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Archive for February, 2012

In Southwestern Ontario? Come Join Me, Bryan Eisenberg in London — Feb. 28

Wednesday, February 22nd, 2012

If your job or company revolves around online marketing, and you’ve always wanted to see Bryan Eisenberg in action, the keynote alone is worth the small price of this year’s eMarketing Conference at Fanshawe College in London, ON. As always, it should be a great day of learning and networking… and all within friendly reach of the “breadbasket” (and BlackBerry Patch) of Ontario. Posting this from the “other” London, I guess that makes two visits to the Thames for me inside of two weeks!

See you there.

The Long Bubble

Sunday, February 19th, 2012

High level principles here, not a raft of charts, facts, and stats. Some of it is speculative.

With that out of the way, let’s have a deeper look at the warped reality field you’re likely to have to endure over the next couple of years.

As we’ve seen blatantly from recent asset bubbles in stocks, dot com funding, and housing: money and assets warp reality. There is a certain solidity in what is “making money,” even if it’s money borrowed from other people, or the future. That whole tranches of blended, not really blended, subprime loans with a diversified, not really diversified, risk pool, were rated AAA sort of illustrates how seemingly “solid” investments and industries can be just as illusory as any other.

In the next couple of years, everything’s going to be fine for Facebook.

Facebook isn’t going to face any cash flow problems because it’s going to raise billions in an IPO at a reported valuation of $100 billion, on top of all the money it has already raised. It’ll be able to buy just about anything it wants. It’ll be able to delay the pace of monetization in order to improve user satisfaction. It’ll be able to recruit great talent.

Compounding that warping of reality will be convenient devices like their symbiotic relationship with Zynga. Zynga, for their part, enjoy a stunning $9 billion market valuation. They also make up more than three-quarters of all the “fees and subscriptions” revenue shares Facebook enjoys. Facebook has every reason to be nice to Zynga. Zynga has little reason (for now) to be anything but grateful to Facebook.

There is no question that both are big, happening companies. Facebook is enormous enough that its advertising program and other visibility options for advertisers can and will become impressive. But the reality is, they aren’t doing all that well (from the standpoint of advertising programs) for a company that has raised the amount of money it has. And with their own IPO money sloshing around, along with a lot of other bubble money sloshing around and heading Facebook’s way, the financials the public sees are likely to be a pretty warped reality field. Facebook can delay full monetization for years, just as Google has done with YouTube and Google+.

Being so well funded, companies like these may look better than they are. Do they ask they hard questions about massive de facto subsidies of partners and product? Monetize intelligently and truly serve advertisers? Will their expansion plans and mass hires lead to a culture of excess and entitlement? Those are all bad precedents to set and eventually these matters need to be addressed when the easy dollars stop, and the hard dollars need to be made.

If you’re enjoying a first mover advantage or an investor-driven subsidy, things look pretty good until you start coming up against an even bigger subsidizer (Google, for example), or when the market for what you’re doing turns down in an economic sense.

Due to the mutually-supporting nature of the assets driving this long bubble, the financial picture painted can be a rosy one for a long time to come, much as the housing bubble went on partying right up until it crashed.

Speaking of that, a look at a long list of recent digital media IPO’s turns up a raft of companies with no earnings or extremely high P/E ratios: Pandora, Zillow, Liveperson, LinkedIn, Angie’s List, and the list goes on. The majority of these companies have continued to float along in suspended animation at high valuations. Those with solid financials, like TripAdvisor and Demand Media, have garnered relatively little respect. Such is the bizarro world of “story” companies that aren’t judged on financials but on future prospects (as long as they don’t run through all their cash).

When the cash is flowing a little less freely, and the myriad “coopetitors” take the gloves off on partnership terms, start laying people off, spending less on product, and cutting back marketing dollars, someone’s going to get hurt — not least investors who buy into “easy money” revenue numbers and fail to see the challenges on the horizon. There are finite limits to this universe, and the phenomenon of users getting bored and ignoring the ads — always one that created a sense of productive paranoia at Google — hasn’t been much  discussed by analysts of many of these companies. But then again, many of these companies are new to the monetization thing.

5 Edgy Paid Search Techniques… and New Ad Units Coming in 2012

Thursday, February 16th, 2012

Elsewhere, I’ve expressed skepticism that black hat techniques are relevant to the world of paid search. Let’s look at some aggressive techniques that are worth considering – and aren’t necessarily black hat. Let’s call them “edgy.”

Confusion in “hat” debates in PPC arose when some players began calling “edgy” techniques “black hat.” If you’re worried about the cool factor, rest assured that everyone in marketing looks sexy in cowboy hats, whether they’re black or white.

Edgy techniques involve pushing normal campaign management routines to the limits, or inventing new ways to achieve goals outside of the “prescribed” optimization techniques. You may not find these in a Google AdWords certification course.

Surely, you wouldn’t overpay for car insurance if having a contact or a bit of insider knowledge gave you a better discount than your less-savvy neighbor who just tried to haggle with his agent over the phone? That’s business.

Edgy techniques include:

  • Competitive intelligence: Many tools provide additional research opportunities beyond what was once seen as the norm. Two of the best-liked are AdGooroo and SpyFu. Brand name sector research can also come from the likes of comScore and Hitwise; it’s expensive, but may be worth it.
  • Multiple account serving: Google doesn’t want to leave revenue on the table for no good reason. So the rules here have become more flexible. If you have two distinct lines of business that overlap on some keywords, chances are you could show up twice on the page for the same keyword. At one time, Google prohibited this. Here’s a key distinction: it’s black hat if you do it for cookie-cutter businesses that are almost entirely the same, while trying to avoid detection by Google. Eventually, Google will detect it – no matter what you do. It’s as simple as a competitor ratting you out or a Googler making a few purchases. Do it that way, and you risk losing all credibility with Google. Another approach is to work with Google. Under Google’s formal (evolving) policies, there are permitted uses depending on the degree of overlap.
  • Dynamic landing page titles and other forms of automation: If you want to build gigantic accounts and do any number of things to try to improve user response on more granular landing pages, no one is necessarily stopping you. It can work for some businesses, not so much for others. Depending on how unwieldy that same strategy makes your actual account, as measured against your spend and importance in the grand scheme of things, Google is either going to become annoyed with the ambitious scope of your account, or not. Users are either going to convert better, or not. Either way, it’s not necessarily black hat. Before creating more bulk, though, consider whether your business model and strategy have enough meat on their bones to warrant the mega-build, mega-automation approach.
  • Large keyword lists: Avoid the temptation to benchmark the size of your keyword list in the aggregate. Quality campaigns are driven by the logic of their campaign and ad group structure, not the sheer number of keyword variations – but you should be striving to grow your list, within reason. In days gone by, black hat abuses of the fact that it’s free to add keywords were largely driven by affiliates and click arbitragers, who would happily bid low on any potential keyword imaginable, regardless of relevance. That led Google to change many rules, and to institute caps. But former black hat use of big keyword lists doesn’t take away from the fact that you might have a high number of SKUs or a desire to get very granular in the geography of your account setup. In such cases, your account might surpass a formal limitation on the number of campaigns or keywords. If it’s being done for legitimate reasons, ask Google to waive the cap. Just keep your priorities straight.
  • Saying you’re the best when you’re not: Yikes, you can’t even do that. There are guidelines that steer you away from making false or unverifiable claims in ad copy. But of course, there are hundreds of ways to tell a compelling story in ad copy: some bogus, some merely aspirational. Knowing the difference is essential. If you’ve never even read “All Marketers Are Liars” by Seth Godin, which explores the mindset needed to build brand equity by telling a better story, then what are you doing “black hatting around,” staring Google down at every opportunity, when you could be just doing better marketing?

This barely scratches the surface of edgy techniques that may come into play as competition heats up.

Of course, black hats and black-hat-friendly loopholes haven’t vanished.

For example, what if a competitor pretends to be located in 50 cities so they can run geo-specific campaigns? If they “shade” the rules, is it black hat, gray hat, or just annoying because now you have to decide whether to follow suit?

This leads to a broader conversation you’ll have to have with yourself, beyond any single example. With the recent proliferation of paid search advertising features and ad formats, there are tons of settings, tactics, and “things to watch” that can lead the curious search marketer to wonder “what would happen if…”

To take one example, it’s widely rumored that in 2012 Google is going to accelerate its move into the “Groupon space” in a big way with Google Offers. Some advertiser offers, with a bright logo, could be integrated with AdWords ad units… just another potential new ad format rolling out.  (This has nothing to do with unfounded speculation that “get offers” like this is a special type of ad unit with any shelf life. That is indeed a special ad unit, but it’s open to many types of advertisers. In Groupon’s case, it’s going to be tough sledding when Google moves in with the real Google Offers integration.)

Will some advertisers think to overdo the offers so that they qualify for more visibility on a particular keyword query, grabbing attention from advertisers who don’t use offers? Will that be unfair because it compares apples with oranges?

The offers space itself has certainly proven itself to be “edgy” in more ways than one. Some merchants have been so “edgy,” they’ve lost money with every sale (but made it up on volume), without the hoped-for repeat business.

So that’s going to be another tough choice for advertisers to make in 2012. Just as it felt like some click deflation was on the horizon and sound business models had a chance out there in the auction, advertisers are going to have to weigh the group deals loss leader phenomenon as it appears more prominently in Google’s sandbox.

Probably the same advice would apply to pretty much any offers scenario: try to run small tests, or don’t run them at all. Or in Jim Collins’ terminology: bullet, bullet, bullet, cannonball.

 

An earlier version of this column appeared at ClickZ on June 18, 2010. Reprinted by permission.

What will it take to move Canadian retail online?

Thursday, February 16th, 2012

At an ecommerce industry event recently, I heard some amazing statistics — and amazing, but all-too-familiar, anecdotes — about the sorry state of Canadian etail.

Let’s be clear: the Canadian consumer is at the forefront of the digital lifestyle. On average, more connected, more into online apps, more into searching, more into Facebook and YouTube, more likely to use online banking and other cloud tools, etc.

But one stat that is floating around is that Canadian ecommerce currently makes up little more than 1% of retail in the country, vs. 7% in the U.S.

Anecdotally, leading consultants in things like logistics will speak of their struggles *a decade ago* to convince large retailers to build ecommerce empires around their existing logistics juggernauts and strong brands. One was Sears (at the time); and in the consultant’s words: “they decided to buy Eaton instead.”

Today, Sears Canada (which has made more serious efforts online in recent years) is under threat from Target, so the great news for consumers is that Sears is slashing prices to meet the threat. Great for consumers: bad for Sears.

When will companies across the board begin to realize that their short-term maneuvers in this often-failing sector are no substitute for grabbing the online opportunity and its superior efficiencies?

There are key bright spots. But should Well.ca really have to carry the entire mantle for the notion of a pure play ecommerce startup in Canada?

Long term, it may not matter. Eventually the large US players will simply turn on their ecommerce functionality in Canada and that will presumably take us most of the way.

For the time being, from the consumer standpoint there are many key barriers, as compared with their US counterparts.

  • Amazon is not “the store” here as it is in the US. The offering is very limited. Even with books, inventories are different and people have to wait more than they should.
  • The development of shopping comparison engines and Google offerings & products (back in the day, “Froogle,” today, a variety of takes on Product Search) has hit many roadblocks. In part that’s because merchants have been slow to get on board. It’s a combination of culture and smaller scale, but the culture must be a big part of that. Still, you would think that Google Canada in partnership with their US parent could at some point have taken some of the bigger players (no, I don’t mean Canadian Tire; mostly, I mean US companies operating in Canada) aside, given them featured billing and support so that they showed up all over the place in the product search offerings, enough to send a wake-up call to the other vendors that their competitors are basically running the table out there because they’re the only ones who have bothered to integrate with Google.
  • The opportunity is about 8-12% the size it is in the US. So if you are generous and say that e-commerce as a proportion of retail gets up to 1/3 where it is in the US, you’re talking about a market size maybe 4% of the US. Despite our market in general being reasonably-sized, having that small economic opportunity all spread out across a nation means rather terrible things for the infrastructure and ecosystem. Agencies, infrastructure builders, content providers, and other professionals and tool developers don’t get enough to eat from anything but the largest accounts. Opportunities aren’t chased with gusto. So the end client can’t execute optimally.
  • Offline shopping is very convenient for many Canadians, and possibly even enjoyable. Contrary to popular belief, Canada is more urbanized on the whole than the US. And across our small number of known urban centres, each has its own quirks (Toronto, Montreal, Vancouver, Calgary, Ottawa, other parts of Ontario, etc.) that need to be taken account of.
  • But with all that being said, many Canadians crave the consumer choice and cost advantage they know Americans have online. Many wish they didn’t have to order from US stores to get exactly what they want, or for that exact piece of furniture they want, order from the only retailer in the country that has it (say, that Vancouver place with the indifferent service, high shipping fees, and outrageous prices).
The problem is rooted in history. For the most part, Canada is an environment that is conducive to products and services — everything from apparel to phones to construction to digital tools — being provided more efficiently with scale, by a smaller number of very large companies. It’s a culture of oligopoly and many Canadians know to choose convenience over choice and price, because it’s less of a headache. Unless the effort is global or North-America-wide, it is not that healthy a place to launch and grow an SMB or a startup, nor that friendly a funding environment to come to the plate with something disruptive. With best wishes to Well.ca.

 


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