The Online CMO by Philip Hallenborg

Entries categorized as ‘eBiz Strategy’

Genombrottet för annonsnätverken genom målgruppsstyrning (“targetting”)

June 14, 2010 · Leave a Comment

Annonsnätverken i Sverige har hittills haft begränsat genomslag om man ser till andel av den totala mediainvesteringen online. Enligt IRM stod online (och mobilt) för c:a 18% av mediainvesteringen 2009 (c:a 5 miljarder SEK totalt för Internet). Av det var c:a 1.7 miljarder eller 32% display/ bannerannonsering. Min gissning är att annonsnätverken i Sverige tillsammans har kommer att ha c:a 10% av den kakan 2010 d v s runt 200 miljoner SEK. Det kanske är lågt räknat.

Det är min uppfattning att det pågår ett skifte just nu. Från att ha varit blinda nätverk (otydliga eller dolda sitelistor) är nätverken nu mer transparenta och tydliga med sina komponenter. Dessutom möjliggör teknologin att nätverken i allt högre utsträckning kan optimera resultatet av enskilda kampanjer för såväl annonsör som siteägare (“publisher”).

Skiftet ligger i att målgruppsstyrningen (“targetting”) öppnar för större värde för annonsören och att acceptansen för nätverk som alternativ till kontextuella placeringar med högre prislapp ökar. Min magkänsla säger mig att få annonsörer kommer att göra aktiviteter online om ett år utan att ha en targetting-komponent. Den kommer att konkurrera med argument om kontextuell relevans som många stora medieägare lever på idag.

Störst och viktigast kommer s k re-targetting att bli spår jag. Vi ser redan tendenser på kontinenten där teknologi fokuserad på re-targetting vinner mark. Med re-targetting menas i allmänhet att återexponera ögonpar som besökt annonsörens site eller liknande site baserat på intresse/varor/tjänster.

Den största utmaningen för nätverksindustrin kommer att bli att korrekt attribuera försäljning eller aktiviteter till rätt annons (vilket i brist på branschstandarder mm är tveksamt idag) samt att se till att leverera volymer utan att gå in i gråzon kring spårning (vilket är en helt annan diskussion).

Categories: eBiz Affiliation · eBiz Big Picture · eBiz Demand Generation · eBiz Globalization · eBiz News and Trends · eBiz Strategy
Tagged: , , , ,

Renodling av sökaffären pressade affiliatemarknaden 2009

May 20, 2010 · Leave a Comment

Det har inte undgått någon att sökordsmarknadsföringen eller “Search Engine Marketing” tagit stor andel av marknadsbudgettar och onlinebudgettar senaste åren. Enligt den senaste mediabyråbarometern (18/5-2010) växte sökinvesteringen med +27% årsvis.

Källa: Mediabarometern maj 2010

 

Växten drivs huvudsakligen av omfördelning av budgettar till online och onlineförsäljning  (inte tillväxt i ekonomin). Det rör sig främst om offline budgettar som läggs till sökkanalen.

Historiskt har affiliatenätverken arbetat med många olika typer av affiliates eller publishers. Som exempel kan affiliates ha inriktningarna meta/ prisjämförelsesiter, bloggar och aggregatorer.

En typ av affiliate som tagit en viktig position i affiliatenätverken har varit sökordsaffiliates – alltså affiliates som istället för att ha en stark site närvaro fokuserar på att driva efterfrågan genom budgivning på sökord och sedan vidare till landningssidor som pekar på annonsörens varor och tjänster. Svenska Keybroker och brittiska Netmediaplanet är exempel på två sökordsmarknadsföringsföretag som har startats och/ eller växt genom att vara sökordsaffiliates.

Genom att sökordsmarknaden tagit fart och flera företag fått upp ögonen för kanalen har också konkurrens ökat. Därmed har sökordsaffären renodlats. De flesta mediabyråer har satt upp dotterbolag som aktivt managerar egna kunder sökbudgettar. Sökordsmarknadsföring är idag ett verktyg som är minst lika viktigt för varumärkesvårt och PR som det är för direktförsäljning och avslut.

Med det har också antalet kunder som tillåter sökordsaffiliates minskat. Även Google har i t ex fallet Netmediaplanet straffat företeelsen med sökordsaffiliates eftersom relevansen för den som söker anses vara mindre (sökordsaffiliaten ses som en onödig mellanhand).

Utvecklingen har fått en tydlig påverkan på affiliatenätverken som haft en inte oviktig del av omsättningen genom sökordaffiliates. Denna utveckling har varit särskilt tydlig under 2009 där flera stora kunder “plockar hem” sökaffären och managerar den själva. Eftersom sök utgör en viktig källa för försäljning så märks det också för affiliatenätverken.

På sikt är det sunt att sökordsmarknadsföringen behandlas för sig och ses som en egen kanal. I vissa fall kan sökordsaffiliates fortfarande utgöra ett bra komplement (expertis, småmarknader med egna språk, kostnad för att managera).

Implikationen för affiliatenätverken är att de är sårbara även fortsättningsvis om de har en stor andel sökordsaffiliates och inte kan erbjuda sökordsmarknadsföringstjänster.

Categories: eBiz Affiliation · eBiz Big Picture · eBiz Demand Generation · eBiz Management · eBiz News and Trends · eBiz Strategy
Tagged: , , ,

Life not easy for Search Engine Marketers

January 19, 2010 · Leave a Comment

Since Google removed the Best Practice Funding program in 2007/2008 (its latest media agency kick back scheme involving 3-8% of ad spend money back) most search engine marketers are looking at gross margin from Search Engine Marketing of 8%-15% of spend (excluding consulting or fixed revenues). In a highly competitive market a search engine marketing firm has to be exceptionally capable to exceed gross margins of 15% on core transactions.

Naturally, this suggests that Search Engine Marketing is a volume game. Much like a media agency model it is all about achieving critical mass or break even volume to achieve high return on invested capital.

Although fast growth and redirection of offline budgets into online is driving search spend in general, there is one specific characteristic of search engine marketing (and especially search engine optimization) that creates issues, namely scalability. Or should I say lack of scalability.

Our colleagues at Google figured out a long time ago that a middle man is necessary if Google is to preserve a highly scalable and profitable business model. The middle man – in this case the search engine marketing firm – would deal with the time consumable, non programmable issues such as client meetings, multi language translation, client education and creative management of an effective key word strategy.

The lack of scalability equals cost. For every dollar spent in search engine marketing there is a marginal increase of the work needed. Of course large accounts tend to scale with size, but again many key word strategies for blue chips can involve hundreds of thousands of key words.

If I take a quick look in my market – Sweden – there are approx 6-10 dominant competitors. Most of them are running businesses that are not profitable. A qualified guess would be that a stand-alone Search Engine Marketing play needs at least 10-15 million euro of search spend before seeing black numbers on the bottom line. Few companies can and will achieve that kind of revenue given the competition so consolidation, especially with other online marketing product areas, is to be expected over the coming years.

Categories: eBiz Big Picture · eBiz Demand Generation · eBiz Management · eBiz Strategy
Tagged: , , , ,

Time is up for keyword affiliates?

May 25, 2009 · Leave a Comment

It seems more and more advertisers are choosing so called closed keyword policies i.e. they choose not to work with specialized affiliates that employ search engine marketing (SEM) tactics to drive traffic and make money on the difference between cost per click bids and cost per order rewards.

In many markets, savvy keyword affiliates can still make nice profits. However, as marketing departments adopt a proper search strategy and acquire relevant know how, many affiliates that previously delivered search originating traffic through an affiliate programme are sacked. In the short term, they can focus on other programmes and activities. In the long term, we are seeing a migration of affiliate revenues into search. For the affiliate market it is hardly bad news. A short term loss in revenue will be replaced by true affiliate revenues as digital marketing spend grows.

The beauty of true affiliate programmes lies in a common interest in the consumer between an advertiser and an affiliate. Without a relevance between affiliate traffic and advertiser products, the model won’t generate enough return. Affiliate programmes take long time to build (not only technical tracking) and need a lot of tweaking before they can be deemed successful.

So as both demand channels continue to grow, affiliates will become more clean cut. All good.

Categories: eBiz Globalization · eBiz Management · eBiz Strategy
Tagged: , , ,

Top five marketing ROI tips for downturn

May 8, 2009 · 1 Comment

Closing down

Most companies are now looking over how to get the most out of their marketing budgets. Here are my top 5:

  1. Push a cost per order agenda – reduce risks by getting marketing communications suppliers to share your risk (cost per lead, cost per click or cost per order).
  2. Transition budget into online vehicles primarily search but also affiliate programmes (skew your spendmix toward last click vehicles).
  3. Reduce brand focused spend mix and increase sales focus sales mix – i.e. increase campain network budgets – deliver much more at a lower cost.
  4. Do not cut banner/ display advertising online as a default cost reduction measure. At the end of the day this portion of your budget will create meta effects that improve click through and conversion across all vehicles online.
  5. Consolidate your suppliers as much as possible. Do not buy online vehicles from three different suppliers. And why not skip the middle man unless you feel he is adding value.

Philip

Categories: eBiz Big Picture · eBiz Demand Generation · eBiz News and Trends · eBiz Strategy
Tagged: , ,

CPM, CPC and CPA Arbitrage- An Emerging Online Opportunity

March 6, 2009 · 5 Comments

For most people, trading equals buying low and selling high. Typical traders will run there own stock or inventory and look for quick in and outs in any given market place.

In financial markets arbitrage is the practice of taking advantage of a price differential between two or more markets: striking a combination of matching deals that capitalize upon the imbalance, the profit being the difference between the market prices (Wikipedia definition). My appreciation of the term arbitrage also includes the notion of the capitalization being “risk free” i.e. the practice described above is done simultaneously such that no risk is incurred.

My colleague Jonas Rundgren brought my attention the other day to the emerging practice of “arbitrage” in the online advertising space. Impressions, clicks and actions are referred to as “currencies” and the arbitrage lies in capitalizing on the imbalance in conversion rates between cost per impression, cost per click and cost per action.

For example, if you know a historic conversion rate of impressions of financial services to clicks of financial services you can start trading when an imbalance occurs.

Let us assume that the market cost per thousand impressions (CPM) for relevant publishers/ site owners is 2€. Let’s say the standard historic conversion rate of financial services is 1%.  This would mean that a thousand impressions would give you 10 clicks. In a balanced market, the financial services cost per click (CPC) should be 100x the cost per thousand impressions (CPM) i.e. 200€. If this is not the case there is an arbitrage opportunity.

Publishers (site owners) will be more or less willing to settle for anything else than CPM deals. Let us assume they are indifferent. Opportunities in this case will arise from assymetric knowledge about conversion rates (historical data, publisher data, assessment of offering in question, seasonality). Assuming that the CPM and CPC prices are constant, a higher than average click through rate will allow market makers to buy CPM and sell CPC making a margin off the imbalance. A lower than expected conversion rate will allow market makers to sell in CPM and buy in CPC, again making a margin off the imbalance. A real opportunity, in real dollars, occuring every day.

Some maybe sceptical as to the real value in understanding this? But seeing that impressions, clicks and actions are the new currencies of the next century, with trillions of CPC, CPM and CPA transactions every day, there is a tremendous amount of money to be made in trading them. Only issue is that few players on the market have the adequate data to do it successfuly. And those that do hardly have the competency to understand how to manage risks and structure a trading outfit.

Categories: eBiz Globalization · eBiz International · eBiz Management · eBiz News and Trends · eBiz Organizations · eBiz Strategy
Tagged: , , ,

The Email Dilemma: Low Cost, High ROI – but no dollars…

January 31, 2009 · Leave a Comment

The email spend portion of the average digital marketer is approx 2% on average (see eMarketer November 2008). Why wouldn’t emarketers spend more on this holy of e-grails? Some would answer that because the cost of sending an email to the customer database is so low, the spend will always be very low and hence a small portion of spend. They may also argue that the majority of email programmes contain price oriented call-to-action messaging and place themselves at the very end of the purchasing funnel.

True. And not true. My view is this: Most companies have no clue of the number of touch points they have in their customer relationships. More often than not customers will receive a call from there favorite sales rep the same week the company is doing TV advertising, sending monthly mailers and worst case also emails. Many large companies run a digital budget that in practice lives independently from the print/ offline budget and vice versa. This is a natural result of multi market/segment/product interests under the same roof.

The problem with low spend is that regardless of a predominantly high return on investment (ROI) on that very spend (which is probably positively skewed given allocation of fixed retainers, IT costs etc), it generates few dollars. Even though margin profiles maybe good, I would claim that many opportunities in business generation are lost in low volumes.

Email is a poorly utlized asset. Here are the reasons why:

  1. Although media agencies often use email as a component of ad-hoc campaigns, many media agencies are not actively involved in the more bread and butter type recurring campaigns because of their dependency on complex customer data management. This leads to a fragmented approach where email is managed internally and externally (often by a third party email dedicated agency).
  2. Companies struggle to make any sense out of the vast amounts of customer data. On paper, there are CRM systems with triggers and targets. But in practice few companies have the capabilities to transform promotion decisions into data base requirements and finally into a relevant email with a compelling creative.
  3. Because many email programmes are not appropriately resourced, negative side effects such as understated ROI (driven by lower than necessary open/click through), opt-outs by attractive customers and even privacy violation charges, arise.

Finding incremental opportunities (read free sales) should be the first priority of any marketer in these times. Forget a CRM system and triggers. I would suggest a much more simplistic approach:

  1. Work on the organizational parts of how to execute an email. Make sure the entire organization – from product and brand to data mining and creative execution – works together. Create a task force for each email prototype. Include the product manager, the database analyst, the creative talent and you will see wonders. I have.
  2. Start with some basic tests  - create an à la carte menu of 10 successful campaigns across your relevant product categories of your business. Make sure they are known in the organization and refine these. Eventually, your organization should have a library of model campaigns that have been tested and can be used according to your objectives.
  3. Limit the number of touches. Think: “take out something every time you put in something”. Many emarketers forget that you are looking for the optimum $/ customer over say a year, not the greatest open rate or conversion on one email. Less is more. Make sure not to touch a potential high end customer with a low end offer etc.

Although this sounds somewhat trivial there is a reason why open rates and click through rates seem to be declining over time (eMarketer.com/ “Epsilon Q3 2008 e-mail trends and benchmark”). As emarketers we simply forget that we are sending the same emails that we so much hate to receive.

Categories: eBiz Big Picture · eBiz Demand Generation · eBiz Management · eBiz Strategy
Tagged: , ,

Corporate Blogging: Common Sense.

December 16, 2008 · Leave a Comment

In an article titled “Time to rethink your Corporate blogging ideas”, Forrestor Research Analyst Josh Bernoff claims corporate blogs rank at the bottom of the trust scale with only 16% of on-line consumers who read them saying that they trust them. He provides some solid research (below) to support his point. Bernoff continues to say that consumers who say they trust these blogs are the most likely to trust all other sources of information.

 screenhunter_02-dec-16-1003

Bernoff does not suggest stopping corporate blogging but he maintains that you have to be “strategic about them” meaning “blogs that talk mostly about products often aren’t worth the effort”. Instead “blogs make sense if they demonstrate thought leadership; fit into a larger groundswell strategy with communities, videos, or the like; or allow PR groups to respond to groundswell threats” says Bernoff.

 

This is quite intuitive. I have previously written about how marketers shouldn’t be tempted to use Social media arenas for traditional advertising and self-interest broadcasting. I would say the same goes for corporate blogging. So in that sense there is nothing new to what Bernoff presents.

 

To me the real value of Bernoff’s data is actually that bloggers and blog readers tend to rely more on corporate blogs than the general population. This is rather a reflection of user maturity in using social media than anything else. And proof that as usage of blogs increase, a credibility gap will emerge between those corporates engaged in a dialogue and those not.

 

The purpose of corporate blogging should be to engage. Credibility doesn’t come from the engagement itself but from the depth of engagement (2-way), objectivity, coherence and integrity of the communication.

 

Similar to listening to someone next to you at a dinner party, you will be happy to find that they are talking to you 1 to 1 and not always to the whole group. Nevertheless, the credibility will come from a set of behavioral aspects and the contents of message. After all, we all know how interesting it is to set beside a self-centered individual who broadcasts a one way resumé of key accomplishments during a three hour dinner.

Categories: eBiz Management · eBiz Organizations · eBiz Social Networking · eBiz Strategy
Tagged: , , , ,

Top etailer tip: Grey Market – A Post Economic Crisis Opportunity

December 8, 2008 · Leave a Comment

A gifted colleague of mine brought my attention to the grey market of products that is emerging in the aftermath of the financial crisis.

 

The simple facts are:  

  • Increased bankruptcies of companies as well as whole sellers and  retailers are driving an emergence of a grey market. Products such as electronics and accessories etc that are not used, but “not new” are becoming increasingly available and sought after. For a Swedish example check auctioneer www.kvd.se
  • These units are anticipated to “flood” the market over a foreseeable future (Q1-Q3). http://www.bloomberg.com/apps/news?pid=20601103&sid=ag5pxFL3YpFY&refer=news
  • As customers increasingly seek value, the portion of customers looking for distressed stock and “new” products that are not sold directly from a manufacturer or traditional retailer will increase.
  • Many etailers with an appropriate strategy to address this can increase sales.

 greatdepression1

 

Bottom line recommendation

  • Create an extended sales strategy taking end of life or soon obsolete products into an outlet business model.
  • Cease to offer these products in your natural site environment.
  • Drive demand using on-line vehicles only. Target this specific market only (e.g. search terms “de-stock”, “outlet”, “new used ”, “distressed stock”, “bankruptcy retailers”).
  •  Set up a dedicated landing pages with an outlet look and feel for the limited products that link to a special store set up (Dell SMB still fronting). No links to this landing page from our main site to minimize cannibalization.
  • Balance units and margin$ using the new outlet channel.

Categories: eBiz Demand Generation · eBiz Management · eBiz News and Trends · eBiz Strategy
Tagged: , , ,

Survival Strategies for Downturn

November 18, 2008 · Leave a Comment

eMarketer CEO and co-founder, Geoffrey Ramsey, recently published an interesting piece on on-line marketing called “Digital Marketing Now: Seven strategies for Surviving the Downturn“. In addition to presenting some key strategies to fight off the downturn, he also shares his valuable personal experiences from previous downturns.

Ramsey offers seven strategic suggestions to more effectively drive demand and spend money in a difficult economic environment. I have chosen to extract the most important ones and comment on those to offer further granularity on the subject matter.

1. Get with the Accountability program.

Ramsey suggests that this is the time to step up efforts to better measure marketing seeing that all managers will feel increased pressure from senior management. The specific actions areas named are:

  • Measure on-line branding efforts.
  • Breakdown silos between off and on-line (and maybe intra company segments).
  • Build a sales impact model using sophisticated measurement tools.

Whereas I agree that these three areas of accountability are ever so important in an economic downturn, I kind of wonder how you can be a successful on-line marketing manager without having addressed these regardless of economic climate.

I have previously discussed difficulties with off and on-line business optimization (i.e. channel conflict). This will always be an issue and I hardly believe that the economic climate will make sub channel managers more willing to experiment with their targets, despite an increase in pressure on performance.

On the building of a sales impact model, I have experienced a number of attempts to address meta effects both between off and on-line marketing communications , and between different types of marcom (transactionally vs. consideration focused). These attempts tend to end up in multiple regression models and I often see them met with great disbelief from sales managers trying to hit their targets. This disbelief will inevitably increase when more pressure is put in the system. As a result more and more focus will be placed on pure transactional – highly trackable and efficient vehicles.

2. Search: A necessity for marketers in a depressed economy.

Ramsey promotes the idea of shifting towards direct response and underlines the importance of search as one of the digital era’s most effective marketing tools. He points to four key advantages:

  • Search provides a highly measurable ROI.
  • Search garners click-through rates that exceed all other forms of on-line advertising.
  • Search offers the potential for immediate sales on-line as well as for on-line an offline sales at a later time.
  • Search can even enhance brands.

Ramsey provides some clear evidence suggesting that advertisers not doing search will give business away to competitors that are. He continues to make a case for search growth (both mix wise and in absolutes) where most advertisers are planning to increase spend. Finally, latent effects are mentioned where in North American B2B sales 80+% of respondents found a vendor on-line (and then purchase either off or on-line).

Problem with search in an on-line mature industry is that every one is there. The opportunities to shift mix into search are highly dependent upon bidding levels and most of all available “headroom”. This transparent and highly effective auction model leaves little room for asymmetric pricing opportunities. The fact that money is pouring into this channel will further increase competition.

In addition, I would suggest to view ROI numbers from search with a grain of salt. To my best knowledge, the ROI numbers extracted by search marketing fail to take into account click behaviour (5-7 clicks narrowing down a search to the overrepresented brand term) and more importantly meta effects from display advertising on-line and all other marcom. Even Ramsey shows data that supports the necessity (point 3 below: “if marketers only do search they are missing 70-80% of their market opportunity”) of combining consideration/brand communications with search to optimize ROI.

I am pretty sure that there is an emerging risk that decision making will be too short term and transactionally focused – all disguised as “effective”. Bottom line: I would rather move toward a balanced marketing communications mix with a healthy brand component than max out mix on search.

3. Beyond search: Do not ignore the power of branding on-line.

Ramsey highlights three key developments:

  • Grow brand advertising on-line (vs. offline).
  • Measure on-line branding efforts.
  • Integrate metrics.
  • Use display/ branding to leverage on-line shopping.

On the first point, Ramsey points to clear evidence that brand advertising on-line is growing (mix and absolutes) despite strong indications that it will be negatively impacted 2009. I am not certain whether he suggests an increase in display advertising (mix) but he provides evidence that there are clear multiplier effects when combining search with display advertising and vice versa.

Moreover, he presents a handy score card where on-line “branding” can be split into a number of KPIs. Finally he continues to suggest that standalone KPIs don’t offer a good overall view – the merely reflect “the last ad clicked”.

A few things come to mind. First and foremost, I am kind of surprised that Ramsey’s article completely omits one of the real fighters in economic downturn namely the cost per action (CPA) model. I am especially thinking of the affiliate model.

In practice, it is virtually impossible to get senior level buy in on brand spend in this environment. In my view, the best levers to pull at this very time are the affiliate and email levers (in fairness Ramsey mentions email in his forth reco: Stay close to customers). I have previously commented on some interesting aspects of the CPA model in times of recession.

It is important to point out that the CPA model typically contains elements of search (in that some affiliates are search engine marketers). Still from a pure linear cost per order view, the affiliate model is arising as the most efficient – more efficient than search. It is traditionally less managed than the search words and I believe the model is suffering from a very low end product mix with many retailers, which in turn drives decisions based on false assumptions.

Categories: eBiz Big Picture · eBiz Demand Generation · eBiz Management · eBiz News and Trends · eBiz Strategy
Tagged: , , , ,