Internet Marketing Strategy and Implementation

One of the services we here at Metrist provide a number of our clients is search advertising management, also known as Search Engine Marketing. Many of those clients come to us assuming Google is the be-all and end-all for Search marketing. Google is, with 70% of search advertising, clearly the dominant player in the Search advertising space.

However, Randall Stross's September 21st "Digital Domain" column in The Sunday New York Times business section, "Why the Google-Yahoo Ad Deal Is Nothing to Fear", reported on a study by SearchIgnite, an Atlanta SEM firm. Stross noted that while Google AdWords generally gets a cost-per-click premium over Yahoo search ads, "Yahoo, on average, collected a 38 percent premium over Google in one niche: the top ad position on a page for keyword searches involving a brand name."

Why would a click on the top Yahoo spot for a brand name command a price premium over Google unless those competing for that spot saw a compelling reason to be there? Clearly, there is a segment of searchers who use Yahoo for brand-name searches, and their clicks convert buyers at a higher rate than their Google counterparts. If you are a consumer-level advertiser and have dismissed Yahoo, there is a reason to test placements there, and probably at MSN as well.

Labels: Google, Search advertising, Search Engine Marketing, Yahoo

Avery Cohen of Metrist Partners presented to the Chicago Joomla! Users on Wednesday 9/10/08. The talk focused on practical SEO tips for marketers and web site developers, showing how they can work together to optimize a web site for sales and lead generation.

Abbey Klaassen's article on Gates and Seinfeld on AdAge.com (a Metrist client) reminded that, watching the Republican Convention the other evening with the sound off while talking with a friend, I saw Jerry Seinfeld apparently selling shoes to Bill Gates. Thanks to a link on the Klaassen piece, I've seen the Seinfeld Gates ad on YouTube, I see 90 seconds of pure image advertising that could be the beginning of Bill Gates as Dave Thomas, Orville Redenbacher, or Harlan Sanders. And KFC waited until the Colonel had died before they made his cartoon character shake booty, as Gates did.

So, how does the marketer with a smaller ad budget than Microsoft's do image advertising? Search Engine Marketing (SEM) and Content Ad Marketing (CAM) with messages intended to establish a brand message in 25 characters of headline, 70 characters of elucidation, and a URL. Ads clicked through by enough bloggers and journalists begin the outside referrals that build Search position for the long term, Google willing. [Commercial message: We at Chicago online marketing firm Metrist Partners have done this with clients in fields as diverse as software and political advocacy].

Labels: Chicago Web Analytics, Gates, image advertising, Metrist Partners, online advertising, Search Engine Marketing, Seinfeld

The Chicago Technology Insiders Summit was held at the Illinois Technology Association (ITA) facility on Thursday, August 14, 2008.
There were three panels:
1. Raising Equity -- Venture Capital firms talk about funding Chicago entreprenuerial companies.
2. Maximizing Equity -- Successful CEO's of funded Chicago firms.
3. Sweat Equity -- Leaders of Chicago startups in various stages of development.

What the investment bankers said about venture capital investing in Chicago:

Ultimately, this was a lot of what we already know -- VCs are primarily looking situations where money will enable a proven team to scale up a proven concept into a national or international marketplace quickly. If you are a guy (or a gal) with an big idea, VCs probably aren't your first stop. But if you have a great team with some initial success under your belt, and money will make the difference, can you make it in Chicago?

Ed Chandler of DFJ Portage has been in VC since the 1980's. Traditionally, capital flowed out of Chicago to the coasts. He has seen significant changes. The Tech Bubble fueled inerest around the country in what entreprenuership could produce in terms of yield. At the same time, the Internet created inforamtion flows that let startup companies gain insight and go beyond constraints or need for the Silicon Valley infrastructures.

The problem he percieves with Chicago has been a lack of [experienced] people willing to stake their careers on startup companies. The tech boom put people intot the entreprenuerial environment. The success of initial companies begets more similar companies. This leads to a much more prepared and better informed community.

Kapil Choudhary of Illinois Innovation Accelerator's Fund (I2F) says there is significant buying power in the large corporations based in Chicago. The ITA and CEC provide resources for connecting.

On the consumer side, he hasn't seen people or companies spin out in Chicago. This is despite the fact that large companies target Chicago when they go to market with new consumer goods. Chicago is seen as a great advertising market and a bellweather for consumer marketing.

He agreed with Chandler that you don't see as many people taking startup risks, but that is increasing now.

Brett Maxwell of MK Capital says "we do business on the coasts, but we aren't just on the two coasts. We like Midwest values." He sees Chicago as being the second or third target for expansion offices. But he says that it's hardest finding talent to run the companies, noting proven sales and marketing talent. He closed with these damning words: "there probably is not enough of that DNA in these communities to drive companies to success in the market."

Chandler replied to that last comment, saying that there is a cycle. Management talent leads to good engineering talent and marketing talent. These teams are required for successful exits. More successful exits drives more capital into the community.

When moderator Paul Catalano asked "What are our biggest gaps?", Mark Glennon from Leo Capital also countered with many of Chicago's strengths. We are ahead of the curve, especially in consumer-oriented businesses. Chicago had historically strong retail presence with Sears and Wards, now Walgreens. The West Coast doesn't like direct consumer plays. Chicago is strong in wireless radio, with talent from Motorola and Lucent. Chicago has been successful in Financial Services markets. He sees many talented 2nd and 3rd generation entreprenuers. The gaps between Chicago and the coasts are closing.

Catlano asked the panel their opinons of Chicago's local entreprenuerial talent.
Chandler said that Chicago is the center of a larger and more diverse economy, with a mix of old and new businesses. "If we have a compelling opportunity set, we will be able to attract the needed talent. We have brought two or three CEOs back to chicago to build." Increasingly you will have strong, proven local talent to run companies.

Choudhary pointed out that the University of Illinois is producing top engineers. Paypal, You Tube were created at U of I. They achieve success and leave. However, for the most part, as you achieve success, you get more successes. He sees companies coming up with "Orbitz DNA". The recent Feedburner exit will produce more new ventures.

In a rare public speaking engagement, Chicago tech scene gadfly Ron May took one of the half-hour spots at SocialDevCamp Chicago 2008, on August 9, 2008. The event, styled on the BarCamp model of loosely-organized informal presentations and opportunities for techies and entrepreneurs to exchange ideas and hold impromptu working sessions. The SocialDevCamp event focused on Social Networking on the web.

May signed up to give a talk entitled “Lessons Learned from the Past,” but he primarily speculated on the potential for a new web-based resource for local tech entrepreneurs.

May said he was planning to present something akin to the “Andrew Keene meets Clue Train” debates. May is not a fan of Keene’s. He looked in The May Report archives for case studies of layoffs and for how people started communicating anonymously in 2001. Ultimately, he decided that a presentation layoffs would take too much time to prepare.

May took a new tack, “you know I’m trying to revamp The May Report.” He has been looking at models on the web. One site that was brought to his attention was “theFunded.com”, which May characterized as “trash your local VC firm”. This wouldn’t work for Chicago, as “our VC’s don’t do anything,” quipped May.

May sent a letter to some of the respected members of Chicago’s technology and venture communities, including Tom Churchwell, Ellen Carnahan, and Dennis Arial. Through an oversight, May’s initial correspondence didn’t include the web site name, but many of the people on his mailing list knew the site by description. The general consensus from the “knowledgeable sources” was that “we don’t need another bitch at the VC’s site” in Chicago.

May floated the idea of providing a “comprehensive list of sites that any entrepreneur needs to start a business, combined with a rich description of the resource, and its history including both successes and failures. May suggested including commentary on the people at the various resources: What they want – their criteria for success – what they bring to the table, and a list of historic deals. Chris Rollyson said this sounded like TannedFeet.com.

But, said May, “if there was a need for this, it would already have been done.” The problem is “nobody wants to be evaluated for their performance.” One of the VC’s in the audience, Nik Rokop, said “we are doing it internally.” May countered, “external review is a different thing.”

May expressed the opinion that greater transparency on both sides of the funding conundrum would help to alleviate what he perceives as the greatest problem facing the Chicago tech and entrepreneurial community: “the gatekeeper mentality.”

“It may not be bad to have gatekeepers, but we need to mitigate the dominance of the gatekeeper mentality.” VC’s only list their few successes on their web sites. They aren’t clear about their criteria for doing deals. By eliminating the “double-standard,” you create an opportunity for more deals to be done.

How do you get “officialdom” to buy into the idea of this sort of resource? You use “theFunded.com” as a “stick”. Give us transparency, insights into deals, what worked , what didn’t. If the VC’s cooperate, there won’t be a need to focus on the negative.

May said there were two issues with building such a community-based resource. First, it would take a lot of work. Second, it would involve some wrangling over politics. Ultimately, he said, a comprehensive directory and history of Chicago’s technology and VC community could be assembled. Chris Rollyson again recommended an existing site, Jigsaw.com.

Is some of this content buried in The May Report’s archives? “How many years do you have” to mine that data, quipped May. Besides, May insisted, “this wouldn’t be The May Report.” There’s too much baggage around the May report. This would be something different, perhaps something new.

I spent 15 years as the financial analyst and analysis manager of A Defunct Former Catalog House, and later built mailing lists for catalog retailers and financial services companies. Here are the three most important things I learned from retail advertising, and what I think they mean for online.

1. Behavior trumps demographics.

Neighbors are very different, at least in their retail actions. Their constellation of retail choices vary widely within a neighborhood, and just because Bill and Mary have Our Credit Card and spend on it, doesn't mean its worth sending advertising to Joe and Sue next door.

Lesson: Don't bother buying demographic adjacencies (that is, people who look like your sutomers) unless you've run out of behavioral adjacencies (people who act like your customers). And you won't.

Open question: Are Social Network "friends" of a buyer sufficiently better prospects than geographic neighbors of a buyer?

2. Most paper-based advertising is garbage, literally.

John Wanamaker is reputed to have said, "Half the money I spend on advertising is wasted; the trouble is I don't know which half", or words to that effect. Well, if he truly got economic value out of half of his advertising expenditure, he would be the best retail advertiser in history, or perhaps in a tie for that honor with some jeweler in a small town who once sent pre-holiday letters to the two richest men in town, after which one walked in and made a purchase.

But, no, I'm certain he wasted the vast majority of his advertising, though his was the biggest store in Philadelphia. By the last 20 years of the 20th century, only a small percent of those delivered an advertisement would make a purchase during the term of the advertised promotion, and only a percentage of them bought because they saw the item in that advertising. Most of the recipients treated our ad as garbage. Literally.

My Defunct Former Catalog House employer spent at least 90% of the budget in print. Fortunately, literal waste in online advertising is a small percentage of that. The incremental online carbon footprint for $1 million of online advertising is, I'm guessing, smaller than a hundredth of the carbon footprint of the typical $Million AFCH spent: logging, pulping, papering, ink processing, printing, shipping, not to mention trashing and recycling emissions. If I'm wrong, please send me links.

I'm happy they are no longer felling trees in Canada so that my particular Defunct Former Catalog House could tell millions that "Our Best Sofa Spectacular Ever!" was in full swing. I'd be surprised if the incremental Internet heat costs of an online ad placement were larger than the electricity of a CFL for an hour. Advertising is a cleaner industry, and the sooner that newpapers make most of their revenue online, the sooner we'll be a less garbage-making America.

Lesson: Don't obsess about waste. Your ads will not appreciably warm the planet. Online advertising waste is therefore not an ethical issue, just an economic issue in your business. Businesses: Focus on controllable contribution: net or incremental contribution from each separable segment of the ad budget. Increase the dollar yield and you will decrease waste. Non-profits: Choose ad buys to incrementally maximize the desired effect in your communities.

Oh, if you think I'm off base on the incremental carbon footprint of online advertising, please educate me. I've read that Google is now the Earth's largest electric user, but your ads won't change their consumption materially.

3. There is nothing like additional panic ads for last-minute increased sales, so long as it doesn't have to pay for itself. Last minute advertising rarely does.

Scenario: The Season is not living up to our meager expectations. It's too late to print an insert or mailer, but we can get an ad to run in the pages of newspapers. It's got to have impact, so throw in a bunch of low-margin items to "goose" sales. (Yes, that was the verb they used.)

The damage: A dozen people miss at least one family dinner, we spend three-quarters of a million dollars. The return: The weekend is $1.25 million higher in sales than it would have been.

That $1-1/4 million looked good on the daily sales reports, and we wouldn't see the bottom-line impact until the monthly P&Ls. If we hadn't done it, we would have been more profitable. The maintained gross profit (close to the gross margin, for you non-retailers) of the incremental items sold was about $250,000, so the $750,000 spent netted a negative half-million hit to the bottom line: just one of the many reasons that my Former Catalog House is now Defunct.

Lessons for online: Don't panic. Throw good money only after good. Never ask staff to miss a dinner with significant other(s) for something that will reduce our bottom line.

Don't add placements unless you thought they'd be profitable before. The more we know about the specific contribution of each segment of our ad program, the better we'll be able to guess about the productivity of new and different buys. (Ad: We help clients do that in Search and Content advertising.)

Consider more buys or alt. creative to pad a statistic besides cash flow? Each buy, each creative execution represents an investment of our managerial and clerical time: people time. That's what's laid waste from panic buying. "so, don't do it" unless it is worth the financial and human cost.

Not that you would, of course.

Labels: former catalog house, online advertising, retail advertising, ROP

I always read obituaries, whence I take history in small bites. And I learn such interesting things in those obituaries, such as the fact that the world's first business computer was not owned by IBM, Procter & Gamble, or General Motors, but by a chain of English tea shops, J. Lyons & Company

Lyons, like the retailer where I did my analytic apprenticeship, is now defunct. However, in the post-WWII years, their LEO (the Lyons Electronic Office) computer, using programs flow-charted by David Caminer, whose death at 92 occasioned the obituary, pioneered such business applications as payroll calculation, which even a first-generation mainframe could do 300 times faster than an experienced clerk. The Ford Motor Company, among others, later bought LEOs.

The volume of SKUs and plethora of calculations of a retailer naturally called forth the talents of electronic brains, as they do today in both the online and offline worlds. Much of what I learned in retail analysis I now apply across a broad range of clients, and for me, it was SAS and Visicalc, then 1-2-3, then Excel, that electronically provided the grist for my nascent analytic mill. And to think it all goes back to David Caminer, and tea shops.

The whirlwind Online Marketing Summit (OMS) Tour, sponsored by the national branch of the Business Marketing Association (BMA), visited Chicago on July 17. I attended the first OMS in San Diego a couple of years ago, and I was glad to hear that organizer Aaron Kahlow was touring the event around the country this summer. I've spoken with Aaron, and the OMS tour joins two things he is passionate about: educating people about web analytics & internet marketing and traveling.
The OMS is a great place to dig into all aspects of online marketing: Search Engine Optimization, Paid Search Engine Marketing Campaigns, Web Site design and usability, Web Analytics, and Email. Kahlow and the presenters all share a strong commitment to education, and the policy of OMS is that sales takes a back seat to case studies and lessons learned. The audience is encouraged to "boo" any sales talk from the speaker.

1. Are You in a Cuban Time-Warp?

Kahlow's opening remarks chided marketers for living in a "Cuban Time-Warp" -- with another travel reference, he compared marketers (and specifically B2B marketers) to Cuban car owners, relying on really well-maintained technology from the 1950's and 60's. He went on to describe this time warp the result of marketers continually "hitting the snooze button", buying time with half-measures, rather than "waking up and embracing the new day" full of lead generation, customer service, community and brand building that online marketing offers.

2. The benefits of One Page Memos

Doug Lenos of BRC Marketing, Inc. shared a few of the secrets of his success in re-creating the web site for Cintas, the uniform and business services giant. The first was the enormous benefit of the one page memo. Every time his team received a measurable benefit or significant learning from a change to the site, they released a one page memo stating 1) the objective, 2) what was done, 3) the quantifiable results (or do you say metrics), and 4) the conclusion reached. By taking incremental actions in the early assessment phases of their project and sending out these one page memos, the team built credibility for the full-on web site redesign.

3. Pictures Matter

Another insight from <> came from his team's experiments with different photographs on the Cintas home page. When they found the right photo they knew it -- a significant increase in multi-page visits, or, as we tend to say these days, a big drop in the site's Bounce Rate. Good photographs make a strong emotional connection. Knowing who your audience is and having a picture they can relate to makes a big difference.

4. Marketing is the new B2B sales person

Debbie Qaqish of The Pedowitz Group shared the results of their study on how companies are using the internet to support "demand generation". "Marketing is the secret new sales person in the firm." The biggest challenge facing B2B marketers -- creating higher quality leads (62% of respondents), tracking & reporting metrics (49%), Time to devote to analysis and improvement (43%), collaboration with sales (29%), generating enough leads (29%). The study also discussed the challenges of skills acquisition, staffing, compensation and budget trends.

5. Low hanging fruit for email marketers

Chad Malchow of Return Path had some examples of going from good to great with email campaigns. He also had some interesting statistics from a Return Path study, highlighting where people can find some low hanging fruit for email marketing: 30% of the sites did not send any email within the first 30 days, and the average time from sign-up to first email was nine days. 60% didn't send a "thank you" or "welcome" message, which is a best practice with a high value payoff for marketers. And while 70% of the companies studied collect enough information to personalize the email, 75% don't use that information. Malchow showed some case studies where strong welcome messages and personalized emails and/or targeted offers made a significant difference in returns.

The MIT-EF White Board Challenge gives emerging companies and entrepreneurs in the Chicago area an opportunity to give a five-minute presentation on an innovative business concept, with over $5,000 in prizes going to the top three presentations.

There were 67 applications, from which 13 finalists were selected to present at tonight’s event. The finalists showcased innovation from a wide range of technologies, from a better spray bottle to a "smart" electrical outlet that can prevent electrocutions and home fires.

The first prize, $ 3,000 and a business model study from the Coleman Center, valued at $ 1,500 went to the Guardian Angel Outlet, presented by Dan Masterson. Masterson was easily the best presenter of the group. He opened with some “shocking” statistics: 2400 children are treated each year for electric shock. Hundreds of them die. And 3300 household fires start at electric outlets. Masterson presented the “Guardian Angel Outlet”, a “smart” electric outlet.

The Guardian Angel Outlet contains a microprocessor that uses a capacitive sensing technique (Masterson name-checks the iPhone for using this technique). It senses that a hand is near and turns off the power. The outlet can identify safe/unsafe conditions: the nearness of a hand, excess heat, or an arcing situation.

This is the same technology licensed to Fellowes for their Safe Sense shredder, which won the 2007 Chicago Innovation Award and was Fellowes biggest selling item ever. They hold four pending patents on the technology.

They estimate the 16 Million dwellings with children under three years old as being a market that is emotionally ready to purchase their $10 outlets. They are currently negotiating to license the Guardian Angel technology to the top outlet manufacturers.

Second place went to MagDrive, presented by Igor Stamenkovic. MagDrive has patented technology that makes electric motors and generators more efficient. This is basic electric technology: fixed magnets, copper coils and a spinning core. The folks behind the MagDrive used sophisticated physics and numeric analysis to optimize the configuration of the electric motor or generator.

Over 15 million electric motors of varying sizes are sold every day, and the motor/generator components represent a $500 Million per day spend. The MagDrive’s efficiency makes it less expensive to operate. The design is modular and can scale up or down depending on the size and power requirements. The MagDrive component retrofits easily into existing equipment.

What was missing from Stamenkovic’s presentation was a clear statement of how much more efficient the MagDrive is compared to current technologies. I have no idea of the expected savings, or payback period for investing in a MagDrive. Nor was it clear what stage of development the MagDrive has reached.

RevStor, presented by Russ Felker, was the third place winner. RevStor uses existing corporate data resources to build a secure computing cloud on your premises. RevStore ties together an existing network to provide systems management, backup, archive, and security.

This provides an internal alternative to the external “cloud” or “on-demand” computing solutions offered by Google, Amazon, or Seagate; the (antiquated and possibly expensive) tape-based solutions offered by the likes of HP; and the (expensive) SAN solutions offered by the likes of EMC. RevStor shares CPU, storage, and network resources inside an enterprise in a secure managed environment. RevStor was also a finalist in the MIT-EF “Below the Radar” event last month.

The panel of judges for the Chicago MIT-EF White Board Challenge included Raman Chardha from the Coleman Center at DePaul University; Bernadette Freeman, Admin Law Judge from the City of Chicago, Adam Masia, Partner at Bell, Boyd & Lloyd; and Bill Myers, Director of Business Development at Motorola’s Early Stage Accelerator. David Weinstein was unable to attend due to an illness in his family. Attendees were given a vote as well, calling a toll-free number and entering their choice. The attendee votes counted as one judge, and I was told that the crowd choice coincided with the judges’ winner.

That’s the winners in a nutshell. I’ll share my notes on the well-deserving runners-up tomorrow.

Labels: chicago technology, innovation