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iPhone5’s implications for Advertisers

September 12, 2012 Apple announced the new iPhone5 which was widely leaked prior to the event. As many suspected the phone is thinner and longer which allows for a larger screen.  This larger screen has several implications for online advertisers. Outside of the screen several enhancements to the phone’s hardware and operating system also will impact advertisers.

Considering that Apple’s products contribute so much of the current mobile traffic, I think it is time Advertisers start to plan for these changes in their respective media plans.

Hardware changes that affect Advertisers:

  • Currently there is no mention of NFC or near field communications which Android phones have been pushing. This means that mobile banking might not become mainstream until next year.
  • The LTE web access which is relatively fast web access is going to increase consumption of information greatly. It will increase the number of web pages you access, the number of videos you watch and the number of apps you check for updates. All of this increases the number of impressions per micro-tasking session. For example if a person is standing in line at Starbucks, you used to just check Facebook, but now you might check Facebook, the weather, and the news.
  • The LTE web access will be so fast, that I can see more and more casual users getting rid of their laptops in favor or their phone and tablet. This clearly requires new ad formats and media plans that take into account more mobile inventory.
  • The larger screen creates black bars on the sides of older apps if they are not upgraded. This could be a new ad spot for something similar to a takeover unit that wraps around the app.
  • The larger screen is longer which has implications on the usability of the phone. People’s thumbs will not grow longer, which means the upper left corner of the screen is actually too hard to reach for most people. Once app developers realize this, they have two options, move the navigation controls to the bottom or make their apps in landscape mode for two handed use. Each of these scenarios potentially moves where ads can be placed in apps and the actual size of the ad unit. Being at the top of the page on a long phone may be the new “below the fold” unit. Just bad CTRs. Being near the navigation of the app will be key to higher CTRs.
  • Given the new physical format of the device, lots of accessory providers are going to be buying advertising this holiday season. There may be a minor bump in online ad competition due to this.  This also takes away spending money from other sectors.
  • Considering that Apple has been rather aggressive with Samsung in terms of patent lawsuits, you may actually see Samsung beef up their advertising of the Galaxy S3 to counter act Apple’s advertising. Once again pushing CPM rates up higher over the holiday season in the tech vertical.

Software changes that affect advertisers:

Apple’s new phone will ship with iOS6. For the most part this is Apple’s first big push to start to eliminate it’s dependence on Google products like Maps and YouTube. From what we have heard, YouTube will not be a default application on the iPhone. YouTube has already announced a native application for iOS6 to counter this. I suspect most people will download this on day one of owning the phone.

  • As Apple pushes out Google, this changes user behavior in terms of how they search and get other basic info. Most of which we used to get from Google. This potentially will reduce Google’s mobile search penetration on Apple devices and therefore lower AdWords revenue from Apple devices. If Siri gets your info via another service, you stop visiting Google Search.
  • The strike at YouTube actually gives advertisers more potential options of video advertising. I think you will start to see new ad units in the native YouTube app over the coming months. This will be an area of strong growth for Google in my opinion especially with the LTE web access.
  • The changes to the email in iOS6 allow you to mark people as VIP which sends them to a different inbox, similar to Google’s priority inbox feature. This potentially puts a major damper in email advertising on mobile phones. If your email ads are not being seen or open your ROI is going to be lower.
  • Given the faster web access, more and more people will be checking their emails on their phones. If for some reason they don’t use the VIP mailbox, and they open your email ad, you need to make sure your email renders properly. Having responsive email design will be paramount to ensure high CTRs.
  • PhotoStreams can now be subscribed to. This is huge for advertisers, especially fashion advertisers. Being able to subscribe to celebrities streams and I am assuming brands, you will see what photos they are taking, similar to Instagram or Facebook. If Advertisers play this well, you will get iPhone5 users to subscribe to your stream and push coupon images to them or pics of new menu items or new clothes in store. This will be a major way to drive traffic to your store and/or website. It will also put a major dent into Facebook, Instagram and Pinterest assuming there is no integration. If Facebook is smart, they will allow the iPhone to publish its photostreams directly to Facebook. As an advertiser it will be important to understand how photostreams work. You may find yourself buying a paid spot in Kim Kardashian’s photo stream sooner rather than later.
  • Passbook seems a bit like TripIt in that it keeps your tickets and travel info in one place. This feature has major potential to monetize geo-location ads. This is  if Apple opens that up. Right now it is more of a pipe dream.
  • Apple switching to its own maps interface, potentially reduces the importance of Google Places or business pages. The effect of this is still yet to be seen but for smaller local advertisers, I would keep asking my customers where they are finding my listing to see if there is a major shift in user behavior.
  • New apps means more consumer spending which means less expendable income for other purchases during the holiday season. In other words Apple will dominate your wallet in the coming months.

Some exciting changes coming up for the advertising world given the new iPhone. Stay tuned for more updates and please feel free to comment.

 

 

 

The Most Comprehensive List of Google Resources

Google has become more than just a search and email company over the past few years. Many of us don’t even realize how many things they now do and more often than not, we get lost in all of the information.

This is the most comprehensive list of resources of Google products and how-to videos which is especially helpful for small businesses looking to navigate the complicated Google waters.

Policies

Security

Software Principles

 

Google Culture Institute

Politics & Elections Tool Kit

Giving @ Google

AdWords– Watch this Space

Take Action

Gone Google

NewMe Accelerator

 

Think Insights

 

Users

NonProfits

 

 

Education

 

Small & Medium Local Businesses

 

Google Places

 

Google+ Learn More

  • Community

 

UNICEF and Mia Farrow host a live Hangout from Bukavu, Congo to discuss polio, gender violence, and child soldiers as part of UNICEF’s greater campaign to raise awareness of humanitarian issues. Participants joined from around the world, including India, Pakistan, Argentina and the US

 

YouTube

 

Picasa

 

Google Accounts

 

Gmail

 

Gdocs (now Google Drive)

  • Video Support

 

Gcalendar

  • Video Support

 

 

Google Webmaster Tools

 

Google Analytics

 

Google Ads

 

Google Apps 

 

Lead Gen and Mobile

Lead generation on mobile is still somewhat a mythical form of advertising. Some are buying lots of cheap inventory and driving lots of leads. I consider this the brute force method. People don’t like filling out lengthy forms on their phones but they will if they have to.

The other issue is that form filling on a mobile phone just doesn’t make sense. Why ask someone to fill out a tiny form when they are ready to talk right now and have a phone in their hands? Mobile advertising should really be focused on click to call campaigns to generate inbound leads.

There will always be varying opinions of what is right and wrong within mobile marketing but our perceptions can be refined by knowing exactly what the does on their phone during the course of a day.

In a recent IAB report, which can be found here, it highlights what users actually do online during the course of the day. The report is fascinating and shows many of the hurdles that mobile advertisers have to overcome. It also shows why slow or lengthy forms are not the way to go into the future of lead gen.

Here are the highlights:

1) Mobile use is highly time sensitive

Mobile usage spikes during commuting times and decreases during work hours. This is the opposite of many display buys that lead generators have done in the past. We used to buy during work hours, this gives us another medium to explore after the person has left work.

2) Mobile is often seen as a tool for price comparison, especially in store.

People on mobile search are much further down the decision path and ready to commit especially with physical goods. Finding a better price can take the consumer out of the store to complete the purchase with an online retailer.

3) Mobile is often used during another activity like watching TV.

61% of mobile commerce happens in the living room/TV room. 49% of people are watching TV at the same time they are using their mobile phone. Speed is a huge issue with mobile offers. If you can’t complete your lead gen process within 30 seconds, you risk a TV commercial or some other media actually taking the user’s attention away. Focusing on getting the person deep into the conversion flow or on the phone can help break them away from the other media.

Another issue with mobile commerce is the issue of “push notifications” which can pop up frequently during a flow and interup the conversion process. Once again speed becomes the biggest advantage.

4) Boredom is a major reason why people are on their phones

People are waiting at stop lights, in line, for something to download, for a commercial, etc. When people are waiting or bored of the primary task they often use their mobile phone to fill the gap in productivity.  From an advertiser perspective it is necessary to understand that people fill boredom with impulse buys. Focusing on low cost, compelling offers, and easy purchase flows can create more success in the mobile marketing arena. Large purchases can be more enticing if there is a special limited time offer or if there is an obvious incentive to engage right now.

5) Mobile is local

The term “SoLoMo” has become a buzz word since it reflects how many people use their phone throughout the day. It is seen as a tool to help them explore their local community, find restaurants, find a tow truck, find movie times, etc. Small local tasks seem to be a major use model for mobile. The social aspect does not seem to be a major factor in motivating a user yet, but this is partially because the number of social local mobile services is fairly small at the moment. I expect that to change in the coming 6-12 months.

6) Re-targeting may be the key to mobile.

Now here is the golden nugget. If users go to an offer on their notebook or desktop, massive value can be derived if the user is “followed” to their mobile device. For instance the user visits a car insurance website on their computer, and doesn’t fill out anything. They get a retargetting pixel which follows them on to their phones through browser synchronization.  When the user is browsing or searching on their mobile phone they will see ads from that same car insurance company, perhaps with a personalized message of sorts.  This model may even work in the TV realm, imagine watching a Geico commercial, your phone is “aware” or “listening” and then starts showing you more Geico ads.

That will be the holy grail of mobile advertising.

Lots of interesting things to come out of mobile advertising in the near future. Understanding more of what people do on their phones will be key to creating successful marketing campaigns in this market.

 

 

 

Yahoo Axis and SEO

Yahoo! Axis is the new browser plugin by Yahoo! which allows people to once again “browse” the web in a visual interface.

My initial thoughts on the interface:

  • It is fast! It is also much more intuitive to use than Bing’s Social Search or So.Cl products.
  • It is a glorified toolbar in some respects. It is attached to the browser which is a great distribution strategy since it works with the major browsers. Any decent toolbar developer with a Yahoo feed could potentially replicate this quite quickly.
  • Ads are either not present or they are very well hidden. I can’t help but think this will not drive more revenue for Yahoo.
  • The flip side of the ads argument is that this tool allows you to stay on your favorite site and search at the same time. So essentially the display ads on the main site still maintain a lot of value since the impressions are much longer now.
  • This is a huge boost for sites like Facebook. Bing should have really done something like this instead of trying to get people to Bing.com. Given that people spend hours and hours on Facebook a day, allowing them to really get true search results while never leaving their “ecosystem” is huge.
  • The touch interface works well with a Mac and iPad but PCs without multi-touch support may not get all the benefits of the simpler UI.
  • Images are an interesting way to browse the web, but when it is not fashion or recipe related, the value of an image is greatly reduced. Just seeing a snapshot of a webpage doesn’t help me know if I should be going to that page.
  • There is not much in the way of social integration.
  • I couldn’t get any video results or image results to appear when searching for things like “lamborghini aventador video” or “lamborghini wallpaper” This seems to be ignoring a large portion of the web.
  • Location at the bottom of the screen is “thumb friendly” for tablet devices.

How does Yahoo Axis affect SEO?

From a technical standpoint, it doesn’t change anything in SEO since the search results are largely served by Bing.

However, from a consumer standpoint, the ranking is not hierarchical anymore. It is horizontal indicating a slightly more egalitarian structure. Subliminally if things are placed horizontally most humans will think they are of equal importance. This is very counter intuitive to Google’s vertical ranking which indicates the one at the top is the most relevant.

Another major point from a laymen consumer is that now your site is largely being chosen based on an image block. Most informational websites are designed around text and navigational elements. For example, if you run a company that provides mortuary services, would you put an amazing photo of a dead person or a fancy casket on your home page? Would this image establish the site as an authority and sway the browswer’s opinion in any way? In other words, would this image get me a click?

This is an extreme example but the reality is that many things can not be conveyed in images. Company logos are a great way of creating trust through branding but Yahoo’s interface focuses on a webpage rather than a logo. Most people don’t associate any brand notions with your webpage especially if they have never heard of you nor interacted with you.

Yahoo! is trying to push the web back to 1999 when we were largely “browsing” or “surfing” versus searching in the mid 2000’s. Visual search is being driven by sites like Pinterest but the content it caters to is inherently a subset of the entire internet. Without support of multi-media searches, the Axis tool seems somewhat of a mobiel accessible toolbar and that is not a huge value generator for the consumer. This tool is really focused on publishers keep their users in one place for the majority of the day.

I think Axis has the bones to become a great tool, but this version is not something I will use.

 

Facebook vs Adsense

Facebook is due to IPO within the next two days and the analysts on the street are wondering how Facebook can keep its current multiple long term.

Is Facebook the next Groupon?

In my opinion, I think Facebook has some interesting plays which could boost revenue in the coming years. Groupon is an accounting mess you don’t want to touch with a 10ft pole.

What will Facebook do to grow revenue?

The key here is that Facebook will have major trouble growing its user base past the 1 billion mark. There are just not enough people online in the world to make that grow. Without a dominance in China, they might plateau around that 1 billion user mark.

Also once they become public you will see a marginal decline in users since they may be forced to disclose how many of the actual users are just advertising accounts or duplicate accounts.

Facebook drives most of its revenue via ads. No surprise here. I think this will remain the core for years to come. Here are the pros and cons of their potential revenue models.

Mobile

A large portion of Facebook users primarily access the site via their mobile devices. Currently the issue is that the majority of interactions are notifications or action items. You tend to browse more on the desktop version of Facebook. The argument here is that the majority of their display ads are for a browsing type audience. Building new ad units for the mobile user and fitting everything within the 4 inch screen will be tough. The only real spot for an add within a native app is in the feed itself.  Or perhaps Facebook allows advertisers to send messages/emails to the users with relevant ads? Either way, the model is subpar at best.

If Facebook were to release a click to call network, that might be something to watch. Perhaps they acquire a company like Marchex to get that technology.

TV

People often forget that TV is still a monster of ad revenue. Facebook users are often on Facebook while watching TV. There is a play to be made here. And advertisers know the breadth of Facebook. Will TV shows start broadcasting on Facebook and will there be regular 15 to 30 second commercials on Facebook? Taking this route directly takes a stab at YouTube which we all know has a massive amount of ad inventory which monetizes fairly well.

AdNetwork outside of Facebook.com

One analyst mentioned that he thinks Facebook will start to attack the AdSense model and go after publishers outside of Facebook.com. This is one of the most valid ideas since it can be executed relatively quickly. Publishers have no loyalty to any ad network so there is little switching cost. Facebook already has a strong ad platform, but it doesn’t have much variability in terms of the ad unit sizes. This could be an issue for pubs. The other issue is that Facebook is largely CPC focused, but for publishers the CPM model might prove more effective. Google is clearly more advanced in this sector but they don’t have the social data to increase overall click through rates for pubs.

As the web moves towards being more mobile, this could also present another roadblock for Facebook. Will they be able to make display ads work on mobile partner sites? Does Facebook have a big enough sales team to go after the publishers that work with Google already?

Will having a transparent network be good for advertisers? Will having a transparent network be good for users?

My guess is that people will start to feel weird about Facebook following them outside of Facebook.com. I bet the privacy lawyers at Facebook will hold back revenue growth in some ways.

Facebook.com

Facebook.com still has more inventory than ads, which means the ads show at a very high frequency compared to some other ad networks. This results in a lower conversion rate for advertisers and lower monetization for Facebook.com. They really need to get more advertisers in the mix so users are always seeing something fresh. The burnout rate for ads is just too fast for most advertisers to keep up with.

CPC rates have risen very quickly for the big advertisers but they are fighting for certain demographic groups which convert. Making the long tail of impressions and users will be important to long term monetization for Facebook.

Apps 

Ah, Apps within Facebook. For the app world it makes sense to compare Apple’s app eco-system to Facebook. Apple makes a ton of money by being fairly agnostic of the user interface, they provide a solid hardware platform and simple monetization engine. They also provide fairly consistent growth in their devices which keeps the market growing.

Facebook on the other hand, provides various speed bumps or walls before you can get to your intended content. It also rapidly and frequently changes the user interface which is key to how app developers gather new users. The concept of “social sharing” is a moving target and can sometimes go away completely with larger changes like the Timeline implementation. Products like social readers blew up in terms of usage and died almost as quickly because of the UI changes Facebook implemented.

Consider how much time it takes to build an app, and the costs behind it. If you can’t deploy within weeks, you may actually miss the entire market opportunity. From an investment standpoint, I think investors will be hesitant to put money behind these ideas since they are unable to drive long term revenue or user growth. The other side of this is that developers will get sick of not being able to drive long term revenue with Facebook. They will focus on iOS where things are stable.

If a company like Zynga were to launch today, it wouldn’t work and it wouldn’t be driving 15% of Facebook’s revenue. Facebook is not allowing new products/companies like Zynga to sprout. This could be a serious issue when considering long term growth.

1 billion member affiliate network

Facebook could be on the brink of releasing the largest affiliate network ever. Imagine if it allows advertisers to pay each individual for getting their friends to buy a product or service? There would be millions of micro payments per day and massive fraud. This particular model could put a serious dent into Facebook’s cool image. But people want money and there will always be a group willing to sell their friends.

Search

Google dominates search, and Bing runs a pretty solid site. Bing.com doesn’t need to exist anymore. It can live within Facebook.com and probably grow much faster. Searching for anything on Facebook is a horrible experience. I would bet that most people still leave Facebook.com to do a Google search, and then come back.

Facebook needs to stop people from leaving the site and truly incorporating Bing into the system will achieve that. It will also create a new ad product within Facebook.com which most advertisers are very familiar with. Search Ads.

There are no real costs associated with this strategy. Bing and Facebook already play nice together and are integrated loosely. But having the full power of Bing within Facebook is the better use case for users. Time for Microsoft to let go of this brand and focus on really attacking Google.

I think this proves to be the biggest threat to Google long term. If they lose their foothold in search, it could spell disaster for their entire product line.

 

Google+ Hangouts on Air and EDU

Google just announced that Google+ Hangouts on Air will be available to everyone worldwide.

What is a Google+ Hangout?

Google+ is a Google’s social network which is more based on friend discovery which is different than Facebook’s model of being a voyeur on your friend’s lives. Google+ hangouts allow you to have an online video chat with multiple people at once. Think of it like a giant video conference call.  Quick promo video is here.

The cool thing is that this is 100% free, and you can join anyone’s public hangout. This means you can really strike up a conversation with people you don’t know and potentially learn new things.

Google+ Hangouts on Air is a way for people to publicly broadcast their hangout and save the video recording on their YouTube channel for a later viewing. Some examples of this are here:

Trey Ratcliffe in a Google+ Hangout.

Here is a quick explanation of how to get your Google+ Hangout started:

Why is this important for Education Marketing?

Marketing in general is about questions and answers. (OBVIOUS STATEMENT). Does your product or service help me do X?

Education marketing is largely form based and a one to one approach. I fill out a form, get on the phone with you, ask a bunch of questions and the school tries to sell me on a course.

Leads are incredibly inefficient in some regards. They ask a person to wait for an answer, sometimes the leads are never called back since they don’t meet certain criteria, and you are in a sales pitch most of the time, not a true consultative approach. Another downside for leads is that they require one call center rep to be talking to one person at a time. Lastly, I would bet that most prospective students don’t have a pen and paper to write down their questions and the respective answers. The majority of the knowledge on the call is lost within seconds of hanging up, resulting in more calls or a lost sale.

Being in a recorded communal chat with video has several advantages.

  • The video is recorded – people can review the video again later if they get interrupted. Being interrupted is almost 100% certain given the volume of communications methods we have these days.
  • The questions come from multiple people. One person may ask a question you never thought of. This benefits everyone in the group.
  • Cost delivery is much lower. One trained person can talk to several people at once.
  • Since it is online, you can continue the conversation after the video. It is easy to take the conversation private or continue via phone.
  • It feels more personal since you can see the other person’s face.  This builds major trust with students that are worried about “fake online schools.”
  • The video itself can be used a marketing material. Real conversations are a great way to show your company has a soul and see that the other prospective students have the same worries as you. Knowing you are not alone is a major psychological element.
  • If a person can successfully communicate via a video chat, they should have no problem learning online. Consider this a quick and free test to assess their technical skill level.
  • You can easily assess their grammar level and communication skills.
  • You don’t have to worry about transparency issues. Everything is recorded.
  • No school is doing this now. The first movers here will establish a major market advantage and potentially drive real sign ups versus useless “likes” on Facebook.

What about B2B marketing?

From a B2C perspective, there are many advantages for using Google+ Hangouts on Air for marketing. However, I think there are also major benefits for using this method for B2B marketing of Education technology.

Imagine being able to host webinars about your technology for a variety of market leaders at once? At first you might think this is a bit odd since your competitors might be on the call.  That may be true in some settings but in other settings you might actually receive valuable insight from the other people in the Hangout.

Instead of traveling to expensive conferences, sometimes it is better to get 5-10 thought leaders into a common place and hash out a guideline, talk about a white paper, or talk about some pertinent news. Or perhaps after a conference, the panel wants to clarify a few points, they can easily hold a hangout to further discuss. The conversations should continue after the convention.

Anyway you look at it, Google+ Hangouts on Air has the potential to really enable a lot of new ways of communicating for the B2B world.

Another potential use for this technology is a shareholder conference. I can easily see quarterly shareholder calls going from boring phone calls to interactive video chats so that shareholders from around the world can question management.

 

 

Trusting EDU Lead Gen Again

In 2010 the EDU market essentially ran out of gas and has been forced to come up with more sustainable fuels to keep the system going.

The EDU lead gen market went from a booming industry to an industry that had two parties, vendors and buyers who didn’t trust each other anymore. Suddenly there were “ad police” in the market sending you screenshots of what was wrong and not kosher according to the new DOE standards.  When the police arrived, a community based group called the Education Marketing Council put forth self imposed regulations and standards.

All of this lead to a massive decline in the publicly traded EDU stocks, a drop in overall lead flow and layoffs at various organizations.

Why did all of this happen?

It happened mainly because very few if any lead buyers knew where their leads were coming from. If they knew where they were coming from, they were not 100% sure if those leads were fresh.  Think of it like if you went into Whole Foods and bought a really expensive steak which looked fresh but you really had no idea how long it had been there, where it had come from, if it was organic, if it was grass fed, etc… You mainly relied on the fact that it was sold by Whole Foods, a historically  reputable company.

The effects of buying bad leads from a high quality provider caused a massive sense of distrust in the industry which spread like wildfire. It seized the lead gen engine that had run so smoothly for the last 10 years.

In a so called performance marketing system on boarding vendors costs on average $20-60k (conservative test buy of 500 leads a month for 3 months at a CPL of $25)  before you know if the leads are viable or not. I am not sure if that is “performance marketing,” anymore.

Leads are Commodities…or are they?

The EDU Lead Gen market is a commodity market. Everyone is just selling information. However, this market is unique in that the leads can be graded by the following factors:

  • Freshness – how long it took to get to the buyer. And how many middlemen it passed through to get to that buyer.
  • Source – What was that lead fed in terms of a marketing message. Was the message filled with false statements etc.
  • Certification – Did the lead go through a system like Targus Info to validate that it is in fact a real phone number and contactable?  Also does that phone number match the name on the lead?
  • Modeled – Based on the buyer’s historical success rate, does this lead look like it has a stronger chance of becoming a paying student?

After 2010, several EDU companies invested heavily into differentiating their leads and spent thousands on travel visiting their clients assuring them that they were going to be transparent moving forward.

But for some reason, this didn’t really resolve the trust issue in the industry. Media buyers still were skeptical of on-boarding unknown vendors. Mainly because if the bigger guys played by the rules, the little guys had a lot of incentives to play in the grey area and test the limits.  The other reason is that the majority of actionable metrics were retro-active. You had to wait until you got enough info to determine if the lead was bad and kill the source. This took time and a lot of money.

Enter LeadID

In 2011 a company called LeadID entered the market. It is headed up by Ross Shanken, an old TargusInfo guy. He set up a simple system which essentially gives a lead a stamp of origination. This stamp essentially stays with the lead no matter where it goes in the market. If a buyer buys a lead with this stamp they can see how many hops it took to get to them. It also shows how long it took to get to them.  All of a sudden the EDU market has a way of showing a buyer that they are actually delivering what they are promising.

Huge.

It is easy to compare this system to something like a CarFax. It is a report of what happened to X car. The main differences are that you can get around a CarFax and not report information and a CarFax is somewhat retroactive. LeadID is in real time and once implemented you can not get around it.

I won’t go into the tech too much but here is a quick video explaining the concept behind LeadID.

http://www.youtube.com/watch?v=jjyXQpc2QKA

 

As a media buyer what does this mean for you?

If you have ever bought a used car you have been trained to “ask for the car fax” through various commercials and friends recommending the system.

As a media buyer imagine how much time you can save by just asking “Show me that you have LeadID implemented.” If not, simply say we are not testing new vendors without this.

This one question has the potential to save you that initial media testing cost and save you tons of time listening to the exact same sales pitch.

This strategy has a lot of potential benefits for media buyers in the EDU industry and the system as a whole.

  • It creates trust and honor in the system. If you stamp your product with a seal, you better be delivering what was promised. The buyer now has real time insight into if you are delivering it and can call you out at any time. This is also a metric that doesn’t require a ton of Excel time to find. It is in a simple actionable dashboard within LeadID.
  • You can finally start to pay more for the good stuff while the media source still exists. A major issue with media buying today is that the inventory itself changes so fast. If you want to replicate a Facebook buy from 3 months ago, that is virtually impossible. There are new users, new ad units, and much higher prices. Being able to reward vendors now versus 3 months from now is big.
  • As a media buyer you can spend more time talking about strategy with your vendor versus interrogating them about their “transparency.” Once again going back to building a solid relationship and partnership.
  • You have one more point to negotiate prices be it positive or negative.
  • You can cut outliers in the data quickly. Cut anytime during the month if they are not delivering what they originally promised.
  • There is no real implementation time on the buyer side. It is a web based interface.

Is this all good?

No, of course there are issues with any new technology. To really make this work, it needs to be a standard and used by the majority of people in the industry.

Since it is technology, it may be possible to break it. The inherent mentality of a vendor is that they will always be testing/hacking to find the highest level of performance.

It also won’t erase the mass mis-trust in the industry right away. It will take some time for both buyers and vendors to realize the true value and get back to the more important conversations.  This may require some re-training in the industry to show that new vendors can be given the benefit of the doubt.

What should be my next steps?

As a media buyer, vendor or C Level exec – the easiest thing to do is evaluate the technology for yourself. You can find Ross and his team at the upcoming Insights Summit in Las Vegas. I believe they will be presenting a case study with a current publicly traded client. You can also email Ross directly at ross@leadid.com.

Before your meeting with the LeadID team, I would encourage you to ask yourself and your organization a few questions:

1) When you hear from new vendors – are you hesitant to reply to their emails knowing that you can’t test them or just don’t want to deal with the boring sales pitch?

2) Are you rewarding higher performing vendors? Are you able to cut bad vendors fast enough?

3) What is the average cost of your test buy? How many enrollments does that usually provide?

4) When is the last time you had a call with a vendor to talk about corporate plans 6 months out and actually have the vendor execute on a plan?

5) If your financial projections for 2012 and 2013 are flat, what are other ways you can save money in your media buy?

 

 

Startups are Destroying the US Economy

In the past few weeks, I have been lucky enough to visit a variety of conferences regarding entrepreneurship.

One of the most recent events was sponsored by Bain Capital and the Accelerator at the University of Texas at Austin. It had three engaging speakers, a professor from Rice University who had done well in business, a CEO who had sold a company for over a billion dollars, and an entrepreneur who sold a small personal item belt.

During the course of the discussion I think most people discounted the entrepreneur who sold the belt, since it was low tech, it was a physical product and she had not taken money to develop her business. Kim Overton’s company SPI Belt is 100% bootstrapped.

People started paying attention her once she said that she was making close to $8 million dollars on these tiny low tech belts. And the kicker was that she didn’t have to answer to anyone and she still had 100% ownership. By most definitions she runs a successful small business.

Why I bring this is up is because it hints at an issue with American culture. In 2012, millions of entrepreneurs have taken the route of creating a startup instead of creating a small business.

The laymen distinction between a Startup and a Small Business is that a small business is an industry that already has a definitive revenue model. A startup just has an idea with no current revenue model.

From a macro-economic perspective, my personal take on this is that early stage investors are actually destroying value by taking a strip mining approach to entrepreneurialism. In a traditional strip mine, thousands of tons of earth are moved to find ultra valuable minerals in tiny concentrations. This is not sustainable since it disrupts the larger eco-system which doesn’t repair itself quick enough.

In current day startup investing billions are spent to find the next Facebook or Twitter.  On top of the engineering costs millions more are spent on PR to create buzz. In reality they are trying to be market makers to define the value of a particular technology.  Most of the PR is professing why you should be using X technology to share, communicate, be involved, engaged etc.

Daily, companies are funded that have no revenue model and intentionally shun traditional monetization programs like advertising.

Now, what are the effects of this approach?

  • Thousands of well educated individuals go into jobs being mainly compensated via investment capital or even worse shares of equity. This usually equates to a shoe string budget for the person and it greatly limits disposable income. From a macro-perspective I am sure that thousands of entrepreneurs choose not to buy a home or durable goods since they are not sure if their income stream is going to be consistent. This undermines economic value creation.
  • From a time perspective, if a young person spends 2-3 years in various start ups that all ultimately fail, this is time that could have been spent working in a traditional business driving real sales, and potentially more tax revenue.
  • They are repeating failure. They are encouraged to continue to take risks and continue to waste time and money. There are few instances within the Silicon Valley culture where people say “hey, I think you failed enough, I think it is time for a regular job.”  Silicon Valley has created a culture which is a kin  watching a gambling addict. They will double down on every hand even if they know they are going to lose.
  • Startups are fairly elitist. They look for people with pre-existing skills or a higher education in many cases. Startups don’t usually create jobs for under-educated people and don’t really have the resources to train people. Once again preventing larger economic growth for people who don’t have access to higher education.
  • Startups are clustered. The investment and startup community is rather incestuous. If you really want money for a startup the most common advice you will get is to move to Silicon Valley. This creates a brain drain in communities which need it the most and relegates them to stagnation. Imagine what would happen if those sample people stayed in their community, grew a small business and infused their enthusiasm to a more traditional business. Perhaps their community would start to see growth again and retain talent long term.
  • Start up culture has rebranded the concept of panhandling or begging. Asking for money in exchange for an idea/vapor is the exact same thing as begging. If you have no intent to ever monetize your idea but create really cool technology, your concept or start up is undermining fundamental business rules.

By now, most of your are thinking, this article is really offensive and doesn’t cover every start up. And you are right. I apologize for that. But keep reading it gets better.

Should early stage investors stop gambling on new ideas? No.

So what should change?

There are a few things that need to change to create more talent in America that generates real revenue.

  • An investor should embed startups with the concept that having a revenue model from day 1 is not only good but also necessary for funding. No exceptions.
  • Startups should understand that the ultimate goal is to get information about users and get more eyeballs. What that statement means is that ultimately we need to sell advertising/products to your user base. If you don’t feel comfortable with the concept of selling, you shouldn’t be starting something up. The other perspective on this is that your start up should reduce costs. EG – making transmission of data, faster, cheaper, easier. That is value people will pay for.
  • Larger companies need to restructure research in house. Millenials fear large companies since they appear to be boring, slow and lack innovation. Internal skunk works will create macro-economic value through salaries/taxes and potentially create new revenue streams for the company. Plus you get to train the person to work in a much more diverse set of individuals.   The idea of an internal skunk works department also helps keep knowledge in a system where it can deliver value now or later. If a start up dies, most of the knowledge dies with it. There are lot of start ups which come up with the same idea but with minor variations. If the core idea is corrupted or not able to make money, we are now wasting resources two times over. There really should be a site of concepts that never worked. F**Kedcompany used to be that resource.  I suspect that this site will come back very soon. The IBMs, HPs and Ma Bells of the world were some of the best incubators of all time. The US military is also one of the best investors on the planet. Why aren’t more startups aiming at being inside HP or selling to the US military?
  • The concept of early stage investing should always include mandatory focus groups and professional managers with a record of selling a product or service to customers. Focus groups of real customers keep your product realistic. Only work on ideas that people actually want and understand. Technology should work for us, we shouldn’t have to learn it.   Having a person on the team that knows how to make money will force you to compromise. This is a short term compromise. Once your company is large enough you can start experimenting more with “cool” features.
  • Investors need to get back to fundamentals of revenue and costs. Coming up with bullshit metrics to justify the company’s growth curve is selling snake oil. Time on site, number of page views, engagement, social velocity are useless terms unless your site has a true way of making money from all of those people.
  • Instill common values about not wasting resources, be it money, brain power, or time.  If you are interested in seeing how spending limited resources might actually cause  a collapse check out this MIT Study.
To really see any of this work, the unfortunate fact is that we need to re-align values. The only quick way that happens is through a major catastrophe or market crash.
For more information on how Silicon Valley was created I suggest reading the NPR series here. 
My advice for today is get off your computer/phone/tablet for a moment and look outside at a local business. Imagine how long he could give away his product for without you paying for it…The Internet is reality, it must make money eventually.
What I would like to augment in this article:
If there is a university researcher out there that wants to help me gather data on how much startups take from the economy and how much they actually produce, please email me! The only true way to verify the thoughts above is through hard statistics and defining if a dollar invested in a failed company actually creates any value, or if it is a 100% loss.
I welcome your thoughts/comments!

 

How Mobile Growth will Fuel Advertising for Years

The Business Insider put together a great presentation about where we were in terms of mobile growth world wide and smart phone penetration globally.

It had some amazing insights which are summarized here, but I also wanted to provide a perspective on how this may affect online advertising.

  • Currently 835 million smartphone users vs 5.6 billion feature phone users. (Keep in mind the number of phones is almost the same as the number of people in the world!)
  • Smartphone sales exceeded PC sales.
  • About 46% of US mobile users have a smart phone now.  So we are only half way through the transition to everyone having a smart phone.
  • SmartPhone Penetration is highest amongst the 18-34 group with income above 75k.  Soon the trend will be everyone.
  • Android and iOS are dominant. But developers prefer iOS due to Androids handset fragmentation
  • Mobile ad revenue is estimated at $800 million currently. Google is dominant taking 64% of the market share.
  • Only 1% of ad spending goes to mobile currently, however the consumer spends 23% of their available time on a mobile device.
  • Apps can generate a ton of revenue on mobile platforms and spread very quickly. However, overall share of mind is limited. Each new app may take user time away from another app.

What does all of this mean for the future of online advertising?

There are a few things not mentioned in the presentation which may help us understand how this will affect online advertising.
When people are online at their computers, or watching TV, they always have their mobile device with them.
Most advertisers already realize this and have started to launch integrated ad campaigns which ask you to complete an action on your mobile phone while watching a show. Twitter and TV integration is quite widespread now, you will notice most shows now have hashtags on the screen during the show.
The possibilities of how these two industries will be integrated is quite limitless. For general marketing purposes I think you will start to see overall ad budgets increase overall. The whole advertising ecosystem must be looked at in a holistic manner.  Often times TV ads actually boost the performance of online ads since they ad validity to the company advertising. EG – If they can afford to buy a TV ad they must be a real company and somewhat trustworthy.
On slide 27 of the Future of Mobile deck, you can see that TV still gets the lion share of ad dollars. I don’t see this changing in the near future. Especially as TVs become more connected. Once Apple or Android release a TV/Computer hybrid you will see a massive change in your TV experience. Imagine having a prime time show up and a browser window up on the same screen, and a mobile device on hand.  Also, it is highly likely that your phone becomes your remote. Not only is it in the room, it will actually be integral to your viewing experience.
Consumers will have incredibly short attention spans since they are trying to pay attention to multiple devices at the same time.
What we have established here is that the new electronic mediums play nice with technologies like TV and Radio.

Does Print Media have a future?

In my opinion, no. Print and digital devices are redundant. Even as much as I like holding a physical book or newspaper, the ability to deliver content faster and cheaper online will win.
Print excluding things like billboards (there is no replacement for those yet) takes a huge amount of ad spend but yields low results. The postal system is a key indicator of this industry collapsing. People are able to get their NY Times on the iPad now. Why kill a tree for something you are going to read for 5 mins?

Will the desktop still matter?

In the short term (2-5 years) people will still use desktops since they are important in work environments and portable devices are simply not big enough or strong enough for an 8 hour day.
Web based ads served to desktops and laptops will be important but the level of targeting will be antiquated compared to things we will be doing in mobile. For decades people have been able to pick demographics to target, but micro-targeting based on demographic, time, location, who you are with, personal influence, etc… will increase click through rates and overall engagement.
Ad networks will take that and charge premium rates due to the high level of engagement. Expect mobile ad rates to go up but not skyrocket. There is a ton of inventory out there. If supply was limited it would make the rates skyrocket, but inventory is outpacing advertiser interest at the moment.

As a media planner where should I start buying?

If you are an online media planner, it is important to learn how to buy on TV. I can’t stress this enough. The online world and TV will merge. Not knowing how to buy on both platforms will hurt your career and your clients.

Secondly, start setting up test buys on mobile. Inventory is cheap now, you can afford to make mistakes. Focus on what happens from an operations perspective to make sure the customer’s experience is a high quality, and quick experience with your company. Focusing on your short term eCPM or eCPA will not give you the learnings you should be focusing on.

The key to a long term strategy is really designing a pleasurable customer experience on a small screen or via voice.  That is what makes people buy, come back, and tell their friends.  Creating an experience that mimics your web checkout or form flow will kill your campaign. No one wants to fill out 15-20 fields of info on a tiny screen. Time is crucial. Most people will have various push notifications, text messages, new emails and other distractions coming through during your checkout process. Making sure your flow is quick is not just important it is the cornerstone of your mobile strategy.

Sometimes as a media planner, it is important to know where not to buy. It is time to move away from print. Go up to any hipster and ask them the last time they bought a magazine or a newspaper. Most likely they will spend their $3 on a fair trade cup of coffee instead of a magazine they can get online for free.   Print media has no reliable metrics. With so many tools available these days, why invest in something that can’t tell you if it was the right choice or not?

Mobile is just getting started. Start now, learn while it is cheap. It is our inevitable future.

Google Attacks Head Terms through Semantic Search

The Wall Street Journal announced that Google will be updating their search algorithm in the coming weeks/months.

There are some important changes that could affect the lead generation industry that you should know about.

First, what is “Semantic Search?”

Semantic search is basically understanding the context in which you ask a question. This is how Siri for iOS works also.

Example – Lets say if you are talking to your friend about a future trip to Las Vegas. Your friend already knows you love good steaks, so the first thing out of their mouth is “you must check out this steak restaurant at the Palazzo!”

The semantic aspect of this is that your friend has known you for years and knows your likes, dislikes and your budget potentially. They use their own experience to quickly rattle off a handful of things you can do in Las Vegas.

Implications in search.

Most likely you are not having a conversation with your Google page. You enter in short search queries in hopes of researching various topics. EG – “Things to do in Vegas.”

With the new search algorithm Google may recommend a list of things to do and may push down other organic results. It may also determine that a restaurant ad is more relevant to you rather than a flight advertisement.

How does this work?

Google being Google does not release much detail but they say it is based on “attributes” from your personal search history, various websites and other common searches. Google is trying to become skynet in someways.

Why is Google doing this?

Lots of reasons!

  • Google is battling Facebook. They know Facebook’s search is horrible. Most people still need to get info from Google. By making search potentially more context based, it may increase usage of sites like Google+ (this is a really convoluted way to get more users)
  • This user flow is really tailored towards mobile users. Making Google a 1 page website and offering multiple types of results for one search is key to increasing user interaction.
  • This user flow is also great for a voice based mobile device. Imagine calling Google and getting this information read to you? At the end of the call it will ask you to connect to X advertiser. Return of the click to call lead gen model!
  • SEO has created a sea of garbage websites. Google knows no one goes past page one of the search results. Making page 1 more relevant is key for them long term. Creating content for Google via SEO and not users is counter -intuitive long term. They are hoping this allows them to be more useful. Creating a pivot this large is pretty scary. It is like transitioning everyone on Earth from gas to electric cars. You have already built a huge infrastructure around gas, the switching cost is pretty high.

What does this mean for lead generation?

Google is no longer agnostic. They are your competitor and friend at the same time.

Head terms are going to be affected the most. In the WSJ article an early alpha tester said it could change up to 20% of your search traffic. This is huge.

It is hard to say if this is going to affect long tail terms in the short term but if the system learns fast enough, this should have an equal affect for head and long tail terms.

From a PPC perspective, it should technically drop the number of impressions you get. It should technically increase your CTR if your ads are highly targeted. From a conversion perspective, it really comes down to how your ad groups are structured. If they have specific term groups but general landing pages there is an argument to be made that your C2C will actually drop, but that is not a new statement.

What will be the effect on Google’s stock price?

In the short term I can see this potentially lowering revenue. If such a massive portion of your revenue comes from advertising and linking to your index, presenting information before the click should technically reduce revenue.  In the short term I would say there is a dip in their stock price and long term I could see massive growth based on the mobile usage. Most likely analysts will jump on this and push the stock lower to create a lucrative short environment knowing full well that the long term is positive.

This is assuming that they don’t launch any new revenue models like the “speak to connect” ad model. Given that mobile usage of Google is increasing fast, the attention should be really on how can you get in front a mobile user with semantic search. Without knowing more about Google’s Semantic Search, it will be hard to recommend anything at the moment. I strongly suggest contacting your Google Rep for more info.

Thoughts? Comments? If you have an inside line to Google what are you asking them?