Archive for internet marketing training

04 Aug 2011

All Your Data Are Belong to Us

No Comments cookies, internet marketing training, retargeting ad, social media

My hat is off to Kara and Walt for warning readers of All Things Digital about tracking cookies on their site. Today, it seems that surfing the web is akin to wading naked into a mosquito infested swamp.  You can’t avoid getting stung, but you have no choice– your home is in the middle of this swamp.  And it wasn’t because you decided to build your house in the swamp– the mosquitos saw where you lived and decided to locate where you are for convenience.

Not all tracking cookies are evil, but how is the consumer to know who is doing what with your data and where you’ve been?  Usually, it’s a good thing, such as remembering that you’ve come to a place before.  Sometimes it’s questionable, such as retargeting or remarketing, where you are followed around the web just because you went to a particular site. And sometimes it just outright unethical, such as flash cookies (which aren’t even cookies) and are nearly impossible to be removed. With new technology comes new opportunity for advertising in ways that even industry pioneers haven’t considered yet– and certainly not regulators.  Check out what Roger McNamee has to say, for example. If you’re an advertiser, what are you doing about this?  If you’re a consumer, what do you think, given there isn’t much you can do?

09 Oct 2010

Google Analytics can predict the future

1 Comment internet marketing training, search engine optimization

My best friend is a stay at home dad. Last Halloween, he blogged about funny pumpkin carvings and quickly started ranking on that term.  His traffic went from a few dozen visits a day in late October to a couple thousand daily uniques right at Halloween.  It’s now one year later, the content is unchanged, and we see traffic building up. Here’s the traffic trend through October 8th, just 3 weeks away from Halloween.

As you can see, it’s gone from a couple visits a day to about 80 visits a day.  I’d estimate that by the time Halloween hits, we’ll be up to 2,000 visits a day on this term, which would be slightly more than last year.  He’s already ranking #2 on this term, as well as a number of other Halloween keywords.

WHAT YOU CAN LEARN FROM THIS

Consider what posts you’ve written that have season value.  Got something on your favorite Christmas stories?  You get another shot this year around to get a multiple of what you did last time.  This time, you’re already ranking and have had a chance to evaluate what keywords drove you traffic. Thus, you know now how to send linkjuice to this post and what terms are valuable.  It’s like watching re-runs of a game show you’ve already seen– you already know the answers. So if you can’t win, something is wrong.

TAKE ACTION

Maybe you have a winning egg nog recipe.  Now create one on hot spiced cinnamon cider or related topics and link these articles together.  Get your friends to link to you on these new articles.  You already know Google likes you for a certain set of terms, so as long as you stay close to those, you’ll be able to expand out and get more traffic on similar terms.

If you have some high resolution pictures, that will help you in image search. Integrate Facebook Connect as Keith has done, and you get another multiplier of traffic, since Google is indexing Facebook pages.  Getting more comments to your post will also help you get more traffic– there’s more content to index, plus Google sees that your site is heavily visited and commented.

Love to hear your experiences here.

07 May 2010

Alexa, Quantcast, ComScore, Compete, etc… Are they accurate?

8 Comments internet marketing training

We get this question all the time, so I’m going to answer it here and then point people back to this post.

Alexa is the most well-known of the traffic measurement services, but also the least accurate. Let me explain why. Alexa rankings are based on the behavior of the folks who have downloaded the toolbar. No wonder that tech-heavy and venture capitalist sites have fantastic Alexa ratings– the tech people are disproportionately represented as Alexa users. The Alexa on this blog fluctuates between 50,000 and 250,000, which is better than the 30 million plus sites being tracked. Though my blog gets only a few hundred folks a day, it has an Alexa rank better than many sites that get 10,000 uniques a day, such as some of our clients.

What you need to know about Alexa is this:

  • If the Alexa rank of a site you’re looking at is not under 100,000, then the odds are the traffic is low.  And if your traffic is low, then the activity of just a few users can make your number bounce from 2 million to 20 million– it’s just noise.  Remember, Alexa estimates your popularity by extrapolating the behavior of a few users up to the entire web. But the Alexa userbase (those who use the toolbar) is highly skewed.  
  • You can game the Alexa toolbar by having your friends visit your site or employing a bot service– seems silly to go to that effort just to better your rank.  I suppose geeks can have their boob jobs, too.
  • You CAN compare Alexa figures between sites in the same category– so one daddy blogger versus another daddy blogger is fine, since they’re likely to have the same mix of Alexa users.  But a tech blogger versus a kids’ site?  Nope.

Compete and Quantcast are usually far more accurate.  Quantcast allows you to be “quantified” by placing a tracking pixel, so it’s the most accurate.  Yet I don’t see benefit in sharing your stats with the world– but then again, I don’t understand why some people share some of their most personal details in public forums.  When we do analysis, we use multiple third party traffic sources– and typically, Compete and Quantcast go together, while Alexa deviates.  Some thoughts about these two services:

  • Compete is great if you want to compare multiple sites at the same time– hence, the name “compete”.  I haven’t personally paid the cash to use the Pro service, but can’t imagine that any paid service is really worthwhile, given how many free tools are available.
  • Quantcast is great for individual site demographics and to tell you what other sites are in the same category.  I’d ignore the education and income measures– no way they can accurately determine that.  A neat trick is to take the related sites spit out by Quantcast (your competitors, I’m assuming) and then paste those domains into a spyfu.com or other keyword research tool to get their keywords.

ComScore is for big companies that have a lot of money to spend on reporting, although the unwritten rule is that if you pay ComScore for their reporting, you might somehow rank better in their various reports.  ComScore doesn’t matter to you unless you’re VC funded or a big company that is depending upon who ComScore says is top in a particular category for your valuation or ad rates.  There is a minor conflict of interest here, but not much more so than the fact that automobile review magazines accept ads from car dealerships, or that Yelp takes ads from restaurants that have reviews in their directory.

But the most important tool to use in grading your site is your own analytics– and you should be using Google Analytics here unless you are an enterprise client that can afford a custom clickstream tool to do click level attribution, or are perhaps doing some crazy form of lead generation.

The question is what your goal is with these 3rd party traffic tools. And there are different tools for different jobs depending on whether your aim is keyword research on competitors, exploring new demographics for a product you want to launch, researching the other players to demonstrate where you’ve kicked ass over the last year (to get a raise), or perhaps it’s just a nice stat to consistently track each month over time.

So what tools do you prefer to use for assessing popularity on the web?  My favorite is still Alexa because it’s easy to use and commonly understood.

14 Apr 2010

Why some technology companies fail and others succeed

6 Comments finance and economics, internet marketing training, local advertising, people management

Many folks speculate why Google has overtaken Yahoo! in search or why Facebook has dominated in social networking, versus Friendster. I believe there’s one key factor— if you’re running a technology company, you need a technologist at the helm.  Larry and Sergey of Google were Ph Ds (or about to be) in Computer Science.  The last few folks who have run Yahoo! were anything but technology people– one was a film executive, one was a financial analyst, and another is a professional manager.  Running a technology company requires a deep understanding of what’s coming next in a rapidly changing world.  And to not have a keen pulse is to drive in a dangerous fog.

Facebook was founded by Mark Zuckerberg, a young computer science genius– not a 55 year old male who is good at manipulating spreadsheets.  If you see a social networking start-up being founded by 55 year old males who are probably not even on Facebook– run the other direction as fast as you can.  The folks who can best guide a company are those who connect deeply with their customer base.  How can you start and manage a company if you don’t use the product yourself?  Even the guy who runs Hair Club for Men is also a client, so the commercial goes.

Of the technology companies we see fail, it’s not just age.  Often it’s also a lack of having a balanced core team.  Salespeople hire salespeople.  Engineers tend to like to hang out with other engineers.  It just works that way somehow, as people hire folks who are like them.  But to operate a technology firm, you need folks who are experts in sales, engineering, marketing, finance, and other disciplines.  And the technologist should be king in the technology company, in the same way that Nike was started and run by a star athlete, Phil Knight.   Does Frito Lay have a technologist at the helm?  No, they have a marketing person, since that’s the firm’s core expertise.

So watch out for technology companies that don’t have any engineers in sight or believe that engineers are commodity products that can be contracted out or hired offshore.  If you are a business person and are thinking of starting a company in the Internet space, my advice to you is to quickly find a technical co-founder.  You’ll thank me later for this advice.  

A great entrepreneur knows what he knows- and more importantly, knows what he doesn’t know– finding someone to complement him or her.  If you’re an engineer, find a strong marketing/sales ally and make him a business partner.  Your freelancer will give you great results for a couple months, maybe longer– but eventually will flake out on you, which is why they’re freelancing.  

Are you a technologist— and if not, do you have a technologist that is part of your founding team or is at least a CTO level person?  If you are one of these companies that’s lacking a technologist, but wondering why you may be having trouble executing, I hope this article helps shed some light on why.

14 Mar 2010

10 Commandments of Running an Ad Network

1 Comment Ad serving, internet marketing training

If you run an ad network, see how many of these 10 Commandments you actually deliver upon versus just say you do:

1.  Thou shalt deliver publishers better eCPM’s: Not the highest payouts, but just better than the competition. That means some ads don’t get to run.  Though we are a marketplace, we want to deliver consistent earnings, which may require us to adjust margins and allocate high performing offers unevenly to key publishers.

2.  All users are not created equal: Focus on the top 10 advertisers and top 10 publishers– not the 700+ other guys who have random thoughts and will waste our time.  Total self-service for them. Tier accounts based on value to the network, which means better performance and personalized service.

3.  Don’t reinvent the wheel: There are common standards for most of what we do (sign-up screens, payment terms, clickfraud detection, reporting, account management, ratecard discounting, etc…).  Copy AdSense and AdWords.  Over-invest where we are different.

4.  Test, test, test: Got an assumption?  It’s probably wrong, so run a quick test and make decisions based on the data. Establish a testing framework so we can do zillions of tests with limited effort.

5.  Payment up-front: We don’t give out loans, ever.  You gotta pay to play.

6.  We have 31 flavors: Don’t argue with them– if they think buying clicks at 10 for a dollar is cheaper than 10 cents each, fine. If they think managing to CPC or CPI or another metric is better, who are we to argue?  If they want to manage their account via facebook.com, socialmedia.com or through their API, that’s great.  Provide all mechanisms– see Commandment #3.

7.  # Follow the money: Let the market tell us what is working and continue to do more of it.

8.  We are not religious:  Let publishers decide what they want to accept. We allow any offer to be on the network, provided it is legal and would be acceptable for a public company.

9.  Everything can be measured: If it doesn’t produce measurable margin, then it shouldn’t be done.  All people, projects, features, advertisers,  publishers, and tasks can be boiled down to their margin contribution.

10.  Transparency: We will show advertisers and publishers their own performance in stunning detail, but not that of others.  All performance questions can be answered by a finite set of automated analytics.

10 Mar 2010

Five Magic Words to Grow Your Online Marketing Agency

15 Comments Featured, internet marketing training, people management, promoting yourself

Sometimes you get a piece of advice so deep, yet so obvious, that you have to stop for a minute to think about it. Thanks to Gillian Muessig, President of SEOmoz, for mentoring me on this– her five magic words a bit later….

Have you ever been approached by a prospective client that would like to do business with you, but clearly doesn’t have the money? These are “wanna be” clients. They can’t afford to be clients, but have champagne tastes on a beer budget. See if any of these sound familiar to you:

  • “We want to be business partners with you and share the risk” (translation: “we have no money”).
  • “If you deliver us the revenue, then we can pay you your fee” (translation: “we have no money”).
  • “I can get this a lot cheaper elsewhere” (translation: “we have no money”).
  • “Let’s do a trade-out of services” (translation: “we have no money”).
  • “We need to ask you some questions to qualify you” (translation: “we have no money and want to string you along for free advice in the meantime”).

If you ever hear any of this, here are the 5 magic words you say…. Drum roll, please…

WE ‘RE NOT RIGHT FOR EVERYONE.

Repeat that to yourself three times to lock it into your head. Don’t fall into the trap of selling yourself short. You’ll regret taking on a cheap client– and not only are they the ones with the least money, but also the neediest and hardest to deal with. Our best clients pay us handsomely, treat us well, and are a joy to work with. The clients where we’ve made exceptions to this rule suck the life out of us and sometimes make us wonder why we’re in this business. Spare your staff the angst and remember these 5 magic words, else you risk losing your best people, too (who can work anywhere).

Tell the prospect, firmly and politely, that you work with a select group of clients — that you work with the best in the industry and pay your people well, because you have the best people. Mention that you don’t compete on being the cheapest game in town, nor are you the most expensive. If they keep pushing, hold the line — say that you’re not a discount agency, that you can refer them to other agencies that would gladly take their project.

The clients that do pass this bar are going to be businesses that are likely to be solid in their operations, have folks who appreciate value, and will rekindle the excitement that caused you to strike out on your own to begin with. You’re being paid well enough to afford to do a good job, and it becomes a self-fulfilling prophecy. Your staff members look forward to working with these clients and the enthusiasm is infectious.

Bruce Clay pulled me aside at SMX Advanced last year and gave me similar advice. He said the key to getting the right clients is to “stand in the middle of the road, arms outstretched, screaming that you are the best.” Half the people will think you’re crazy and walk away. The other half will say “Gee, he really must be the best” and then hire you.

Bruce also advised to ask the prospect this question, “If your child was sick, would you go for the cheapest heart surgeon or the best?” That should do it. If not, you don’t want to work with them. Their business is like their child– and when you have only one shot to do it right, they should choose the best every time, unless they have no money.

You don’t want or need to have every potential deal that’s out there. Be choosy. Would you rather have 40 clients that each pay you $1k a month in fees or 4 clients that each pay you $10k a month? If you have 4 clients, you can focus your efforts to deliver solid value, build a solid relationship, and have on-going solid business deals — as opposed to spreading your efforts thin among the chorus of squeaky wheels that compete for your attention.

So let’s make it 6 magic words, courtesy of Gillian:

SORRY, WE’RE NOT RIGHT FOR EVERYONE.

Maybe when that prospective clients get a little larger, they’ll be right for you– or maybe if they’re serious about what it takes to succeed in online marketing. But remember that if you’re having a hard time with them when they haven’t even paid a dime, imagine how they’ll be when they’ve handed you a few dollars.

If you follow the Pareto Principle (the 80/20 rule), then remember that you need only a few clients to have a great business. Don’t be afraid to cut some clients loose. They may have been right for you a couple years ago when you were a smaller firm or just getting started. But now you’re a different company and have moved on to a different client base. You can recommend others that can do a great job.

If you like this, please let me know or send a note to Gillian thanking her for the advice she’s has generously given here.

24 Jan 2010

4 steps to make a KILLER Infographic and drive natural inbound links

3 Comments internet marketing training, local advertising, search engine marketing, search engine optimization, social media


Gather some interesting statistics and then make a chart out of it– and you’ve got yourself an Infographic.  Examples are showing a map of the world and income for each country displayed by green bars.  Or perhaps it’s the price of gasoline over the last 2 years graphed against milk prices to show some interesting trend.  The goal of an InfoGraphic is to visually stimulate people with statistics and get them to tell their friends or blog about it.  A few days ago, I saw an InfoGraphic showing the percentage of times people tweet after having sex. Certainly that drew some attention, although I’m not sure how accurate their methodology is.  It’s not as if you can set up hidden cameras in bedrooms across the world to measure this.  The percentage is 36% in that study, by the way, if you’re wondering.

There are 4 steps to getting this done:

  1. Get the raw data-- some folks will do a survey, which is easy enough to do via Facebook and twitter.  Just do a web search and you’ll see a number of sites that allow you to create free or inexpensive polls. The plus– polls are easy and you can get data fast.  The cons– massive sampling bias, as you’re not getting a random sample, plus your sample size is likely too small to have statistical significance.  The best results are where you can scrape from a large dataset– but this may require you to spend money to get that data via a gnip, addtoit, or other service. Some are free and some require no programming.
  2. Crunch it– slice, dice, and manipulate the data.  Some Excel wizardry– or SQL queries if you have a larger data set and need to load it into a database– and you have your aggregates.  Group by keyword, geography, type of user, or other attribute.
  3. Make an image-- Easiest and most common tactic is to do a map overlay. For example, look at the beer drinkers in America by state.  Or you can do something silly, such as The Onion’s mockery of MySpace’s privacy. Not a great designer?  Just find someone on rentacoder or odesk for $100, telling them what imagery to imitate.  If you’re doing an Infographic on how many cups of coffee Americans drink, broken out by state.
  4. Promote the heck out of it: If you’ve done the previous 3 steps right, you’ll go viral. Make sure that nobody can nail you on poor methodology– bad sampling, incorrect assumptions, or other flaws in your research. Blog about it, get your friends to Digg it, post it on your Facebook and Twitter.  A good headline here can make or break the result. 

If you generate enough controversy or have something hilarious and/or interesting, then watch this go viral– and the links to your site will start flowing.  Brent Csutoras, the best social media linkbuilder on the planet (in my opinion), told me that he can sometimes get tens of thousands of links from a single post.  That includes a smattering of PR7 and PR8 links– if you hit a home run. But perhaps a typical viral campaign will generate just a few hundred links– you never really know. 

Now compare those results against trying to buy links or reaching out to bloggers one at a time. Even if you could buy links without getting in trouble, what would the comparable cost be?  Matt Cutts, the Google spokesperson for SEO, says that this link building methodology is completely white hat and legitimate.

So what are you waiting for?  What interesting factoids and tidbits can you assemble for the website that you’re trying to promote?


04 Jan 2010

Google now offers Pay Per Call indirectly

6 Comments internet marketing training, local advertising

If local advertising companies aren’t already quaking in their boots with Google’s recent blitz of new enhancements in local– Place Pages, Favorite Places, Caffeine, ad extensions, sitelinks, Fixed Fee Listings (yes, the beta was over due to poor performance), and so forth.  

We’ve known for a few months that you can do Pay Per Call on Google AdWords.  You merely set up a mobile PPC campaign targeting anything but phones that have rich web experiences– so basically anything but an iphone.  And then you can specify a phone number instead of a url.  Thus, a click is a call– and now you’re doing Pay Per Call.

Today, Google AdWords Support sent out a blast email saying that your phone number can appear in your mobile ad on full web browser phones– so they’re extending this feature to iphones.  Now that’s scary.

// begin AdWords letter

Dear AdWords Advertiser,

We’re pleased to announce that beginning in January, your location-specific business phone number will display alongside your destination url in ads that appear on high-end mobile devices. Users will be able to click-to-call your business just as easily as they click to visit your website. You’ll be charged for clicks to call, same as you are for clicks to visit your website.

How will phone numbers appear in my ads?

Based on the customer’s geographic location, the phone number and closest business address will appear as a fifth line of ad text when the ad appears on mobile devices with full HTML browsers (e.g. iPhone, Android, Palm WebOS).  

Where will I be able to see the results?

At launch, you’ll be able to view calls from your ads on your Campaign Summary page within AdWords from the “click type” segment option under the “Filter and Views” drop down. 

How will I be charged for phone calls I get from my ad?

The cost of a click to call your business will be the same as the cost of a click to visit your website.

What actions should I take?

If you’d like your ads to show location-specific phone numbers when displayed on mobile devices, make sure that your campaign is targeting iPhones and other mobile devices with full HTML browsers, and that you have included phone numbers with your business addresses in the locations under your Campaign settings.

If you would prefer your ads not show phone numbers, simply remove the phone number from the business listings included in your campaigns targeting mobile devices.

We hope this new feature enables you to connect more easily with your potential customers. If you have any questions or feedback, please email us at ctc-feedback@google.com

Sincerely,

The Google AdWords Team

Google Inc.

1600 Amphitheatre Parkway

Mountain View, CA 94043

// end Google AdWords letter

Also consider also how Google’s market share in Local has increased from 15% to 26%, making them the clear leader in local now (they weren’t last year– it was SuperPages).  See TMP Direction Media and Comscore’s findings.  

Google can easily increase their market share if they decide to force more Local 7 pack or Local N pack into the search results.  Many SEOs have lamented how soon all real estate on Google will be for sale.  Looks like Google can take a page (pun intended) from Baidu, even though Baidu is taking a page from Google and reducing the number of ads and identifying paid ads.

02 Jan 2010

2010 Local Online Advertising– why we’ll see massive growth

21 Comments facebook marketing and advertising, Featured, finance and economics, internet marketing training, local advertising

Let’s first address the size of the local online advertising market, then show why these masses will have a good shot at finding success in 2010, but haven’t before. If you don’t like stats, skip down to the red text below and start reading.

Borrell Research, in their 2009 “Main Street Goes Interactive” report lists 14.6 million small businesses online in the United States.  Kelsey claims 18 million. Other Yellow Pages publishers claim upwards of 22 million.  Whatever cut-off you use for small business– if you include lemonade stands and folks selling tupperware or beauty cream at night– the price point for these small businesses is $500 a month for advertising.  That’s not just PPC or even online marketing to build websites and run email campaigns– that’s the whole budget for everything.

For paid search, these businesses spend an average of $261 on paid search per employee per year– keep in mind the lie of averages, since you’re accounting for companies that spend zero, as well as those hobbyist businesses. That $261 represents 11% of the total ad budget, which works out to $2,373 per employee per year.  Assuming the average small business salary is $35k, then advertising is 7% of labor cost– low for professional service firms, but high for a retailer.

  • SMBs (Small and Medium Businesses) spend on average only $267 per year on their website (hosting, development, and support).
  • While all businesses spend only 26% of their online marketing dollar on advertising, SMBs spend 83%.
  • While all businesses spend 67% of their online dollars on support, small businesses spend 9.3%.

Why?  They can’t afford custom development for just a couple hundred dollars.  And the ones doing paid search are using self-serve with budgets of a couple hundred dollars a month– way too small for an agency to pick up and provide a listings product, PPC campaign, site development, email autoresponder, call tracking, and the significant consulting (client education) needed to make this happen.

The small business sweet spot is $500 a month and under, while the price point in the market to truly deliver value (there are players who are less than $500 per month, but don’t deliver the full solution needed) is $2,000 per month. That gap will close in 2010.

The way it will close is through the intersection of local, mobile, and social.  The research we did at Yahoo! showed that small businesses are not comfortable with self-serve, no matter how “simple” we try to make creation of PPC campaigns, building a site through templates, setting up email autoresponders, and so forth.  Too daunting, not enough time, too expensive– and therefore it remains untouched.  The stats from 2007 were that 87% of small businesses were aware of PPC, but only 9% of them were actually doing it.  This gap underscores the point.

Video game dynamics teach users complex systems of rules via a gradual leveling and unlocking mechanism– starting from a basic set of operations and gradually revealing new features and options until players have learned the game. You can read here about these mechanisms and how they apply to Farmville, your local supermarket, learning to read, or other activity by checking out this post on social game dynamics.

Now these games have moved from the desktop to your phone– and now there are games such as FourSquare, Gowalla, and Poynt, where you can earn virtual currency in a giant, real world scavenger hunt. And the phone knows where you are, can take pictures, can collect data in ways that PC’s can’t.

And the social networks have now amassed the social graph in ways that makes game dynamics truly possible.  Facebook recently shot through 350 million users worldwide and is now 25% of the traffic in the United States– that’s 1 in 4 pageviews across ALL traffic in the US–

So now you have a mobile crowd that is connected to the social graph, earning incentives to record where they are and gather information on local businesses.

THIS is your salesforce. This is the borg that will assimilate you into the hive– the stay at home moms that will earn points for enrolling small businesses into BlitzLocal, playing a video game that happens to earn them real dollars.  This is the army of local entrepreneurs, playing not FarmVille, but BlitzVille.  We’re not calling it that, but you get the idea. Watch as thousands of stay at home dads, motivated by online video games designed to enroll small businesses use a system that simplifies the process of online marketing for local businesses.

And the small business will receive personal service from their friends, a measurable result from the system that they’re using together (after all, video games are all about clear rules), and have a good time while they’re at it. No more hard sell, no more being handed off to the next available call center agent (he says his name is “Peter”, but you know it’s not from his accent).

It will be interesting to see how the traditional model of aggressive direct sales fares in the open, social, local, mobile approach:

  • Consider how they will react when small businesses demand transparency (just show me the CarFax) on how much of their dollar is actually being spent on ads versus sales commission and overhead.
  • How will they deal with margin compression when their model of having multiple people involved in the process– sales, operations, engineering, support– gets squeezed down when the local/social/mobile approach requires just one person who is eager, well-educated and already has a relationship with that client?  The direct sales model has 30% of cost in sales and marketing, while the local/social/mobile model has no traditional advertising costs.
  • How will the traditional sales model deal with a price point that will drop below $500 per month– maybe to $200 per month– ye still be forced to drive as much value at the previous $1,000 a month packages?  You’ll see a deflationary impact just like the rapid obsolescence of computer equipment.
  • And to the software sellers, who are licensing software for $200 a month– so they do meet the price point– how will they solve the “last mile” problem of collecting enough data from that small business owner to be able to create a website that is compelling– that won’t waste the traffic that comes from a templatized PPC campaign?  The SaaS (software as a service) model of monthly software fees is appealing for its scale and ability to sell at low price points, but will fall down for not being able to integrate service.  If service weren’t necessary, then everyone would be on Adwords and WordPress already.
  • What will the software and direct sales firms do when they cannot spend their way out of the margin issue, no matter how much money they raise– IPO or not?  If you’re selling $10 bills for $8, you’re not going to make it up in volume.

The model of local/social/mobile is:

  • Akin to the open source software movement– a belief that the community can organize to provide products for nearly free and of better quality– that results should be transparent and that campaigns should be owned by the small business, as opposed to being held hostage so they can’t switch out.
  • Keeping dollars in the local economy– to support local businesses, with anyone being able to start their own local Internet marketing firm to serve their neighbors honorably– to create a grass roots army of local Internet marketing experts.
  • Employing stay at home moms, students, and anyone who is well-educated, but can’t work full-time in sales. We’ll tap into the labor market of part-time and underemployed folks, who might not be trained professionally in Internet marketing, but can use our systems to create results as good or better than the “big firms”. They might have a Masters degree, but need to spend time with the kids. Or maybe they just don’t want to work in an office 40 hours a week.

If you want to join our team, see our training processes, or even try our product for free, just drop me a line.  Gamers of the world unite. You will be assimilated.

21 Dec 2009

Google AdWords Bid Simulator– observations

1 Comment finance and economics, internet marketing training, search engine marketing

bid_simulator_adwords The new Bid Simulator, which you’ll see in the keywords tab, forecasts how many clicks and impressions you’ll see at different bid levels.  It only shows the simulator for some of the keywords– not sure what logic is used to choose which ones.  It certainly isn’t search volume, since some of the lowest volume terms in our campaigns have the Bid Simulator icon.

Important to note that the Google AdWords Bid Simulator doesn’t predict the future– rather, it estimates what would have happened in the last week had everything else stayed the same except for your bid.  Google explains it here.

In this first screenshot, you see that we’d get nearly the same traffic at any bid price for this keyword.  Note that the estimates impressions is the same.  By bidding higher, we move to a better position.  We are currently bidding $3 a click to get 63 clicks, but if we drop our bids to $1.01 (a third the price), we get only 3 clicks less (a 5% reduction).  Thus, a 200% bid drop for only a 5% click volume drop– for you economics students out there, that’s significantly inelastic.

Why?  At some point, you’re already in first position, so bidding higher won’t matter.  Google’s AdWords bidding auction, as clearly explained by Hal Varian (Google’s Chief Economist and the author of my undergrad Econ textbooks) in this video, shows that our price is based upon an increment of the next highest ranked bidder and your Quality Score.  P1 = B2Q2/Q1.  In other words, the price you pay to be in position 1 (P1) is the AdRank of the advertiser in position 2 (Bid of Advertiser 2 x the Quality Score of Advertiser 2)– then divided by your Quality Score.

On high volume, highly competitive terms, you would expect to see a more gradual fall-off in this bid curve.  Normally, you’ll get hit with the double whammy of more clicks at a higher cost per click– if clicks and CPC are both increasing by 50%, then you’re hit with an overall cost increase of 1.5 squared, which is 225%.

What I think Google may have neglected to include in their Bid Simulator is the impact of sitelinks in position 1, which give a tremendous boost to position 1 advertisers.  This estimation would be hard to do, given that the feature is not in wide release– though BlitzLocal is fortunate enough to have enough accounts that we have a few of them with this beta feature enabled.

bid_simulator_no_clicks_adwordsHere is an example of a Bid Simulator shown when there is hardly any data— on a tail term with phrase match on.  Were there enough ad data, we’d be able to calculate the Incremental Cost per Click (ICC).  Don’t make fun– the ICC is the term that Google uses to describe this concept– namely, the additional price you pay for incremental clicks, measured by the change in cost divided by the change in clicks.  If you’re bidding up, your ICC is significantly higher than your average CPC, which averages in all lower click costs.

Overall, I find the AdWords Bid Simulator partially helpful.  Looking at average position I believe is nearly as good, since Google won’t tell you the bids and Quality Scores of the other advertisers anyway. It also doesn’t appear to take into account the effects of negative keywords, dayparting, geo-targeting, and other settings (at least based on their internal PowerPoint showing the actual data used versus estimated for Bid Simulator.

The next step for Google is to make recommendations on how to increase profit based on the simulation.  If I raise my bid to get more traffic, then I’m also decreasing my profit per click.  Google should tell me what bid makes the most of this trade-off.  Currently, all Google’s recommendations seem to be to increase bids, add keywords, and increase budget, so not sure if they’re going to do this any time soon.

However, it is true that if you use Conversion Optimizer, that you can’t use Bid Simulator and that using Conversion Optimizer is effectively maximizing profit if you know the right CPA target.  Love to hear anyone’s experiences here with Bid Simulator, ICC, Conversion Optimizer, and other estimation tools.

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