September 2010 – Channel Crossing: Social Media

Social Media Marketing: Keeping Your ROI in Check

Is it possible to quantify the true value of social media marketing (SMM)? Advertising and marketing firms across the globe are scrambling to answer this million-dollar question. Yet without knowing the answer to this question, we continue to see companies invest tens of thousands of dollars in social media campaigns, apparently throwing caution to the wind.

Marketing spent on social networking sites in 2009 reached $2.4 billion, according to a report by Mintel. The social media revolution is relentless in its expansion. Most businesses fighting for survival in today’s economy refuse to be left behind–even if they don’t understand how SMM efforts conducted by a hired firm actually affected their return on investment (ROI). Pack mentality is driving the market and may actually be its greatest proponent.

If only radio, television and online marketing firms had it this easy. Wouldn’t they all love it; forget audience analysis…forget cost per lead (CPL)…forget proving to clients that any and all marketing efforts are worth the investment. It’s as if the phenomenon of social media took off too quickly for people to question its validity. Yet, we all know that effective networking–whether through social media or other means–generally leads to business growth. So the value must be there, but how will we ever monetize it? In short, through technology.

Putting the “Buzz” in Social Media Marketing
Most will say revenue growth through SMM is difficult to track; the rest will say it’s impossible. Do not be deceived. Without an industry-accepted formula to calculate social media, here’s what you need to know: Social media firms know the buzzwords. They will “strategize, engage, listen and influence online consumers,” while encouraging others to “connect with, trust and recommend” your brand.

Through them, you will gain “direct contact with consumers,” “real-time customer feedback,” “reach untapped markets,” “gather valuable customer data,” “achieve branding recognition” at its best, and even “gain influence over consumers.” The buzzwords continue. Your chosen firm will report to you on the number of new “backlinks,” “friends,” “followers,” “likes,” “online articles,” “blogs,” “bookmarks,” “newsletter opt-ins,” “comment sentiment,” etc. Yet, they can’t tell you how any of this actually affects bottom-line revenue. Business growth spawns from innovation and it seems the horses (social media firms) left the cart (your business) in the dust before anyone knew the race had started.

So forget all that. What can we really track with even the most basic, often free, technology? How about increased web traffic, number of new leads, leads converted to sales and overall revenue growth achieved through SMM efforts? It seems a simple request. If your social media firm is unable to deliver these fundamental figures and if its business model is obscure like most, then you’ll never truly understand objective ROI when it comes to marketing through social media.

However, there is a solution. Find a firm that grows as you grow: a firm whose interests are your own. I’m, of course, referring to revenue sharing, which is simply a way to grow a business in a manner outside existing portals. Can your firm offer a concrete social media CPL prior to campaign launch? Not likely. They’ll need a new business model for that.

Also, lead generation is imperative. People who “like” your Twitter business page are not leads. Their “like” does not give you their e-mail address or phone number. Social media sites are merely a collection of consumers versus a purchased list of leads falling within your target demographic. The social media leads are useless if not given specific instructions designed to get them to hand over lead information to you and you only. Micro-sites now enter the equation.

Find a firm that’s willing and technically able to set up a top-notch micro-site. As they drive traffic to this site (at no out-of-pocket cost to you), let them climb the social media mountain with you rather than for you. Then just sit back and monitor online traffic, new leads, conversions and revenue growth. This is how results get achieved. This is how technological innovation has finally caught up with the wild brute we call the social media revolution.

Ed Elliott is chief financial officer at Media Worldwide Partners in Long Beach, Calif. Contact Elliott at (562) 439-3900, or via e-mail at eelliott@ mediapartnersworldwide.com.

September 2010 – Columns: Direct Response Insights

Money Not Well Spent

All online orders are not created equally. Some are ‘free’ while others cost money to obtain. Unfortunately, many electronic retailers don’t even realize they’re incurring additional costs when obtaining orders online and don’t properly manage or factor in these costs.

Let me explain. If you display a web address in the end tag of your spot and someone types that URL into the address bar of his or her browser and places an order, you realize no additional media costs for that order. That person saw the ad, went to your site directly and placed an order. This is good. It is ideally what you want every customer to do; however, it doesn’t end up working that way.

And, if it works any other way, you incur additional costs to realize the order. Whether it’s money spent on search engine optimization (SEO) to obtain high organic listings, media costs of clicks from paid search or affiliate bounties paid, you’re handing out money to someone for each order driven. Once you look at it this way, you’ll realize just how important it is to properly manage the web overall and throughout the entire life of a project or campaign.

Keep It Simple
Believe it or not, web marketing starts in product research. If I were on the product development team, I would open up a browser to Go Daddy and type in domain-name ideas as we developed the product. Don’t go with odd names and misspellings. I can’t stand it when I see things like: www.GardDog.com or www.KarMat.com. Consumers type in the domain name of the item (as they feel it is spelled). Try to come up with a name that is also available as a web address. And please get .com and not .net or .tv. People type in .com just as they dial “800″ instead of “877.” As a side note, be sure to purchase the misspellings of the domain. Case in point, years ago we convinced a client to purchase www.GlassWizzard.com for their Glass Wizard campaign. Nearly 7 percent of the orders came from that domain! It only cost the client $8 for the domain.

Before leaving this point alone, I can’t stress enough how important it is that people find their way to your site directly and with ease. If they go to a search engine, are forced to look for the site or otherwise don’t know where to find you, it will cost you additional money to be found. Some of them will search in a search engine or see a banner ad or e-mail from an affiliate. If the consumer comes to your site through any other door, it will cost you money. You’ll have to pay for the clicks from paid search, or worse yet, pay affiliates large bounties for the orders they drive. Make it clear and easy for people to find your site and you’ll save money–a ton of it.

To that point, please say your domain (website address) out loud in your end tag–and prominently display it. No, web orders don’t take away from the call center. The conversion rate in the call center has no relevance to the conversion rate of your site. If you think that you’re losing orders because the call center is converting at 60 percent while the web is converting at 15 percent, you’re wrong. The more ways you give a consumer to convert, the more conversions you’ll see. I assure you, it is all complimentary.

Consider SEO
Studies have shown that people visit a site three times prior to making a purchase. If that’s the case, that would put the maximum conversion rate on the site at 33 percent. People check out the site prior to ordering, even if they order via phone. Put the domain name in big letters in your end tag, then analyze the numbers and see how your “organic” order volume increases versus “other” orders realized online. Remember, your organic orders cost you nothing.

I would urge today’s DRTV marketers to spend a little time doing some SEO work. There are some basic SEO tasks that can be achieved for very little money. True SEO with generic terms can cost thousands of dollars and take months to kick in. You can do this as well. In other words, set up your meta tags and provide some copy on your site that includes your TM and other key terms.

Now, for one of the most important items. Do your own TM paid search marketing. Pay for the clicks. Don’t ever pay a set bounty for each order driven from TM terms. What I mean by TM terms and paid search is bidding on terms in the search engines that are made up of the trademark name of your item. For instance, you would bid on “widget” if your product was named the Widget. If you don’t have the capacity to manage it all, find an agency that will manage the campaign on a media- buying-agency-fee basis–pay an agency fee on the ad dollars spent on clicks in the search engines. The average cost per order on TM terms in paid search on a given $19.99-$40 item is in the low single digits. So, on average, it would take say $2-$5 in click costs for each order driven. If you’re paying a flat rate–or worse yet–paying affiliates for orders driven from the search engines, you’re paying way too much. Why would you pay $10, $20, $30-plus on an order when it otherwise would cost you $2-$5?

I truly believe this is a macro factor that is negatively affecting many of today’s DRTV ad campaigns. Un­fortunately, most electronic retailers don’t realize this and they continue to bleed money without knowing it.

It is extremely important that you control the listing in the paid search on your TM terms. If you have a trademark, Google and others are quick to help you out and you can push others out of the search results. This all comes back to what an order costs you online. If you drive people to your site, it costs nothing more. If you market to them in paid search under the TM terms, your additional cost is minimal. If you let affiliates and others steal orders from your TM terms, it costs you a mint.

Control your web business. Make it as easy as possible to find your site. Let them know how to get there. Don’t hide it, leave it out or allow others to make money by driving you orders you should have otherwise achieved directly on your own. In a recent study of a campaign, we found that proper management of the domains, TM paid search and the affiliates saved a client over $350,000 in one month alone. Now that’s a big number.

Ken Osborn is president and CEO of Liquid Focus Direct in Bridgeport, Conn. Contact Osborn at (866) 892-0259 or at kosborn@liquidfocus.com.

September 2010 – Columns: Guest Viewpoint

DRTV Categories and Product Promises Withstand Hard Times

Recent economic reports offer a mix of messages that may as well come accompanied with the disclaimer, “Results may vary.” However, as DRTV marketers continue with their own varying outcomes during what has now become known as the Great Recession, there are some encouraging signs. Nielsen reports that primetime viewership is up 3 percent in households that have high-definition television sets and that nearly 52 percent of all U.S. TV households are now watching TV with the more vivid technology.

What’s Considered Recession-Proof?
The phenomenon is no doubt a reflection of the hunker-down mentality that many consumers have adopted–think “staycation”–where folks forego pricey expenditures and, instead, focus on feathering their nests and bringing balance to their lives. Interestingly, the most successful long-form DRTV products of recent note reflect these very same ambitions. An analysis of the IMS Retail Rankings for May 2010 illustrates that there are several categories and types of consumer products that appear to withstand the vagaries of a shaky economy:

Five of the top 25 shows come from the Health and Fitness category, including four of the top 10, reflecting buyers’ desire for a body makeover. While this category seems to consistently be a dominant one in both good times and bad, its current resiliency may in part be attributable to the sort of personal recalibration that occurs in times of economic strife. The New York Times reports that one-third of Americans are obese, suggesting that in addition to waistlines, the category itself will continue to grow. Further, such products are frequently sold as a convenient and wallet-slimming alternative to gym memberships.

Household products comprise the largest category, with nearly a third falling into this broad spectrum. From solutions for the kitchen to the bathroom, to the outdoors, these products all offer ways to make life at home more livable. All of the products that are winning in the current environment reflect cost-savings that eliminate the need for more expensive alternatives. For example, a steamer can be a cheaper solution to maintaining a clean house versus hiring a service to do it for you. Likewise, DRTV-marketed outdoor tools can replace a costly gardener and VoIP telephone service saves money compared to a landline.

Products that are able to withstand an economic cold front often possess another enduring quality: they offer miraculous results or instant gratification. From undergarments that instantly reshape the body to chamois that absorbs both water and consumer skepticism at impressive rates, a broad spate of such products continues to thrive despite recessionary woes.

While it may seem like the current trend will never end, it’s worth remembering that such climates, like the seasons, are cyclical. Neither a blue-sky mentality nor an outright embracing of the blues should color the day. Rather, it’s faith in our ability to embrace the tenets of success that will chart the industry’s future prosperity.

Peter Koeppel is president of Koeppel Direct, a full-service media buying agency based in Dallas. He can be reached at 972-732-6110 or online at pkoeppel@koeppelinc.com or twitter.com/DRTVBUYER.

September 2010 – Cover Story: The Father of Multichannel Retail

GVG Capital Group Chairman and CEO Love Goel Is Renowned For His Ability To Turn Consumer Brands and Retailers Into Thriving Businesses.

BY VITISIA PAYNICH

It’s no secret that general advertisers and brand marketers have throughout the years looked sideways at the direct response industry. Yet while those on Madison Avenue began tightening their belts during the recession by slashing advertising budgets, direct marketers forged ahead by delivering solid, accountable advertising via television, radio and the Internet. Love Goel, chairman and CEO of GVG Capital Group in Minnetonka, Minn., is among those who believe that direct marketers know how to effectively reach consumers using multiple channels.

Lauded as “the Father of Multichannel Retail,” Goel built Macy’s and Fingerhut into two of the top three multichannel retailers during his tenure, acquired more multichannel companies than any other private equity investor, created $30 billion in shareholder value, and advised 50 of the top 100 multichannel retailers. On Sept. 22, he will deliver the keynote address at ERA’s D2C Convention in Las Vegas.

“I am honored to talk to the leaders in the direct response and electronic retailing industry. It is a group that I have admired for a long time,” says Goel. “Today, when we literally have seconds to ‘hook’ a customer before they tune us out of their extremely busy lives, the leaders in this retail channel excel at figuring out the hook, constructing the right message and delivering it effectively. Retail leaders from all channels would benefit from learning those skills that are core to this industry.”

Electronic Retailer spoke one-on-one with Goel to learn about the things that have inspired him throughout his career and what he believes are the key elements to creating a true multichannel business.

Electronic Retailer: You achieved more during your 20s than most people do throughout their entire careers. What do you believe has been the driving force behind your early successes?

Love Goel: There are three key factors that are behind any business success, which were true for me. We had fantastic teams, pursuing a compelling vision buffeted by powerful macro trends, and we were lucky more often than not. Personally, for me, beyond those three factors was the active coaching and guidance of mentors who gave me the opportunity to take on big challenges, to fail, to learn and to grow. I cannot speak highly enough about the mentors who took chances on me.

When I coach emerging leaders, there are two key pieces of advice that I give them. First, find good mentors. Second, do not worry about the money; do something you are passionate about. If you are passionate about it, you are more likely to give it the effort it will take to excel. Once you are the best at what you do, the money will take care of itself.

ER: Did you see yourself as a visionary and if so, what challenges did you encounter when you shared that vision with others?

Goel: It is a key part of the role of any leader to define “victory” or the long-term success, and the “path” or how we get there. The biggest challenge is that you have to communicate it continuously and consistently so that all your constituents get it, and often enough that as you bring new people on board–employees, vendors, consultants–they have a chance to understand and embrace what it is you are trying to build.

ER: You played a key role in transforming two iconic American retailers: Sears and Macy’s. Given that they both had long and well-established histories as traditional bricks-and-mortar businesses, what obstacles did you face in trying to turn them around and make their brands more relevant to today’s consumers?

Goel: I was fortunate to be on great teams that had a positive impact on these companies through their evolution. As in any established and successful culture, I think it is important to celebrate key elements of your brand and heritage that resonate in the marketplace while updating the way you do certain things. In the case of Sears, we really moved into soft-lines in a big way, which made us much more relevant to the female customer and dramatically improved our sales, gross margins and profitability. At Federated (or Macy’s as it is now known), we moved to a much more multichannel approach of being available to the customer 24/7–whenever she was ready to shop. In both cases and other transformations that I have been involved in, the most challenging part is not about figuring out what needs to be done, but rather getting people on board. You do that by sequencing activities in a way that allows the team to earn small victories, inspires confidence in them about the path forward, and then hope that the momentum will take everyone all the way there.

ER: You were the only person to build three e-commerce start-ups into $1 billion+ businesses before you were 30. Tell us about those ventures.

Goel: The first two businesses were created inside the crucible of a large Fortune company (Fingerhut and then Macy’s), and the last one was a venture capital funded Silicon Valley business. The first one was the nation’s largest third-party e-commerce services company at the time, FBS, offering fulfillment, call center, marketing and merchandising services, which helped put dozens of clients like Walmart, Levi’s, Pier 1, 1-800 Flowers, USSB/DirecTV and several other companies on the Internet. The second one, Federated Direct, was the world’s largest bricks-and-clicks retailer at the time, which included over 20 e-commerce properties that comprise three of the top 100 Internet retailers–including the world’s largest retail closeout site, the first custom jewelry site, the first online flower site, the first bricks-and-clicks wedding registry, the largest birthday club and the largest general merchandise site. The last business, Personify, was the world’s largest customer profiling platform (500,000+ data points for over 100 million customers) and leading analytics provider of clickstream data to dozens of top retailers like William Sonoma, J. Crew and LL Bean.

ER: What’s more satisfying: building a company from the ground up or going into an existing company and completely turning it around?

Goel: I think they can both be equally satisfying and rewarding. The best part about any such experience is when you accomplish something that exceeds the expectations of everyone on the team and outside. It is a testament to the power of what you are trying to accomplish and the quality of teamwork that made it possible. The interesting thing is it is also the most fun–when you are in the midst of one of these missions, you can feel the palpable excitement and enthusiasm that everyone on the team has.

ER: Can you tell us more about GVG Capital Group?

Goel: At GVG Capital Group, we are passionately committed to building market leaders in the multichannel retail and consumer sector. We bring deep operating experience, industry insights, a powerful network and capital to help management teams grow their companies.

We are unique in the private equity sector for three reasons. First, we are the only firm focused exclusively on the multichannel retail and consumer sector. Second, we are led by seasoned operating executives who helped build best-in-class companies like Macy’s, Home Depot, Levi’s and Apple–so we see our role as helping companies win in the marketplace, not financial engineering. Third, because of our commitment to helping leaders and companies in our sector, we advise and serve on the boards of companies beyond our investment portfolio.

ER: Of course, you’re no stranger to direct marketing or live shopping. In fact, you’ve advised QVC, ShopNBC and a number of our members. Based on that experience, what can brand marketers and traditional retailers learn from this industry?

Goel: There are three core strengths that all retailers and brand marketers can learn from this industry. First, as I said at the outset, this industry is probably the most skilled at distilling and communicating the “hook” to customers. Second, it is an extremely data-driven business, which leads to real-time adjustments in message, price and offer. Third, losses are minimized by a culture of testing in the marketplace with real paying customers, not just focus groups. If we could all bring those disciplines to our respective retail channels and formats, we would be a lot more effective and profitable.

ER: What does it mean to be truly multichannel?

Goel: This answer requires some context because being multichannel is about more than just having a website, store, catalog, TV or mobile presence. For the first time in human history, consumers have better information about products, prices and promotions–and consequently more power–than purveyors of goods and services; especially at the point and time of sale. This dynamic has created a whole new set of consumer behaviors, which retailers ignore at their own peril. But one of the key shifts in consumer behavior is that more than two out of three customers research things online before buying offline and vice versa.

The two key elements of being truly multichannel are: first, to offer customers a seamless shopping experience whether it is research, buying or service across all channels; and second, to leverage the structural and economic advantages of a channel to enhance both the customer experience and profitability. For example, in SKU-intensive categories like apparel, footwear and domestics, it could mean placing Internet kiosks in the aisles to offer customers many more styles, colors and sizes to complement the in-store offering–which can improve same-store sales dramatically. Or, for TV and catalog marketing programs, it could mean taking orders online rather than over the phone, reducing order processing costs dramatically.

ER: Many direct marketers are successfully utilizing multiple channels such as television, radio and the Internet, while other direct marketers might be hesitant to engage in other channels like social media and mobile. How can marketers take their business to the next level by integrating these other emerging channels?

Goel: I think it all starts with the customer. How do customers prefer to shop the products and services you sell? That should serve as a guide to the level of investment and capabilities that you add across all the channels. I have seen too many companies waste a lot of money by chasing the latest fad–whether it be mobile or social media–without thinking it through, or other companies like Blockbuster and Sam Goody not do enough when it was clear that their business models were outdated.

ER: Do you believe technology has changed the profile of the average consumer?

Goel: Absolutely. It has enabled consumers with easy/free availability of information (prices, promotions) and easy access to other vendors (one click away) that has dramatically changed the way they buy. This means that the average retailer has to be that much better–it is much more difficult to get away with a shoddy retail concept like you could 10-15 years ago. You better have a clear “hook,” something compelling to offer–unique product, lower prices, better services–you get the idea.

ER: Today, marketers, retailers and e-tailers are armed with web tools (such as web analytics and behavioral analysis) to understand consumer-buying habits and really get into their minds. Do you believe most companies are utilizing that information to its full potential?

Goel: You have stumbled upon a key gap in the capability of most companies today. This is a historical challenge and opportunity. For example, when I was at Fingerhut, we had 3,000 data points on 32 million customers, and 1,500 data points on 100 million households–the availability of this data and our direct marketing capabilities made us the most profitable in our industry. We were able to do amazing things like customize each and every one of our 600 million customer interactions (mailings) each year, or perform 5-10 percent better upsell than anyone else in the industry. But, even at that time, it always surprised me that as a small $2 billion player we had the nation’s largest customer profile database. Retailers have been slow to embrace this thinking. Most of them use web tools to track basic things like conversion rate. Very few, almost none, of them really excel at utilizing the vast quantities of behavioral data available to them in tailoring their merchandising, marketing and customer service programs either for competitive advantage or greater profitability. Also, most retailers really do not know how their various channels are performing–their matchback strategies and rule of thumb cost allocations typically driven by political infighting or legacy thinking obfuscate the true efficacy of their marketing dollars. This is probably the area most rife for improvement, apart from leadership development, in the multichannel retail world.

ER: Why do you believe some direct marketers are hesitant to try mobile? Will there eventually be a sea change in this area?

Goel: I think it is challenging to offer a full, rich offering like you do on the Internet on a mobile form factor. It sounds similar to what people said about the Internet 15 years ago compared to the store or catalog. That said, direct marketers will have to figure out for their respective categories and price the right business model(s) and customer experience that works–is mobile a price discovery and promotion channel, is it an edited assortment channel, is it a social media channel or some combination of all of the above?

ER: What changes do you see occurring in the social media space?

Goel: Social media, in my mind, has two primary roles: first, to help you manage your social relationships in an easier and more meaningful way; and second, to use your social relationships to make your life better from finding a date to a job to a car, to the hottest little black dress. I think we are in the very early days where there is a lot of noise and confusion. As the dust settles over the next few years, real businesses will emerge that make the world a better place.

ER: What other trends in technology do you believe will have a dramatic impact on retailers and marketers in the long run?

Goel: I believe we are at the intersection of four powerful trends that will dramatically alter the ways people live their lives and how retailers and marketers will have to sell: 1) cloud-based data and services (think mobile apps); 2) ubiquitous, high-speed, broadband wireless connectivity; 3) always on, always connected smart devices (think smart phones, tablets, etc.); and 4) products, services and information on the Internet.

ER: What’s the best piece of advice you could offer marketers and retailers when it comes to succeeding in today’s multichannel world?

Goel: Pay attention to your customer. Deep, meaningful customer relationships are likely to be the sustainable competitive advantage in a world of channel fatigue, product and brand commoditization, advertising overload and attention fragmentation.

September 2010 – Columns: Rick Petry

You, the Network

Facebook users understand that its influence can sneak up on you. Once it wraps its tentacles around virtually every part of your consciousness, it becomes a sort of umbilical cord to the sphere of influence that you’ve built there and a vital (and viral) part of one’s daily existence. On the other hand, those refusing to join the party frequently characterize it, with emotional vehemence, as trivial and an enormous waste of time. But if recent trends are any indication, Facebook isn’t just about monkey business; it is rapidly displacing LinkedIn as the preferred social networking site for conducting real, tangible business.

There are two types of users of Facebook for business: those who create an identity that is clearly devoted exclusively to their company and often named after it, and those who blend the personal and the professional into one. My own mix of Facebook “friends” includes people I went to high school with, business colleagues who I also consider friends and some who are passing acquaintances. But amid the parental bragging and vacation photos, some unexpected things are emerging:

• Business leads are coming in through Facebook.
• Instant messaging related to business is coming through Facebook. In fact, one learns pretty quickly who uses the site habitually and can reach them there more easily than through e-mail or a telephone call.
• Inquiries about business topics are starting to surface on Facebook.

Perhaps this behavior is a byproduct of Facebook CEO Mark Zuckerberg’s assertion that, rather than maintaining two separate identities—one for business and one for personal—that social networkers are destined to maintain but a single identity. If you believe that each individual is a brand, then Facebook becomes the ultimate expression of that brand with its ability to narrowcast one’s stream-of-consciousness with effortless will.

In a recent conversation with the head of an ERA supplier member, he remarked, “Oh, I can’t be bothered with that stuff.” I conveyed who some of my Facebook friends were, which includes the head of a very well-known direct marketing company. “I can’t get him to return my calls,” he bemoaned. “Well,” I explained, “when he posts one of his videos on Facebook, you can comment on it. It’s like leaving a little deposit of goodwill. If you do it frequently enough, by the time you get to the next industry gathering, you’ll know 10 things about this person you can use to strike up a conversation.”

Given that industry professionals depend on networking to drive business, it should come as no surprise that their presence is being felt with increasing pervasiveness on the likes of Facebook. As Dr. Robert Cialdini points out in his seminal book “Influence: The Psychology of Persuasion,” people buy from people they like. Facebook is like one giant cocktail party that never ends, filled with everything from insipid chatter to the occasionally profound and, increasingly, the business at hand. In this case, that hand happens to be holding a computer mouse where you’re potentially one click away from making your next business connection.

Rick Petry is a freelance writer and is a past chairman of ERA. He can be reached at (503) 740-9065 or online at rickpetry.com. On Twitter at http://twitter.com/thepetrydish.

September 2010 – Online Strategies: Online Insights: Social Media

Measuring ROI of Search and Social

The burgeoning social media landscape is studded with success stories. Take Dell, for example. By the end of last year, the company had racked up $6.5 million in sales—direct from its Twitter accounts.

You can bet Dell can calculate the ROI of this effort. It knows exactly what it’s investing in the initiative: 100 employees are tweeting in 35 different channels to customers in over 12 countries. Brazil alone brought in an average $100,000 in sales per month in 2009.

Calculating the ROI of direct sales from social media is easy, but only so long as you remember that while many social media tools, such as Facebook and Twitter are free, time is money regardless of channel. Yet, many marketers have social media goals that are far softer than moving product. These can include increasing traffic, awareness, PR, customer relations and support, lead-building, conversions, SEO and even product development. In fact, most marketers admit to having no real defined social media goals.

How do you measure the ROI of that? A recent Econsultancy study, “The Value of Social Media,” asked marketers how well their organizations are at measuring ROI from social media activity. Over half (51 percent) admit to being “poor” or “very poor” at measuring social media ROI. A scant 15 percent rate themselves as “good” or “excellent.” Nearly all of them—94 percent—would like to know their social media ROI. They just don’t know how to get a handle on it. Despite that, 90 percent say social media activity will consume more of their time next year.

ROI Calculations Made Easier
Thanks to improved tracking technology, other digital marketing channels such as SEO are much easier to assign ROI to, as well as to compare to other marketing channels. Social media, still very much in its infancy, still lacks those technological and cross-channel underpinnings.

The ROI of search advertising campaigns is relatively easy to calculate. Almost by definition, search ad bids must be calculated on a break-even or cost-positive basis. Otherwise, why advertise?

Social media campaign ROI is more analogous to organic search engine optimization. Goals must be defined and measured against concrete benchmarks, e.g., cost per lead, average customer lifetime value, the conversion rate of a desired action, organic traffic and conversion sources.

Unless your social media campaign is based on direct sales—and many good ones aren’t—establishing and valuing key performance indicators (KPIs) is the first step toward calculating ROI, and determine where to go from here.

Bear in mind that the old saw, “everything online can be measured,” is true. Except when it isn’t. Just as every direct conversion from SEO will never be precisely measured, the same holds true for social media, even when the tools do improve. That’s still no excuse for not setting goals and constantly measuring and monitoring efforts against those benchmarks.

Rebecca Lieb is vice president of Econsultancy’s U.S. operations. Contact Lieb at rebecca.lieb@econsultancy.com.

September 2010 – Online Strategies: Online Insights SEM

A New Way of Looking at SEM and the Long Tail

It’s been more than half a decade since Chris Anderson first introduced the concept of the long tail in a 2004 Wired magazine article, which he expanded into a bestselling book. Since then, the “Long Tail” theory has been applied to a myriad of subjects, including online advertising. From hotly debated panels at industry events, to IAB initiatives such as IAmTheLongTail.com, it’s clear that the Long Tail theory remains relevant today.

Applying Long Tail to Search
Allow me to highlight a specific industry where we can examine the concept of the long tail—search advertising. Admittedly, talk about search and the long tail is nothing new; not long after Anderson published his theory, a plethora of articles popped up outlining how one could apply the principles of the Long Tail theory to the process of bidding on search keywords. In a nutshell, these articles advocated the value of expanding campaigns beyond the 10-20 most popular keywords to include bids on the hundreds or thousands of keywords that on an individual basis may not be searched for very often, but that, as a whole, have the ability to send a high volume of relevant traffic to your site.

Another meaningful, yet often overlooked, application of the Long Tail theory to the search advertising industry relates to the employment of search advertising partners. It’s widely documented that the overwhelming majority of both searches and search ad spend takes place on the “Big Three” search engines: Google, Yahoo! and Microsoft. According to the most recent 2010 Nielsen Company data on the top U.S. search providers, Google, Yahoo! and Microsoft together represent 92 percent of the market share of searches. These three companies can be considered the short tail of search advertising partners, while the other players in the search advertising space who account for the remaining 8 percent of search share can be considered long-tail partners. Search ad networks that fall into the Long Tail category aggregate and monetize traffic that doesn’t originate on the big three search engines.

Now, 8 percent might not seem like a huge number, but when you consider a recent eMarketer report that estimates search ad spend in 2010 will reach a staggering $12.4 billion, it’s clear that long-tail providers can add significant value and volume to existing search campaigns. The long tail may be a smaller market compared to the big three, but why turn away the possibility of additional ad spend return? Similar to the concept behind economic theories of savings and how many of us manage our financial assets, even a relatively small amount of additional revenue each month can slowly make an impact over time.

At my company, we’ve been evangelizing this idea for a long time, often advising advertisers to adopt a “Portfolio Approach” to search advertising. When advertisers manage their search portfolio like their stock portfolio and diversify their ad spend wisely, they often see impressive results and more money in their pockets.

Although it can be challenging for search marketers and advertisers looking to maximize ad spend, thinking outside of the confines of a consolidated market and choosing long-tail partners wisely can work to your advantage.

Kaley Dobson is marketing manager at LookSmart, a long-time provider of search marketing solutions. Contact Dobson at kdobson@looksmart.net.

August 2010 – Column: Direct Response Insights

Stop Overpaying Affiliates

How much are you paying for your affiliate orders? Why? Who said you had to pay that much? Have you asked these questions lately? Well, you should. Let me share some things I found to be true about affiliate marketing today.

Most of the affiliate orders I’ve seen produced can be associated with a successful offline ad campaign. Other than a very select few, I’ve yet to see affiliates take a non-TV offer and run with it. And from my experience, affiliate marketing only works when there’s TV or offline media behind the campaign. I’m not talking about lead gen. I’m referring to an electronic retailer taking a hard good item, creating a DR campaign and running it straight out of the gate with affiliate marketing. More often than not, it doesn’t work.

Keep the above thought in mind and consider this macro-event that has occurred recently in the affiliate marketing world. The activities of the credit card issuing companies, the FTC and Senate have killed the soft offer in the continuity business–you know, the free trials with large backend monthly charges to consumers. Primarily run by nutraceutical companies, electronic retailers would take items like male enhancement pills and electronic cigarettes and convert consumers into monthly continuity programs.

Taking Back Control
The industry collapsed when many of these marketers would avoid answering calls and allowing people to cancel. It was horrible, and the changes that were implemented really needed to be put in place for many players. Well, those players had very low costs of goods, and high revenues due to people being stuck in continuity. In turn, they were paying affiliates $30, $40, $50-plus for every affiliate order driven. So, when a typical $19.95 DRTV hard good offer with a $10 payout would be presented to the affiliates, they would balk at the offer and run with the nutraceutical offer. They had a greater chance of making money.

Photograph by Burke/Triolo Productions/Brand X Pictures/Thinkstock

Now, take the fact that affiliate marketing campaigns for DRTV items really only work when there is media behind them and the fact that the easy money has disappeared for the affiliates and what do you have left? You have marketer control. And that’s the way it should be. If you have a good DRTV offer, are spending hundreds of thousands of dollars on TV each week, there’s a good chance that an affiliate can earn some decent money by dropping an e-mail, blogging, putting up banner ads or running performance-based ads in turn for a bounty on each order they drive you.

The playing field is now more level and you, the marketer, are now in control. Rather than paying out $15, $20, $30 or more per order, consider offering affiliates a more reasonable payout. Offer them $8, $9 or $10. Wait ’til you see what happens. They may complain at first. But, when you tell them it’s an exclusive offer and that the campaign is a success on TV, they’ll most likely listen and give it a shot.

Affiliate marketing is a solicitation game. Your affiliate team has to be proactive. They have to understand what you’re doing, know how to sell and relay to the affiliates why the offer is unique. Control your affiliate marketing and you will save money–a ton of money.

I’ll leave you with this thought: If you save $10 per order from affiliate marketing and save that on 3,000 orders per week, that’s $30,000 going right into your pocket…each week!

Ken Osborn is president and CEO of Liquid Focus in Bridgeport, Conn. Contact Osborn at (866) 892-0259 or at kosborn@liquidfocus.com.

August 2010 – Columns: Your Association, Your Bottom Line

Education Drives Success

It’s an eye-catching resume to say the least, one which any retail executive would be justifiably proud of:

• He’s the only CEO to have built three Internet start-ups into billion-dollar companies;
• While in his 20s, he transformed Macy’s and Fingerhut into two of the top-three multichannel retailers in the world;
• As CEO of GVG Capital Group, he has acquired 25 multichannel retail organizations while creating more than $30 billion in shareholder value; and
• He has advised some of the world’s greatest, most iconic companies, including Walmart, Google, Apple, Nike, Amazon, Starbucks and Walgreens, among many others.

The résumé belongs to Love Goel, the keynote speaker at the 2010 ERA D2C Convention, held September 21-23 at the Wynn Las Vegas. Mr. Goel will deliver a speech titled, “Innovation 3.0: Winning Customers in a Multichannel World.” In his presentation, he’ll outline the new rules for success in a retail environment where customers have more information about products, prices and promotions than ever before, and more channels to buy from–and where retailers have more data concerning their customers than ever before, and more channels through which to market and sell their products. We’re living in a retail world that’s transforming dramatically before our very eyes, and Mr. Goel can help us adapt and innovate–which, he says, marks the difference between extinction and success.

Mr. Goel will speak at 9:00 a.m. on Wednesday, September 22, following Tuesday’s Education Day, which will feature the most robust education program in the 20-year history of the convention.

Sessions and panel discussion will be presented along four tracks: Direct Response Success, Digital Marketing Intelligence, Operations and Profitability and ERA Government Affairs: Protecting Your Bottom Line. And, of course, we will again feature one of the association’s most popular education franchises, DRTV 101, moderated by the dynamic Stacy Durand, president of Revenue Frontier. Whether you are looking for emerging trends in direct response, curious about how to successfully integrate campaigns across channels, considering leveraging a new channel, want your back-end processes to contribute to your bottom line or are interested in the most crucial legislative and regulatory issues impacting our industry, there will be something for you on Tuesday.

The education program does not end once the tradeshow floor opens, however. On the show floor on Wednesday and Thursday, be sure to attend bonus sessions including a panel of some of the most influential women executives in our space, an analysis of performance-based marketing, a look at trends and best practices in production from a marketer’s perspective, all in addition to a “live case study”–Wednesday at 1:00 p.m.–featuring some of the most successful marketers in direct response–it’s a rare and valuable opportunity to learn directly from the innovators behind some of the industry’s current hits.

I am confident that this year’s education line-up will provide each and every attendee with an opportunity to gain valuable, actionable knowledge to drive their current and future success. And remember, it all starts on Tuesday, September 21. For more information about this year’s educational offerings and the rest of the exciting events planned for the 2010 ERA D2C Convention, please visit www.D2Cshow.org.

August 2010 – Online Strategies: Online Insights Web Analytics

What Should You Test?

New clients just getting started in A/B and multivariate testing often ask us for advice on what to test on their websites or mobile web initiatives. The answer is: It depends on what you are trying to accomplish. Since you can test pretty much anything about your website, what you should focus on depends largely on the combination of your user’s goals. What are they trying to accomplish with your own marketing goals? What do you want your users to do?

Determining where users spend their time on your site will provide insight for areas to test. You can find this information through web analytics click stream analysis (like Google Analytics reports), with heat maps that show you where users are focusing their attention within each page (like Crazyegg), with survey tools that allow users to explain what they do and don’t like, and various other types of tools. No matter how you get your information, you should be looking for common pathways through which your users are navigating around your site, as these are the areas where testing variations is most likely to affect behavior.

As a marketer, you should also have a clear definition of what your own goals are for the site.

For example, are you interested in selling product, acquiring leads or generating clicks to other sites? Put another way: how do you measure success? The answers to these questions will help you zero in on what you should be measuring to gauge the outcome of each test.

What to Measure
Once you identify the key pathways through your site, refer to the following list for ideas of specific things you might test variations of. Consider making not-so-subtle changes; bold changes produce bold results, whereas tepid changes often produce little or no effect.

Text/copy

• Long vs. short
• Style and tone, such as chatty vs. formal
• Positioning, such as which value propositions, features and benefits work best
• Call-to-action text

Font, color and size

• Think about your target audience. For example, if your audience is older, test larger fonts.
• Roughly 15 percent of men are color blind; consider contrast and colors in text and surrounding areas.

Buttons

• Color
• Location relative to the form or feature
• Copy/text

Navigation

• Sequence of items
• Labels
• In-line text link
• Link style, such as underline or bold

Images

• Content of image, such as including a man vs. a woman vs. a group
• Size and color depth
• Location on the page

Layout

• Location and size of areas or boxes on the page
• Attention focus, such as which layouts help focus vs. create distraction
• Buttons and links, and where to place them

Functionality

• Three-page checkout vs. five-page checkout
• Requiring form fields vs. making them optional
• Adding bells and whistles vs. turning them off

Photograph by Hemera/Thinkstock

In addition to creative elements, you should also consider the effect of added content (like heavy images or scripts) on site speed. In many cases, there is a strong correlation between a site’s speed (the combination of page load and render time) and marketing goals like conversions or bounce rates. In other words, faster sites produce higher conversions.

For example, Mozilla.com, one of the top 50 trafficked websites worldwide, found through testing that by streamlining a landing page, it was able to get the site to render 43 percent faster and as a result, increased conversions by 15.3 percent. This translated to more than 10 million additional downloads per year.

Website testing is a highly effective way to make systematic improvements that boost conversion. Identify what your users are doing (or want to be doing) on your site, clarify your marketing goals, and then try testing variations that are likely to nudge users along through your site’s conversion pathways. And remember that optimization isn’t only about creative; it includes site speed and performance. When users experience a more usable, persuasive and faster site, everyone wins.

Eric J. Hansen is the founder and CEO of Boston-based SiteSpect and the chief architect of the firm’s non-intrusive technology for multivariate testing, behavioral targeting and digital marketing optimization. Follow Hansen on Twitter at @ericjhansen.