performance is everything. There is no “real” price tag for the time of an online marketing consult.

I disagree with this point. I would argue that service business pricing is based on four quantifiable values: scarcity, value, cost, and risk. Let’s go through each of these individually.

Scarcity

Scarcity in an economic sense means that there is more demand than there is supply. Scarcity causes commodity prices to increase, hot Christmas gifts to get sold above retail on eBay, and top experts to charge hundreds or thousands of dollars for their services.

From a supply perspective, the market for marketing services happens to be an inefficient market, meaning that not all buyers and sellers are transparent to each other in one giant marketplace. Most buyers of marketing services don’t know all of their choices; indeed, they usually only know what they can discover through search engines, webinars, or word-of-mouth. This leads to information asymmetry, almost on a buyer-by-buyer basis. One buyer may have a list of 100 marketing consultants, and can thus get a very good sense of the true value of a consultant’s time. Another may only have access to one or two consultants (for example, someone who’s only exposure to the marketplace is an email from Startups.com). The greater the supply scarcity (again caused by information asymmetry), the greater the value of the services.

From a demand perspective, scarcity exists because marketing service providers can only handle a certain number of clients at once. As more potential clients ask for a consultant’s time, the consultant can raise his rate. Hence, a consultant already working 40 hours a week might be approached by a new client and decide that he’ll only take on this client if he is paid double his current rate, but a consultant with no work at all places much lower value on his time, and will probably work for a bargain price, just to get some income.

Suffice to say, it is up to the service provider to understand the supply and demand equilibrium and price his services accordingly. When I first started my agency in 2008, I charged a minimum fee of $500/month. I had no clients and every dollar mattered. Today, I charge a minimum fee of $5000/month. This pricing is due in large part to scarcity – there are too many clients that want to work with my team (always a great problem to have), so I have to be more selective about who we bring into the fold. At some point, if the supply of potential clients continues to grow, I may increase this further. If the supply dwindles, I would reduce it.

One final point about scarcity is the concept of substitute products. At some point, if scarcity drives the price of marketing consultants too high, buyers will start to consider bringing a marketing person on full-time, in-house. The tipping point for every buyer varies (in SEM, it is often correlated to the amount of spend under management, and hence the fee for this spend).

A rule of thumb someone gave me when I first started consulting was to charge double what my hourly rate would be if I was in-house. This dollar amount takes into account the fact that as a consultant you pay for your own benefits and you are often not fully booked a 40 hour week. Given that the average American works 2000 hours a year (50 weeks X 40 hours), you can come up with a pretty good proxy for your hourly rate by figuring out what your potential clients are paying for F/T in-house team members. Hence, if a client would hire you for $100,000, that works out to $50/hr, which means that you should charge that client $100. If you wanted to charge $200, the substitute product rule would probably come into effect and, assuming there are decent candidates willing to work in-house, the client would probably go the in-house route.

Value

Value refers to the economic impact you provide to a client. The more the impact, the more you get paid. Why do hedge fund managers make millions of dollars while strawberry pickers get $10/hr if they are lucky? In part due to scarcity (most hedge fund managers could pick strawberries, most strawberry pickers couldn’t be hedge fund managers), but also straight economic output.

In the marketing services world, especially the online marketing world, value can be clearly quantified. One agency might drive 20% ROI on your campaigns and another might drive 5000%. Apples to apples comparisons can be quite easy to obtain.  Not surprisingly, the greater the value a service provider drives, the greater the demand for that provider’s services, and the greater the service provider can charge. The fact that my agency has increased our minimum fees by 10X in just three years is in large part due to the fact that we drive immense value to our clients, especially compared to many other agencies!

Cost

Different marketing service providers have different cost structures. Some companies hire independent contractors overseas to do all their work at $5/hr. Others hire 10+ year veterans, have fancy offices, sophisticated technology, and generally high overhead. It goes without saying that the rate you charge clients has to consider the cost to service those clients!

Risk

Lastly, there’s the notion of risk. Some marketing service providers assume a lot of risk when taking on a new client. For example, a performance marketing company might not charge their client anything unless they hit a certain cost per sale goal. Traditional agencies take no risk – they require an upfront retainer and get paid regardless of the results of their work (within reason). As a general rule, the greater the risk, the greater the upside.

To provide a hypothetical around this, let’s say that Widgets.com sells blue widgets. If they sell a widget for $20, they make $10 of profit. A performance agency offers them this deal: we’ll market your widgets for you and you only have to pay us if we get sales for less than $10 each. Widgets.com agrees and the agency sells 50,000 widgets with a marketing cost of $4 each, which means that the agency gets $6 ($10-$4) times 50,000 sales, or $300,000. A traditional agency has the exact same performance, but elects to charge Widgets.com 10% of spend regardless of whether they hit the $10 per sale metric. In this case, since they spent $200,000 on media, they end up charging Widgets.com $20,000 (10% of $200K).

Putting it All Together

You can charge whatever you want for your marketing services, but to really grow a meaningful business, you need to take the above factors into account. It’s true that you might occasionally find a client who is willing to pay you way more than scarcity demands, has little concern for whether you provide value, doesn’t care about your cost structure and is willing to take on all the risk, but that is more of a lottery ticket approach to business than a sound business plan.

 

Marketing Tip #1: Inflate Your Prices by 900%, then Offer 98% off

I got a Groupon-like deal from Startups.com offering me “98% off” marketing consulting from a company called Clever Zebo (I like the name by the way). For just $39, I get “a 45 minute phone call with a specialist who will get all the information needed to revolutionize your company’s marketing strategy.”

Now I wasn’t a math major in college (and actually, I typically got a lot of C’s in math in high school), but if 45 minutes for $39 is 98%, that means the actual cost would normally be around $2700/hr. Assuming a 200 day work year, that works out to an annual rate of $5.4M. I’m pretty sure you could combine the annual salaries of the CMOs of Amazon, Google, eBay, and Microsoft and their salaries wouldn’t exceed $5.4M. So either Clever Zebo is an elite cadre of Fortune 50 CMOs (and they are all simultaneously talking to me for 45 minutes, which might actually be too many cooks in the kitchen anyways), or this deal is more than a wee-bit overpriced.

I checked out Clever Zebo’s team, and I’m going with the latter. Indeed, I actually know one of their team members, and while I can vouch for him as a very smart, talented guy, I’ll stop short of saying his advice is worth $5.4M a year.

Given some of the blowback Groupon has received from offering discounts on inflated pricing, I would think that other daily deal sites would be a little gun-shy about such tactics. Apparently not. In the meantime, I am offering a few daily deals of my own. Loyal readers, I’m pleased to announce Blogation’s “Sucker Born Every Minute” Deal Site! Today’s deals:

• Snickers Bar: Regularly $1000, now just $1.50 (98% off)
• Startups.com Membership: Regularly $500, now just $1 (98% off)
• PPC Associates Consulting: Regularly $1M, now just $100K a month (90% off)

Limited supply so act now!

 

+1 and AdWords: The Possibilities Are Endless

This week Google added their “+1” button to AdWords text ads. +1 is the Google version of Facebook’s “Like” concept. 

The idea behind +1 for AdWords ads is to improve ad relevancy through collaborative filtering. For advertisers, the benefit is allegedly that this will help bring more relevant users. To quote the Google announcement directly:

We expect that personalized annotations will help users know when your ads and organic search results are relevant to them, increasing the chances that they’ll end up on your site. You don’t have to make adjustments to your advertising strategy based on +1 buttons, and the way we calculate Quality Score isn’t changing

This concept, by the way, is also borrowed from Facebook. Facebook shows ads that include the name of a friend that liked the ad (or at least the advertiser’s fan page) and measures these as “social clicks” and “social impressions.” Facebook’s internal research suggests up to a 4X improvement in CTR when a friend’s name is mentioned as liking an ad (no link here but I saw this in a Facebook PPT).

The difference, here, however, is that Facebook gleans all of its social proof from fan pages, articles, or app downloads, and not from the actual ad itself. This makes sense to me – consumers may be willing to “like” a fan page or an interesting article, but why would consumers spend their time actually liking ads? Indeed, consumers generally hate ads – or at least claim they do. TiVo exists for a reason!

I could imagine a scenario where consumers +1 a funny ad, but then, does that really create additional relevancy for the advertiser? I suppose for brand advertisers or for companies that just want to create virality, perhaps the +1 element enables them to attempt this sort of viral strategy on AdWords. The ability to actual achieve this at scale, however, is going to be a challenge, simply because direct marketers will likely outbid any cheeky attempts at virality.

My best guess for where this is actually going is that Google will start to co-mingle +1 ratings of web sites with +1 friend data in ads. In other words, let’s say I +1 the Apple.com site because I am a Mac geek (I’m not, but suspend your disbelief for the sake of the argument). Google could then show my name in all of Apple’s ads when any of my Google-connected friends do a search for which Apple has a keyword. A bit misleading, but basically the same concept that Facebook now uses.

Of course, right now, I have about 14 friends with which I am socially connected via Google (going on 24 hours on Plus.Google.com, thanks to Tim S!) and I have yet to personally +1 anything. So the only way this will really work is if Google is successful at getting a lot of people to either switch from “likes” to +1, or at least use them both interchangeably. Given Google’s prior failures in social media (Buzz, Orkut, Wave), success is not a foregone conclusion here. I will say, however, that the reception to Google Plus has been much more positive than any of these other forays into social media. This one might stick.

The final point I want to make about +1 and AdWords is the notion that +1 won’t affect Quality Score. This seems to me to be a preposterous notion. Assuming +1 really does act as a signal for relevancy, and assuming that Google gleans data about user perceptions of both ads and pages, it would be nonsensical for Google not to use +1 to influence Quality Score. Indeed, I would argue that for auctions where there are enough +1 rankings, QS should be disregarded entirely! Think about this, if I do a search for “ipad” and 100 of my friends have +1’d a penny auction site that has great deals on iPads, why should QS (an opaque combination of generic CTR and Google’s qualitative opinion of a site’s merit) trump what my social circle has recommended?

My assumption is that Google’s claim here is for one of two reasons: first, so that people don’t try to game the system by +1ing their ads to increase QS. Second, because +1 would probably be more transparent than QS, which could enable advertisers to crack Google’s murky pricing (which would cost Google money). Google now offers “relative CTR” on Google Content, enabling advertisers to see how their CTR compares against the competition. I can imagine a future where an advertiser complains “I’ve got a relative CTR 5X higher than the competition, one million +1’s, and you’re telling me my average QS is 2?”

All of this is pretty confusing to me right now, and I apologize if this post was a bit scatterbrained. +1 another wrinkle for us online marketers to figure out!

 

Stanford GSB: Home of Internet Founders, Not So Much Display Ad Designers

I’m betting that about 20% of the successful companies in Silicon Valley were founded or led by a Stanford GSB grad. These grads are apparently too busy building multi-billion dollar companies to go back to campus and help their alma matter build a decent advertising campaign. I got the follow ad this morning on Yahoo:

 Managing talent for strategic advantage? What does that even mean? And I’m sorry, but a picture of a smiling woman picking her teeth doesn’t compel me to send in my application. Geez!

 

Thanks for the Email, [Company]!

 

PPC isn’t TurboTax – it’s QuickBooks: Why You Probably Need a Professional to Manage Your AdWords Campaigns

Every AdWords pro has probably had the same reoccurring nightmare: Google or a 3rd party software provider releases killer technology that suddenly makes it incredibly easy for anyone to effectively manage PPC, rendering our years of experience and training obsolete overnight. I don’t have those dreams anymore, and you shouldn’t either. Here’s why.

There was a time – circa 2002 – when PPC was really straightforward. There was just GoTo and AdWords, and the PPC game pretty much consisted of finding tons of obscure keywords for a few cents a click and then jockeying for position on head terms. Sure you had some choices around geo-targeting and match-type, but for the most part PPC was a straightforward game.

Had things never changed, you could imagine some software coming along that could ask a business owner a few questions and quickly (and automatically) create a pretty darn good PPC campaign for the business. You could probably limit the software to three questions:

1. What category is your business in?
2. What geographies do you serve?
3. How much can you pay per conversion?

Maybe this is an over-simplification, but I think the overall point is pretty sound: you could have created a “TurboTax-like” tool that guided anyone through PPC, just as TurboTax un-complicates the tax code for the average tax filer.

When TurboTax was released – and especially after it started to gain adoption – it probably caused many a sleepless night amongst local tax preparers. And since there are now more than 23,000,000 people that use TurboTax annually, I’m going to assume that there have been some tax preparers that did lose their jobs as a result of this software.

Of course, the flip side of this argument is that there are still plenty of accountants and tax specialists who continue to do quite well during tax time. Despite TurboTax’s success, any individual with a slightly complex tax situation and virtually all corporations still rely on humans (humans who probably use some software) to file their taxes. It’s hard to imagine Intuit coming up with a version of TurboTax any time soon that can replace highly skilled individuals.

In the last ten years, I’ve seen many, many attempts to “TurboTax-ize” AdWords. 3rd party applications like Yield Software, Clickable, WordStream, and Click Equations all offer turn-key PPC management solutions, usually starting at just a couple hundred dollars a month. Companies like Trada and BoostCTR are attempting to use crowd-sourcing to create an alternative to often pricey PPC agencies (like mine, PPC Associates!).

Google has also made a concerted effort to make AdWords as easy as possible over the years. This includes everything from the CPA optimizer, ‘expanded’ broad match, category targeting on the Google Display Network, an ever-expanding learning center, roving training seminars, toll-free support, and AdWords Engage.

And yet, despite all of this effort – internally and externally – AdWords is not getting easier, it’s actually getting much harder. AdWords advertisers now have to consider site extensions, text vs. display ads, mobile ads, YouTube, integration with Google Shopping, custom geo-targeting, new match types, behavioral targeting, remarketing, placement targeting, day-parting, Quality Score, and probably 20 other things that I can’t think of at the moment.

Oh, and let’s not forget that Google isn’t the only game in town. Bing/Yahoo is still worth mastering and Facebook PPC could be the biggest challenge ever to AdWords’ PPC dominance (on Facebook, by the way, you need to choose between sending users to a fanpage or your URL, whether to use sponsored stories, which image is most effective, which demographics and psychographics to target, and many other factors). Put succinctly, PPC today requires a lot of specific knowledge – and that demands dedicated, full-time experts looking at your account.

This leads me to QuickBooks. I tried to learn QuickBooks, really I did. I even had a friend of mine come over to my house for three hours and walk me through it step by step. He then left me with several books from the leading QuickBooks training seminar. I consider myself a reasonably smart person, but about 15 minutes after my friend left, I felt as lost as I did the day I installed the software. Quickbooks is not designed for novices like me. It’s designed for accountants and bookkeepers. While it true that you can learn QuickBooks even if you don’t have an accounting background, most business owners would be better served focusing on their actual business instead of trying to master QuickBooks.

This is the way I think about PPC today. If you have a very simple AdWords account – let’s say you’re a dentist that serves a mid-sized town through one office – you are probably a “TurboTax” AdWords user. You can either learn enough through the AdWords Learning Center to get reasonable ROI, or you can use a basic 3rd party software to get the results you need. If you have a complex business – or if your business survival literally depends on the effectiveness of your PPC programs – you are a “QuickBooks” AdWords user. You need a pro to manage your PPC and you need to spend your time managing your business.

In the near future (i.e., the next five years at least), I don’t see either Intuit, Google, or a 3rd party coming up with a TurboTax-like solution for all users. PPC experts, your jobs are safe. Rest easy.

 

How to Lose Friends and Piss Off People on Facebook

A cardinal rule of thumb in my book is to connect ad text with your landing page. If you promise someone a free whitepaper in your ad, you darn well better have a whitepaper on the landing page. Failure to connect the two is a great way to lose people early on in your conversion funnel.

An even better way to lose people – potentially for life – is to outright deceive them in the ad, and that’s exactly what the folks at Pinchit are doing. I got served this ad today whilst checking in on Facebook:

It’s a pretty compelling ad, as I happen to like Kokkari’s, and I would like it even more if it was free to eat there. So I clicked through to learn more and I come to this – far less compelling – landing page:

It turns out that this is nothing more than a sweepstakes to get me to join yet another daily deal site. I get the fact that this ad is likely to pull a very high CTR on FB (hence lowering their CPC costs) and that any new entrant into the daily deal space is probably willing to do anything to get someone to join their site.

What I don’t get is outright lying to a potential customer as your first impression. If Pinchit is tricking me in their ad text, I have to assume that they are not adverse to tricking me as a customer – anything from deals with ultra-short expiration dates to “discounts” that require me to pay above-market rates to use a coupon.

So Pinchit clearly won the battle (low CPC, high CTR) but lost the war (acquiring a customer). That’s a bad strategy!

 

Gevalia Offers Me 50% Off (50% Off)

Here’s some fine print from Gevalia. The big headline says “50% Off!” – Hooray! The fine print, which I’ve highlighted below, explains that it’s 50% off four packages after you buy four. Granted I didn’t do that well in Calculus in high school, but I think 50% off 50% of your order is actually 25% off.

I’ve got a deal for Gevalia. I’ll pay you 200% of what I normally pay for your coffee (note: if you give me seven free packets of coffee, I will buy the eighth one for 200% of the normal price).

 

Epic Post Part VII (The End!!!!): Online Video (Do You YouTube?)

Google likes to brag that YouTube is the world’s second biggest search engine (in your face Bing!), and when you look at it that way, you realize the magnitude of the opportunity on YouTube. When I think about my own online behavior, I probably watch at least 15-20 YouTube videos every week, and I suspect most people fall into this camp. And yet, of the 40 clients with which we are currently working, only a handful have given anything more than lip service to creating a marketing strategy around YouTube.

I suspect that the main reason for this is that video is a lot more complex to set up than a blogging strategy or buying text ads or even throwing up some nice display ads. And of course, video is not a direct-response medium – it is definitely a top-of-the-funnel “demand creation” strategy. When you look at the sheer size of YouTube, however, and combine that with the fact that most marketers are not investing much or anything in video marketing, it makes you think. For this reason, I think that YouTube marketing represents an arbitrage opportunity for marketers, in the same way that I feel these arbitrage opportunities exist with mobile and Facebook advertising.

To be sure, YouTube is a high risk/high return play. You might spend $10K producing a series of slick videos and get 20 views; you might also hit a nerve with your target audience and become an overnight sensation. Most likely, you’ll fall somewhere in between. My general feeling, however, is that there is still a lot of opportunity to make YouTube successful, and ROI might be lower in the future as more marketers catch on to this channel.

 

Semantic Algorithms Enjoy Drinking Tea at Right-Wing Parties

 

Epic Post Part VI (Almost Done!): Analytics: Attribution, Phone Tracking, Do-Not-Track?

2010 was a year in which I personally got a lot smarter about Web analytics and tracking. My biggest epiphany was around the importance of multi-channel, multi-click attribution. Attribution, in a nutshell, is the process of stitching together the enter click path a user takes on the way to a conversion. This includes multi-channel (they might have clicked a banner ad, then Facebook, then a PPC ad on Google) as well as multi-click (did they click on five AdWords keywords before converting?).

Today, most advertisers ignore attribution entirely, instead focusing on “last click attribution”, i.e., the very last click gets 100% of the credit. If you think about this for more than a few seconds, it’s a pretty ridiculous way to measure performance. While there are definitely conversions that come from just the last click, depending on the complexity of the purchase, anywhere from 20% to 80% or 90% of the conversions are likely to have been influenced by clicks prior to the last one.

And if you don’t give these upstream clicks any credit, you may end up cutting your marketing budget on the very clicks that started the funnel that eventually resulted in a sale. Moreover, you are likely to give too much credit to the end of the funnel. While you might not expect an SEM guy to say this, the truth is that this usually means that SEM is being over-valued if you don’t set up proper attribution!

Most advertisers don’t bother with attribution because they either a) don’t know it exists or b) think it’s too hard to properly set up. Awareness increased and complexity decreased in 2010, and I’m confident that these trends will continue in 2011. There are already two strong 3^rd party companies providing attribution management (Convertro and ClearSaleing) and – you didn’t hear it from me – Google will be slowly integrating multi-channel, multi-click attribution into Analytics in 2011. Now that Google is no longer just a search business (with the acquisition of DoubleClick’s display business, as well as YouTube), there’s now more of an incentive for Google to give credit beyond the last click.

Setting up proper attribution is smart for two reasons: first, it gives you more accurate measurement of your marketing budget. This allows you to make smart decisions about display, Facebook, video, mobile, and all the other trends I’ve been talking about in this document. Second, it gives you a huge competitive advantage over all of your competitors who aren’t doing it. Let them over-spend for last-click keywords while you invest in a wider funnel of sales!

Another area of tracking that saw a lot of, pardon the pun, traction in 2010 was phone tracking. Phone tracking, as the name implies, allows you to attribute a phone call back to the exact keyword that drove the call. This is usually done by dynamically serving a different phone number on a landing page for every keyword that drives a click. There are at least a half dozen companies that offer this service to advertisers (ClickPath, CallSource, VoiceStar, Mongoose Metrics, IfByPhone). And not to be left out of the fray, Google is also toying with a variation of phone tracking, allowing AdWords advertisers to insert a unique phone number right into their ad text and tracking this back to the campaign (not as granular as the keyword-level tracking provided by the 3^rd parties, but this could change).

Phone tracking is important for two reasons. First, stating the obvious, if your company closes a lot of your business via phone conversations, you need to figure out what’s making the phones ring! Second, by adding phone tracking into the mix, you may discover that certain keywords that you thought were duds are actually incredible performers. We’ve implemented phone tracking for a few clients and the data is often surprising.

The last tracking trend of 2010 – the “do not track” furor – was not a good one, at least from an advertiser perspective. A series of articles in The Wall Street Journal (sadly, written by a college classmate of mine) attacked cookie tracking, retargeting, and the sale of aggregated third party data, as an incredible invasion of consumer privacy. Consumer advocates and the FTC started to get involved and there has been talk about creating a “do not track” list similar to the “do not call” list that prevents telemarketers from calling you.

If consumers really acted en masse to block cookies and tracking, it would be a serious blow to online advertising. Our ability as online marketers to properly allocate budgets is entirely dependent on proper tracking. Without it, we are left with an offline-like world, where we must use surveys, focus groups, and intuition to determine who should see what ad, when, and why. My sense is that there is no need to panic about this at the moment. Most likely, we’ll see the big online giants like Google, eBay, and Amazon come together to suggest standards that address consumer concerns but still allow a reasonable level of measurement.

 

You Know Your Country Lacks Name Recognition When . . .

You have to send out this email:

 

Comment Spam for the Sake of Spam, Not Links?

I don’t get it. I sometimes get comments on this blog that are totally ridiculous that then have a link to best-underwater-basketweaving-in-india.com or something – clearly a way to try to get in-bound links via leaving comments on a blog.

Over the last few days, however, I’ve been getting 3-4 comments a day that are totally inane, but then link to Bing, Yahoo, or Google. Here are some of the great “comments” I’ve gotten:

Touchdwon! That’s a really cool way of putting it!

That’s a mold-baekrer. Great thinking!

Kudos to you! I hadn’t thguoht of that!

IMHO you’ve got the right awensr!

Got it! Tnhkas a lot again for helping me out!

Why would someone bother to add comment spam without an attempt at an inbound link? My only theory right now is that this is some way of getting around WordPress’ automatic spam detection – if I accept these comments, the commenter gets ‘positive points’ for not being a spammer. At some point, he gets enough credit with WordPress that he can massively spam lots of blogs and the spam filter won’t catch him.

Beyond that theory, I’m stumped. Any ideas?

 

One Step Forward, Two Steps Backwards for Meltwater Reach

A few weeks ago I chastised Meltwater Reach – a sparklingly brand new PPC firm started last year – for trying to poach one of our clients by suggesting that they shouldn’t be showing up on the keyword “custom logo headbands.” We subsequently noted that Meltwater Reach was advertising on the equally obscure keyword “Meltwater Reach headbands” and a senior representative from Meltwater posted a comment on this blog promising to instruct his team to be more targeted with their keyword research going forward (oh, and not click on ads when doing sales research).

Today, I have some good news and some bad news for Meltwater. The good news is that it does indeed appear that their keyword selection for their sales letters to our clients has improved. We have a client in the evening wear category and this time Meltwater used the term “backless evening dress” for their client hunting. This is a real thing that a real person could really search for, so I have to give credit where credit is due – way to go Meltwater!

But alas, Meltwater still has some work to do. The contents of the pitch letter this time focuses on the ad text. Here’s what it says (in relevant part):

The real reason why I’m reaching out to you is because I came across one of your paid search ads on Google on the search for “backless evening dress” and saw that the ad copy could be a lot more targeted.  Knowing that this is a competitive arena in the PPC space, a more compelling ad copy would allow you to lower your Cost Per Click and Cost Per Acquisition in the long run (see screen shot below).

So let’s take a look at the screenshoted ad, here it is (I blacked-out the client’s name, everything else is straight from Meltwater):

For starters, this ad mentions “dress” twice and has “evening” in the display URL. So other than not specifically mentioning “backless”, I would count this as a well-targeted ad to this keyword. Indeed, the only ad that mentions the exact query does so in such a lame dynamic keyword insertion (DKI) fashion that it feels a lot less targeted than this client’s ad. And then we have the Nordstrom and David’s Bridal ads that don’t even use the word “dress”, opting instead of “gown.”

And of course, let’s look at the actual data behind this query. From my clever team member Sean:

Amazing!  The best part is that this query has generated an 0 impressions in the last thirty days.  It’s plural counterpart “backless evening dresses” has a whopping 28 impressions and 2 clicks for a 7.14% CTR.

If Meltwater has enough time to customize ads for the 38,000+ queries we were matched to last month I doubt they’d be able to do much else.  Good thing for us that we’ll focus on those that actual convert and show impression potential 🙂

Given all of this, I once again question the sales approach here, which appears to be as follows: 1) Find any medium to large advertiser on AdWords. 2) Do a keyword search (preferably for a relevant keyword – improved process!, do not click on the ad – improved process!); 3) Come up with any reason to suggest that there’s a problem with the advertiser’s SEM campaign, whether there is or not; 4) Close new client!

C’mon Meltwater, you’ve made some good progress since we last chatted, but you’ve still got plenty of room for improvement. I’m anxiously awaiting the next sales pitch iteration.

 

Cingular. Really?

A few weeks ago I criticized Meltwater Reach for trying to poach one of our clients with some questionable keyword research. Today, my teammate Orlee discovered an ad (in Gmail, I think) so incredibly inept that no sane person could fault Meltwater or any other agency for going after this business. So here’s the ad, keep in mind that AT&T acquired Cingular in 2004.

Note: unlike other agencies, we didn’t click on the ad to verify whether this really goes to AT&T. I have no reason to believe otherwise though.

 

Truth in (Shopping.com) Advertising

I have no doubt that these people are actual members of the Shopping.com community and are not hired models! I think the woman in the back may be one of Rebecca Black’s talented dancing friends.

 

+1 is Only the Beginning

Earlier this week, Google announced a concept that they call “+1.” Anyone who has ever used or even heard of the “like” button on Facebook will no doubt realize that this is Google’s attempt to counter the popularity of Facebook likes!

This is not the first time that Google has attempted to counter the incredible growth of Facebook and social media. Other notable attempts include Orkut (their social network), Google Buzz (a social extension to Gmail), real-time search (integrates Twitter and blogs into search results), and Google Wave (integration of IM and mail, among other things). If past performance is any indication of future success, +1 has an uphill path to success. For whatever reason, consumers (perhaps other than Brazilians who use Orkut!) have not adopted Google’s social applications in the same way they have accepted most other Google innovations (like maps, Gmail, YouTube, and so on).

Ultimately, this is a battle that Google has to win. Ceding social media to Facebook is like Yahoo ceding search results to Google, and we know how that turned out. So with all that being said, it’s not surprising that +1 is just the start of a much larger Google social media initiative. Over the last few weeks I’ve learned a little about this new program, mostly from my AdWords reps, but also from a few inside sources I’m not about to reveal here.

The program, at least internally, is called Google KnowMe. Here’s how it will work. If you are like most people, Google has a lot of information about you. For example, the emails you write (Gmail), the places you go (Google Maps), your interests (Google Search), your schedule (Google Calendar), your credit card and purchases (Google Checkout), even the news you read (Google News).  All of this is easily connected to you personally, because you need a Google account ID to use gmail, calendar, and checkout, or if you want to personalize your Google Reader or news page.

So Google can take all of this data and quite accurately predict how you might interact with your friends. For example, let’s say you are a big fan of the Iowa Hawkeyes (like me). A news story comes out that talks about the Hawkeye football team’s chances for the 2011-2012 season. Google knows you’ll like this story, and they know which friends you’ve emailed/chatted with in the past about college football. They can also use neuro-linguistic programming (NLP) to capture your unique writing style. The result is a social post that you didn’t write, but that you would have written if you had the time, or had seen the article. Here’s what it looks like:

David Rodnitzky: Go Hawks! This story has the Iowa Hawkeyes ranked #15 for the 2011-2012 season. Go Hawks! www.bit.ly/2s9fsdf

Here’s another great example of how KnowMe is potentially better than Facebook. Let’s say I am planning on going to go to a concert next week and I’ve scheduled time in my calendar accordingly. KnowMe will automatically post an update to my profile with the details:

David Rodnitzky: Join me at the Kei$ha concert at Shoreline Amphitheatre next Saturday!

 

Perhaps most interesting about KnowMe – and probably most controversial – will be the ability to auto-reply to other people’s posts. Keep in mind that we’re talking about auto-replies to auto-posts – effectively an entire conversation can occur without any of the parties to the conversation participating.

Adam Rodnitzky: It is sunny here in San Francisco. Rock n’ Roll!

 

 

David Rodnitzky: Hey Brother, that is cool. Remember, I am the better Brother.

Adam Rodnitzky: No, you are not. I am the better Brother.

David Rodnitzky: No, I am.

Douglas Tarr: I find this funny.

Steve Rowley: I am a fan of the Northern Iowa Panthers. I dislike the Iowa Hawkeyes. LOL.

I think KnowMe really solves a major problem with social networking: the time commitment. If you think about the history of social media, KnowMe was really inevitable. What started with blogs (requires complex story structure and actual thinking) and then progressed to Facebook posts (snarky comments confined to two or three sentences at most) and has most recently turned into Twitter (140 characters max, so even monkeys can garner plenty of followers) can now be handled entirely by computers. No need to even spend time trying to remember your password, KnowMe will continue to post and reply on your behalf whether you are logged in or not.

If KnowMe does catch up as Google hopes, and I suspect it will, this opens up an entirely new world for social networking. Instead of people using computers to update their likes, interests, and favorite photos, people can instead spend their time going out and interacting directly with their friends – offline – comfortable in the knowledge that Google’s computers are handling all the social networking for them. I know that the concept of personal interaction with social contacts sounds futuristic, but I think Google may have finally made this possible.

Posted one day early.

 

The Quality Score Fix-It Team

“Whether you’re a serial offender with over a dozen suspended AdWords accounts, or you’re a brand-new advertiser that got banned simply because you didn’t know what you were doing wrong…
we can help.”

Suspicious? I was. But the folks at PPC Renegade (appropriately named) want you to believe that they have secret connections inside Google that will cure all of your Quality Score ills.

So I watched both videos on their site. The best part comes in video #2 (page 2) at exactly 8 minutes into the video. According to the presenter, the first rule of avoiding a Quality Score slap is to not upload a lot of keywords. There is probably some merit to this claim. For example, if you uploaded 20,000 keywords to a new account, that might raise some flags. But here’s what he said in the video:

Presenter: Do not upload massive keyword campaigns, a bunch of them

Audience: What’s a bunch in your mind?

Presenter: A bunch is anything, I don’t know, anything over 100 keywords.That gets their attention, they’ll come in, they’ll manually review you.

This is chutzpah times two. First, this company is claiming that they have some super-powerful inside connections inside Google that will allegedly get virtually any site that has been slapped back on to Google – trust me, they don’t and they can’t. Second, the guy speaking obviously has no idea whatsoever about how AdWords works. 100 keywords is a massive account that will get you manually reviewed by Google? Wow, just wow.

Here’s the link to this wonderful AdWords scam.