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Netflix Digital Bulimia

Netflix released all 12 episodes of the House of Cards season 2 on February 14, 2014. By the evening of February 14th, there were several reviews online of the entire season. These reviews included spoilers and a bit of reflection by each writer on the experience of watching nearly 12 hours of content in one sitting.

Netflix has come up with many innovative ways of delivering content and has in some ways supported the concept of binge consumption. For the blog writers, the need to binge on the content is in order to be the first to post a review of the content.

However, for regular viewers, it can be argued that binge consumption is not healthy socially, physically nor mentally. Binge eating is largely considered a disorder. For people who suffer from the eating disorder, they tend to hide it, they do it alone, and there is little incentive to share their binging experiences with others. It stresses the body and can ultimately lead to death if not treated properly.

Media content binging is not all that different. People who binge watch all 12 episodes, will largely have trouble finding a large enough group to discuss the storyline with. This is a really hard show to discuss by the water cooler since you have no idea what episode the other person has seen.  Being able to watch all 12 episodes at once also signals that the viewer may not have a real social life or other responsibilities. This again is somewhat embarrassing in social settings. Lastly, sitting around for 12 hours watching a computer or TV is not physically healthy.

Netflix spends months making all 12 episodes only for a viewer to race through the content. Feeding the disorder, they want more and more, and feel less and less satisfied with each piece of new content. Netflix has written an excellent story line with House of Cards, each episode beckons you to watch the next episode. Ultimately, you are left at the end of the season on a cliff hanger, with no way of getting a new fix. You have to wait until the next season is produced, which could be months.

This inherently, is Netflix’s biggest problem. The time it takes to make high quality content versus the rate at which we can consume it.  To offset this, Netflix really needs to have multiple shows in production at all times. They will need to stagger the release of each show to help keep everyone hooked on their content. Essentially, they don’t need you to be loyal to one show, they need you to be loyal to their system or network.  Think of this as demand fillers. Perhaps this comes in the form of new shows, back stories on the main show, or other new forms of content. Either way it has to be highly engaging, garner social media attention and be easy to create.

This is a monumental shift in media content creation and delivery. Netflix will have to ride a very fine line between content production costs and overall subscriber revenue. To keep everyone satisfied they will have to have a much larger library of original content. Combine this with the overall bandwidth costs of delivering high quality video, Netflix is facing a major uphill battle in the coming months.

As an investor, one must ask themselves, can Netflix sustain these costs? If they can, will the viewers be loyal in between seasons of shows? Can Netflix create secondary content around each show to fill the demand from the viewers to keep their loyalty? Can Netflix come up with enough new shows to keep viewers loyal all year round? Is Netflix’s value built upon a constant life time value throughout the year or a fragmented life time value of people paying only when new shows are available?

All of these questions will be answered in due time, but until then, take note of how your friends and family discuss or more likely don’t discuss their binge habits.

The most important play of the Superbowl

How did everyone miss the most important portion of the Superbowl?

Easy, the NFL only dropped a short hint about the new NFL NOW service. With all the other ads and the boring game, it was easy to miss. But do take notice, this is about to revolutionize sports and advertising.

What is NFL NOW?

NFL NOW is essentially the foundation for a truly omni-device content delivery network from the NFL. In the initial launch it will offer only clips of videos but it is easy to see where the NFL wants to take this. They want to go direct to the consumer.  This mirrors what the WWE Network is doing but does not have the clear cut billing model nor the full length content the WWE is promising.

The current marketing around the NFL NOW network is really focused on getting the avid fan highlights about their team and their fantasy players. Personally, I think the real long term value of this is being able to see out of market games on any device. Combine this with the ability to do AirPlay or ChromeCast and you suddenly don’t need the bundled cable offerings.

It also adds a whole new layer of entertainment for in-stadium viewing. Imagine being at a Seahawks stadium and watching highlights from any other team in the league.

The additional analytics and additional engagement models are enormous. The ability to cross sell other event tickets, and deliver ultra-personalized advertising really makes this network launch a massive cash machine.

This also has the potential to open up a whole new audience outside the US. However, my guess is that the NFL will keep this a US only product for the near future.

So what could go wrong? 

Given the size of the NFL, there are plenty of existing legal contracts that either have to expire or be reworked to allow for full length content to be delivered in real time. Lawyers know how much money is behind the NFL and the Cable companies, so it makes sense to draw this out as long as possible.

The other thing that could go wrong is that the NFL doesn’t make bite size content well or doesn’t leverage the true power of the mobile operating systems. For instance, if you are repurposing TV spots, the overall length maybe too long and it may not be considered exciting enough for modern consumers. Combine that with 30 second ad spots and you have a poor consumer experience.

However, if you add the ability to do slo-mo scrubbing on the phone or create instant memes, the content amplification could be huge.

NFL Now is certainly a product to keep an eye on in 2014. Seeing a major brand like the NFL go in this direction is a clear indication that 2014 is about delivering content in a whole new way.

 

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.

 

 

 

Why the MOOC is redefining online education

The MOOC for the past year or so has been evolving very quickly. It really took off when the Stanford AI class shot past 250,000 students.

Since then the model itself has been refined and several startups have aligned themselves around the methodology. A few months ago if you asked me who the leader would be in this space, I would have said Udacity. I thought they had the organic growth and quality that you need early on when building a brand.

Today, my answer would be Coursera. I think they have a few things that are really creating a competitive advantage over Udacity and even sites like EdX.

First, they have quite a bit of money behind them, $22 million to date. That amount is not that significant, but the people putting it in is. Kleiner Perkins and John Doer put in $16 million alone. John Doer is considered one of the most influential investors in the Valley. He is also a master of PR pushing his start ups to the front page of major news outlets and leveraging his connections for strategic deals.

Coursera announced that top schools like Duke and University of Virginia have signed on to be part of their offering. Not only are they attracting major traditional school brands but they are asking them to adapt their teaching to the MOOC model.

The ability to change their viewpoint on how online education should be delivered is a massive step forward. We are no longer just watching videos of a lecture, there is true interactivity, peer to peer learning and instantly updated materials to learn from.

Coursera is making the right moves, and getting rave reviews from students. If they keep the quality high they will make a massive dent into online education.  Some of the courses even offer a certificate. This is a huge step forward for employers. Now employers can verify completion and potentially create better HR paths based on this info.

Lastly, I think Coursera is engaging an audience who wants more education but doesn’t want a full degree. This a la carte option is attractive since it is low cost, but more importantly low commitment. Just a few weeks and you are done. No need to rework your whole life.  Now you have exposed a lot of new people to online education and I think this will potentially impact the for profit education sector faster than the publicly traded schools realize.

For profit EDU has been growing for the past 10 – 12 years, but has only scratched the surface of potential students. Coursera is exploding given the higher broadband penetration and higher number of connected devices. I can see their growth trajectory being much faster. Keep an eye on them, they could impact your stock portfolio very soon….

 

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.

 

Can the government trademark “GI Bill?”

On Friday, President Obama issued an executive order that will limit or regulate how for-profit schools will be able to market to and recruit military members.

In the order President Obama stated he would like to trademark the term “GI Bill.” The original TradeMark application can be found here. GI Bill Trademark application You can also view it online here. 

There are a few issues with this strategy that schools and lead vendors should be aware of:

  • The Government can own a trademark, unlike a copyright.
  • The GI Bill is technically a law, not a good or service, which Trademarks are usually reserved for.  However, you can trademark words, but the cases are usually weaker.
  • There are many chapters within the original GI Bill – like the Post 9/11 GI Bill Chapter 33. To really make any policing effective, they would have to trademark specific chapters of the original law. Once again, this doesn’t really seem to fit traditional trademark law.
  • The GI Bill has been around since 1944.  I would argue that the majority of people know this is something from the US Govt not a private entity. I think the potential confusion arises when you have sites with official military terms like “military” and end in a .com instead of .gov. Any true military member knows that an official government site should end in .org or .gov.
  • There is also the case of nominative use. If there is no other way to reasonably refer to the trademarked term, anyone can still use the term.  How far will the government go to protect this term? EG will they penalize people for saying that their schools accept “GI Benefits?”
  • In the other DOE crackdown on for-profit edu schools were promising things that weren’t necessarily true. This time around – I personally don’t think the schools are promising anything about the GI Bill. All they are saying is that they accept the benefits and stating how much you may potentially receive.  If a school or website said you were guaranteed the maximum benefit then they might have false advertising claim. They may be misleading a person about how the GI Bill works but it is virtually impossible to say that your school offers the GI Bill itself. Everyone knows that the GI Bill benefit must come from the VA.
  • Once again the DOE nor the WhiteHouse has defined how this law will be enforced or when it may be enforced. The most common way of dealing with Trademark infringement is a simple Cease and Desist letter, not a financial penalty.
  • Trademarks once filed are open for debate. It is possible this process could take a long time if there are many comments from other businesses or the public. To file an opposition you can go here. Please note you can only file an opposition once the application has gone to the official Gazette for public opposition.
  • Many not-for-profit schools use the term GI Bill on their website. The removal of this term or policing of this term may have a negative impact on military members knowing where they can use their benefits.
  • The end consumer here – the military member may have less information on how the GI Bill works. Personally I think the VA website is a mess of red tape and acronyms. Why not let other sites explain it?

In a recent Business Week article they mentioned the govt is worried about schools marketing “bad programs” in conjunction with the GI Bill. The core statement of programs being “bad” is rather subjective. The quality of any school is really determined by the student.  At most of the for-profit schools you will find a mix of students who like the program and some who don’t. This sentiment will be somewhat similar in any school in America.

From a school perspective I think it makes sense to fully understand how Trademark law works before pulling back on marketing to military members. Some recommendations for the short term would be the following:

  • Note on your site – clearly and prominently – that you are not an official government website.
  • Do not promise GI Bill benefits. Edit your language to be less definitive.
  • Focus on your core product – education. Most Trademarks are enforced if they feel that a group of consumers is being misled. If you are honest and open about your offering and how it relates to the GI Bill, I would argue that you are playing within the terms of the law.

 

 

The top 10 Fastest Growing Industries – #3 For-Profit EDU

IBIS World just published a report about the fastest growing industries even in a somewhat tumultuous economy.

The breakdown which is an interesting mix of industries is as follows:

Generic Pharmaceutical Manf.

Solar Panel Manf.

For-Profit EDU

Pilates and Yoga Studios

Self Tanning Product Manf.

3d Printer Manf.

Social Network Game Development

Hot Sauce Production

Green and Sustainable Building Construction

Online Eyeglass sales

Fastest Growing Industries Full REPORT – IBIS World 2012.

 

From my personal perspective, I think EDU is on there because the traditional education system is no longer sustainable and technology is now enabling us to access education when we want.

If we look at the list from an investor standpoint, my attention flows to the Green materials, Pharma and Education. They have massive needs, strong revenue models and lots of fragmentation. There will massive failures in these sectors and massive wins. The only downside to these three sectors is that they are somewhat susceptible to the 2012 Presidential Elections.

 

 

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?

 

 

Mobile Advertising 2012

Marin Software put together an awesome report about the state of mobile advertising in 2012. It can be found here.

Some of the most interesting highlights are the following:

  • Google is estimated to generate $5.8 billion dollars from Mobile advertising in 2012. This would represent almost 15% of their estimated 2012 revenues.
  • Mobile currently represents 12% of all clicks on Google.
  • Supply of ad inventory on mobile is still larger than advertising budget. This means low prices!!!
  • 25% of all paid search clicks will come from mobile in 2012
  • Every day 700k Android devices are being activated. This may expand as more Android tablets appear.
  • Tablets represent 45% of all mobile clicks.
  • Mobile clicks are 36% cheaper than desktop clicks
  • SmartPhones have the worst conversion rates of any mobile device. Partially due to most landing pages not being optimized for mobile.

As an advertiser, what does all of this mean? Should this influence your media buy in any way?

With any new trend it is easy to get caught up in the excitement and want to jump on it.

The best way to approach this is the following:

  • Take a look at your Google Analytics to see how many people are coming to your site via mobile devices. If it is very low that might be an opportunity for you to expand it or just ignore it for now.
  • Take a look at some mobile use cases. In a recent report by Yellow Pages you can see what people most often look for on their phones. I don’t think this info is valid for Tablet users though. Does your company fall into these use cases? If not, you can probably wait on mobile. But double check this by asking your customers in real life!
  • Pull up your webpage on a mobile phone or tablet. How does it look? Would you sign up? If not, get a mobile redesign! Also check out concepts around Responsive Design.
  • Set up a test campaign to see if you get any clicks from a mobile campaign. In Google Adwords you can set up a campaign to mobile devices only. If you see a significant number of clicks within a few days you know there is an audience. Build them a flow!
  • Get an 800 number. Most mobile campaigns that do well need an 800 number. Use services like RingCentral.com to track your calls. Make sure this 800 number is different from a number you might use on TV or Radio. This helps with tracking.
  • Set a goal for your mobile campaign. It can be cost savings on your overall paid search buy or it can be something as simple as generate 100 calls. Without that target or goal you are never going to know if this makes sense for you.
  • Lastly – do research to see if your competitors are on mobile already. If they are, see how you can make their landing pages or call experiences better. Don’t re-invent the wheel, just make it go faster!

 

mobile_search_us2012_marin PDF DOWNLOAD