Epic Post Part III: Facebook Will Be Big(ger) in 2011

This was the year of Facebook: Mark Zuckerberg was named person of the year by Time, The Social Network movie was a huge hit and is probably the odds-on favorite to win the Oscar for Best Picture, the site passed 500 million users, and rumors have it that the company also made more than $2 billion in revenue. Not too shabby. Amazingly, however, building a great advertising platform is noticeably absent from Facebook’s impressive list of accomplishments.

Facebook’s user interface (UI) for advertising is sub-standard to say the least. Despite the incredibly rich demographic and psychographic data available to advertisers, running tests on different segments of data is simply not scalable in the UI. On top of that, Facebook’s tracking technology was misleading (treating both view-throughs and click-throughs equally) and was recently discontinued altogether. This lack of scalability has resulted in two consequences: first, many advertisers have tried and failed to make Facebook PPC work, resulting in low CPCs and a lot of negative press from advertiser blogs, pundits, etc. Second, numerous 3^rd party software companies have integrated with the Facebook API and created tools to make it easier for advertisers to scale on Facebook. Most major PPC management platforms (Marin, Kenshoo, SearchForce, etc) have included Facebook management as part of their workflow automation.

The big question I have about Facebook advertising is whether we need to look at it from a demand creation (branding, top of funnel) or demand fulfillment (direct response, bottom of funnel) perspective. Obviously, if you are marketing to someone who lists their marital status as “engaged” and is a fan of “wedding rings”, you can take a direct response approach to this consumer, much like you would if someone typed “buy wedding rings” into Google.  And if you want a quick way to build buzz around a new movie, you can reach millions of 18-34 year olds who like “movies” in a matter of days on Facebook (indeed, Facebook is now the largest server of display ads online, so for many demographics, it’s becoming the mass medium of the Internet).

These are two extremes, however; the bulk of advertisers – and of impressions on Facebook – fall somewhere in the middle. If you take the wedding ring example, the vast majority of Facebook users will not spend the time to express interest in “wedding rings.” When you buy an ad directed to all users who are “engaged”, should you assume that this ad will have the same ROI as your AdWords campaign, or should you think of this as “awareness” that will lead to a conversion down the road?

The answer to this question most likely comes down to proper attribution – if you can actually track a consumer from a click (or view) on Facebook to an eventual purchase days later through, say, a PPC click, then you can give Facebook the right amount of credit. Unfortunately, 99% of online advertisers at the moment have no way to track at this level of granularity (we’ll discuss this more later on).

What I’ve seen in 2010 is that advertisers that try to hold Facebook to the same standard as a PPC campaign will be sorely disappointed – it is definitely a hybrid of “creation” and “fulfillment” marketing. In 2011, I think that smart advertisers will change both their thinking and their measurement of Facebook and find a way to make Facebook work as a meaningful complement to existing PPC campaigns. Here are a few ways I think this will happen:

a.      Proxy Metrics. A proxy metric is a “soft” metric, i.e., one that shows a likelihood of a positive outcome, but is not the final positive outcome. For example, a user who clicks on a link to “get directions to store” could be measured as a proxy metric for user intent to purchase something in a store, whereas a shopping cart conversion is a hard metric. Because I think Facebook is a hybrid medium, you need to combine proxy and hard metrics to judge performance. So even if the conversion rate to a purchase is 50% of your average conversion rate on Google AdWords, if you also see that Facebook users have a much stronger tendency to sign up for emails, refer friends, bookmark pages, click the “contact us” button, and so on, you may still discover that Facebook is incredibly powerful for your business. Note that almost all of these metrics can be easily tracked through Google Analytics.

b.      Attribution: Online measurement tools will improve in 2011, and part of that improvement will come from better attribution. If advertisers can determine how Facebook impacts downstream conversions, the result may be more budget spent on Facebook ads.

c.      3^rd Party Tools: We’ll see more and better Facebook tools in 2011. So far the best one I’ve seen is Alchemy out of the UK, but I’m pretty confident that the paid search campaign management companies will be catching up quickly to the stand-alone Facebook tools (or they’ll just acquire them). These tools will enable advertisers to quickly and efficiently test hundreds of cross-sections of user data – e.g., massive combinations of geo, age, psychographics, etc – as well as many different images and ad text, and identify the sweet spots amongst the millions of users out there. Unless Facebook suddenly comes out with a better user interface (I’m not betting on it), investing in one of these tools will be a must for anyone who wants to spend more than a couple of thousand dollars a month on Facebook.

 

It’s a Compelling Offer, But I’m Going to Have to Decline

Ah AdWords testing . . . I love it when placeholders inadvertently go live . . .

 

 

Epic 2011 Trends Post, Part II: Mobile Advertising

Mobile: Android, AdMob, and iPad, Oh My! I’ve been hearing about how important mobile is to businesses since 2000! Every year, some industry pundit predicts that “m-commerce” is going to explode. I think we’re finally at a point when the pundits might actually be correct. In my mind, there’s a convergence of three factors that will make mobile important in 2011.

First, there’s Android, Google’s operating system (OS) that is now a serious competitor to the iPhone. Google is allegedly shipping 300,000 Android phones a day, and folks not on AT&T (which still has exclusive rights to the iPhone) are eating up Androids quickly. The iPhone and Android are the first mobile devices that are really being used by consumers as mini-computers. This is due to the incredible diversity of useful applications (“apps”), the bigger screens, faster browsing, and touch-screen usability. The number of consumers that now have access to a decent and useful Web experience on their phones has virtually doubled overnight thanks to Android. For 2011, this means that e-tailers who have a mobile-friendly site should start to see a small but meaningful number of transactions coming through mobile. For non-e-tailers, it means that an app strategy or even a straight mobile advertising strategy might make sense.

Apple’s iPad launch, while not really a mobile device like a cell phone, is still relevant to this space because it is basically a big iPhone without the phone part. Consumer usage of the iPad, however, is much different than a cell phone or a laptop (or even a netbook). I see tablets as purely interactive devices. They are useful for digesting and exploring content quickly. For some reason, it’s fun to flip through a bunch of pages of merchandise (or articles) on the iPad in a way that would be boring on a laptop or too slow on a mobile device.

What I think this means is that we are basically moving from one dominant form of online engagement (the computer) to three: the computer, the mobile device, and the tablet. The tablet is still at least a year or two away from mass adoption, so I don’t think tablet development needs to be a priority for 2011, but the success of the iPad (and subsequent launch of many competitors) tells me that this is coming in the near future. And if you are inclined to spend some money now building a really cool iPad app, you do stand a decent chance of getting good adoption from existing iPad users – the number of iPad-specific apps out there is still pretty limited so the competition is sparse (that won’t last, trust me).

Finally, with the growth of mobile, it’s not surprising that Google made a move in 2010 to protect its online advertising dominance, acquiring AdMob for $750 million (congrats to my friend Saar for being an angel investor in AdMob; he’s buying the next 25 lunches we have together . . .). While I know of few advertisers that have had a lot of success through mobile advertising in 2010, I believe that in 2011 all advertisers should at least begin experimenting with a mobile advertising strategy, and some advertisers will actually find some nuggets of gold in mobile ads. The big challenges that I see for mobile advertising are 1) proper tracking (no cookies!); 2) proper attribution (is it the top of the funnel, the bottom of the funnel, or somewhere in between?); 3) resource allocation (how much time should I spend on this now if I hardly have enough time to work on my existing channels?).

The good news is that you can dip your feet in mobile and figure this stuff out at a fairly affordable cost at the moment. Just as PPC was a great “arbitrage” opportunity in the early 2000s, so too is mobile these days. Starting some testing in 2011 gives you the opportunity to figure out the right mix and measurement of mobile and be a few steps ahead of the competition as mobile’s marketshare heats up.

For a great summary of mobile developments, I recommend this report: http://metrics.admob.com/wp-content/uploads/2010/06/May-2010-AdMob-Mobile-Metrics-Highlights.pdf

 

A New & Epic Seven Part Series: Internet Marketing in 2011. Part I: PPC

Editor’s Note: I sent an 18 page letter to PPC Associates clients earlier this year. This seven part series is basically that letter. Enjoy (and become a client and get it a month earlier next year!)

A year is a long time in “Internet time.” Companies and concepts that weren’t even a footnote to 2009 were major players in 2010 (e.g., Groupon, FourSquare, AdMob, and DSPs). Below are my “big seven” trends from online marketing in 2010.

1. PPC: The Fall of Text, The Non-Rise Of MicroHoo. While AdWords initially started as a non-obtrusive, text-based alternative to the “banner blindness” of display ads, there’s no doubt that Google now believes that future revenue growth will come from integrating ‘extra stuff’ into AdWords ad units. To that end, Google launched a bevy of “ad extensions” in 2009 that allow advertisers to supplement their text ads with pictures, maps, and more. A few of the more interesting launches included:
   1. Product Extensions: Show images and prices of relevant products;
   2. Star Reviews: Integrated customer rankings from BizRate;
   3. Phone Number: A custom phone number that can be tracked back to your AdWords campaign;

All of this is in addition to the existing extensions that Google already offered, including a Google Checkout logo and map extensions.

More ad extensions are coming in 2011. Google has a private beta called “Offer Ads” that will allow merchants to run printable coupons in ads. They have also experimented with allowing advertisers to run videos as an extension. It would not surprise me to also see Google launch a product similar to Milo.com (acquired by eBay), which provides in-stock availability of local merchandise. This would be a good complement to the existing product extensions.

The bottom line for AdWords advertisers is that text ads alone aren’t always going to work on Google anymore. It’s important to constantly test the different extensions currently available to determine which one drives the highest incremental click-through rate (CTR) and conversion rate for your business. All PPC Associates (PPCA) account managers are well aware of all of these extensions, so make sure you are asking them regularly about what is best for your business!

Meanwhile, after many months of preparation, Yahoo and Microsoft officially merged their PPC advertising platforms into one unit. The big question on the minds of many PPC advertisers was whether this merger would create “economies of scale” that would suddenly make it more worthwhile to spend time on Yahoo and Microsoft. Prior to the merger, most advertisers felt that they were lucky to get 10% of their total clicks from these two search engines (versus 90% from Google AdWords alone).

Since the merger, the general consensus has been that the combination of the two networks has caused more problems than benefits. Inconsistent volume, low quality clicks, and difficulty controlling partner sites and content networks have all been noted by PPCA team members. As a result, the current feeling on “MicroHoo” is that it is still not a huge opportunity for our clients.

I do think that many of these bugs will be worked out in 2011, so at least management of accounts will be easier. I don’t, however, think that we will see a significant shift in marketshare from Google to MicroHoo. While Bing has made some small gains in marketshare, the search wars are over and Google is the far and away winner. Running on MicroHoo can provide some incremental clicks, but the focus should still be Google first, then MicroHoo (time permitting)!

 

A Partial Apology to SMX & A Full Plea to All Conference Organizers

I’m always surprised to discover that anyone other that Steve in Des Moines, Chris in Palo Alto, Terry in SF, and Jeremy in Chicago actually reads my blog, so imagine my surprise when I got an email from Danny Sullivan at SMX contesting some of the points I’d made in my last post about SEM conferences.

For those of you (um, like Steve in Des Moines) who aren’t deep into the world of SEM, Danny Sullivan is a living legend. I’m not saying that to be sycophantic, he just is. He was writing about SEM before Google was even a twinkle in the eye of Larry and Sergei, and his Search Engine Strategies (SES) conference was pretty much the only place a nerdy SEM could go in the early 2000s to be surrounded by other people who actually found all of this search stuff interesting. After selling SES a few years back, he founded Search Marketing Expo (SMX), the conference I recently applied to – and was rejected from – as a speaker, and the catalyst for my recent diatribe on SEM conferences.

Over the last few days, Danny and I have had a frank dialogue over email about my blog post, SMX specifically, and SEM conferences in general. While it would not be appropriate for me to quote any of Danny’s comments from a private email conversation, he definitely convinced me that some of my statements about SMX were unfounded. In particular, I feel bad about the comment that SMX’s process of choosing speakers was based on “a complex vetting process that can only be described as a combination of Cronyism and laziness.” I’m now convinced that Danny and his team take speaker selection seriously and review all submissions carefully (though it is of course insane that they wouldn’t want me speaking on the panel I submitted to!)

And in general, I now see that Danny and his team have a genuine passion for creating great conferences and for trying to make SEM conferences better. I’ll be the first to admit that I stopped going to SEM conference sessions several years ago simply because I felt that “the definition of insanity was doing the same thing over and over and expecting different results.” So I’m almost ready to take Danny at his word and give SMX sessions a chance again.

Now that I’ve been uncharacteristically nice for this blog, there are still things about SEM conferences – SMX or otherwise – that trouble me, and I’ll use the rest of this post to outline my Utopian vision for the perfect SEM conference. Here, then, are BLANK ways to make SEM conferences better:

1. Speaker and Moderator Diversity: No doubt there are speakers out there who can prepare brilliantly for multiple sessions in a single conference, but my experience suggests otherwise for the vast majority of speakers out there. Moreover, because virtually every SEM out there has a unique approach to their trade, even if a speaker could talk on multiple panels, I still believe that more knowledge is shared when more people present.

2. Active Versus Passive Speaker Recruitment: Most conferences send out a call to potential speakers to submit their names for a panel. The problem with this approach is that it inevitably attracts consultants, agencies, and other sales organizations with ulterior motives. This is not to say that these speakers can’t provide valuable content (I know that I always try to . . .), but the best speakers are likely the ones who aren’t proactively volunteering. The “in the weeds” SEM nerds need to be coaxed to share their secrets.

3. Less Versus More Speakers: As Alex from ClickEquations noted in the comments from my last post, whenever you have more than two or three speakers on a panel, it’s impossible for anyone to actually share in-depth learnings.

4. Fewer and Longer Rather that More and Shorter Sessions: Basically the same point as above. I’d like to see 90 minute sessions with 2-3 speakers, rather than 60 minute sessions with 4-5 speakers.

5. Overwhelming, not Underwhelming Presentations: Rather than catering to the lowest common denominator, I’d like to see sessions where people leave scratching their heads, not yawning. Show me your algorithm! Decode Quality Score! Make my head hurt!

6. More Presos, Less Roundtables. As much as I hate to say it, there’s a time and a place for PowerPoint, and a conference is probably that time and place. Roundtable discussions are great if you want to hear theoretical musings from CEOs, and occasionally that is interesting, but for the most part I’m interested in tactical details. Plus, when a panel is filled with middle-level managers, a roundtable structure encourages rambling and a lack of preparation.

7. Required Draft Submission and Editing. Every speaker should be required to submit at least one if not multiple drafts to the moderator of their session, and the moderator should work hard to come back with constructive comments.

8. No Circuit Speakers: Anyone who speaks at more than 3-4 conferences a year should be banned from further speaking engagements that year.

9. No Computers on Stage: No emailing, tweeting, web surfing, or whatever else a speaker might want to do on his/her computer.

10. Free Admission for Experts!: OK, perhaps a pipe dream, but why not? Why not compel experts to join the audience – even if they aren’t speakers – by offering up free admission? This is already done for the exhibit hall, after all. (OK, this point is a bit of a silly one, but I felt like I needed to have 10 points . . . ).

So there you have it. Feasible? Utopian? Less cranky than the last post?

 

Why Do SEM Conferences Suck So Badly?

Upfront Disclosure: I applied to speak at SMX West and was rejected.

I don’t know anyone who has been in SEM for more than a year or two who has ever come back from a search conference with oodles of new and useful information. The purpose of going to SMX or SES or Search Insider Summit, or Search Outsider Summit (if it exists) is really to network, as far as I can tell. Typically the sessions have the same speakers every time, most of whom are either totally unprepared or totally unqualified, or both.

Last year I spoke on an “Advanced Paid Search” session at SES SF and one of my fellow “experts” told the audience to never buy competitors’ keywords. This is like a tax advisor telling you not to take charity deductions – it’s just wrong and will cost you money. I’ve also seen some well-known speakers who bring their computer up on stage and tweet/do work while other people are presenting. Isn’t that sort of like talking loudly on your cell phone at a five star French restaurant?

This year’s list of speakers at SMX West appears to have been chosen through a complex vetting process that can only be described as a combination of Cronyism and laziness. To wit, a quick review of the speakers (only on the PPC side mind you) reveals that the following companies each have representatives on three different panels (in some cases, the same person):

• AimClear
• Click Equations
• Did It
• Efficient Frontier
• Rimm Kaufmann Group

Don’t get me wrong, these companies have a lot of smart people working for them (and apparently even smarter PR and event management people). But given the sheer number of PPC agencies and experts in the SF Bay Area alone, one would think that having five agencies take up 15 speaking slots could be – and should be – avoided.

I find it especially troubling when I see the same person speaking on two or sometimes three panels. If you are such a great expert that you are worthy of appearing on three panels, you are no doubt in such high demand that you simply do not have the time to adequately prepare for multiple presentations. The inevitable result, of course, will either be rehashed or ‘re-purposed’ presentations from prior panels, or no preparation at all.

I’ll be the first to admit that I am not qualified to come up with a solution for this conference malaise. I tried to start my own conference two years ago and I don’t believe I succeeded in truly creating valuable content at every session. Based on my own experiences, I think part of the problem is that there is simply a disconnect between creating a ‘successful’ conference from a revenue-perspective, and developing high-quality content.

Building a conference requires a ton of work that is not related to content – booking event space, closing sponsors and exhibitors, promoting the event, selling tickets, biz dev deals, etc. Ironically, putting together great content almost becomes an after-thought. And let’s not forget the subtle and sometimes explicit pressure that comes from top sponsors to have their speakers on the primo panels. The line between editorial and business is not very clear in the conference world.

On top of that, there’s the problem of trying to be all things to all people. Conference organizers feel an obligation to create some panels for beginners, lots of panels for intermediate knowledge, and just a few advanced sessions. And speakers often feel that they must water down their knowledge, thereby talking to the lowest common denominator. It’s sort of like a one room schoolhouse – the sixth graders have to sit through 1st grade arithmetic.

It all comes together in a well-packaged, cool-sounding, but incredibly stale and pointless series of conferences. Attendees continue to attend to network and meet old friends, speakers continue to speak to build their personal brands, and sponsors continue to sponsor because they probably do snag a few new clients from the exhibit floor. In the process, little knowledge is actually shared. It pains me that we can’t break this cycle.