So today Google launched TV Ads, Google's attempt to wrest control of TV remnant space away from traditional media outlets. Does this story sound familiar? Of course it does - it's the exact same approach Google took in their attempt to capture the radio remnant market (Audio Ads) and the newspaper market (Print Ads).
While I am sure that traditional media outlets will declare this move the end of traditional TV advertising as we know it, I'm not impressed. Why? Well, for two reasons. First, because Google has tried this already in print and radio and failed. Despite giving away millions in free advertising to encourage advertiser participation, advertisers haven't signed on to the programs.
This may be because Google's traditional base of advertisers fundamentally don't understand anything but online marketing, or because the quality of the inventory Google is selling simply doesn't perform, but I have yet to hear anyone (either advertiser or Google representative) proclaim victory for Audio or Print Ads. Indeed, a friend of mine in the radio industry told me that Google was stuck with hundreds of millions of dollars of radio inventory they purchased from Clear Channel and resorted to "free ads" promotions as a way to unload it.
The second reason Print and Audio hasn't taken off is publisher skepticism. Publishers have complained about Google's heavy-handed approach to their channels, and have been unimpressed by the monetization delivered by Google products. Combine Google's somewhat condescending attitude toward offline channels and bad monetization, and you are going to have problems breaking into new channels.
I see nothing in Google's TV Ad launch that leads me to suggest that this product is going to be any different than Audio or Print Ads. The only saving grace for TV is that online direct marketers have already invaded late night TV in a big way. Check out virtually any cable station after 10pm and you'll be flooded with ads for free iPods, payday loans, and get rich quick eBay businesses.
Insofar as this is a fragmented remnant space, I suppose Google may have an opportunity to bring efficiency and thus value to the market. But this was the same theory that was suppose to usher in the Google era for radio, and that hasn't happened. My conclusion: expect a lot of media excitement, but little actual value from TV Ads.
Google TV Ads - Strike Three?
Google Sneeze Alert: Google Changes Logo
Many a blogger was a buzz today about Google's change to their homepage logo. Once upon a time, this was a quirky and creative concept that showed Google's willingness to stray from conventional best practices. These days, however, Google logo changes are either predictable (e.g. on the 4th of July), or driven by a desire to promote a new Google product, as is the case for today's change, a promotion for iGoogle customizable skins).
Bloggers that have actually spent energy today announcing this logo change are lame for two reasons: first, because of the aforementioned fact that this is nothing more than an attempt by Google to get free publicity for a product; and second, because anyone who happens upon the Google homepage (which the majority of Americans probably do once a day) would no doubt see this change themselves and therefore do not need to be reminded of this by bloggers who are supposed to be writing about interesting developments in the world of search engine marketing.
For the record, bloggers like myself - who are criticizing others for their inane journalism are justified in spending energy on this topic - consider this post to be analogous to The Daily Show reporting on other reporters reporting a meaningless story (yes, I just compared myself to The Daily Show and I recognize that I am inviting much ridicule by doing so . . .).
Here are some of the juicy blog posts glowing about today's Google logo change:
SEO Roundtable's account of the logo change provides no information that could not be gleaned by actually clicking on the Google logo.
I give some credit to Search Engine Watch for using the iGoogle logo as a launching pad to discuss Jeff Koon's marriage to an Italian porn star. Unfortunately, the articles incorrectly posits: "Why in the world would a world-famous artist like Jeff Koons hire himself out for graphic design work? It seems the multimillionaire artist and ex-husband of an ex-porn star may need the moolah." As other stories note (those that copied the Google press release), none of the artists were paid - charitable donations were made on their behalf.
The San Francisco Chronicle, on the other hand, wrote up the story by basically quoting a Google press release.
CNET also quotes liberally from Google PR, and adds a weak justification for covering the story: "It may not help Mountain View on its quest to organize all the world's information, but it can make some of that information look a little prettier."
Why Digg, Sphinn & StumbleUpon are in Trouble, and How They Can Survive
The first time I played with StumbleUpon, I was mesmerized. After a week or so of rating sites, StumbleUpon seemingly knew my tastes perfectly. I was so excited about the very concept of crowdsourcing, that I even wrote a blog post suggesting that crowdsourcing could end up replacing algorithmic search engines like Google as the preferred online searching (or “discovery”) technology.
But as impressed as I was at the time by StumbleUpon, I also recognized the potential problems that could arise if a crowdsourcing application ever truly became a major phenomenon. I wrote: “Granted, as with any technology, the more popular it becomes, the more likely it is susceptible to manipulation. Just as the rise of search engines created an entire industry of “search engine optimizers”, so too will the rise of “social media” create an entire industry of “social media optimizers.”
And, of course, that prediction has come true (to be fair, I wrote that about a year ago, after people far more into social media than myself had probably already declared themselves social media optimizers). As a result, the utility of social media “discovery engines” seems to diminish every day. To wit, a recent story on Sphinn - the crowdsourcing discovery engine for the search engine marketing industry - was about outraged StumbleUpon users complaining about an SEO company that had social media optimized itself into heavy rotation on StumbleUpon.
It turns out, however, that there was one other cause of social media manipulation that hadn’t occurred to me - the “heavy user” (a term that I borrow from the fast food industry, it refers to a very frequent visitor to a fast food joint). These aren’t necessarily people that are purposely trying to manipulate the popularity of a website or story on a social media site for profit; rather, they are just passionate users who happen to spend far, far more time than other users on the social media site. As a result, the influence of a small group of heavy users becomes disproportionately large.
This has already happened on Digg.com, the discovery engine for news stories. Rand Fishkin of SEOMoz describes this phenomenon aptly: “When folks think of Digg, they’re often misled into believing that the content seen on the homepage is representative of what a wide base of Internet users think is news-worthy and important. The numbers tell a different story - that of all stories that make it to the front page of Digg, more than 20% come from a select group of 20 users. Rand goes on to note that the top 100 Digg users drive 56% of front page content. Out of hundreds of thousands (or millions?) of Digg users, this truly represents a “monarchy” of Digg users who control what stories shall and shall not achieve popularity.
All of this is bad news for discovery engines. To combat social media optimizers, social media sites must invent rules to reduce the impact of social media optimization (SMO). And what does one call a series of rules designed to improve search results - why an “algorithm”, of course (see, for example, Digg’s recent announcement on changes to their ranking system). At some point, if a crowdsourcing discovery engine keeps on adding more and more algorithmic inputs into the determination of search results, it no longer becomes a discovery engine, it becomes an algorithmic search engine.
Over time - as we have seen happen with Google - the only way to combat optimizers is to hire a huge army of very smart engineers (and perhaps an even bigger army of temps to manually rate sites!) who continually try to keep one step ahead of the optimizers. This is an expensive and never-ending process. It’s hard to imagine websites like Digg, del.icio.us, or Sphinn having the resources to do this.
But even assuming you are able to to keep the SMOs at bay, a potentially more difficult issue is what to do with the heavy users. If you change your algorithm to reduce the impact of heavy users, you take the risk that you alienate the very people who love your site the most. It would be like an airline penalizing frequent fliers for using their service too much!
Ultimately, I suspect that the only solution to this conundrum is to encourage/force users to not only rate stories but also rate their fellow users. Like a “negative keyword” on a search engine, users will need to create “negative users” that discount any recommendations that come from users unlike then. Results will then become different for different groups of users, depending on the ‘micro-crowd’ that they have selected to use for their results.
Again, quoting my own post from last year: “In the current social media world, it is possible to “Digg bomb” and generate buzz around a news story simply by spamming the results and voting a site up the ranks. But if users have the ability to approve or reject members of their ‘crowd’, you could truly end up with a spam-free world where you really trust the results that you get back from the social media engine.”
In other words, crowdsourcing by itself is not enough. To succeed, you need to develop crowdsourcing 2.0 - a combination of crowdsourcing and personalization. Call is my-crowdsourcing if you will. This sort of technology is far less complex to develop and maintain when compared to the ongoing algorithmic improvements required to maintain quality search results in Google, and I still believe there’s a chance that such results could outperform algorithmic results over time. In the meantime, I’ll continue to use sites like StumbleUpon to find stories about spiders using drugs, and wait for the day when discovery engines evolve to the point of making Google obsolete.
Editor's Additional Note: The impetus for the observations on "heavy users" negatively impacting crowdsourcing can be found here.
How Bad is comScore Data? Just Check Out the Demographic Info They Provide to AdWords!
For several month now I've been writing about how outrageously unreliable the data from online metrics companies like comScore and Nielsen//NetRatings is. Indeed, loyal readers will recall that I predicted that the comScore data suggesting a decline in clicks on Google (that resulted in a 4.5% decline in Google's stock price) held little weight. Earlier this month, when Google announced impressive earnings, Google CEO Eric Schmidt specifically called out a not-so-anonymous online metrcs company for under-estimating Google's click volume.
Well, it turns out that you don't need to rely on me or Google's stock price or Eric Schmidt to see how bad online metrics companies are - all you need do is to play around with Google's demographic targeting tools inside AdWords, which happen to be powered by none other than comScore! To show you how bad comScore's demographic targeting is, I ran a query to find all sites that had good demographics for "women, 65+ or older, with no children in the household."
Here's proof of my query, along with the small print highlighting comScore's involvement:
Not to be too stereotypical here, but my assumption prior to seeing the data would be that there would be sites about knitting, medical advice, retirement, grandchildren, RVing, book clubs, and gardening. The sites that show up on the list don't seem to reflect my stereotypes. Here's a snippet of the 50 or so sites that Google recommended (highlighting by me):
Grandma likes Xbox cheats and MySpace layouts? How about PSU.com - a PlayStation portal, or 411Mania.com, a pop culture site? I'm not denying that there are some hip grannies out there, but c'mon people, it doesn't take an online metrics guru to discount this data. Shame on comScore for putting their name behind this junk, and shame on Google for apparently paying for it!
Hey Google Cross-Channel Tracking, Where'd Ya Go?
Another weird move by Google. Remember "cross channel tracking" - the ability to track non-Google campaigns from within AdWords? This morning I tried to set this feature up for a new client and it was nowhere to be found. When I did a search within the "help" section, I found this message:
What happened to cross-channel conversion tracking?I can't decide if this is an attempt by Google to get more people to use Google Analytics, or if there was some legal challenge from a competitive advertising channel, or something I am missing all-together. One thing I am pretty certain about though, is that it's unlikely that "advertiser feedback" is the true reason. I can't see many advertisers proactively complaining about an optional feature. Me thinks something is rotten in the state of Denmark . . .
Based on advertiser feedback, we've decided to make the cross-channel conversion tracking feature unavailable to new users. As an alternative to cross-channel conversion tracking, you can use the free Google Analytics program to receive even more data about all your online marketing efforts.
AdSense's Day of Reckoning Cometh?
In the next issue of Search Marketing Standard (the print edition), I have an article discussing the dramatic rebirth of AdSense (the Google Content Network). Once avoided like the plague by search engine marketers, AdSense has quickly become as effective a marketing channel as the regular search results. In fact, for many advertisers I'd go so far to say that AdSense is actually much better than search. If you had told me three years ago that this statement would appear on this blog, I'd have either declared you crazy or a very gung-ho member of the Google PR department.
But now that the printing presses are churning out my positive review of AdSense, I've recently had a change of heart. Though I still recommend using the AdSense network, I'm starting to wonder whether my declaration of AdSense's rebirth was premature. Why? It's not due to low quality (as was the case years ago), but rather due to the increasing convergence of display and contextual advertising.
You see, AdSense was once text ads only. Today, more and more AdSense placements are banner ads or even video ads. The click-through-rate is higher, the conversion rate is better, and publishers get paid a higher eCPM (earnings per thousand impressions). Now that AdSense publishers are getting a taste for banner ads (display), it's doubtful that many of them will want to go back to the text-only days.
That in itself is not bad for Google. What is bad, however, is that there are plenty of competitive advertising networks out there that do a very good job of monetizing display advertising. Think Right Media (now owned by Yahoo), Advertising.com, or ValueClick as examples. Suddenly Google's competition for contextual advertising went from a few small networks (Quigo AdSonar, IndustryBrains, Yahoo Content), to many very large display networks.
The other twist in all of this is that Google did just acquire DoubleClick, which happens to have an ad network and the top ad server (DART). You can be sure that Google will soon be pushing AdSense to publishers using DART, and pushing DART to publishers using AdSense. No doubt DoubleClick's expertise in display advertising will help AdSense considerably in the fight for contextual/display dominance.
At the end of the day, however, publishers go for the highest eCPMs, and advertisers go for the best ROI. In a world where switching from one network to the next is increasingly easy, and where contracts are "at will" (such as on the AdSense network), the fact that someone is a DoubleClick customer today isn't necessarily a guarantee that they will be one one year from now.
Indeed, competitors like Yahoo have also started to gobble up behavioral targeting networks, such as Blue Lithium, which in theory should provide better eCPM and ROI for everyone involved.
Combine increased competition, commoditization, and advanced targeting and Google has a lot of work ahead of it to maintain the strength of AdSense. In some respects, by turning AdSense into a display network, Google may very well have won the battle but lost the war. Of course, the folks at Google are known to be (somewhat) smart, so I'm sure they've thought all of this through. So I'm not predicting the imminent demise of AdSense (yet). But when you read my glowing review next month, add just a pinch of salt to it!
Lead Generation vs. Affiliate Marketing: Similarities and Differences
I frequently get asked to describe the differences between affiliate marketing and online lead generation, so I figure a brief post on the topic is warranted.
Lead generation and affiliate marketing are often confused primarily because their core monetization scheme - performance-based marketing - is the same. In other words, affiliates and lead generators only get paid when they deliver something of value to their advertiser. This could be a sales lead (at a basic level, it could be an email address; at a more advanced level, a completed form or an actual phone call), or an actual conversion (a sale of a product, a subscription to a continuity program like NetFlix). You can call it CPA ("cost per acquisition") or CPL ("cost per lead") but you can't call it CPC ("cost per click") or CPM ("cost per thousand impressions") or anything else where the buyer pays for traffic or placement but not for actual leads or sales.
But beyond the way they are paid, these two types of advertising are really quite different. As I see it, there are three primary differences worth discussing:
1. A Focus on Lead Quality. Affiliate marketers see the end goal of their business as delivering a lead or sale to their buyers - period. Whether that lead eventually converts into a sale, or whether that sale ends up being refunded is not relevant to an affiliate. By that, I don't mean that affiliates don't care about the financial success of their partners, I simply mean that the affiliate marketing model is priced on the assumption that the affiliate has no responsibility (beyond preventing outright fraud) for the end value of the lead/sale they deliver.
If a lead generator gets $30 or $40 for a lead from a lead buyer, you would expect an affiliate working with that same advertiser via a major affiliate marketing portal like CommissionJunction (CJ), LinkShare, or ShareASale to get 40% to 50% less per lead. The buyer expects to sign up a lot more publishers through CJ (an automated process) than he does via lead generation relationships (a business development process that almost always requires human interaction), but he expects that this less personal approach will result in less consistent lead quality across all his affiliates. Indeed, apart from wanton fraud from affiliates, the buyer will likely pay for all leads he receives from the affiliate network, on the assumption that his 40-50% cut in CPAs will balance out an increase in fraud or poor quality.
Lead generators, on the other hand, are judged by a much tougher standards. As I noted in my analysis of the recent LeadsCon lead generation conference in Las Vegas, lead generation companies are judged on two factors: the quantity and quality of their leads. A lead generator who delivers a huge volume of leads that turn out to have low quality to the lead buyer will soon lose his relationship with that buyer. To wit, lead generation companies are increasingly obsessed with "post-lead quality management." Many have developed sophisticated "lead scrubbing" technology to eliminate fraudulent leads before they deliver them to the buyer. Lead scoring companies like Targus and eBureau have created significant businesses by providing additional lead quality analysis to lead sellers. And the increasing importance of "hot transfers" (where the lead seller pre-qualifies a lead over the phone and then transfers that person directly to the lead buyer), is yet another way lead generators are taking responsibility for the quality of their leads.
2. Business Development. Affiliate marketing is a business that can be successfully run by the proverbial 'guy in his basement.' Beyond basic Web development skills and an understanding of marketing, any can start up an affiliate business in a matter of days. Of course, that doesn't mean that anyone can create a sustainable and profitable affiliate business - that is much harder to do - but the basic elements of affiliate marketing have low barriers to entry.
Most affiliates have little to no personal interaction with their lead buyers. And what interaction they do have involves grabbing new creative, getting updates on promotions, and other administrative tasks. A single affiliate manager at a major lead buyer will likely handle several thousands affiliates.
Lead generation, on the other hand, requires additional effort. Lead generation companies tend to invest heavily in business development or sales functions. These people then go out and contact potential lead buyers who are willing to develop direct relationships with the lead gen company. In many cases, the lead gen company can then 'multi-lead' (send the same lead to multiple buyers), thereby increasing their back-end economics. Alternatively, the lead gen company can create a 'ping-tree', where the lead is only sold to one buyer, but is essentially shopped around from buyer to buyer to get the top price.
3. Participation in Sales Process. The majority of leads from affiliates are sent from a link on the affiliate's Web site to the lead buyers form or Web site. Affiliates have some control over the link anchor text, or the banner they want to use, and sometimes the page on the lead buyer's site to which the user will be sent, but the affiliate is not allowed to do much more than that.
Lead generators, on the other hand, are expected to do much more than just linking to an affiliate's site. Most lead generators will develop their own form and send leads directly to the lead buyer through technology (XML, for example). Lead generators are increasingly employing their own call centers where they can talk to potential leads first, prior to sending them off to the lead buyer (see discussion of hot transfers above).
Conclusion
Though I have been critical of affiliate marketers in the past, the point of this post was not to advocate lead generation over affiliate marketing. Both channels can be valuable to lead buyers, and both can be profitable for online publishers. But there's no doubt that these are different channels which require different strategies and different expectations. Whether you are a lead buyer or lead seller, understanding these differences can save you a lot of time as you plot the direction of your marketing strategy.
12 Tips for Choosing an SEM Agency or Consultant
Most businesses currently running SEM campaigns could vastly improve their performance with outside help. I can say this with confidence for two reasons: first, having worked with dozens of companies over the last eight years (most of whom have received millions in funding from top-tier Silicon Valley venture capital firms), I can speak from experience that I rarely go to a company that is doing search 100% right. This can range from very basic errors (no tracking and thus no insight into ROI) to more complex but no less important problems (misunderstanding of bidding strategy, insufficient ad text or landing page testing).
Second, most businesses aren’t in the business of search marketing - as such, they never really focus enough attention on their campaigns to really get it right. After meeting the senior executives at all those companies, as well as the marketing departments, I know that the personnel at these firms are incredibly bright and dedicated. But when search marketing is one of 15 things you need to do in a day, inevitably you end up doing a lot of things poorly instead of a few things well.
As a result, a lot of companies these days turn to outside consultants or agencies to help them with their search marketing campaigns. This can be an incredibly smart decision - if you pick the right firm. Picking the wrong firm can be a massive time suck and a financial disaster. Being someone who has been on both sides of the search consultant/agency negotiations (choosing the outsourcer and pitching to be the outsourced consultant), I’ve learned a few things along the way that will help you to make the right choice on your search marketing consultant or agency. Here’s my top 12 tips (not in order):
1. Consider the size of your account. Do you spend $500 a month on search or do you spend $500,000? How much do you plan to spend in the future? This is a crucial starting point before you begin looking for outside help. If you expect to spend under $2500 a month, very few agencies will want to work with you - you are better served by a local consultant. Between $2500 and $10,000, you have a few more options. For example, companies like Yodle.com and ReachLocal.com have semi-automated solutions that can work well for local businesses looking to ramp their search spend, and experienced SEM consultants are also a good option. Once you get over $10,000 a month, small agencies might be interested in your business. At $50,000 and above, even the biggest search agencies will want to talk to you. I’m not suggesting that just because you have a big monthly spend you should use an agency, but I am suggesting you limit the scope of your research based on the size of your budget - it will save you time.
2. Ask for representative clients, then find them on the search engines. PowerPoint is a wonderful tool isn’t it? Any agency can create a PowerPoint that makes it seem like they have the most advanced technology and proprietary methods for getting your business optimized on AdWords and YSM. My advice is to avoid the PowerPoints all together. Ask the consultant/agency for a few representative clients and then go onto the search engines and look for their clients’ ads. Are they showing up for keywords you would expect to have high conversions? Is the ad text targeted and compelling? When you click-through, is the landing page targeted to the keywords and likely to convert a potential customer? Is there evidence in their destination URL that keyword-level tracking has been implemented? Don’t rely on a salesperson to tell you how great their SEM services are, check it out for yourself!
3. Decide which pricing model works best for you. There are four basic agency/consulting pricing models in SEM: percentage of spend, hourly rate, fixed monthly fee, and performance-based fee. Percentage of spend is a charge based on the amount you spent that month. For example, if you spent $100,000 and your agency gets a 10% percentage of spend fee, you would pay then $10,000 on top of the $100,000 you spend on your SEM ads. Hourly rate is what most consultants usually charge (usually between $100 to $250 an hour, depending on expertise). A fixed monthly fee is a flat rate regardless of your spend amount of how many hours someone spends on your account. And performance-based fee is basically a revenue share based on the amount of profit the outsourced firm makes for you (this is a very uncommon billing method at the moment).
If you think you will only need a few hours of help a week, an hourly consultant is a good bet. A small campaign (say, under $10,000 a month of spend) that you want completely managed by outside help is perfect for a fixed fee relationship. As your account becomes bigger, you’ll encounter larger agencies who will usually insist on a percentage of spend pricing plan. Performance-based agencies exist, but they generally consider themselves to be “online lead generation agencies” rather than SEM agencies. Still, these types of companies are out there and it doesn’t hurt to ask a potential agency if they would be willing to take part or all of their compensation on a performance basis.
4. Determine what services are and are not offered. Not all SEM agencies and consultants are the same. Some only want to deal with your keywords and bids. Others will work on ad text but not landing pages. And some will help you in every element of your SEM campaigns (keywords, bids, landing pages, ad text, tracking, reporting, search engines). Personally, I recommend working with outside SEMs who will at a minimum do keyword creation, bid adjustment, ad text testing, and tracking and reporting for you. At the end of the day, however, it’s your decision to figure out what services you do and don’t need. For example, if you have great internal Web designers, don’t pay extra for an outside firm to do landing page optimization for you. Knowing what you want before you begin negotiations can save you a lot of money.
5. Determine your long-term SEM strategy. Is SEM always going to be less than 5% of your marketing budget, or could you see SEM eventually driving the lion’s share of your business? The answer to this question should help you decide whether you want an outside agency that “gives you a fish everyday” or “gives you a fishing pole and teaches you to fish.” If SEM is a “nice to have” for your business, I recommend that you don’t spend too much time trying to learn it yourself. I equate this sort of situation to getting an oil change at Jiffy Lube; sure, you could change your oil yourself, but you have better things to do and it’s worth the $30 to have someone else get dirty.
On the flip side, if the success of your business depends on perfect SEM execution, you should think about hiring an outside consultant that will not only optimize your accounts today, but also teach you the ‘dark art’ of SEM. From my experience, if you hire an SEM expert for between one to two weeks of intense training, you can learn the ropes of SEM to the point that you will only need periodic (perhaps monthly) refresher courses. Keep in mind, two weeks of training is 80 hours of a consultants time and that is not cheap (probably between $8,000 and $20,000 for this service), but if SEM is vital to your business, this investment will be well worth it.
6. Look for vertical expertise. If you are a personal injury lawyer, do you really want an “ecommerce SEM expert” optimizing your SEM? Of course not. As SEM has become more and more popular, I am starting to see vertical SEM consultants and agencies emerge. This is not an absolute requirement, but if all other things are equal, choosing an expert who has direct experience building campaigns for similar businesses to yours should tip the scales in his/her favor.
7. Understand the difference between a sales rep and an account rep. A classic bait and switch technique is to send in a senior level expert to pitch your business and then turn the account over to a freshly-minted college grad once the deal closes. If you are making your decision based on the quality of the agency staff, make sure that you meet the actual person or people who will be managing your account on a day-to-day basis before you sign on the line that is dotted. By the way, there can sometimes be an advantage to having that new college grad work on your account (they tend to be less jaded and can work longer hours than the ‘over 25 crowd’), but that’s a decision you need to make with your eyes open.
8. Distance from your office may be relevant. Are you located in Boise, Idaho and getting pitches from an agency in Chicago? Phone consultation can be very effective, but there is value to having face-to-face meetings from time to time. Back in 2001 Yahoo screwed up my Yahoo Mail account and I couldn’t get any messages. After writing them for days without response I finally sent an email that said “I work in Redwood City. If I don’t hear from you in 24 hours, I am coming to the Yahoo headquarters to personally get an answer.” My email was fixed in less than an hour. Idle threats aside, being close to your service providers is just a good way to get more personal and frequent help.
9. Contract length, extra fees, incentives. Read the contract before you sign it! Are you getting locked in to a two year contract with a minimum bill of $10,000 a month? Is there a fee to have a phone conversation? Is the consultant/agency willing to work for a lower fee in exchange for a performance bonus if he hits certain monthly profit goals? All contracts are negotiable and it’s your loss if you don’t try to change the language to benefit your company.
10. If it sounds too good to be true . . . I saw a terrible ad on AdSense yesterday. It said “Guaranteed 1st Page Placement on Google - $49/month.” I clicked through (to cost them money and to figure out the scam) and the fine print basically said you’d show up on at least one term ‘related to your business’ on the first page through either paid or organic search. So if you are a Miami plumber for $49 a month you might show up in position #10 in the paid results for “North Miami leaky sink free consultation.” The clicks would cost the SEM firm $1 a month and they’d get $48 in profit. Any agency or consultant who starts off by talking about ‘guarantees’ or ‘insider information’ or ‘X thousand percent gains in profit’ isn’t being upfront with you. Find an agency that is realistic about what it can achieve for you and is under-promising and then over-delivering to build a long-term relationship.
11. Determine if your agency is outsourcing to another agency. Some agencies are nothing but glorified salesforces. They will pitch you on their proprietary techniques and technology and then outsource your business to a bid management firm or an Indian outsourcing company. You have a right to know who is doing what for your account. If you are uncomfortable with the agency sharing your campaign data with other companies or using overseas sub-contractors, make sure to you ask potential agencies to disclose this data to you.
12. What happens after you cancel? Some people and companies are wonderful to work with . . . until you cancel your contract. If you happen to have stumbled into a relationship with a vindictive agency, you might wake up to find thousands of keywords in your AdWords account deleted, or with a bill from the agency for several thousand dollars for “data transfer” and “transition costs.” Indeed, some contracts specifically mention these sort of extra costs in the event of a cancellation.
The best way to avoid this sort of problem is to pro-actively include favorable language in the contract. For example, “in the event of cancellation, agency agrees not to delete any keywords, ad text or other information from client accounts. Agency agrees to provide a transition document at no cost that summarizes learnings and best practices from the relationship. Upon request, agency will remove any and all tracking URLs from client account at no additional cost.” Keep in mind that I am not a lawyer, and I literally made up that language in a few minutes. Talk to your company lawyer and he or she will be able to create a much more powerful clause that protects you.
If I sat here staring at my computer for a few more hours, I’m sure I could come up with another dozen tips to help you choose an SEM agency. But as I read over the tips I’ve already created, I’m sure any additional tips I’d add would fall into three categories: 1) ask lots of questions; 2) know your business; 3) read the contract! There are a lot of great SEM experts out there waiting to help you. Making an upfront investment in thorough research into a potential service provider will ensure that you find the right help for your business.
What GMail Taught Me About Competition, and Why it Makes Me Worry About AdWords
At the time, I didn't think that GMail would ever replace my Yahoo Mail account as my de facto email address. In fact, initially the whole concept of "dynamic tagging" of messages confused and annoyed me (I like to call it "quantum tagging" because the same message can exist in two or more folders at the same time). Over time, however, GMail grew on me. I began to like the interface better, I liked the free POP forwarding, and the huge and free storage size was a big win over Yahoo's then measly 6MB of storage.
During the same time that GMail was launching, Yahoo was raising prices on Yahoo Mail. If I remember correctly, to get 25MB, you had to pay $20/yr, and for more storage, it was something like $50 a year. And the free version didn't allow POP forwarding, and hadn't really been updated for years (and the SPAM filter was pretty bad to boot).
As GMail's popularity began to grow, the folks at Yahoo Mail slowly realized that their "pay for less" servic" was no match for Google's "get it all for free" competitor. In a matter of months, Yahoo significantly increased their storage size, improve their SPAM filtering, and set in motion a new look and feel for Yahoo Mail that was basically a direct copy of Microsoft's Outlook program.
For me at any rate, Yahoo's response to GMail came too late. By the time Yahoo had matched most of Google's features, I had migrated most of my email traffic over to GMail. Indeed, although GMail has only been around for four years, the service now boasts 51 million subscribers, compared to Yahoo Mail's 250 million. So yes, Yahoo is still in the lead, but I suspect that many of those 50 million users on GMail are former Yahoo users like me. And when you consider the fact that Yahoo had to reduce or eliminate their pricing for most users as a response to GMail, it's clear that GMail has had a majorly negative impact on Yahoo Mail.
The story of an upstart entering a market and forcing its established competitors to improve services and reduce prices is nothing new. Indeed, books like The Innovators' Dilemma can spout case study after case study on the concept of "disruptive technology". From a legal perspective, this is one of the primary arguments in favor of antitrust legislation. Let's face it, companies with huge market share (whether to the point of an actual monopoly or not), don't have much incentive to innovate, be customer-friendly, or be competitive on pricing.
All of this leads me back to AdWords. AdWords is probably not a monopoly from a legal perspective. Unlike something like oil, water, or an operating system, businesses and consumers aren't forced to use search engine marketing to survive. And there are strong competitors already, such as Yahoo, MSN, and Ask. But even with these competitors, it's worth considering whether Google really had an incentive to make AdWords better for it's clients.
But I would argue that Google is not doing as much as it could for its clients because it doesn't have to. A few examples demonstrate this point.
1. The broadening broad match algorithm. Over the last few years, the "long tail" has become harder and harder to find on Google, mostly due to Google's expansion of their broad match algorithm. This reduces the opportunity for advertisers to find bargain keywords with few bidders, it reduces overall ad relevancy for searchers, and it of course increases the cost per click for these keywords. The result is bad for advertisers and bad for consumers but good for Google. If Google had major competition like GMail versus Yahoo Mail, I doubt the broad match algorithm would have expanded so quickly and massively.
2. Hiding the negative keyword feature. Google does a lot of UI testing. A recent change to the UI that made it more difficult to find the negative keyword feature seems like a change that could only result in more revenue to Google (as a result of less negative keywords and thus more advertisers showing up on more queries). Again, a benefit to Google, but not to consumers or advertisers.
3. Arbitrary price minimums. Advertising on Google is no longer truly a free auction. Google sets the minimum bid, determines who can bid in what auction (see point #1 above), and in many cases bans advertisers they don't want in the auction entirely (see point #4 below). Many advertisers complain of having to pay huge minimum CPCs - for their own trademarked keywords! But Google has the traffic they want, so they pay it rather than let their competitors buy those clicks instead. There's no recourse against price minimums. If Google had more competition, you wonder whether the pendulum would shift and advertisers would move their budgets (perhaps even out of protest) to competitive sites.
4. Selective Persecution of Quality Score. Jay Weintraub recently wrote a compelling and heart-felt post about a friend of his who suddenly saw his entire AdWords campaign shut down - not because of any violation he had committed, but because he was associated with another advertiser who had committed some wrong-doing in Google's eyes. As Jay recounts in his post:
The arrogance, lack of information, and unwillingness to help by Google employees who find themselves in the position of power and more frustratingly the almost unquestioning trust in their system's correctness in dispensing sentencing. Without a doubt, you are presumed Guilty, but you will not be allowed to prove your innocence.
Google can shut people down at will because they know that there is nowhere else for these people to advertise. It's somewhat ironic, but Google can "act badly" because they are "so good" at delivering great traffic. Still, in five minutes I am can find you ten examples of ads showing up on Google that are clear violations of Quality Score. Type in "nursing degree" and check out how many times a single advertiser is showing up on the same query (not just double serving, but quadruple serving). Or take a look at the number of advertisers showing up on the keyword "free ipod."
Why do some people get banned for linking to bad neighborhoods while others openly flaunt the rules for months on end with no consequences. As Jay notes, when you advertise on Google, you play by Google's rules, and not all the rules are explained to you in the first place!
5. AdSense improvement. A few years ago AdSense was horrible. Most savvy advertisers avoided it like the bubonic plague. At some point last year, however, it suddenly became much, much better. Indeed (as I will be discussing in greater detail in the next print edition of Search Marketing Standard) some people now believe that the Content network in many cases is better than AdWords itself!
Why did AdSense improve? Was it altruism on the part of Google's product managers? Of course not. It improved because several smart competitors started to take away market share from Google through their innovation. In particular, competitors like Quigo AdSonar, IndustryBrains, and Kanoodle provided better targeting, more transparency, and an overall better value proposition for both advertisers and publishers.
As big publishers (ESPN.com, BankRate.com, SFGate, etc) started to leave AdSense, AdSense was forced to change for the better. Today AdSense is finally useful for both publishers and advertisers.
Conclusion: Waiting for a GMail alternative to AdWords
Companies with dominant market share don't change unless they have to. Why rock the boat when the money is pouring in? Yahoo Mail was a product that Yahoo executives clearly thought was a mature market-leader - one which could only grow revenue by charging customers more and more for usage. AdWords is now in the same situation. Having captured something like 60% of the search market, I'm sure that Google executives spend most of their time thinking about how to increase monetization per search, rather than increasing performance for advertisers.
That mindset - as with the mindset of Yahoo Mail managers - will only change once a GMail-like competitor comes along to challenge Google's dominance. Just as Quigo and Industry Brains forced AdSense to revamp their platform, AdWords needs their "Avis" ("we try harder") to stimulate improvement. Until then, we search engine marketers have no choice but to accept our daily bread from Google and wait for the day when we do have a choice.
Yahoo's AMP: Panama or Panacea?
SearchQuant posted a good analysis of AMP - Yahoo's new display ad exchange - on his blog this evening, and he included a link to Yahoo's promotional video about the release. Basically, AMP is an ad exchange that combines the inventory of Yahoo, major newspapers, eBay, and several other big players into one place. On top of that, it promises a slick user interface, and targeting tools like geo-targeting and demographic targeting.
As SearchQuant and others have noted, the announcement of this exchange - which won't launch until Q3 - seems to be closely connected to the recent threats by Microsoft to withdraw it's acquisition bid of Yahoo. An alternative reason could also be the recent EU approval of Google's acquisition of DoubleClick, which Google has acquired to create their own ad exchange. Announcing AMP today could cause potential partners for Google's ad exchange to take a wait and see approach, preventing Google from locking up the market before AMP is ready.
Having watched the promotional video for AMP, and having experienced the many delays and eventual disappointment over the release of Panama - Yahoo's search marketing platform - my perspective is one of hope but also skepticism. On the one hand, I do think that an ad exchange is a perfect fit for Yahoo, for several reasons. First, Yahoo has always been strong in display media. Second, Yahoo recently acquired Right Media and Blue Lithium, two big players in the world of networks and exchanges. And third, many publishers (in particular newspapers and traditional media outlets) are afraid of Google's aggressiveness and would love nothing more than to see a legitimate competitor to the Google-DoubleClick juggernaut.
So if AMP really works the way the video suggests it will work, and if it is delivered on time, and if it signs up the partners it is claiming to sign up, this could be a really great thing for Yahoo, as well as for media buyers. But note the number of "ifs" in that last sentence. It's easy to create a slick video filled with promises of revolutionizing ad buying as we know it. Indeed, the buzz about Panama in the early days was that it would be as good (and perhaps better) than Google's AdWords platform. Once Panama was released, however, the enthusiasm diminished. Granted it was better than the legacy Overture platform, but it wasn't anywhere near Google AdWords.
As I always advice clients who are looking at bid management software, 'anyone can create a PowerPoint that claims that their bid management software will grow your profits by thousands of dollars a year, but the distance between a good PowerPoint and good bid management software tool is pretty great.' And in Yahoo's case, creating a pretty video six months before the scheduled launch date of the product is about as reliable as a good PowerPoint. Don't get me wrong, I'd love to see AMP work (hey, I am a YHOO stockholder, I am sometimes embarrassed to admit), but if past performance is any indication of future performance, don't bet the farm on a Q3 ad revolution just yet.
Lesson from LeadsCon: Leads Are Dying
I just got back from a whirlwind trip to Las Vegas for the inaugural LeadsCon conference - the first conference created entirely for the online lead generation industry. If conference attendance is an indicator of the health of the lead gen industry, lead gen is doing quite well.
To wit, conference creator Jay Weintraub had hoped to get 300 attendees and he ended up turning people away after more than 600 registrants invaded the Palms ballroom (indeed, I also heard that some people at the investment banking conference down the hall were trying to sneak into LeadsCon as well).
So now that lead gen had its own conference and over-subscribed interest, you might deduce that "the lead" as a form of online marketing has finally arrived. After listening to the speakers on stage at LeadsCon and the chatter in the hallways, I'd argue that the lead is dying.
If there was one overarching theme of LeadCon, it was "lead quality." For example, a major sponsor of the conference was eBureau. What does eBureau do, you ask? Real time scoring of lead quality (sort of like a credit check). This enables lead buyers and sellers to quickly determine the likelihood that a lead will turn into an actual sale, rather than waiting 30 to 90 days to reconcile their data. A similar service is offered by TargusInfo.
There was an entire session on "hot transfers", which is basically when a lead seller talks to a person who submitted an online lead on the phone to verify that a) the person actually exists; b) that the contact info is correct; and c) that the person is truly interested in the service or product for which they submitted a form. Once the lead is verified, the seller can obtain a premium price from the buyer.
And in my many discussions with lead sellers at the show, the number one answer I received to the question "how are you different from other lead sellers" was "our ability to scrub leads and only deliver qualified leads to our buyers." Indeed, as one speaker aptly put it: in 2002, buyers just wanted quantity at all costs, today they only want leads if they are quality.
Think about the evolution of online advertising - in 1996, there were page sponsorships (no guarantee of impressions, clicks, leads, or sales); by 1999, CPMs were king (cost per thousand, a guarantee of impressions). Overture and Google made CPC hot in 2002 (cost per click, a guarantee of a click). Affiliate marketing and lead generation (Commission Junction, LowerMyBills, Quinstreet, etc) created a massive industry for lead-based marketing over the last several years (guaranteed lead). Any way you slice it, publishers (in this case, lead sellers) are taking more and more of the risk, in exchange for a greater percentage of the return on the sale from the lead buyers.
The emphasis on lead quality is indicative of a further shift toward greater risk for the publisher and greater share of the return - revenue share marketing. Let's face it, when a lead buyer expects his sellers to use a credit rating type system like eBureau, develop their own internal filters, and then hot transfer the lead, the lead buyer is really saying that he doesn't want leads, he wants sales!
Lead sellers are no longer able to grow their businesses by opening up their offers to thousands of anonymous affiliates and dumping thousands of questionable leads at the door of a lead buyer. "Direct post" relationships - where a lead buyer lets a partner host his lead form on the partner Web site - are also becoming rarer, again as a way of protecting lead quality.
Just as many merchants are now wary of affiliate marketers, many lead buyers - burned one too many times - now prefer to deal with a few dependable lead sources rather than taking their chances at more volume with more partners. A few years ago, The University of Phoenix - one of the largest lead buyers in the world - did exactly that, reducing their direct relationships from hundreds to just a few.
I think all of this is good for the lead gen, er, rev share gen industry. Focusing on the leads that drive sales rewards honest and innovative publishers as well as rewarding buyers who have perfected their inbound sales processes. Any fly-by-night operators who once made a killing sending old, misled, or outright fraudulent leads to buyers will soon find themselves out of business.
So thanks Jay for the conference - it was enlightening and I'm excited to attend the next one - but you might want to register the domain name RevShareCon.com for the future . . .
Zillow Enters The Lead Gen Fray for Mortgages
Well the timing isn't necessarily that great, but Zillow is trying to throw a further wrench into online lead generation for mortgages by launching what is essentially a "reverse auction" for mortgages.
As described on TechCrunch, "Borrowers submit just the essentials - what type of loan they need, where they’re located, their estimated property value, their credit history, etc - without divulging any of their contact info. Then certified lenders make offers that can be compared side-by-side. It’s up to the borrower to reach out and contact those lenders, not the other way around as it is with services like Lending Tree."
My first impression thoughts (literally, I am writing this no less than five minutes after reading the story):
- At first glance, it seems like it gives borrowers more control over the lead gen process for a mortgage. But looks could be deceiving. It may be fairly easy for Zillow to create a system that appears impartial but is very effective at getting users to contact the lender that provides the highest level of monetization for Zillow (e.g., sort results by monetization, 'feature' certain lenders, etc).
- Good for Zillow for coming up with innovative ways to monetize its immense traffic base - it's about time.
- As with Prosper, whenever you give consumers more control, there is always the chance that the quality of the consumer data can get skewed. In some respects, a consumer might actually be more honest when filling out a form and expecting to be contacted by lenders, because the last thing most people want is to get totally irrelevant phone calls. I can imagine people continually editing the information they submit to Zillow as a way of trying to get matched with 'the best rate' (sort of like the way people try to game Priceline).
- There's no doubt that the lead generation experience for mortgage could be improved for consumers. The consumers' inability to filter their matches prior to getting phone calls is a definite benefit (from a consumer user experience perspective) to the Zillow model.
- You could argue, however, that giving consumers choice could actually result in poorer results for the consumer. First, because lazy consumers may not do enough due diligence and actually contact multiple vendors. Second, because consumers may be swayed by 'brand name' mortgage companies and eschew lesser known lenders who might be able to provide them with better service.
- Overall, when a major Internet brand like Zillow launches a product like this, it's worthwhile for everyone in the lead gen space to stand up and pay attention. If successful, it could fundamentally change consumer behavior, for the mortgage industry and eventually for other similar lead generation businesses.
Google Print Local Finally Ready for Launch!
After several years of low-key alpha testing and on and off again rumors of launch, it appears that Google Print Local will finally go live as a public beta in the next few weeks. Though I am often critical of new Google launches (see for example, my critique of Google Sky and Google Print, amongst others), from everything I have heard about Google Print Local, this one seems like it could really have legs.
For those of you who aren’t familiar with this product, here’s the basic concept (note: I have only seen screenshots, I have not actually played with the product yet). Online local searches - while growing every year - still make up a small minority of all local business searches performed every year. The problem is that the majority of Americans simply don’t think of going online when they need to do a search for, say, a “San Francisco plumber.”
Google Print Local solves this problem by literally bringing the Internet offline. Print Local starts by algorithmically creating categorization of local businesses. For example, if you are a personal injury attorney, you would be categorized as “attorney - personal injury.” Each categorization is then sorted alphabetically for easy searching. Google then applies geo-targeting to the alphabetized categorization. For example, if you live in Atlanta, you would only see listings from Atlanta.
Google has hired local sales teams to sell to local businesses. Once they have a critical mass of advertisers, they then go ahead and create an actual print directory. Google’s usability team did extensive research on the look and feel of the directories and will be using bright colors to make the books stand out (most likely, both the cover and advertising pages will be bright yellow, I am told). Using CART-SORT (carrier route sorting) technology, they can then distribute categorized, alphabetized, geo-targeting local listings to all residents in the appropriate area.
As with all Google products, placement within a category is determined by how much an advertiser is willing to pay (and relevance, but of course monetization comes first!). Again, assume you are a lawyer, if you are willing to buy a full-page, full-color ad in your category, you are automatically placed in first position. Advertisers who only want bolded headlines and text links end up toward the back of the listings. And businesses who don’t advertise at all still show up (like organic search results), but after all the paid listings.
One of the neat innovations of this system is that even if a user tries a different categorization when doing their search, Google has used semantic clustering to direct the user back to the main category. For example, let’s say someone does a search for “lawyer” instead of “attorney.” The user would see a message that says “see listings under attorney.”
This is truly the ‘killer app’ that local advertisers have been waiting for. Think about it: algorithmic categorization, alphabetized sorting, geo-targeting, CART-SORT delivery and semantic clustering - all without even having to go online! It really makes finding a local business palpable for the majority of Americans.
To make sure that I wasn’t simply drinking the Google Kool-Aid like most bloggers, I decided to run this story by a few industry experts prior to publication to get their reaction to Google Print Local. Here’s some of the comments I got back:
Jordan Rohan, RBC Capital Markets: “Absolutely brilliant innovation by Google. Getting local advertisers into the consumers’ home just makes good business sense. Consumers can put the Print Local book right next to their phone and have instant-access to a well-organized guide to local businesses. I call it “Page to Call” technology. Google to $800?”
Charlene Li, Forrester: “As always, Google is one step ahead of the competition. No doubt Microsoft will be preparing a similar offering soon. I wonder how this could be made into a Facebook application? In any event, expect a 500 page report on this from Forrester soon.”
Steven Levy, Newsweek: “Wow! I was ’starry-eyed’ when Google Sky came out, but Print Local totally ‘eclipses’ Sky. Cover story here we come!”
Valleywag Editor Owen Thomas: “Does this have anything to do with the Google Jet? No? Then I’m not interested.”
So I’m clearly not alone on this one. Google Print Local is going to change the way local businesses advertise and the way consumers connect with those businesses. Congrats Google - you have struck gold! What’s next for Google? Well, the obvious extensions of this project would Google Telephone Pole, Google DirectPak, and Google Side of a Building. Says Google Product Manager April Feuwel, “After the release of all this incredible products, you’d be a fool not to trust Google with all your local advertising campaigns. Also, I have a bridge in New York to sell you, are you interested?”
Disclaimer: In case you haven’t figured it out yet, this is an April Fool’s Day joke. All the statements in this post, including the comments/opinions, are fictional.
