PPC Online Advertising May No Longer be the Solution for Products Targeted at Specific Market Niches

Back in the late 1990s, a number of advertising agencies (Poppe Tyson and ModemMedia being just two) extolled online marketing as uniquely capable of providing marketers with a method to truly personalize presentations of product promotional information for highly specific market segments. Poppe Tyson’s promotional literature talked about something called “the considered purchase”, meaning a type of lengthy consideration a certain cut of buyers will undertake to carefully study potential solutions to a burning need, and why online marketing was the perfect venue to provide these prospects with information tailored, specifically, to appeal to them, and them alone. The epitome of this notion is the concept of “Marketing 1to1”, which Don Peppers and Martha Rogers, Ph.D, coined around the same time.

But now, in 2014, all of these notions may amount to little more than hyperbole, at least if an article titled How Facebook Sold You Krill Oil is credible. The article recounts the efforts of a Mr. Joao Rodrigues to determine if a marketing campaign on Facebook, which he has been considering for his product, something called Mega Red Fish Oil, would ” . . . help him find people who were already buying fish oil or other products that suggested they were concerned about the health of their hearts, and perhaps persuade them to switch to his brand.” (quoted directly from Mr. Goel’s article, as published on the New York Times web site)

As I read it, Mr. Rodrigues’ question is never directly answered by the team from Facebook, or the agency recommending the Facebook network of web sites as the perfect venue for Mr. Rodrigues to obtain the reach he required. But implicit to the rest of the article is the notion he cannot obtain those results, at least not through promoting his product on Facebook.

All of this should certainly be a big deal for anyone thinking about an investment in Facebook, or in any of its competitors. The enormous market capitalization each of these companies has achieved is built upon a set of assumptions likely to include a conviction they are uniquely capable of delivering a winning solution to Mr. Rodrigues’ requirement. If they are not able to deliver, as expected, and some significant portion of potential advertisers begin to realize this limitation, and opt for other methods, this same market capitalization may deflate very quickly.

Disclaimer: I have no investment in Facebook, nor in any of its peers

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2014 All Rights Reserved


Business Valuations of Key Players in the Worldwide Online Advertising Market Widely Exceed Total Market Size

According to some data published on the PwC web site, Internet advertising segment insights from the Entertainment and Media Outlook: PWC, the likely size of the worldwide online advertising market should be worth more than $185 Billion by 2017.

If we add in another $30 Billion to this 2017 forecast, for the mobile advertising market (smart phones and tablets), then we come up with a total 2017 worldwide market forecast for online advertising of $215 Billion. To understand my reasoning on this 2017 forecast for worldwide mobile advertising, please visit Gartner Says Worldwide Mobile Advertising Revenue to Reach $11.4 Billion in 2013. I included a healthy 20% year-over-year increase in total worldwide consumption of mobile advertising products from 2016 to 2017.

But the combined business valuations as of 17:07 hrs on April 23, 2014 (3+ years away from 2017) for simply four of the major publicly traded players (Google, facebook, Yahoo and Twitter) in this market (conspicuously absent is Ali Baba, which is yet to go public, and Baidu) amount to approximately $589 Billion, or just about 174% more than the total 2017 market.

Perhaps readers will agree these valuations are unsustainable. Nevertheless, investors continue to buy up shares. While facebook was reporting its Q1 2014 earnings, today, the stock was up, after hours 5.66%, which amounts to a market cap for this business of somewhere above $180 Billion, or 84% of the total forecasted worldwide market size.

If one argues Google presents a wide range of products targeted to other markets, I would argue where are the compelling results for these other efforts? Having closely reviewed Google’s Q1 2014 conference call webcast over the last week, I have to say the combination of the spin off of Motorola Mobility, and relatively insignificant performance for the “other business” segments (Google Apps, cloud IaaS, and Chromecast) render the “Google is a diversified business” rather less than an accurate read on their business, at least as they report it in the current quarterly earnings statement.

It’s difficult to come up with any other conclusion, on this topic, than the valuations of these businesses are clearly highly inflated (in other words, the whole market is likely a bubble). Anyone with a position in these businesses might want to consider adopting a defensive strategy, and soon.

Disclaimer: I have no current position in any of the mentioned businesses in this post.

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2014 All Rights Reserved


EMail Marketing for Small to Medium Sized Businesses Shows Some Troubling Signs of Diminished Usefulness

My recent experience, on behalf of clients, tells me email marketing remains one of the most important online promotional tools available to Small to Medium Sized Businesses (SMBs), here in the US.

But I’ve noted some technical limitations, which lead me to recalibrate, upwards, the amount of effort required to put together a truly productive email marketing campaign for SMBs. It may be helpful to frame the obstacle as follows:

Email marketing is no more, no less than a method of engaging with market participants who, at some level, should be considered sales prospects. So the only meaningful performance metric I know of for this type of campaign is the number of responses received from recipients.

If an HTML email marketing campaign touches 1K recipients, but stimulates only 5 responses (1/2 of 1% response rate), then, it is surely safe to conclude the campaign required a considerable amount of effort vs. the return. An SMB with a 15K email address database can only run a campaign, like the above, 15 times. If the pool of responses at the conclusion of all 15 campaigns amounts to only 75 responses, and sales closes 5 – 7 $10K orders from all of the effort, then it may be safe to conclude the return on investment is marginal (of course all of this depends on the annual revenue produced by my hypothetical SMB, average sales price, etc.).

Usually, I will advise a client to then look to a tool like VisualVisitor, which can be configured to identify web site visits resulting from a click on a special hot link included in an HTML email message, to point out recipients who opted to visit a web site in lieu of actually responding to the email message. This method exposes additional opportunities for sales teams. The additional benefit from this approach can be considerable.

But HTML emails are required to obtain the added benefit from implementing links with VisualVisitor tags. In my opinion HTML emails contribute, substantially, to recent ineffectiveness of email marketing campaigns for my clients. Markets are looking for a personal email message, which is best achieved with plain text. I haven’t yet experimented with adding VisualVisitor tagged links to plain text email campaigns and have no plans to do so in the near future.

I do plan on speaking with the technical team at VisualVisitor to see if there is any precedent here. In other words, has anyone used the tags in plain text email messages? If you have an interest in this topic and would like to follow it, please contact me.

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2014 All Rights Reserved


Tools Like VisualVisitor Promise to Boost the Value of Online Marketing Campaigns for SMBs

With increasing frequency industry analysts are drilling down to some disturbing characteristics of online marketing. Not the least of these is a pessimistic, but nonetheless popular, conclusion about the likelihood of engagement with website visitors — or the lack of it. The unfortunate consensus is website visitors are much less likely to engage with online promotions than promoters would hope them to be.

Solutions like VisualVisitor can be very useful tools for online promoters in need to accelerating the timing of opportunities to engage with website visitors. If lead generation solutions like Marketo and Oracle’s Eloqua can attract substantial investor interest, I can’t help but think businesses like VisualVisitor will soon follow.

The lack of engagement issue is actually a very big deal for online promoters. Google’s recent investment forays into business sectors otherwise completely disconnected from its core online advertising revenue generation machine leads me to suspect click ads aren’t delivering the profits they used to. If I’m right on this point, then at some level the reason for profit drop has to be attributable to changes in customer behavior. Google’s online advertisers are largely made up of the same SMBs (Small to Medium Size Businesses) engaged with high effort/comparatively low return online promotion campaigns. This base is primed for offers capable of delivering the missing engagement component.

My clients use VisualVisitor to reduce the length of the sales cycle for bigger ticket tech product buys. The website visitor recognition service VisualVisitor provides is especially effective for re-connecting with existing customers. We recently identified a website visit from a past subscriber to one of my client’s SaaS offers. When we reached out to the key customer contact we were pleasantly surprised to find the visit was actually made by this person, who immediately disclosed to us an interest to double the size of an expired past subscription. Needless to say my client was very pleased.

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2013 All Rights Reserved


Just What Costs are Included in Google’s Traffic Acquisition Costs?

Google’s Q3 2013 earnings report includes an important section titled “Traffic Acquisition Costs”. Google has offered a definition of these costs. The Google definition of Traffic Acquisition Costs is very specific to the “network” component of their revenue. Google’s network affiliates receive payments based upon operational terms governed by contract.

So these costs should directly correlate to the “network” segment of any quarterly earnings report for this business. For Q3, 2013, the “network” revenue component posted a decline in revenue by approximately 1%, but the “Traffic Acquisition Costs” declined by approximately 1.3%. Is it safe to say the network affiliates are under some pressure? How else to account for a reduction in these costs exceeding the commensurate drop in revenue production for this component?

If this is the case, then analysts may want to dig a lot deeper into these numbers. If Google benefits more from its search revenue component, which operates wholly on its own websites, and, further, Google appears to be making very serious efforts to accelerate the efficiency of its network business, then perhaps the value of its pay-per-click and pay-per-thousands of impressions products has deflated more than otherwise appears to be the case. Personally I think this view, that the standard Google ad products are not delivering on their expectation, is the case.

I would add to the above information some observations on the amount of effort Google is expending to ensure the success of SMB advertiser campaigns. Via its “Engage” agency program, Google has been maintaining human support resources, accessible to any advertiser, via telephone contact, for several quarters. This program, alone, likely adds a cost component of some magnitude to their advertising products and, therefore, diminishes the profit margin.

Finally, it would be good to get some ideas as to the costs of the Analytics product. This product has a hefty price tag for enterprise customers, but the free version, which appears to be the method by which most users avail of this product, requires a lot of infrastructure and periodic systems development.

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2013 All Rights Reserved


Google Announces a New Search Algorithm Named Hummingbird

On Thursday, September 26, 2013, Google announced a substantial change in its search engine. A new algorithm named “Hummingbird” had been implemented. As Greg Kumparak wrote in an article titled Google Recently Made A Silent Shift To A New Search Algorithm, “Hummingbird”, Google claims ” . . . that this was the biggest overhaul to their engine since the 2009 ‘Caffeine’ overhaul (which focused on speed and integrating social network results into search) and that it affects ‘around 90% of searches'”. The announcement offered few technical details.

The main focus, and something that was repeated several times in Mr. Kumparak’s article, was that the new algorithm allows Google to more quickly parse full questions (as opposed to parsing searches word-by-word), and to identify and rank answers to those questions from the content they’ve indexed.” (quoted from Mr. Kumparak’s article).

This announcement seems to me to be more fluff than substance. For example, I just tried out this new search tool with a simple question “Where can I find a ride to Las Vegas?” The very first Search Engine Results Placement (SERP), “las vegas rideshare classifieds – craiglist” was the ONLY SERP on the first page of results relevant to my question. When I ran the same search with Bing, 2 of first 10 SERPs were reasonable results for my query. So where’s the big improvement for the Google Search engine?

I don’t think there is one. So this announcement signals yet another crack in the wall of Google’s prize position — its search engine. But is there something else at work here? I think there is, something to do with tailoring the search engine to better service the changing needs of click advertisers for better results from their investments. Over the last couple of quarterly returns, Pay Per Click advertising has not done as well, for Google, as the analyst community would have liked to have seen. So I think this change in the algorithm is really designed to deliver better click ad performance. I hope the actual mechanics of how the system will work better for online advertisers will shortly be illuminated for the public.

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2013 All Rights Reserved


Boundaries Between Editorial and Advertorial Online Content Continue to Blur

According to an article written by William Lauder, and published on the online Wall Street Journal website on Sunday, August 25, 2013, Marketers Seek Extra Edge to Go Viral, “More marketers are starting to buy space on websites for their so-called “sponsored content” – brand ads disguised as stories and blogs – using the same kind of automated trading platforms and other ad technology typically used for display ads.” (quoted from Mr. Lauder’s article). The information Mr. Lauder presents makes sense to us. Although the examples he cites are all about tangible products, we’ve noted quite a bit of content clearly assembled to promote intangible products and services, as well.

The concern, of course, is the extent to which this type of editorial content is accepted by readers as legitimate expository prose, rather than what it actually is — meaning skillfully assembled, high powered advertising copy. We think this concern is actually a big deal. If the public is fed this type of content, in other words duped, can we be confident correct decisions will be made about all sorts of topics, from the mundane activities depicted in Mr. Lauder’s article, all the way up to some very big decisions (for example, whether or not it makes sense to vote for a particular candidate, or spend a considerable amount of money on a primary residence).

Any/all examples of this kind of promotional content need to be clearly labeled as such, or else we will cross the line into a dangerous territory where, ultimately, editorial content, itself, will eventually lose any credibility whatsoever when the public, inevitably, wakes up to the ruse.

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2013 All Rights Reserved


Anonymous Website Visitor Information can be a Useful Component of Successfully Managing Online Advertising Costs

We’ve written on the topic of online pay per click advertising options. We’re not convinced they are a worthwhile investment for technology businesses. If a customer’s decision to buy a product can be categorized as a “considered purchase”, there are certainly better ways an ISV can find to invest cash in online promotion.

A useful tool to collect the information your specific business will need to evaluate, to make a correct decision on the true value of pay per click advertising for your product line, is an anonymous website visitor service. VisualVisitor is one of the businesses providing these services.

One of our clients has been using VisualVisitor to track visitor activity on several product pages on his website. We also use the same service to collect information about anonymous visitors to our website, and to blogs we write for clients, for example, Talking-SharePoint.com.

This client is also a customer of Google’s Adwords pay-per-click advertising service. With VisualVisitor, we can identify businesses visiting our client’s website from the client’s online advertising campaign. This access provides us with

  1. a method of verifying the accuracy of billing for the client’s click advertising campaign, and
  2. a glimpse into the website behavior of prospects produced by the pay per click advertising campaign

We’ve noted no conversions from our client’s click advertising campaign to actual customers for the client’s corporate product offers. So we’ve advised the client to, at a minimum, discontinue the pay per click advertising campaign and, for now, sink the same investment into Google’s online brand awareness campaign. For those readers unfamiliar with how the brand awareness online advertising campaign works, our client will not be charged for actual clicks on ads. Rather, the cost for the client is calculated on the number of impressions of the client’s ads on Google’s Display advertising network and its search engine.

Over the longer term we are working with this client to identify a reputable search engine optimization service. We think investing the same budget in a reputable search engine optimization campaign is still a much more promising investment for our client.

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2013 All Rights Reserved


Following Up on Anonymous Website Visits as a Method of Product Promotion

We make daily use of data on anonymous website visits in our work for clients. We use a service from VisualVisitor. Our service plan is available to any business at a cost of under $40.00 per month, which should be a manageable expense. Where we are engaged in discussions with prospects listed on these reports, we can use this data from VisualVisitor reports to predict likely decisions, and even build a wider picture of the stakeholders who will need to be included in our dialogue if we are to help prospects arrive at a decision to purchase one of our client’s products.

But from a broader perspective, following up on anonymous website visits can be a valuable method of promoting products and even building a brand. By definition this data can be used to identify the business domains from which online visitors access a website. But the data does not identify the actual person (or computer program) visiting the site. So any successful effort to engage with a contact from the business will likely present an opportunity to inform a new contact about a product or service.

Engagement opportunities emerging from anonymous website visitor tracking can be especially useful. The intrusive nature of an unsolicited telephone call on a subject foreign to a specific contact can, and should, be managed with a reference to the anonymous website visit prompting the effort. Most contacts will be more accepting of a call when they are informed someone else from the business evidently visited the site. A reference to products and services will likely be more memorable if a prospect is informed about them in the context of a discussion about a colleague’s visit to a website.

Early stage technology businesses should be keen to leverage any engagement opportunity to inform market participants about products and services. Direct contact with people is certainly the best method (albeit a comparatively expensive one) of educating markets about what your business has to offer. The cost of collecting information on anonymous website visits is low enough to justify some sort of outbound calling effort based on this information.

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2013 All Rights Reserved


Quickly Recognizing Website Visitors Leads to Shorter Sales Cycles

We use VisualVisitor on this blog and Talking-SharePoint (a week day blog we write for one of our clients, Rehmani Consulting, Inc).

One of our clients is also using the product to quickly identify visitors to several pages on the customer’s website. In both cases we can say the product is contributing to shorter sales cycles. Here’s a couple of examples:

  • Our second online meeting with one of these prospects included the funding decision maker
  • The business information provided by VisualVisitor helped us identify an influential contact who had gained substantial familiarity with our products from a past employer. So this contact turbocharged the process with her endorsement of our product.
  • In a second case our first online meeting will include several contacts. With different groups represented in our first meeting, we will have a better chance to understand how decisions are made at the prospect’s organization
  • We identified website visitors from a couple of deals in progress. By observing the pages they visited on our website, including the length of their visit to each page, we could catch early indication of a change in purchase direction on the part of one prospect.

We don’t know of many businesses likely to complain about a shorter sales cycle.

We are also big users of Google Analytics. So reviewing historical information about website visits collected with VisualVisitor against data collected from Analytics helps us understand better how our overall market is reacting to the marketing collateral we publish on these websites.

It’s also very useful to have access to the search engine queries leading businesses to our websites. One of our clients purchases click ads with Google. When we correlate queries to click ad campaign objectives, we can remediate market place misunderstandings, while, at the same time, we add value to this client’s campaign by helping them fine tune impressions to communicate the right message to a realistic audience, given their objectives.

Ira Michael Blonder

© IMB Enterprises, Inc. & Ira Michael Blonder, 2013 All Rights Reserved