Tag Archives: Advertising

Facebook Ups Its Ad Game

Facebook is clearly focused on revenue ahead of its IPO. The massive social network has been hard at work innovating on it’s platform – it’s ad platform. Over the last few weeks there have been a slew of changes rolled out to advertisers with announcements of more right around the horizon. Is this a coincidence? No way. Facebook needs to ramp up its revenue capability as it enters the public market. Investors will demand fast growth for the multiple they’re going to pay, and Facebook is laying the foundation to grab as many ad dollars as possible with these new changes.

New Ad Units

Leaked Facebook documents show new Facebook ad units coming and old units sunsetting as Facebook attempts to find the ad units that drive more engagement (clicks) to pay off better for advertisers who are looking for measurable results. The new social units are actually already live on the site if you’re in the developer preview. I’ve grabbed one from my Facebook feed below.

These new ads, say Facebook, are poised to drive more clicks and actually work better than standard ads. I’m inclined to believe them. I’ve run a ton of Facebook ad experiments and I can tell you, in no uncertain terms, that the social ads work better. But that’s another post.

More Ads, More Places

Facebook has been thinking more about how it can leverage the most popular parts of its platform to drive more impressions for it’s ads. When it launched the new version of the photo viewer, it reworked the layout and bumped up the visibility of the ad units. You can see between the previous version and the new one how much visual priority has been given to the ads now, and yes, there’s even an extra ad unit in there for good measure.

That extra ad unit may not seem like a big deal, but when you take into account that 200 million photos are added to Facebook every day (6B/month) and that those photos are viewed on an average of some multiple of that, you’ve just added a ton of new inventory (and CPMs) from your platform to sell and monetize. It’s a big change.

Old Photo Viewer

Facebook's previous photo viewer

New Photo Viewer with Two Ad Spots

Facebook new photo viewer

We should not be surprised to see this ad creep continue to show up all across the platform.

Facebook Mobile Ads

With more than 400 million of it’s ~850 million users accessing Facebook via mobile, and with no current monetization opportunities to capture that audience, it’s a no-brainer that Facebook will unveil mobile ads at some point soon. You just can’t have that type of traffic to a site that you can’t monetize. I’m sure that’s the busiest team in the entire company.

Facebook also acquired a mobile payments company recently. And if they can strike a payments deal where they take a cut, it could be lucrative for them, and a model they’re very familiar with already (see Facebook credits.)

More Tools for Advertisers

In addition to the extra ads and new ad units, Facebook will continue to innovate to make the ad professional’s life easier and their campaigns more successful. Facebook’s treasure trove of data on users is becoming easier to tap and target with recent changes to the ad editor which has become much better at making suggestions for interests as you type. Users of the Facebook Power Editor can now mix and match broad based categories and precise interests, which let you target say small business owners who like search marketing (like the AimClear guys did.)

When Will the Ads Be Too Much?

The big question of course is when is enough, enough? An ad that shows you a funeral parlor when Facebook knows you’ve just lost a relative is going to be far too creepy and turn off a bunch of users. I’m sure there’s some healthy debate going on between ad sales and the product teams about where, when and how to best leverage the platform and drive revenue. Those debates have likely picked up since the S-1 filing.

One thing is for sure, unlike Twitter, Facebook has fully embraced it’s destiny as an ad serving platform. We won’t be paying a subscription any time soon, but we will be seeing more and more ads. The big question is when will it be too much? Will it be the ads that chase the users away? Or will we be perfectly content being served ads for merchandise of our favorite teams and tools that are built for professionals like us?

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Groupon is Not a Marketing Strategy

Groupon logo.

Image via Wikipedia

Groupon‘s UK Managing Director Chris Muhr opined today that the reason Google would want to purchase Groupon was because Groupon has “…something that Google does not have and no one else has and that we have really tapped a new market,” but is it really a new market or have the just tapped into the greed and laziness of businesses who long for days of old media? I think it’s the later, which is why the idea of Groupon is at once appealing and dangerous to small businesses and brands all over. But first a bit of background.

How Groupon Works - Groupon highlights one business in each city every day with a sale that’s too good to pass up. (They also have “side deals” and Groupon Stores, but we’ll focus on the main deal here.) Usually 50% or more off retail price of a service or item. They like to focus on a price range that makes the item easily bought on impulse and guide businesses to try to stay under $50 for the best results. So if you sell wine for $30 a bottle they’ll want you to offer it for $12-$15 on Groupon. Then Groupon takes 50% of every transaction successfully processed through the offer. So to continue the example, if you sell wine for $30 regularly, you’ll put in on Groupon at $12 and you’ll end up with $6 per bottle sold. They’ll also set a tipping point for the deal to be activated (the “group”” in Groupon) and will also let you cap your deal at a certain amount of sales. It’s pretty easy to see that if you don’t have much margin built into your product, you’ll be in the red on every sale, depending on how you structure your Groupon. And if you can give up 75% of revenue and still make a profit, it’s likely going to be a very small one, which means you need to sell a lot of units to make any money.

So, then why does a business use Groupon? Businesses use Groupon because they can drive a large number of visitors to a store location with a single event. They hope that the new customers reached by Groupon will buy additional items above what is advertised (if you’re losing money on your Groupon this is considered a “loss leader” strategy,) and/or you hope that they become loyal customers that come back. But I also think they use Groupon because they’re lazy. That’s right. Lazy. And here’s why.

Groupon works a lot like a newspaper ad used to. You find the biggest circulation possible, you make an appealing offer and you hope that you get customers that will come in and like your business. It’s the old “spray and pray” model of marketing that worked so well in the days of mass production and mass consumption. Get it in front of them and they will buy. It takes little thought, little effort. It doesn’t take cultivating relationships, building a brand or finding customers who really need your service. It’s the laziest form of marketing out there.

If you’re a business you have four critical attributes that help drive sales: your brand, your prices, your awareness level and your location. There are of course many more; but let’s look at these four for a moment.

Your Brand – If you have a strong, growing brand, you don’t need Groupon. Your brand drives customers, customer loyalty, word of mouth marketing and strong margins. You can charge more, spend less on advertising and focus on growing your brand through unique experiences and high quality products. It’s a virtuous cycle, but one which few companies get into and fewer still that can maintain it.

Your Prices - If you don’t have a strong brand but you have incredibly low prices then you’ve defined yourself as the low cost leader, you’re first in the race to the bottom and you know you’ll live a life of low margins and need to move a lot of units to make up for it. You also aren’t ideal for Groupon because you probably have a brand associated with being the low cost leader, and Groupon’s pricing structure doesn’t work well in a low margin world (as outlined above.) If you’re priced in the middle of the market you really don’t have a lever for sales on prices because customers can go to the low cost leader.

Your Awareness Level – Among your customer base your awareness level is what drives repeat visits, word of mouth and new customer acquisition. If you have great awareness, if everyone knows that you’re the only 24 hour locksmith or the only tux rental place in town then you’ve got great awareness. If you’re one of 12 women’s clothing stores, like a Chico’s in a strip mall somewhere, you’re awareness level isn’t great. Groupon starts to sound like a good idea here.

Your Location - Unless you’re a virtual retailer with a strong ecommerce presence, you’re really limited to the surrounding area for your customers. How far they’re willing to travel to get to you is a function of all three above. Groupon makes sense here too.

So if you’re a middling business with little or no brand, little or no price differentiation, and a fixed customer base that is more or less only growing with the population in your area, then you have only a few levers to pull to make your business go. You can go about the hard work of building a brand in your community. Connecting with core customers, building word of mouth by creating an amazing experience, or demonstrating expertise above and beyond the competition. Or you can cut your prices, be the unbeatable low cost leader and price match anyone else. People know that they’ll get the lowest price from you and that goes a long way. Or you can increase your awareness by advertising, sponsoring events, etc. Or you can open more locations, a capital intensive process that may or may not work for your business.

Or, you can Groupon. Because with Groupon you don’t need to do any of that. You just spray and pray. Cut the prices on an item and let Groupon do the rest. But is that really it? Do the customers come back? Do the customers care that you exist? Do the customers remember who you are and where to go the next time they need something you provide? There are plenty of Groupon disaster examples on the Web that say “No.” Because without thoughtful marketing in place, Groupon is just a flash in the pan.

In the PR trade they say “Getting on TechCrunch is not a PR strategy.” I say “Getting on Groupon is not a marketing strategy.” And it’s where I think Chris Muhr is wrong. Google provides the savvy, thoughtful marketer a lot more than Groupon ever could. It provides the people willing to invest in their brand, their customer experience and their awareness with an avenue to showcase their business to people actually looking for them, not just people looking for a rock-bottom deal.

This goes for big brands as well as small businesses. If your brand is flagging, and you’re undifferentiated among your competitors Groupon is not going to solve your woes. It doesn’t matter how many gift cards you sell if you can’t convert those customers into repeat customers and advocates of your brand. And if you don’t fundamentally change your brand and the customer experience then Groupon will be nothing more than crack for your marketing department. Because each time you run a Groupon you’re high will be a little less than the last time and your hangover will be a little worse. For every Groupon you run, you dilute your brand a little bit. Do it once and it’s a marketing stunt. Do it over and over and you begin to redefine the value of your product or service. You hurt your brand and any differentiation you had. You’ve chosen the low cost leader, commodity approach. Prepare to accept the consequences.

So can Groupon work? Absolutely. Is it the right answer? Maybe once. Is it a strategy? Absolutely not. Is it easy? Too easy. Small businesses and big brands should focus on reengineering their customer experience from the web site to the warranty service. And when that is done then, maybe, it’ll be time to shout it to the world with Groupon. But more likely, the people that have been blown away by the change in your service will have already told the people you want to reach. Don’t be lazy. Do your job. Your brand and your bottom line will thank you.

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Celebs Make the Jump to Online Video

Adam Corolla for Klondike

Celebrities are more and more appearing in online video. Advertisers who are seeing the success of video campaigns on YouTube and around the Web are turning to known quantities to connect with customers and inspire action.  These celebrities are slowly displacing Web-celebs like iJustine and other paid Web-based pitchmen now that the medium is proven and effective.

While I believe that Web-celebs will continue to get commissioned endorsement work-after all, they create a much different type of brand interaction-celebrities will more and more become a fixture in online video.

via Advertising – Known Faces Displace Amateurs in Online Videos – NYTimes.com:

Online video, in its initial phases, was populated mostly by unknowns because many stars were reluctant to lend their prestige to an untried medium. Now, though, the ability of celebrities to cut through the clutter means that familiar actors, athletes, comedians, models and singers are being cast for webisodes.

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How Many Trade-Offs Can You Afford?

Trade offs. We’re asked to evaluate and make trade offs everyday. Particularly when it comes to things that are hard. Building a web site. Creating advertising. Starting a new public relations campaign. Delighting the customer. All hard tasks, all made harder by the constant need to make trade offs. How willing are you to trade quality for cost, or time for cost, or user experience for profit? These questions are posed every day and answered differently by people depending on the situation and the costs of the trade off.

The million dollar question is how many times can you trade things that benefit you over things that benefit the customer before you lose? If you automatically opt someone in to email marketing upon registration you’ve traded a faster list build for the trust of the customer. If you build in aggressive upsell offers in your sales funnel you’ve traded a larger order size over customer goodwill and usability. If you use an auto-attendant on your phones you’re trading cost for customer aggravation. In each one you’re making a bet that the cost savings outweigh the damage you do to your customer relationship.

Trade offs are like playing chicken with your customers. Who will blink first in a race down to the mimimally acceptable transaction?

What a sad and dangerous way to engage with customers. Playing chicken, seeing how much they’ll tolerate before walking away for good is never the way to building a successful, long-term relationship. It’s why you don’t see great companies doing it. You may see profitable companies doing it. But you don’t see companies and brands that people love doing it. Why?  Because people don’t want to invest money and time in to an adversarial relationship; they want a beneficial relationship. One that helps them. No one wants to look over their shoulder constantly to make sure they’re not going to get jumped.

Bigger companies, quasi-monopolies and government can get away with it-simply because we have no alternative. A cable provider can treat you like crap, so can a telco, because switching costs are high and choices are limited. In those environments the trade offs are easy to make.  Trade 200 customer service reps’ salaries by keeping people on hold 5 minutes longer? Easy. Cap Internet bandwidth and add another pricing tier to penalize your most active customers? Easy.

But small companies don’t have the luxury of making those trade offs. Why? Because people can and will go elsewhere. It’s hard to vote with your wallet when you only have one cable provider in your area. It’s a lot easier to vote with your wallet by choosing one of a dozen companies providing the service you need on the Web.

Additionally, small companies don’t have the advertising budget to gain the traction they need with the mass audience. They need strong word of mouth to grow their business. They can’t treat their customers poorly or ding their pool of goodwill repeatedly during the sale process because only bad things can happen:

  • They’ll get one sale but the customer will never return, looking for a better service in the future
  • The customer will abandon the sale process and try someone else
  • The customer will buy but not tell anyone
  • The customer will buy but tell anyone who will listen not to buy
  • The customer will not buy and tell anyone who will listen not to even bother

All of those outcomes can spell death to a small company trying to build a reputation.  The world is too small and too connected today for small companies to make repeated trade offs at the customer’s expense.

In reality trade offs must be made.  There are development limitations and cash limitations that make it impossible to meet every expectation right off the bat.  But this simply makes the trade offs that you do have control of even more important.  Because people will put up with and understand that as a new company you need to make trade offs in some areas.  In others, people aren’t as forgiving.

So if you rely on word of mouth, if you rely on reputation to grow your business, think long and hard the next time you look to trade something for the time, respect, effort or goodwill of the customer.  Because the next trade you make could be the one that causes your customer (and their friends) to walk for good.

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Can you make what you do a game?

More and more we’re seeing the world of marketing and gaming mix. From the latest location-based social networks like Foursquare, to the digital “tree” that “grows” in response to fuel efficiency in new Ford Fusion, making marketing a game is becoming a sure-fire way to reach customers. In a world where most advertising and marketing gets ignored, what can you do to build game play into your marketing messages?

We’ve all been told (and all know by experience) that people are overwhelmed with information and have limited time to pay attention to anything new. Getting a piece of their attention is the hardest job a marketer has. But in an apparent paradox, people will invest hours and hours playing simple games online like Farmville, check in repeatedly to earn points (worth nothing more than bragging rights) on Foursquare and even change their behaviors to win at games that have little perceived value. What Ford and Foursquare have done is used the elements of gaming to create enjoyable interactions that reward users and provide brief periods of escape while surprising and delighting them with unexpected changes based on their use.

The idea of putting game elements into marketing isn’t anything new of course. Les Wunderman famously used the hunt for the gold box in Columbia House Records advertising to drive direct response sales that crushed traditional advertising campaigns. McDonald’s runs Monopoly year after year for a reason. But it seems every time game play is introduced in a new way it means success for the marketer that incorporated it into their awareness campaigns.

Here are a few ways to incorporate gaming into your marketing:

  • Make the game easy. Ford makes the game of fuel efficiency in their new Fusion by allowing the driver to “grow” a digital “tree” on the dashboard in response to their fuel efficiency.  It rewards driving in a manner that improves efficiency and highlights the “green” elements of the car to people attuned to that message.
  • Reward people for taking actions beneficial to you and them. For example, checking in on Foursquare earns users points that give them bragging rights among other users and can become the “mayor” of locations for repeated check-ins.  Foursquare benefits by repeated use.  Advertisers benefit by presenting localized offers to users in the area.
  • Make the rewards visible. Foursquare uses badges, Ford uses a tree image.  By making the rewards visible the players help you market the game by proudly displaying their accomplishments to their friends inside and outside the game.
  • Make the game part of a bigger community. Playing a game individually is fun, but its an experience that can’t be shared.  By providing a way for others to compare themselves to one another you make them part of the community that plays the game.  This makes them more likely to stay engaged and playing by tapping into the competitive and communal nature of our beings.

So what can you do to put game elements into your marketing or product or service? I’m working to figure out how I can do it in my business, but I haven’t figured it out yet. I’d love to hear your thoughts on this strategy of building awareness and engagement with your product/service/message in the comments.

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