Help Blogation Improve - Answer the Reader Survey

Look to the right of this post and you'll see a one question poll about Blogation. Take a moment and answer it (multiple answers are OK). It will help me to determine what sort of articles I should write in 2008.

Happy Holidays!

David

When Does Advertising Cross the Line?

Recently the FTC fined Adteractive (my former employer) $650,000 for deceptive advertising practices. At issue were ads that offered consumers a "free iPod" or other such desirable items, but in reality required consumers to try or buy products prior to getting their free gift. Sample messaging from the FTC press release announcing the settlement included: "Test and keep this Flat-Screen TV," "Test it – Keep it – Microsoft Xbox 360," and "Congratulations! Claim Your Choice of Sony, HP or Gateway Laptop."

In a related story, WebLoyalty, a company that offers consumers $10 off online purchases in exchange for trying out a continuity rewards program, is in the middle of a class-action, again being sued for deceptive advertising. As an article on the suit notes: "You type in your e-mail address to take advantage of the offer and the next thing you know, wham! You just unwittingly transferred your credit card number to a company you’ve never heard of and enrolled yourself in a dubious “rewards” program charging you $10 per month in perpetuity."

We live in a society overwhelmed by ads. Most people aren't at all shocked to see an ad about shampoo that makes the act of using the shampoo brand as erotic as having sex. And every day we encounter ads that are either outright lies or highly deceptive. To wit:

• Newspaper circulars that promise an outrageously low priced computer, until you read the fine print: "limit one per store. No rain checks."
• Airline magazine ads that rank "the best steakhouses in America," ads that are paid for by the steakhouses listed in the fake rankings.
• Movie ads with glowing reviews from sources like "Wireless Magazine" and "The Movie Minute" - fictitious reviews paid for by the movie studio.
• Infomercials that claim a product is "75% off retail" when it is in fact never sold at retail in the first place.
• Offers that are "free with rebate" that have very complex rebate forms that the seller knows will likely be successfully completed by a small percentage of buyers.
• TV news shows that promote a particular brand and then mention at the very end of the credits that the brand paid for the positive coverage.

Americans are lied to in advertising many times a day. But here's the good news - at least at a subconscious level, we know we are being lied to, and we've developed the ability to process out the outrageous lies from the more run-of-the-mill ones. We understand that using a particular shampoo won't be like having sex, that professional athletes don't actually eat the fast food they hawk, and that most infomercials are about 5% accurate in their depiction of the product for sale. We take all this information, throw out most of it, and then make our conclusions based on whatever is left over.

If we really wanted to crack down on false advertising, about 95% of every ad we currently see would have to be banned. Product placement would be gone. Rebates would be gone. Paid testimonials would be gone. But I think we need to have a little bit more faith in the intelligence of Americans. Milton Friedman said it best: "there's no such thing as a free lunch." At this point in our nation's history, anyone who sees a "free iPod", "free with rebate", or "free tickets to a show with timeshare presentation" advertisement and actually believes it to be free cannot be saved by any regulation or lawsuit.

At the same time, we members of the advertising industry need to consider what happens to self-regulated industries when they fail to effectively regulate themselves. Just ask the financial industry after Enron, or the meat packing industry after "The Jungle." For that matter, ask the "free iPod" advertisers what happened to them (Google and Yahoo banned them).

For Internet advertising, there's a fine line between deceptive advertising and 'mere puffery.' Though I believe most Americans have developed the ability to understand the difference between the two, the window of opportunity for the online advertising community to define and regulate this line is closely quickly. I'd much rather have our industry make this determination, that the FTC in Washington or the American Trial Lawyers Association.

Good Books I've Been Reading

Looking for some reading for your Christmas holiday? I recently finished a few good books (sadly, all about marketing and entrepreneurship) and I thought I'd pass the list on to you.

1. Four Steps to the Epiphany. Thanks to my brother Adam and Mike Maples for recommending this one. If you are thinking of starting a business, this is an absolute must-read. Don't quit your day job until you've given this the once over.

2. Influence: The Psychology of Persuasion. Thanks to Jeremy at Lightspeed for this one. Ever wonder why you are compelled to give a Hari Krishna a donation after they force a flower into your hand? Or why car salesmen always have to 'talk to their manager' before giving you some bad news? This book explains all the greatest psychology sales tricks in the book.

3. The Black Swan. Thanks to Will at FindLaw for letting me borrow his copy! Despite the annoyingly pompous writing style, the overall thesis of this book - that many significant events are virtually impossible to predict - is thought-provoking enough for me to give it a recommendation here.

4. The No Asshole Rule. Why are there so many jerks in the workplace, and how can you deal with them? The best answer is the simplest - simply fire the jerks. Ah, if only more people took this advice!

Stay tuned in the next 11 days for a flurry of posts as I try to hit 100 posts in 2007 (about eight more to go)!

Bush Administration-isms Infiltrating Online Marketing

I received a great email a few weeks ago from a comparison shopping engine. I had written to complain about a sudden (and unprofitable) increase in clicks reported on my internal reporting. I received the following response (emphasis added) which basically explains that I would only be charged $67 for $2242 of clicks:

"Regarding November, we can see that your limit was initially set to $100. When you exceeded that limit, by $ 2242.47 which we can see from internal reports, you were deactivated by the tool. One of the protections afforded by the tool is that it "erases" click-surges from your account; you are not billed for these clicks. That's why your reports may show only 234 clicks and $67 in costs."

Ah, the good old click-surge. It's not click fraud mind you, just an innocent click surge. Makes you sleep easy at night, doesn't it?

10 Tips When Choosing Bid Management Software

For those of you who missed this post on SearchMarketingStandard and on Sphinn . . .

During the Q&A section of the panel I participated in this week at PubCon, we got a lot of questions about bid management software. In particular, it seems that everyone in the audience acknowledged the need for it, but no one knew which company to select, nor how to select a bid management software.

So without further ado, my ten tips for choosing bid management software:

1. Don’t even think about building it yourself. I speak from experience here. Building bid management software requires a full-time team, ongoing maintenance, and a lot of trial and error. It will take you at least a year to build a basic version, and at least two to three engineers to maintain and iterate it after that. And it won’t be as good as the software currently available on the market.
2. Assess your expertise and what you really need. Assuming you listened to my first tip, you next step is to understand how you are going to use the software. First, let’s talk about your level of expertise. If you are an expert, you may want to let the bid management software run your tail terms (the 98% of keywords that make up 2% of your revenue) and focus on optimizing the head yourself. If you aren’t an expert, you probably need software that can manage everything for you, with a very simple interface, and possibly the option of full-service bid management combined with the software. Either way, you need to know exactly what you want before you start talking to software providers. Otherwise, you might end up paying for a Ferrari when all you really needed was a station wagon.
3. Understand implementation and de-implementation effort and impact. A lot of bid management software only works if you install a snippet of code on your Web site and if you allow the bid management company to change your URLs on the search engines. This can require significant effort by your internal tech team and changing your URLs in your search campaigns can result in a loss of keyword history (i.e., you will need to pay more to get the same position). Moreover, you need to understand what happens if you end your relationship with the company - will they change your URLs back, or are you stuck with their tracking for the rest of your life?
4. Always do a trial first. I’ve seen some really great PowerPoint presentations from bid management companies. It turns out its easier to make a good PowerPoint than it is to make a good bid management software. Never sign up for anything until you have taken it for a test drive for at least one month and if possible three or four months.
5. Set benchmarks for initial and ongoing success. Before you start any trial, understand the status quo of your campaigns. What’s your current revenue? Profit? Margin? Tell the bid management company your actual metrics and tell them what you expect them to hit for them to win your business. Make sure you factor in the cost of their services. For example, if a bid management company wants to charge you 5% of your spend, and you currently have a 10% margin on your spend, you should demand that they at least bring you 15% margin (and probably higher). By the way, most bid management companies will thank you for this - it gives them something tangible to shoot for!
6. Look for hidden fees. Does the contract include API costs, or do you have to pay these? Is there a charge for consulting and implementation? Is there a minimum monthly bill? Read your contract carefully and ask a lawyer for help if you are at all confused.
7. Ask for performance pricing. I know my co-panelist Kevin Lee is going to kill me for saying this, but don’t be afraid to ask your bid management company to put some skin in the game. If a company’s bid management software is a good as they say it is, offer them 50% of the incremental profit they make you to prove it! More realistically, perhaps ask them to take a slightly lower percentage of spend in return for a performance bonus if they achieve certain goals (see Kevin, I’m not as unreasonable as I first seem!)
8. Get a short contract. If possible, try to get a month-to-month contract (though this will be hard to do). If you can’t make this happen, a six month contract is usual very doable.
9. Be hesitant about handing over your head keywords. For the 50 to 100 keywords that drive most of your revenue, I usually recommend good old human management. Why? Well I believe that a good search analyst just gets an almost intuitive feel for how to grow top keywords, something that computers just can’t do. And managing your top keywords in-house can save you a lot on bid management fees, especially if less than 50 keywords make up 20-30% of your ad spend.
10. Keep testing new competitors. The bid management world is ever-changing. I see new and exciting bid management companies popping up regularly. Always keep a campaign or two available for the next great thing.

Get Paid to Surf the Web! Strike Two . . .

Last year the company formerly known as "AllAdvantage" (also once described by Forbes as "the dumbest dot com" and by another publication as "the bloated whale of Silicon Valley") re-emerged as AGLOCO. As described by the company itself, the concept is pretty simple: "By downloading our proprietary Viewbar™^TM technology, members benefit from engaging content tailored to their interests. AGLOCO™ also pays its members to refer their friends to the community (and for those friends to refer more friends through four levels of extended referrals.)"

Who wouldn't want to sign up for a service that pays you to surf the web? Hey, I signed up for both AllAdvantage and AGLOCO, as did millions of others. Indeed, I have a friend that recently spent about $10,000 of his own money buying AdWords keywords to get people to sign up under him on AGLOCO. Risky, sure, but if the concept took off and you had tens of thousands of people surfing the Web resulting in a referral fee to you, it would be a good investment.

Well, apparently, the concept is not taking off . . . again. This morning I got the following email from AGLOCO:

"We would like to update you on the status of AGLOCO's operations. We continue to believe in the AGLOCO concept, but our revenue is currently not sufficient to give Members a meaningful distribution. And though there are increases in membership, the resulting revenue is not enough to support operating costs. As a development team we are unable to continue to use our savings to fund the operations. If any Member would like to pursue continuing the operations of AGLOCO, you may contact us at agloco1@live.com ."

You know things aren't going well with a company when they send an unsolicited offer to sell the business to the entire membership base.

I still happen to believe in the concept between All-Advantage-AGLOCO. Pay consumers a commission in exchange for getting extra behavioral data from that consumer. That in turns enables you to highly-target advertising to that consumer, which advertisers will pay dearly for.

Think of it as a privacy advocate's worst nightmare but an advertiser's wet dream. You think Facebook's "Beacon" program was invasive? AGLOCO would be much more so. How much do consumers value their online privacy? Apparently at a rate of around $.50 an hour.

The difficulty is building behavioral targeting technology (and building a big enough stable of advertisers) that is good enough to make money at a $.50 per hour rate. With the current CPM rates online at between $2-$4 for one thousand impressions, you are going to need to do something pretty fantastic to get advertisers to pay $.50 for something like 10 to 20 impressions (a CPM of perhaps $25).

I can still see it happening, but as All Advantage, Cyber Gold, and AGLOCO have already discovered, this isn't something you can build in a few months. And now that the concept has apparently failed twice, consumers are going to be a little more wary the next time. Whoever steps up to the plate next better have a good eye and a strong swing, or this concept will be out on strikes.

Google Finally Gets Holiday Gifts Right

Call me ungrateful, but I've never liked a single holiday gift Google has ever given me. Over the last five years I have spent at least $10-$15 million with Google and the collective value of the holiday gifts I've received in return has been perhaps $150.

I know that holiday gifts aren't mandatory, but I'd rather just receive nothing than receive the same form letter and $25 schwag sent to everyone else. That is, until this year.

This year I opened the Google holiday gift and initially began my annual holiday gift tirade against Google. The gift is a very small flash drive that you can fit in your wallet like a business card. I figure it must have cost Google $10-$15 to make these. Cool, but is that how you say thank you to someone who probably single-handedly pays the salaries of dozens of your employees?

So I was about to write an angry post about this when something else fell out of the gift box. It was another credit card-sized card and it was from DonorsChoose.org. The letter than accompanied the card explained that I could use this gift card online to make a donation to a public school in need.

I went online, registered, and found a science teacher in a low-income school in Indianapolis that needed some cabinets to store his equipment. He needed $69. I applied the gift card and then found out I still had $31 of credit left. Google had given me $100 to give to the public school charities of my choice.

This really excited me for several reasons. First, I love the fact that I get to personally choose where and to whom this donation goes. Even though I had spent a total of five minutes reviewing the different options on the site, it got me into the spirit of giving.

There is a concept in marketing called "the escalation of commitment." Once you get someone to a small thing (register, enter their credit card info, add to shopping cart, etc), it is much easier for you to get them to do a slightly bigger thing (buy a small item, sign up for a newsletter, etc) and eventually big things (become a loyal customer, refer new customers, etc).

The very fact that Google got me to register, browse, and actually select a charity on this site is a wonderful (and ethically positive!) use of escalation of commitment. The chances are now much higher that I might add $100 more to my account with my own money and continue to support this charity. If you assume Google sent this card to 100,000 customers, and you assume that only 1% of these customers end up 'falling for' this escalation of commitment, that's still 1000 people who have become new members of this charity. Big numbers for any charity.

The second reason I liked this gift was because of the sheer amount of charitable donations involved. If Google gives 100,000 advertisers $100 each to donate to charity, that's $10 million dollars. And when you consider that most Google advertisers are already middle class or above, and would probably throw any Google-branded gift in a far corner of their office, I would much rather have Google give that $10 million to worthy charities than waste it on junk I don't need.

Imagine what would happen if this level of 'charity as a gift' became the norm in our society. Instead of a dozen 'crackers and cheese spread' gift baskets lying around the office, there were a dozen $100 donations to charities. It could really make the holidays meaningful for a lot of needy organizations (and would also reduce holiday weight gain . . . ).

Moreover, once the novelty of the concept wore off, people like me would become jaded again and start to complain about the size of the donation vis-a-vis the amount I spent with the company. So in the future I might write a post thanking Google for its $100 donation, but also chastising them for the smallness of their donation versus the $500 Yahoo gave on my behave. I would love nothing more than to see a "charity donations arms race" emerge between my vendors!

Wishful thinking for now. And for now, I'm perfectly happy with the $100 Google enabled me to give to a few public schools. It makes me feel great, and it helps the community. That's what I call a great gift.

Don't Even Try to Hire a Director of Search Engine Marketing

A recruiter called me yesterday asking if I knew of any good candidates for a Director of SEM role. He was looking for someone with 3-5 years of search marketing experience to take over search management at an established and reputable company in Silicon Valley.

Normally, when a recruiter calls me trying to fill a position at an Internet company, the odds are pretty high that I'll be able to dig through my LinkedIn list and find a few people that I think would be a good fit and would be happy to consider the position.

Over the last few years, however, I've learned to not even bother looking when I get a call for a director of search. Why? Well, they simply don't exist. Basically, search engine marketing is such a hot profession right now that you only really have three types of search marketers: 1) entry-levels; 2) VPs; 3) independents or consultants.

You see, after the first 3-4 years of search marketing (your entry-level time period), if you are pretty good at the job you'll either want a fancy-sounding VP position, or you'll realize that you could probably make more money just consulting or starting your own lead generation business. So while "Director" sounds like a great promotion in most industries, in search it's not enough of a carrot to sway good people away from a more general VP job or trying their luck with small business.

Some recruiters and companies have apparently caught on to this dilemma and they've come up with a good trick. Create a role that is really director level but offer it as a VP level. It's actually not a bad strategy, but it can cause problems down the line when a candidate accepts the offer with expectations of leadership and ends up regulated to a functional role.

Probably the better tactic is to use the same trick, but on the other end of the spectrum. Rather than look for a VP that's really a director, post for a director but expect to get a senior manager. In other words, put your job posting up there demanding 4-6 years of experience, but expect to find a great senior manager candidate with 2-4 years of experience. Though the candidate may lack some of the "strategic vision" you are looking for initially, you may find yourself with the director you actually wanted in six months to a year.

Internet Marketing Predictions for 2009

I was about to write my annual "predictions for the next year" post when I inadvertently wrote "2009" instead of "2008". I started to correct the error but then thought, hey, wouldn't it be cool to predict trends two years in advance instead of just one? After all, anyone can predict a few months in advance - but two years into the future is where the real experts shine.

So, without further ado, here are five Internet marketing predictions for 2009:

1. Google Acquires NBC. Realizing that their "Google TV" advertising won't get any penetration on its own, Google coughs up a few billion dollars and acquires NBC and it's affiliated networks from GE. Google CEO Eric Schmidt comments "We want to democratize TV advertising. In less than six months, every spot on NBC will be placed through an online auction." Despite the initially lukewarm reaction from advertisers (other than SalesGenie and eSurance), the concept eventually catches on and is adopted by the other major networks.

2. eBay discontinues the Yahoo brand. After a heated bidding war for Yahoo between MSN, eBay and Amazon in 2008, eBay emerges victorious. In the months that follow, three thousand positions at Yahoo are eliminated, mostly in content and sales. In early 2009, eBay rebrands all Yahoo properties with the eBay brand. CEO Meg Whitman notes in an interview: "We want consumers to understand that they can do everything at eBay - email, shopping, searching, phone calls. It's sad to see the Yahoo brand disappear, but these things happen."

3. Apple's iAI outsells Dell. The mobile revolution finally happens during Christmas 2009 when Apple sells three million iAI - the phone-internet-camera-GPS-credit card-RFID machine that folds down to the size of a business card. Laptop makers like Dell warn Wall Street that sales will be significantly impacted by Apple's launch. And Google's shares drop 30% overnight when Steve Jobs announces that Apple has created its own search engine for its products.

4. TrustMe signs up one millionth customer. TrustMe, the ecommerce company that automatically orders products for you based on its understanding of your needs, finally reaches the million customer mark. Privacy advocates continue to warn consumers of the dangers of the TrustMe "FollowMe" software that monitors both their offline and online behavior, but consumers love the fact that the software really seems to work.

5. Stanford Fazes Out Textbooks. Stanford and Amazon agree to a five year deal in which all Stanford textbooks will be delivered electronically. The deal causes panic among textbook manufacturers, which is not unwarranted as Amazon quickly signs up 20 more major universities to the program before the year is over.

Check back in 2009 to see if I got these right. Until then, let's just assume most of them will be correct.

Get Ready for a Google Credit Card!

The following is a transcript of a recent conversation between Google and me:

David: I just want to say one word to you - just one word.
Google: Yes sir.
David: Are you listening?
Google: Yes I am.
David: ‘Plastic.’
Google: Exactly how do you mean?
David: There’s a great future in plastic. Think about it. Will you think about it?
Google: Yes I will.
David: Shh! Enough said. That’s a deal.

I read lots of chatter about the Google Phone (or GPhone) that is suppose to revolutionize the phone industry, and I now I am starting to hear about the Google Computer as well, which I imagine would be loaded with as many anti-Microsoft applications as possible, and of course have some sort of built in AdSense toolbar.

But here’s my free advice of the day to Google - why spend your time on these massively complex projects going up against angry and entrenched competitors (Verizon, Microsoft, Dell - I wouldn’t even want to dispute my phone bill with these companies), when there is much easier money sitting right in front of you, waiting to be grabbed. Attention Google: you need to create a Google Credit Card!

I envision a card that works something like this. First, for businesses: for every $100 you spend, you get $1 of AdWords credit. For every $100 you spend on AdWords, you get $3 AdWords credit, and if you link your credit card to your Google Checkout account, every $100 you spend via Google Checkout gets you $5 of AdWords credit.

For consumers, for every $100 you spend, you get $1 of credit toward the standard affinity card goodies (trips, MP3 players, etc) and when you link your Google Credit Card (OK, let’s be honest, it will definitely be called the “GCard”) to your Google Checkout account, that $1 turns into $5. And for consumers, here’s the additional cool draw: not only do you get a credit card that says “Google” on it in big letters (cool factor for your friends), but you can also redeem your points for awesome Google rewards, from the mundane (Google t-shirts, lava lamps) to the fantastic (10,000,000 points for a ride in the Google Plane with Larry and Sergei; 100,000,000 points and you get to design a special holiday logo on Google; 1 billion points and you get your own sub-domain on Google, like Rodnitzky.Google.com!)

Think of how much money already passes through Google via AdWords and Google Checkout. And then think about how much Google prefers to replace middlemen. And finally think about how giving businesses AdWords credit is such a round trip win-win for Google as a credit card company (i.e.: thanks for spending money with the Google credit card. Here’s some money back that you have to spend on Google.) This is a huge opportunity.

This being Google there would of course have to be some clever twist on the whole credit card industry. Perhaps they would never charge an annual fee but you had to pay your bill online (and to get to the bill pay page, you had to go through several pages of AdSense ads). Maybe like GMail, your credit limit would start low but would continually increase (”never not buy anything again”, sort of like “never delete email again”). Or like the forks at the Google cafeteria, perhaps the credit card could be made out of recycled potatoes - the first biodegradable credit card!

Most of these ideas are silly - I know - but the idea of Google Credit Card really isn’t. Now I know that some of you old-timers will remind me that Yahoo once had (still has?) a credit card that they pushed pretty heavily for a while. Indeed, in the early 2000s, I believe it was standard operating procedure for every consumer-facing online business to have a private-labeled credit card.

I have no idea what happened to the Yahoo card (or the Webvan card, eToys card, or any of the other cards that once existed). I do know that I still use my Amazon card (though only for Amazon purchases). And even if the Yahoo card failed, the Google card I describe above would be different, if only because they could link rewards to AdWords credit and because Google simply has a more powerful brand that Yahoo ever had.

So what are you waiting for Google? I know that trying to simultaneously destroy the phone, computer, newspaper, radio, and software industries is a lot of fun, but sometimes you have to take a step back and pick up the cash that’s just lying there waiting for you. One word Google: plastic.

Speaking at PubCon in Vegas - Come Say Hello

On Tuesday I'll be speaking at WebMasterWorld's PubCon conference in Vegas. The topic is "large scale bid management." In the event that any readers are planning on attending, feel free to stop by and say hello. I will use it as proof that someone does in fact read this blog!