August 2010 – Online Strategies: Online Insights SEM

Growth of Paid Search Puts Spotlight on Technology

The huge growth of the paid search marketing industry in recent years has spawned a raft of technology companies pledging to help their customers use their budgets more efficiently by optimizing pay-per-click campaigns.

As budgets have become more significant and the stakes have become higher, the number of advertisers paying for bid management and related search marketing technology has increased accordingly.

Data from the SEMPO State of Search Engine Marketing Report, published by Econsultancy earlier this year, revealed that the North American search marketing industry was worth $14.6 billion in 2009 and is expected to grow by 14 percent in 2010 to reach a value of $16.6 billion.

Photograph by Hemera/Thinkstock

Are You Using Third-Party Solutions?
Even if the bid management technology industry is conservatively estimated at 1 percent of the overall market value, this is still huge business and represents considerable investment for many companies. Beyond the direct costs of these services, the more considerable number may well be the net gain that results from improved campaign performance or the opportunity cost if that is not achieved.

However, despite the proliferation of companies offering third-party software and services to improve pay-per-click marketing, the SEMPO study found that the majority of companies (53 percent) conducting search engine marketing are not using a third-party technology for paid search marketing, either themselves or via their agencies (see chart).

Instead, most companies rely on the tools provided by search engines themselves and non-specialized software such as Microsoft Excel.

These organizations tend to be smaller advertisers with modest budgets whose managers have not been persuaded that the additional expense of licensing a bid management technology is worthwhile.

Yet, although there are exceptions, most of the largest companies and agencies managing tens of thousands of keywords and phrases regard specialist technology as essential rather than a luxury.

New types of ad format and ways of targeting have made the picture even more complex and increased the reliance on specialist tools such as Dart Search, Efficient Frontier, Marin Software and SearchIgnite.

Another consideration is the need to look at paid-search management as part of the bigger picture of a company’s marketing activity and overall business plan. Technology plays an important role here, and it is no surprise that companies with a heritage in web analytics such as Omniture and WebTrends offer bid management technology as part of their broader portfolios.

Advertisers are also increasingly reliant on technology to make sure that their advertising accurately reflects what they have in stock, and that the copy in the advertisement is flexible enough to reflect differences across thousands of products.

Research by Econsultancy has found that “ease of tracking” and “integration with analytics” are two of the three most important factors for companies selecting a paid search bid management technology platform.

For those investing in technology, one of the main priorities is to get maximum value. The value derived from tools can often be seriously diminished if those operating the technology don’t properly understand how it works.

An inexperienced campaign manager will fail to maximize the optimization opportunities offered by the technology, no matter how powerful the tool.

So a key question for advertisers is whether they carry out paid search marketing in-house or rely on their agency. The arguments for and against agencies are well rehearsed.

Agencies can be more adept at maximizing return on investment from search technology (especially when it is their own), and many adopt a technology-agnostic approach so that they use the best tools for the job in hand.

But an organization can reap the benefits if it keeps its knowledge in-house and develops its own employees to make the most of its search marketing activity.

Simply, the savings relating to in-house paid search management need to be weighed against the possible increased ROI that an agency might be able to extract.

Many companies cite the need for internal understanding and expertise in SEM as a prerequisite for maximizing the benefits of an agency relationship. So, the key requirement for organizations is to invest in their staff and ensure that they are kept up-to-date with search marketing developments and technology, irrespective of whether they are managing search in-house or outsourcing to an agency.

Stefan Tornquist is research director (U.S.) at Econsultancy. Contact Tornquist at sktornquist@gmail.com. For more information about the SEMPO study, go to http://econsultancy.com/reports/state-of-search.

August 2010 – Cover Story: Leading the Charge

Photograph by Roger Hagadone

As the Electronic Retailing Self-Regulation Program marks its sixth anniversary, ERSP Director Peter Marinello talks about the program’s success and why other industries are taking notice.

BY VITISIA PAYNICH

In 2000, the direct response industry was experiencing a bit of deja vu: a slew of bad actors tarnishing its reputation by making egregious product claims in their DRTV campaigns and threatening the very principles for which the Electronic Retailing Association (ERA) was founded back in 1991.

The association sought support from its membership and those within the direct response community by launching an ambitious plan to preserve the industry’s image, to maintain control and to fend off government intervention. The answer, of course, came in the form of self-regulation. Yet in order to get a full-fledged self-regulation program off the ground, ERA realized it needed to partner with a third party, the National Advertising Review Council (NARC). And on July 1, 2004, ERA and the NARC launched the Electronic Retailing Self-Regulation Program (ERSP).

Peter Marinello, director of ERSP, says the program’s success has piqued the interest of other industries that look at ERSP as a model for their own self-regulation guidelines.

Electronic Retailer caught up with Marinello for an update on ERSP’s caseload, to discuss the process for filing a case and to learn why he believes the program has set a precedent for other industries.

Electronic Retailer: Can you provide a brief history about ERSP?

Peter Marinello: We opened our doors back in July 2004 and the program really began at the behest of the Electronic Retailing Association (ERA), which–because of some nudging from the Federal Trade Commission–became very concerned about egregious advertising claims that were permeating the airwaves in early 2000. These were really weight-loss claims. The FTC essentially went to ERA and said, “Listen, if you guys don’t get your house in order, we’re going to do it for you.” So, ERA did the very responsible thing and went to an outside third party, the National Advertising Review Council, and asked them to set up a self-regulatory program designed specifically for the direct response industry. So, that’s how it really began. This is a very unique collaboration between ERA and the National Advertising Review Council, particularly the Council of Better Business Bureaus, which administers the program.

Three of the primary objectives of ERSP are to improve consumer confidence in electronic retailing; provide an expeditious forum for getting blatantly egregious advertising claims off the airwaves and out of publication; and lastly, to demonstrate to the regulatory agencies, the direct response industry’s commitment to meaningful self-regulation.

ER: How many cases have been submitted to the program, to date?

Marinello: To date, we have closed 255 cases, which did not include several compliance follow-up cases that we’ve handled. It also doesn’t include the yearly live shopping analysis that we do for the industry.

ER: What percentage of cases do consumers file versus marketers?

Marinello: I would say that the breakdown of cases is about 40 percent by the marketers, 40 percent is monitoring by ERSP itself and then I would say the other 20 percent is consumer-generated.

ER: Can you provide some other statistics on the program?

Marinello: As I mentioned, we closed 255 cases. The average length of a case is just about 65 days. The published decisions are 243 cases, so there’s actually a little lag time between when we close a case, when we get the press release going, and when we actually post the case on the website. So, that’s why there’s about a 12-case lag there. We’ve probably monitored over 5,000 pieces of direct response advertising, 300 hours of live shopping, 5,000 pieces of e-mailed spam and we’ve pursued about 170 consumer complaints. And, that does not include seven non-English-speaking infomercials that we’ve handled. As you can see, we really try to run the full gamut of the direct response industry.

ER: What is a “competitor challenge” and how does it protect people’s anonymity?

Marinello: We have this great niche in the ERSP policy and procedure that allows companies to challenge competitive advertising anonymously. There are two important advantages for having this nice procedural niche. It allows companies to bring advertising to our attention without worrying about retaliatory challenges and without being publicly perceived as a whistle blower. Those are two key competitive pieces for a challenge. Now if you bring a challenge anonymously, it does not allow you to see a marketer’s responsive submission. All it really does is it allows you to bring an advertising campaign to our attention anonymously and then at the very end of the case, you’ll be informed as to the outcome of the case. So on one side, it offers a discreet mechanism for bringing a case without disclosing your identity, while it also enables the marketer to participate in the process without worrying about a non-disclosed competitor seeing some proprietary information that may be necessary in substantiating their claims.

ER: Once a case is filed with ERSP, what’s the process?

Marinello: Once a case is filed, a marketer will have 15 calendar days to submit their substantiating information. After we receive that marketer’s initial response, ERSP or a challenger will then have 10 days to offer rebuttal information. After we receive the rebuttal information, we’ll pass that on to the marketer for almost the second bite of the apple, where they will have another opportunity to reply to the challenger’s information. And then from there, ERSP has 15 days to write its decision and come to its conclusion. After that, the marketer has 10 days to provide what we call a “Marketer’s Statement,” which is a statement indicating whether or not the marketer will abide by the recommendations of ERSP. They’re also able to give their comments on the usefulness of the process. That whole sequence of events generally falls within 60 to 65 days. And I also should note, within that period, there is an opportunity for both the marketer and the challenger to come and meet with us–either personally or via a telephone conference.

ER: Are most of the cases brought before ERSP legitimate cases?

Marinello: Yes. As a matter of fact, we do have a weeding out process before we officially commit to the case, where if we feel that a challenge is bringing a frivolous complaint, we won’t proceed with the complaints.

ER: What’s the most difficult case that you’ve come across?

Marinello: Maybe some of the most difficult cases collectively are homeopathic cases. The reason being that homeopathic has its own historical reference point that has to be followed and it gets very tricky because it’s based on the traditional use of certain ingredients and the mixture of these ingredients. And, I would say that the regulatory landscape for homeopathic products isn’t as clearly defined as it is with traditional-use products. When I say “traditional-use” products, I’m referring to the types of products we see on an everyday basis–such as exercise equipment, dietary supplements, etc.–that have a clearly defined regulatory road to follow.

ER: How can people find out more information about cases that have been filed with the program?

Marinello: There are two main vehicles of information for ERSP. One is the National Advertising Review Council website at www.narc.org, which includes a specific section on the Electronic Retailing Self-Regulation Program. The other vehicle is the ERA site at www.retailing.org, which also has a very neat section for ERSP. All of the cases that we complete are posted on both of those websites along with the press releases that accompany the cases. There’s also information on how a company or consumer can go about filing a challenge. The posting of case reports on the NARC and ERA websites is a significant element in reinforcing the transparency of our self-regulatory work and the integrity of the process.

ER: The FTC has been very supportive of ERA and ERSP. Do you consult with the Commission on every case?

Marinello: Absolutely not. The cases that are brought to us are treated very confidentially. The only time any outside third party will see the cases is at the conclusion of the case. With that being said, one of the reasons for the success of the program has been the FTC’s support of the program. A lot of times, we’ll refer cases. For example, if a company declines to participate, we’ll refer a case to the Federal Trade Commission. The FTC always makes it a point to put that referral case on the top of its priority list.

ER: Does the industry share the FTC’s sentiment about ERSP?

Marinello: I think it does. We’ve had an uptick in terms of competitive filings in the six years that we’ve been around now. When we started out, it was a monitor-heavy type of caseload; and subsequently, we’ve seen a great increase in competitor challenges–particularly, with the anonymous challenges that we talked about. There are five appending anonymous challenges that are going on right now. So I think a lot of companies and marketers out there see this as a very useful mechanism for bringing egregious advertising to our attention.

ER: What type of precedent has this program created for this industry and for other industries?

Marinello: It’s been an enormous precedent in not just the advertising industry but in other categories of advertising as well. It’s a terrific example of how self-regulation can work. Let’s take green marketing, for example. If there is a concern in one particular discipline of advertising, such as green marketing, those in that industry feel that they can come to the National Advertising Review Council and set up their own self-regulatory process based on that concern. We saw that happen in the Children’s Food and Beverage initiative a few years ago, where there was this vast industry concern about childhood obesity. There was a great self-regulatory opportunity there, and the NARC and the Council of Better Business Bureaus administered a terrific program about three years ago. We’re seeing the same thing occurring in the behavioral advertising world right now, and I believe the industry is looking to the NARC for self-regulatory response to the issues it’s currently facing. I think a lot of that is due to the success of the direct response industry’s self-regulatory program.

ER: What trends are you seeing occurring in the marketplace right now?

Marinello: I think there are a couple of things going on right now. One thing that we’re looking very closely at is the affiliate advertising space and seeing how, with a self-regulatory program, we can offer help to the direct response community in terms of providing some guidance. It’s also interesting that one of the new trends is actually an old trend–we’re seeing an uptick now in weight-loss advertising. So, we have to keep a close eye on some of the claims now being made in weight-loss advertising again. It’s funny how this is cyclical, sometimes. Ten years ago, there was this big issue with the egregious claims being made in the weight-loss industry and now all of a sudden, we’re seeing some companies becoming a little bit more aggressive with the claims they’re making and I think the same holds true for some of the exercise equipment manufacturers out there.

ER: What changes or developments can we expect from ERSP in the near future?

Marinello: I think it’s really important that ERSP makes a concerted effort to evolve with the direct response landscape. That means monitoring the advertising in all these new and different areas of social networking–Facebook and Twitter–and in the affiliate advertising area. I believe we also need to keep an eye on what’s going on in the behavioral advertising world. In addition, I would like to see ERSP going beyond just looking at claim substantiation and truthfulness and accuracy; maybe getting into some of these very topical issues like negative options and things like that. It’s very important for this program to grow with the industry, because it’s evolving at warp speed and ERSP needs to keep pace with it.

ER: Any final thoughts?

Marinello: Any success that this self-regulation program has earned is really predicated on the voluntary cooperation of the marketers and direct response community. ERSP doesn’t work at all without it. The marketers and those in DR have been so supportive over the past six years of what we’ve done, and that’s really helped this program create a nice self-regulatory niche out there.

July 2010 – Column: Rick Petry

Facebook’s Free Lunch with Trimmings

We’ve all heard the expression, “There’s no such thing as a free lunch,” but do you know where it originated? During the mid-19th century, saloonkeepers would offer free food for the price of a drink, based on the gamble that folks wouldn’t stop at one. Today’s watering hole lies at the intersection of curiosity and compulsion. It’s a destination called Facebook, and its patrons will soon number half a billion–legions with an insatiable thirst for triple shots of creative expression, kinship and validation. But just like yesterday’s barkeep, the man behind Facebook’s counter, CEO Mark Zuckerberg, wants something in return for access to his social networking smorgasbord: the ability to use another kind of counter–one that adds up your likes and dislikes to serve up targeted ads.

Zuckerberg’s definition of quid pro quo has gotten the company into hot water with privacy advocates, one of the many topics explored in the fascinating new book “The Facebook Effect: The Inside Story of the Company That Is Connecting the World” by David Kirkpatrick. As Kirkpatrick points out, Zuckerberg’s vision has been to relentlessly pursue growth through dominance and worry about profitability later.

The proof of Facebook’s success lies in a cursory review of some of its astonishing statistics: users spend 500 billion minutes per month using the site with the average user posting 70 pieces of content. They add up to 25 billion per month. And while Nielsen reports that 125 million Americans spend roughly seven hours a month sharing the likes of political rants on Zuckerberg’s brainchild, over 70 percent of its users are outside the U.S. The Private Equity Data Center speculates that the breadth and depth of such devotion may be worth as much as a staggering $35 billion.

Clearly, the future profitability of Facebook lies in its ability to navigate the delicate balance between personal expression and the lifeblood of marketers’ commercial interests. Although Facebook execs admit that past efforts to alter privacy settings have created confusion and consternation, they vow to do better. In a June interview in The New York Times, Eliot Schrage, vice president for public policy at Facebook, admitted that the privacy implications of their ads are widely misunderstood, “People assume we’re sharing or even selling data to advertisers. We’re not. We have no intention of doing so. If an advertiser targets someone interested in boats, we’ll serve ad impressions to people with ‘boats’ on their profile somewhere.” Schrage explains that the site relies on “anonymized demographically targeted ads.” Specific names and personal information of users aren’t disclosed to advertisers.

What Facebook is doing is no different than what television broadcasters have done for decades: pushing ads aimed at appealing to the targeted demography of a show. The key difference is that with Facebook, the content is user generated and personal. But with statistics suggesting that the average consumer is bombarded by thousands of ads a day, it’s not too cynical to suggest that such relevancy is one more positive aspect of Facebook. And with its user base, regulators and management working in concert, perhaps such wry wish fulfillment can take an optimistic turn; one that will benefit the marketers who pick up the lunch tab for this ultimate soapbox, as well as those who shout atop it.

Rick Petry is a freelance writer who specializes in direct marketing. Contact Petry at (503) 740-9065, at rickpetry.com, or on Twitter at http://twitter.com/thepetrydish.

July 2010 – Column: DR Insights

Pennies Wise, Pound Foolish

Ever see one of those ads from the credit card company? You know, the ones that say something like “Cab ride to stadium $20…Grandson’s team uniform $40…Getting to the stadium, reaching for your pocket and realizing the tickets to opening day are on your bed stand…Priceless!” Well, that’s what I think of when I watch electronic retailers launch their campaigns today. They spend tens of thousands of dollars getting ready to launch a campaign, only to cut corners at one of the most important parts: the conversion side—that is the call center and the web. This is a mistake made every day, even by “the big guys,” and many of them don’t even realize it’s a mistake.

IVR vs. Live Agent
George Smith of GWS Consulting Inc., a 35-year veteran in the call center business, has seen his fair share of this over the years. Seeing companies launch a campaign using IVR is like scratching fingernails on a chalkboard for George. Although it seems smart to go to IVR since it’s oftentimes a great, effective order-taking tool for DR, it doesn’t provide any help or feedback to the retailer. You can’t listen to calls, and you don’t know what consumers were thinking. If there is confusion in the ad creative, or an aversion to a price point, the only thing the marketer knows with IVR is that people hung up—that there weren’t orders. With live agents, the marketer could listen to calls and actually hear, firsthand, what consumers were thinking.

This exact situation occurred for a large direct response marketing company, Infomercials Inc. The company ran a test on TV and used live agents out of the gate. Although he was initially against it due to costs, George showed the executives of Infomercials Inc. the benefits of using live agent, at least during testing and optimization. The ad ran on TV and the calls came in. At first glance, the numbers on the campaign didn’t look good. If this were an IVR-only campaign, the folks at Infomercials Inc. would have thought they had a dog on their hands and would’ve walked away from the project. All the time, money and energy spent over the past several months would have led to an abrupt end of the project.

But, this didn’t happen. The team listened to calls and in pretty short order, realized what was wrong. One thing was the commercial confused people. The item was not only a standalone product, but “an expandable system.” Although it seemed like a great advantage to sell during the commercial, in the end it confused the consumer. In a short two-minute spot and short call, the consumer couldn’t grasp the concept and not many people ordered. Further, it seemed there weren’t many calls. After examining the data and listening to customers, there was a decision to go back to the drawing board and re-do the commercial. It was also decided that the offer would change—the value of the offer was increased.

Meanwhile, the website was designed in such a way that there would be multivariate testing of upsells and upsell paths. The idea there was to find out what clicked with the consumer, and just as importantly, what did not. Did more people take the offer at a higher price point? Was an upsell that was being considered actually look attractive to consumers—did they buy it? By using a complicated set of “sites,” and a robust reporting tool, the Infomercials people were able to find the perfect campaign dynamic (upsells and upsell paths) that would deliver a $62-average-revenue per order amount. This was on a $19.99-base offer. It was fantastic! It would contribute to the overall MER and allow for more margins on the media CPO and cost per call.

If Infomercials Inc. went with IVR and a site that was put together by the accountant’s son over at the local community college, this campaign would have died an early death. Instead, the client gained imperative knowledge and was able to fix what was broken. After the knowledge was gained and the campaign was optimized, the team could consider using IVR, or an IVR with live agent opt-out solution. They would realize more costs upfront, but that small amount of money spent would deliver invaluable information. And, since the web was set up to create the right backend structure (upsells and upsell paths), that learning could be brought over to the new IVR script.

As an entrepreneur, I know what it is like to take on risk—and actually invest money in order to obtain success and make more money. And, I know as part of that we all try to cut corners and find ways to leverage what little assets we have to work with. But, I urge DRTV marketers to consider this story and the lessons that came from it. Consider spending a few extra dollars on the conversion side of your campaign and you may find that instead of chalking it up as another loss, you’re moving forward with a successful campaign. Although there are many factors contributing to what we all see as a lower overall success rate, using the right tools from the get-go might bring that number back in line—and may help us all see success where we saw failure before.

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

July 2010 – Column: Your Association, Your Bottom Line

Coordinated Advocacy Produces Results

The regulatory and legislative activity surrounding data-pass and advance-consent marketing practices has been a frequent topic in this column in recent months–and for good reason. Not only is the issue extremely fluid and fast-moving, it’s also of critical importance to the many ERA members who have ethically leveraged these established business practices for years.

As most of you know, in May, Senator Rockefeller (D-WV) introduced the Restore Online Shoppers’ Confidence Act, which would impose significant restrictions on online negative options and other advance-consent marketing practices.

It’s my pleasure to report a huge win regarding this proposed legislation. Thanks to an extensive and well orchestrated advocacy effort undertaken by ERA members and staff, a particularly onerous provision has been stricken from the bill. Specifically, the Senate Commerce Committee removed language requiring a seller to provide 10 days’ notice (including cancellation instructions) each time a consumer’s account is to be charged.

Although, as mentioned above, the issue remains quite fluid, given this revision and the legislative calendar leading up to the August recess, I am cautiously optimistic that we will be able to contain this issue.

I am extremely pleased by this development, not only for what it means in practical terms for our industry, but also for what it represents for ERA and its membership. It’s a direct result of member engagement that began with a special session held in New Orleans at The Great Ideas Summit in early February, which led to the formation of a task force that has met numerous times and–together with other ERA volunteers–powerfully communicated our position directly to policy makers on Capitol Hill during ERA’s annual Government Affairs Fly-In. It’s a shining example of the impact an association can have when its members come together, provide their expertise and “feet on the street,” stay committed and support association staff as they carry the message forward. It’s extremely gratifying and I thank all those involved for their tireless work.

As we continue to increase ERA’s reach and impact in our effort to advocate for and defend the industry, government affairs and regulatory issues will play a larger role at the 2010 ERA D2C Convention, held this year at the Wynn Las Vegas on Sept. 21-23. We will now offer a full education track dedicated to these issues, including sessions on combating counterfeiting, an important new state law that could have nationwide implications regarding e-commerce taxation, as well as one updating the activity surrounding data-pass and advance-consent marketing. Combined with other tracks on best practices in direct response, digital marketing intelligence and operations and profitability–all in addition to the popular DRTV 101 class and four on-floor “spotlight sessions”–we’re confident that this year’s will be our strongest education program ever.

All other indicators are pointing to another record-setting show. As we go to press–and more than three months out–the show floor is over 80 percent sold and pre-registration is out-pacing last year’s by more than 400 registrants, putting us on target to meet our goal of drawing more than 3,600 members of the direct-to-consumer commerce community to Las Vegas this fall. It’s another positive indication of the health and engagement level of the membership and the industry at large. If you’ve yet to register, please do so at www.D2Cshow.org.

I look forward to seeing you there.

July 2010 – Online Strategies: Online Insights

Social Media and SEM: Friends or Foes?

The explosion of social media and the steep growth trajectories of sites such as Twitter, Facebook and, more recently, FourSquare, have created huge opportunities and challenges for marketers in equal measure. According to the SEMPO “State of Search Report 2010,” based on a global survey of nearly 1,500 digital marketers, 59 percent of client-side respondents said social media budgets will increase over the next year compared to only 4 percent who said budgets will be less. Agencies are even more bullish, with 85 percent saying they expect increased client-spend this year.

Although social media marketing budgets are still modest compared to those for search engine optimization and paid search, many companies are starting to take this relatively new channel very seriously.

Social Media’s Impact
Effective social media marketing can help drive website visitors by giving companies and brands more visibility on search engines and social media sites. A good social media strategy can have SEOs licking their lips at the prospect of new links and opportunities for visibility on social media-friendly search engines. Three quarters of agencies surveyed (74 percent) for the SEMPO survey, carried out by Econsultancy, say the rise of social media has had an impact on their clients’ search engine marketing activity.

It should be noted that while social media marketing can help search efforts, the main objectives of social media marketing, and the skill-sets required, are often very different from search.

Although the research found that the primary objectives for search marketing are most likely to be “selling products” (for paid search – see Figure 1) and “generating leads” (for SEO – see Figure 2), the primary objective for social media marketing is most commonly increasing brand awareness and enhancing reputation (see Figure 3).

The skills required for social media marketing, where creativity is paramount, are not the same for paid search marketing, which generally speaking, requires deeper analysis and left-brain thinking. Similarly, the metrics used to measure success are very different.

The primary skills required for a staff member managing SEM, search advertising campaigns include: the ability to stay on top of the latest campaign management and analytics tools, the ability to convert campaign performance data into action plans and the ability to execute exact and different campaign best practices based on the advertising channel.

By contrast, the core skills required for a new staff member to develop and execute effective social media campaigns include: be adept at listening and understanding what your target audience is saying about your company’s product; be able to work with the appropriate social media tracking tools to effectively monitor dialogue and answer questions; know how to drive community conversation; and recognize that successful social media marketing takes time as you work to expand your customer base.

Where SEO and paid search success can be worked out on a more tangible return-on-investment basis, measuring the success of social media campaigns often requires more intricate analysis. The metrics will likely vary based on the objectives.

These differences don’t mean that the same agencies and same people cannot be well equipped to help a company with both search engine and social media marketing. But what should be clear is that social media marketing should be seen as something more than just a search-marketing tactic.

Linus Gregoriadis is research director at Econsultancy, which carried out and published the SEMPO “State of Search Report 2010.” Contact Gregoriadis at linus.gregoriadis@econsultancy.com.

July 2010 – Online Strategies: Brand Protection

What You Should Know to Safeguard Brands in an Online Advertising World

BY FREDERICK FELMAN

Search advertising is a fast-growing marketing channel for brand advertisers and is only getting larger in 2010. According to the Search Engine Marketing Professional Organiz-ation’s annual “State of the Market Survey,” search-marketing spending will grow from $14.6 billion to $16.6 billion in 2010. The lion’s share of this spending will go to pay-per-click advertising campaigns, staff and software solutions. Unfortunately for brand advertisers, there are thousands of online scammers who leech traffic and new customers from legitimate e-commerce brand campaigns.

Illegitimate pay-per-click advertising activities range from click fraud (the practice of a person or computer program clicking on an advertisement for the sole purpose of generating a charge per click) to pay-per-click scams. A pay-per-click scam occurs when a brand name and its derivations are used in such a way that traffic is diverted away from the actual site belonging to the brand, often infringing on the brand’s trademarks. In some cases, these scams even drive traffic to sites that sell counterfeit products. What’s the bottom line? The scammer is driving traffic to his or her own site so he or she can profit at the expense of the legitimate brand.

A variant of this practice occurs when an affiliate uses a branded search term to drive traffic to its own site. While an affiliate grabbing traffic from a brand is not a scam, it adds cost to the brand’s pay-per-click advertising campaigns and often results in the brand paying the affiliate for traffic that the brand itself generated!

According to the recent SEMPO “State of the Market Survey,” the value of the North American search engine marketing industry is projected to increase $2 billion from $14.6 billion to $16.6 billion in 2010.

Scale of the Problem
The amount of traffic diverted from branded pay-per-click advertising campaigns is staggering. In the U.S. alone, there are 4.2 billion brand-based searches on major search engines every day. One in seven of these searches lures searchers to a destination other than the brand’s site. As a result, over 600 million searches are hijacked every month. This affects brands in several ways, beginning with diminished traffic and lower ad campaign ROI. In addition, scammers can bid up the costs on branded keywords. Last but not least, a brand can suffer by being falsely associated with a counterfeit site.

The leading search engines all have programs in place to provide pay-per-click advertisers options for dealing with intentional click fraud or pay-per-click scams. However, it is incumbent on the brand’s ad campaign managers to be proactive in monitoring and reporting problems to the search engines.

It is also notable that not every pay-per-click scam occurs with the use of a branded term. A good example to illustrate this point is the term: “designer handbags.” In a recent survey of 20 popular online product searches, this item stood out. A startling 32 percent of paid search ads that appeared on a search of this term led to sites appearing to sell counterfeit handbags. The misleading ads worked in several different ways. Some ads would inappropriately use branded terms, while some used generic terms. But in every case, counterfeiters are taking advantage of paid search–and brand names–to intercept traffic and profits. Legitimate brands are faced with the reality that they are competing every day with those who would divert traffic from their sites to illegitimate destinations.

How to Fight Back
To fight scammers, ad campaign managers have two options: build an in-house monitoring and detection team with dedicated staff, or outsource to specialized vendors that provide automated detection, auditing and reporting solutions. For large global brand companies, in-house solutions can be extremely labor intensive to implement and manage. In contrast, products from third-party solutions providers are continually updated to address the latest manifestations of pay-per-click advertising scams, are able to prioritize offenses based on the brand’s criteria and can provide automated reporting methods tailored to the brand’s needs.

Remember that pay-per-click scams are borne of and reliant on technology, so they can be prevented and fought through technological means as well. Highly effective automated solutions can be highly adept at detecting search-advertising abuse, and most will prioritize for the worst offenders and immediately take action. Any e-tail brand wishing to maximize its ROI should consider initiating these strategies and making them a top priority.

Some Important Tips
Given the seriousness of pay-per-click scams and the solutions available, brand advertising professionals should consider implementing the following:

Conduct an informal, qualitative audit to assess if your company is a potential victim of pay-per-click advertising scams. A simple way to start is to search for your branded terms on one of the leading search engines and follow the ads that are presented.

If your company sells house-brand goods, your supply chain may also be contributing to a related facet of the problem–counterfeit goods. As part of your informal audit, examine business-to-business exchange sites to see if your house-branded goods are being sold in bulk. A variety of offshore suppliers often make use of these B2B exchanges to sell overruns and ‘name brand’ goods, which could be counterfeit.

Research the third-party software solution providers that can help your company address pay-per-click advertising fraud and scams. Look for the solutions that can help to address the full range of abuse that your company’s brand is experiencing.

Finally, as pay-per-click advertising budgets increase, there are a growing number of educational webinars and e-commerce conference panels to assist brand-advertising managers with addressing these problems. Great places to monitor how pay-per-click advertising problems evolve and how to manage them include e-commerce association blogs and publications, LinkedIn groups comprised of thousands of pay-per-click professionals at www.linkedin.com/in/ppcmarketing and conferences and training events that specialize in pay-per-click and search advertising.

Frederick Felman is the CMO at MarkMonitor, a leader in enterprise brand protection, where he is responsible for promoting the company’s brand protection products. Contact Felman at (415) 278-8400.

July 2010 – Feature: Driving Action with Behavioral Analytics

Leveraging the Power of Information to Strengthen Customer Relations and Add Value to Your Business

BY JASON RUSHIN

When you enter the world of behavioral analytics, you’re confronted with new concepts, new opportunities and new ways to realize new possibilities with your customer data. By interacting with the data directly, you can discover, explore and share insights with others in ways that were never possible before. That’s the value proposition of behavioral analytics. Driving value and return on investment (ROI) with these tools depends on first realizing the unique value of the technology itself.

As you wade deeper into behavioral analytics waters, you’ll begin to not only realize the value of these business intelligence (BI) tools, but you’ll also be amazed at the types of actionable insights you will get about your customers’ behaviors–insights that will guide you toward decisions that help you optimize the relationship between your customers and your company.

Behavioral analytics allows you to quickly hone in on the behaviors that matter, which speeds your time from data to action. Following is an excerpt from the book, titled “Behavioral Analytics for Dummies,” which focuses on how you can use behavioral analytics to drive action–whether tactical or strategic–and how the relationships between behaviors are both measurable and actionable. Using these relationships, or affinities, between behaviors, you can identify what’s working, what’s not and what to do next to drive the desired behaviors.

Realizing the Unique Value of Behavioral Analytics
Behavioral analytics offers a value unique among its BI peers. Using traditional analysis tools, if you don’t know precisely what you are looking for, finding meaningful insight can be like looking for a needle in a haystack. Best-of-breed behavioral analytics tools track the relationships between attributes in your data and provide easy-to-use tools for exploring this information. You can use these capabilities to discover affinities, relationships, patterns and trends in large volumes of data. You can also explore at a general level or target specific areas to pursue a hunch or a hypothesis.

When you understand what your customers tend to do in any given situation or after a given set of actions, you can predict what they will do next time and make changes as necessary to either facilitate or avoid those actions. Indeed, behavioral analytics yields nuggets of information that can drive your entire business strategy to more effective heights.

Putting Behavioral Analytics to Work for You
Standard BI tools only tell you what happened. Behavioral analytics tells you what to do next. By knowing that behaviors X and Y drive behavior Z for Group 1 10 times as often as Group 2, you know exactly what your next move should be. With behavioral analytics, companies can see why people do things and what they do together and don’t do together, and patterns in their behaviors that can point marketing, sales, support, advertising, real estate, product management and other areas in the right direction.

For example, the insights you receive can uncover new product affinities across departments in specific stores or groups of stores, and based on this analysis, increase departmental cross-sells by modifying in-store layouts depending on store demographics.

With behavioral analytics, you can focus on the desired behavior (e.g., a purchase) and find out what led up to that action. Then, you can immediately pinpoint the customers, who take the first step towards that desired action and incite them–through recommendations, marketing campaigns, sales promotions and so on–to take the next step, helping to drive them to the desired outcome.

Behavioral analytics is great for determining positive affinities, but don’t forget about the negative affinities as well. Understanding what drives customers away from a certain action can be just as important as knowing what drives them toward an action. For example, having a customer call your support staff is probably something you’d like to avoid. By realizing what drives customers away from making that call, you can reduce expenses and increase customer satisfaction. In other words, a negative can sometimes actually be a positive!

Focusing on Behavior Patterns
One of the key differentiators of behavioral analytics is the focus on patterns and the relevant affinities. You can uncover significant behavioral patterns that compare your focus to the overall population. Adding affinities avoids the bias created by size differences between the target population and the overall population and allows for quick segmentation of customers by value or action or behavior. Plus, the largest group isn’t usually the one that exhibits the most valuable behaviors. Without the affinity score, you’re just guessing.

The affinity score replaces your guesstimate with a quantitative measure of the correlation or relevance between two data points. The score is derived from past data that can be used as a predictor of future behavior and is inherent in the behavioral analytics tool–which gives you the score automatically.

Here are a few examples of when affinity defines relevance:

• Which web page is more likely to be selected by visitors who view X (compared to all the available pages)?
• Which marketing campaigns are more likely to create high-value customers (compared to all the other campaigns and customers)?
• Which products are more likely to be purchased along with product A (and not with other products)?

Even with a focus on patterns, all of the underlying customer data is still contained within the behavioral analytics system, allowing for quick segmentation of customers, and then exporting of those customer names/IDs to your marketing system for a quick campaign.

Unlike traditional row and column databases, behavioral analytics stores data by tracking the associations between attributes, eliminating inherent redundancy. Any unique combination of attributes is stored only once, even though it may appear thousands of times in the raw data. This same logic applies to more complex patterns, such as product, channel and promotion.

Driving Strategy with Behavioral Analytics
Behavioral analytics is more than just another BI tool. This software reveals insights that can inform your business strategy with more clarity and stronger results. That’s because behavioral analytics allows you to understand both customer behaviors and the changing trends and behaviors in the marketplace as they relate to any business initiative.

Armed with this information, you can drive branding, product direction, public relations, and other areas of your business. By better understanding what your customers do, you can better manage your overall business to stay ahead of today’s quickly changing customers.

Understanding Business Drivers
Mobile phones are allowing people to connect to the Internet wherever they are, and send text messages, photos, web links and more to their friends in near real-time. Meanwhile, social networks are changing the face of word-of-mouth marketing. News spreads in an instant and trends make it from one coast to another in a flash.

Behavioral analytics helps you to understand customer behaviors on a day-to-day basis. With up-to-the-minute information about what’s driving customers to–or away from–your business, you can make adjustments on the fly.

Put another way, knowing how many customers are coming and going (and how they got there and where they went to next) is helpful. But understanding customer behavior–for example, this combination of activities caused people to leave, but that combination caused people to buy–can help you better manage the direction of your business.

Breeding Repeat Customers
Behavioral analytics offers quick insights that can help you get new customers and more revenues in an instant. For example, some celebrity wears your product and your orders skyrocket. That’s great news. But once you fulfill the orders, you need to quickly turn those new customers into repeat customers.

Behavioral analytics will answer questions such as:

• Of the new customers who bought more, what else did they buy?
• Did they buy on the same day or the next week?
• What led them to the other purchases?
• Of the new customers who did not buy, what else did they look at?

Focusing on Business Customers
On the business-to-business (B2B) front, behavioral analytics offers insights that can help you cut costs, drive product improvements, change marketing messages and so on. For example, behavioral analytics helps you understand what potential customers do before they make a purchase. Such insights can be a boon for lead generation, sales pipeline development, and lead profiling and routing.

Here are a few types of insights for B2B:

• Find the affinities between marketing content types, time between downloads and close rates by sales method.
• Identify which initial contact methods, followed by which other interactions over a time period have a higher likelihood to close.
• Uncover which sales tactic and marketing campaign combinations create a negative affinity to deal closures.

It’s easy to see how behavioral analytics can inform your higher-level strategies by offering crystal clear insights into customer behaviors.

Jason Rushin is the director of marketing for Quantivo, a San Mateo, Calif.-based on-demand behavioral analytics service provider. Contact Rushin at jrushin@quantivo.com.

June 2010 – Column: Rick Petry

Blah, Blah, Blog!

Blog, that portmanteau of web + log, has evolved into a powerful marketing tool, yet it is often misunderstood or even dismissed. Maintaining a blog with solid, original content is hard work and let’s face it, a lot of folks would rather take a number at the DMV than stare down a blank page on their computer screen. That’s why more direct marketers need to take advantage of the Electronic Retailer (ER) blog, (www.electronicretailerblog.com), a valuable–yet grossly underutilized–blogging platform available to the entire community. The ER blog is a single-destination site where the totality of the industry’s thought leadership can be aggregated to create an authoritative body of content that will benefit product inventors, marketers, supply chain partners and students of direct marketing.

However, since the beginning of the year, the ER blog has averaged about one contribution per week when, frankly, someone should be weighing in every day. For that reason, it’s probably worthwhile to review some of the key reasons why blogging is so important to the overall marketing mix. First and foremost is the fact that blogging–especially guest blogging on a site such as the ER one–helps with search engine optimization (SEO) in significant ways:

Blogging increases long-tail exposure. In January, Scott Richards, CEO of Dial800, posted a video-log on the site discussing the relative effectiveness of repeater toll-free numbers versus random ones. Now, if someone Googles “repeater toll free numbers,” that blog entry as Dial800’s site ranks very high for unpaid search. So just by posting one blog entry, a slew of phrases have been picked up that searchers can then easily find and link to, what are known as “long tails.”

Link building creates credibility. Once you’ve posted content on a topic that readers are interested in, others may link to your original blog post, a phenomenon known as “link baiting.” Every additional link tells Google that the community has found your content valuable and imbues it with credibility that then translates into link authority. As a result, the rank of your original post rises and the ER blog enjoys strong ranking authority. That linking authority then funnels into your site.

Instant links. Guest blogging on the ER blog can provide direct links back to your website. Therefore, instead of writing a blog on your own site and hoping you get linked, you get connected to the posting from the outset with content that is relevant to your business. This tells Google that you are a thought leader on the given topic.

The ER blog allows the industry to enjoy the benefits of blogging without the attendant pressure for continually generating fresh content being borne by one individual. But in order for it to maximize its potential dividends, it needs us all to step up and leverage our substantial wealth of knowledge.

Rick Petry is a freelance writer who specializes in direct marketing 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.

June 2010 – Column: Best Practices in Online Marketing

Turning Losers into Winners in 2010

I recently had the opportunity to meet with other industry experts to discuss how to turn loser campaigns into winners. This was an amazing exchange of ideas and shared information from these professionals about the ins and outs of how to make a DRTV campaign work in this difficult 2010 period.

Four Key Takeaways
I had a chance to pontificate about four things to help you get the most from the Internet part of a campaign. These four pearls of wisdom can help you to potentially make money and stay out of trouble with the online aspects of your campaign. I have written about some of these things before, but here they are in a nice tidy format. Tear out this article, hang it on the wall and keep it near your desk.

1. Use an optimized web formula. Not all websites perform the same. I have had dozens of conversations with both industry experts and newcomers about this subject.

On one hand, it seems intuitively obvious that different web pages potentially have different key performance metrics in conversion and average sale. If compared in a real head-to-head test, one page will usually perform differently from the other. It’s not usually a tie.

On the other hand, many people instinctively feel that it is impossible that one web page could possibly perform better than another. For heaven’s sake, it’s just a web page!

Honestly, I have no clue why the performance of web pages differs. I like proof…solid, empirical proof.

We build web pages, lots of them with many small and large variations, e.g., A red order button versus a green order button; a button lower left versus a button upper right, a button that blinks or a button that’s static, etc. We test web pages against each other in a systematic sequence. We go forward with the winners and nix the losers. Wash, rinse and repeat. We apply what we learn to every new website we build.

The result is web pages that generate 25 percent to 100 percent more sales. One web page can dramatically outperform another.

2. You can apply what you learn online to your offline creative. What does that mean?

Simply put, it is excruciatingly difficult to get anything working on TV these days. Almost everything is failing. It used to take eight to 10 products to find a winner in the old days…until early 2009. Now it takes 20 to 30. That’s a huge difference!

You can shorten the development cycle somewhat by using online split testing using CoinFlipper, a proprietary A/B split testing tool to split your inbound traffic to multiple websites.

What can you test? Depending on the source of the traffic and your creative approach, you can test:

• Offers – Should you do a BOGO (Buy One Get One Free) or a single sale
• Pricing – Should your price be $14.95 or $10
• USP – Unique selling proposition. Basically your lead selling point
• Bonus items
• Different product names or maybe licensed names

So instead of having to spend $10,000 on media and a few thousand on creative changes and more on trafficked tapes for each test, you can test this online in an A/B split test first and narrow your choices to the ones that performed best online.

Is this a perfect method? Probably not. Is it better than nothing? Uh, huh.

3. Avoid compliance issues. Your website has the potential to get you into hot water if you’re not careful. Your web form is probably not PCI compliant. Even though most forms don’t do it yet, it is against PCI-compliance rules to show the numbers in the CVC field. They need to show up as ***. Not a big deal, until someone decides he or she doesn’t like the fact that you haven’t been doing it correctly.

Another gotcha has to do with sales taxes. New York, North Carolina and Rhode Island have already passed laws that make you liable for tax on 100 percent of all of your retail sales in that state if you create something called nexus.

Traditionally, you have nexus if you have a physical location in the state. The new laws in these states say you have nexus if you have affiliates or sub-affiliates in these states who sell to consumers in those states. For example, you have an affiliate in New York and that affiliate sells to some customers in New York. If you meet certain sales thresholds, you owe sales tax on all of your online and offline sales to consumers in New York for all of your products.

Some companies have terminated all their affiliates in these states. Pity…there is a better way to deal with it.

Finally on compliance, there are laws on the books in 16 states, including California, that if you require certain information on your order form, you may be liable for a fine of up to $1,000 per presentation.

4. Avoid losers before you start. I mentioned earlier that it now takes 20 to 30 shows to find a winner–if you’re lucky. At about $25,000 to $50,000 to knock these shows out, you’re talking over a million bucks of fishing to find a winner. That’s a lot of dough.

That’s why it’s important to consult with an experienced DR professional who can make a thorough assessment and who will be honest enough to tell you whether you have a product that’s worth marketing on television.

I still feel bad every time I need to report back to a client that a product is a likely loser on TV, but we all take solace in the fact that $25,000 to $50,000 was saved in each case.

Well, I wish you happy hunting on your road to DRTV success.

Bob Greenstone is CEO of Permission Interactive Inc. in San Diego. Contact Greenstone at (619) 708-7456 or at bob@permissioninteractive.com.