December 2009 – Column: Ask the Expert

Made to Measure

A: Online video is all the rage these days. Companies of all sizes and across all industries are investing in video cameras and editing tools, making videos and posting them on the web. What many of those firms don’t realize is that putting video on the Internet without tracking its effectiveness is tantamount to hiring a new sales rep, training him, giving that individual a customer list and then never checking in with him.

That’s where website analytics come in. Defined as the measurement, collection, analysis and reporting of Internet data for the purpose of better understanding and optimizing web usage, analytics has become a critical element for companies that want to leverage their Internet marketing investments. Analytics are particularly relevant for users of online video–particularly those who want to know if their time and money investments are paying off…or not.

“Companies are looking for a connection to their ROI,” says Chris Savage, CEO of Lexington, Mass.-based Wistia, a provider of video sharing tools for business. “It’s become even more important over the last year, due to economic conditions, and with firms starting to look to video as a way to deliver their messages more efficiently.”

MEASURING THE EFFECTIVENESS
With so many videos posted online, Savage says the next logical question marketers should ask themselves is: How effective is our video? “If you spend $5,000 to make the video, and 10 hours of each salesperson’s time pushing it, then you’ll want to know if it’s worth it,” Savage explains. “The goal is to draw a connection between the video and the investment to figure out what impact this marketing strategy is having on your business.”

That’s where website analytics come into play. By tracking a site’s statistics, analytics allows marketers to see how many people are looking at which videos, what sites those visitors are coming from and, specifically, who those users are. With that information, marketers can measure traffic to their websites, understand who’s watching what and tweak their online video strategies accordingly.

Analytics tools range from simple online programs that can be downloaded for free to expensive systems that are installed on existing hardware–and everything in between. One of the most popular is Google Analytics. Free for users, the program takes just a couple of hours to install and configure. The program tracks how often visitors come to your site, conversions across multiple pages, visitor behavior and the percentage of people who click each link on a given page.

Video hosting firms such as Wistia also offer analytics tools. Using such systems, marketers can upload their videos and use an application that tracks just how many people actually watch the clips, on which page they clicked “play video,” which videos have the highest engagement rates, how much of each clip was actually watched and at what point the typical user “skipped” to other parts of the show or tuned out completely.

With that information in hand, Savage says marketers are able to craft a clear, concise, effective message that not only entices people to watch the video, but also pushes them to buy your product or service.

PART OF THE WHOLE
Analytics tools tend to work best when integrated into a firm’s overall marketing plan, and shouldn’t be relied upon as standalone tools. “Use analytics as part of a comprehensive program that address what you’re trying to achieve with your online video,” says Brian Tervo, CEO of Burlington, Mass.-based TIE Kinetix, a provider of electronic, business-to-business collaboration tools, “and make sure that those analytics are aligned with your internal sales and marketing processes. Only then will you be able to tell if a campaign is really working.”

If, for example, a particular video has received a lower number of hits than others on your site, think about how you can improve that clip to make it better for visitors, and get them engaged in the video. Companies that go through this exercise on a regular basis are sure to see increases in their online video ROI.

“It could be as simple as re-editing the video or as complex as making an entirely new one,” says Savage, who recently worked with a product marketing company that used analytics to hone its video content over time in order to create more effective messages for its customers. “The most important strategy that marketers can use is to look at the videos that they’ll be creating in the future,” says Savage. “Once you’ve come up with that concise message, it’s pretty easy to keep your audience on your site and engaged.”

That’s good news for marketers who are struggling to attract eyeballs and stand out among the clutter that is today’s Internet. By combining online video with analytics, firms can craft marketing messages that not only call out to customers online, but also keep them watching the clips. The Holy Grail comes when those viewers take a positive action after viewing the clips such as sending the video to friends and family, signing up for an online service or purchasing a product.

Tim Hawthorne is founder, chairman and executive creative director of Hawthorne Direct, a full-service DRTV and new media ad agency founded in 1986.

November 2009 – Channel Crossing: Online

A Product Launch for the Digital Age

By Michael Weisfeld and Howard Chen

“Extra, extra–read all about it!” This old-time cry apparently used by bygone newspaper boys takes on a whole new meaning in today’s digital age. There was a time when the task of getting information to the masses was an awe-inspiring feat, typically handled by large media companies. Today, the world has gotten smaller and with the capabilities of online technologies, the only real challenge faced by marketers seems to be simply the limit of their imaginations.

But let’s be real. This undertaking requires a combination of creativity and execution–not to mention diligent follow-through.

Perform Keyword Research
Connie Mack, the longest-serving manager in MLB history, famously said, “You can’t win ‘em all.” Likewise, marketers simply can’t optimize for every keyword they can think of.

Keyword research is the process of identifying the set of words to target for pull-marketing tactics, such as search engine optimization and social media. This set of words is specifically identified to give brands the most bang for their buck. Start with a set of about 25 “seed words” that describe the product and company. Feed these into keyword research tools like those offered by Google or SEOTools to determine possible variations and associated search volumes. Review the output to select approximately 100 words for your target list. The criteria for selecting a word is a combination of relevancy to your website and predicted search volume.

Develop Content Strategy
The next step is to develop a content strategy that includes assets such as text, images, videos and other files that can be published to the Internet. A successful strategy incorporates brand messaging in all published content and an editorial calendar for continuous content development.

The content should be interesting and valuable to the users during all stages of the marketing lifecycle. Its presentation should help facilitate users’ awareness, interest, desire, action and advocacy for your product. If you find creating content to be a challenge, Junta42.com is a great resource for ideas and vendors.

An example of a good content strategy is Ford’s FiestaMovement.com. The strategy involves consistent messaging through social media channels like Facebook and Twitter to gain product awareness for the upcoming Fiesta model. To further generate interest, Ford has mobilized “agents” from across the nation to blog about their experiences with the vehicle. Desire is also targeted with a “Design Your Own Fiesta” application, which helps users shape their own 2011 Fiesta. Action is then facilitated by placing calls-to-action like test-drive events and an updates subscription. Last but not least, advocacy is supported with sharable features on all content.

Search Engine Optimization
Now you have to optimize all that useful content so that it’s properly indexed by search engines–and can then be found by your target audience when they are interested in learning more about it or better yet, making a purchase. In combination with an SEO program, PPC advertising also helps drive traffic to your website.

Closely monitor the keywords that are achieving premium rankings on search engine results pages and referring visitors to the website, especially branded terms. It is also important to make note of words used by your visitors as logged by your web analytics or onsite search. These might be words used repeatedly by your visiting audience, but which are not on the targeted keyword list. These words should be evaluated and leveraged for inspiration to amend or optimize your content strategy.

User Experience
Simply having more traffic to your site is not enough. While it’s important to have an intuitive and engaging website, the real success lies in producing quantifiable results that meet your business objectives. You will have to prevent visitors from bouncing immediately after they land on your website; first website impressions play a large role in the success of your product launch.

Many marketers have the common misconception that interesting content will overshadow poor usability. Wrong. When the user can’t find the content on your website, it may as well not exist. To make content more visible throughout your website, create “information paths” for the user to follow. An information path is the logical progression of content from broad to very detailed–and will move your customer through the conversion funnel.

Social Media
With so much effort already placed toward developing user-centered content, it would be illogical to keep this content solely on a single website. Instead, flaunt it using two distinct social media approaches. First, you should look to have social features added to your website to support a positive user experience. Examples of social features include a “share this” (www.sharethis.com) button, ratings and reviews, chat and a blog. Platforms such as Facebook have even created APIs (http://developers.facebook.com/ connect.php) that allow users to sign into your website with their Facebook identity.

The second way you can add social media to your product launch is by creating social profiles off your domain on popular platforms like Facebook and Twitter. But also look to extend to niche online communities relevant to your product.

Social media’s main value in a product launch is its ability to extend the reach and frequency of the broadcast of your content. Social media also markets to a targeted audience which has the propensity to create links in their online conversations, which in turn generate synergistic results with SEO. These created links, if rel=”follow,” supply ample SEO value as they pass the page rank of the website. While rel=”nofollow” links fail to contribute to SEO, they’re still useful in driving traffic to a related destination page.

Social links are even more likely to get clicked than banner ads because they are essentially online word-of-mouth referrals. Therefore, when launching a product, it is important to create ways for your growing customer base to easily become advocates and share their experiences with their online contacts. Also, don’t ignore the feedback provided by conversations developing in these communities. Think of these conversations as focus groups with data to supply to product managers or engineers for risk mitigation or future inspiration.

Analytics
Like DR, online marketing is all trackable. You need to gather data from numerous sources and assemble it in an analytics dashboard. Key performance indicators (KPIs) should be applied to each content. When tracked, these KPIs should tell a story about not only the performance of each piece of content, but also the user behaviors. For example, you should be able to determine the popular keywords that drive traffic to your website, how many visitors stayed and for how long and what content they consumed during their visit. Ultimately, these KPIs supplement your analytics platforms to determine the ratio between site visits and products purchased.

As marketing shifts from push to pull, traditional to online and paper to digital, product launches require more than just a smart idea and capable technologies–they require a smart online execution.

Michael Weisfeld is director of online marketing solutions at BusinessOnLine. He can be reached at michael.weisfeld@businessOL.com. Howard Chen is senior social media analyst and can be reached at howard.chen @businessOL.com.

November 2009 – Channel Crossing: Legal

CAN-SPAM and Social Media

By Jeffrey D. Knowles and Mikhia E. Hawkins

Over the past year, traditional media outlets have been awash in coverage of the way social media is revolutionizing how individuals communicate and consume information. According to marketing research firm ComScore, Twitter had more than 21 million visitors in July 2009, up from 780,000 just one year earlier. In the same period, Facebook saw its traffic double to almost 88 million users.

While using social media to drive business is an alluring prospect for marketers, it is not one free of hazards. This column addresses the implications of the CAN-SPAM Act for companies conducting outreach via social media.

What is CAN-SPAM?
The CAN-SPAM Act was passed in 2003 to combat so-called “spam” e-mails by imposing limitations and penalties on the transmission of commercial e-mail via the Internet. The original version of the Act required commercial e-mails to contain an accurate “from” line, a relevant subject line, a visible and operable unsubscribe mechanism and that adult content be labeled as such.

In 2008, the FTC released a discretionary rulemaking that clarified several compliance issues and added four new rules. These rules modified the definition of a “sender” to adjust for e-mails in which more than one party was advertising, required that all commercial e-mails feature a verifiable physical address, clarified the term “person” and required that individuals not be charged an unsubscribe fee.

When a Tweet is not a Tweet
One of the most attractive aspects of social media is the ability platforms such as Facebook give users to customize their experience. Users may, for example, receive text updates on their cell phones when information is posted to their Facebook wall, receive an e-mail when a Twitter user they follow posts a “tweet,” or receive a text, e-mail or other notification when a blog or website they follow using an RSS feed is updated.

Little has been written about whether a Twitter “tweet” by a commercial organization would, in itself, fall under the purview of CAN-SPAM, and if so, how the many CAN-SPAM requirements, such as an accurate subject line, a physical mailing address or an unsubscribe mechanism could be met within the platform’s 140-character limit.

What is clear, however, is that a “tweet” can quickly transform itself into an e-mail. For example, if a marketing message is sent, via Twitter, to users who follow a company’s Twitter updates and one of those users elects to receive Twitter updates to their e-mail account, the message–if it meets the criteria to be considered a “commercial e-mail”–could require compliance with the CAN-SPAM Act.

Although there is an untested but strong argument that the marketer has no knowledge of or control over the applications users enable on their various accounts, cautious marketers should design commercial messages intended to be distributed via social media platforms to comply with the most restrictive regulations until this theory has been tested.

Consideration
Providing consumers with something of value, or “consideration,” to encourage a behavior is one of the oldest and most reliable marketing tactics in the book. It is also the bright-line test that, according to the FTC, determines whether a forwarded e-mail is subject to CAN-SPAM.

When the FTC added new rules to CAN-SPAM in 2008, it also addressed a number of other e-mail marketing issues raised by Act. Among these was the applicability of CAN-SPAM to “forward-to-a-friend” marketing tactics, where a marketer requests or induces a person to forward a commercial message to another person. The FTC concluded that if marketers induce a person to forward a commercial e-mail message by offering money, coupons, discounts, awards, additional entries in a sweepstakes or other consideration, then the marketer is responsible for ensuring compliance with CAN-SPAM’s opt-out and disclosure requirements in the forwarded e-mail.

However, if the marketer merely provides a mechanism by which a person can forward a message, without providing consideration, then the marketer is involved in the routine conveyance of an e-mail and is not responsible for ensuring the forwarded e-mail complies with CAN-SPAM.

Because many social media instances of “forward-to-a-friend” are similar to the e-mail scenario outlined above and, in many cases, may involve e-mails sent to accounts or mobile devices, marketers should assume that the CAN-SPAM guidance will be applied to forward-to-a-friend messages transmitted via social media platforms.

One scenario with potentially dire consequences for marketers is one in which consideration is given to a user who then forwards the marketer’s message to another user. If the user receiving the forwarded message has previously opted out of receiving messages from that marketer, the marketer could be liable for violating CAN-SPAM. Given the tendency for broad and repetitive sharing of information on platforms such as Twitter and Facebook, an individual could receive the same marketing message from dozens of other users, generating significant liability for the marketer.

Accordingly, marketers should avoid using inducements of any kind to encourage “re-tweeting,” the posting of content to users’ Facebook walls, or otherwise disseminating content to users’ contacts. Avoiding triggering CAN-SPAM compliance by not providing consideration enables marketers to eliminate significant potential liabilities and helps them to avoid disclosure and opt-out requirements that may prove difficult to comply with given the limitations of some social media platforms, such as Twitter’s 140-character limit per message.

Don’t Forget the States– and Look Before You Leap
CAN-SPAM is not the only regulation marketers should consider when developing social media marketing campaigns, especially those involving contests. A poorly conceived campaign could easily run afoul of certain states’ e-mail marketing, privacy and/or gaming laws.

As social media expands and matures, marketers need to keep in mind that although the medium appears to have outpaced regulation, federal and state authorities are likely to look to existing rules and guidelines as they build a new regulatory and enforcement framework. For marketers engaging customers and prospects in the social media space, looking backward for likely regulatory guidance will be just as critical as looking forward to spot emerging opportunities and trends.

Jeffrey Knowles is a partner at Venable LLP and heads the firm’s Advertising and Marketing Practice Group. He can be reached at (202) 344-4860. Mikhia E. Hawkins is an associate in the firm’s Regulatory Practice Group with a focus on advertising and marketing law. He can be reached at (202) 344-4573.

November 2009 – Column: Industry Insight

Internet User Trends Show Importance of Media Placement

By Chris Rosica

Content is king for Internet users. The Online Publishers Association (OPA) crunched six years of Nielsen numbers to compile its latest Internet Activity Index, which shows that people continue to spend the vast majority of their online time on content sites. Whether it’s for serious news, celebrity gossip, health guidance or product comparisons, people use the Internet mostly to gather information.

The takeaway from the trend is this: The marketing mix must include public relations outreach to garner media attention. This doesn’t de-value emerging online advertising methods, such as integrated or micro ads, blogger branding and paid tweets on Twitter. It simply reinforces the importance of editorial coverage.

Products mentioned favorably in media reports receive an implied third-party endorsement. Consider news stories about fighting the obesity epidemic that cite a specific workout video, for example.

Neutral–or even negative–references can still be beneficial by boosting name recognition and raising awareness of your product or company. Take the Snuggie, for instance. Sales of the so-called “sweater with sleeves” continued to spike amid news reports this summer that consumers found the commercials cheesy and hilarious. Funnyman Jay Leno poked fun at Snuggies, Ellen DeGeneres spoofed them on her show and on the web, a snarky site (snuggiesitings.com) lets people share humorous images of Snuggie wearers.

How we Spend Online Time
The OPA compared how people used the Internet in 2003 with how they use it today. On average, people spend 6 hours and 58 minutes each month viewing content compared to 3 hours and 42 minutes in 2003. The analysis, using Nielsen/NetRatings data, shows people using Internet-based communications tools (IM, e-mail) less now than they did in 2003, probably because social networks, such as Facebook, give them an efficient way to communicate with many others at once. This finding argues against relying too heavily on e-mail marketing and bolsters the case for using social media to reach wide audiences.

The OPA compared the amount of online time in a variety of categories in 2003 versus today. In addition to content, communications and community, the OPA analyzed e-commerce sites and search engines. The analysis showed major changes in the way consumers spend their online time–less time in communications and commerce and significantly more time on content sites and search.

While the raw numbers for search seem low (although search time grew by more than 60 percent, it still comprises only five percent of our total online time, as compared to three percent in 2003) based on the Internet’s popularity for research, this demonstrates current trends and establishes the importance of online content development. Content can be optimized through search engine optimization practices including social media and link building. Websites will continue to rise in search rankings with the development of fresh content placed strategically online.

Chris Rosica is CEO of Rosica Public Relations, which specializes in online and traditional PR and online reputation management. He can be reached at chris@rosica.com.

November 2009 – Cover Story: 35 Years of Direct Response

Well into its fourth decade of selling hair-restoration products and procedures exclusively through direct response, Bosley is a company that has evolved along with the DR industry as a whole. Bosley’s George Fettig reflects on the maturation of the DR industry and his company’s keys to success.

By Tom Dellner

In 1974, Dr. L. Lee Bosley wasn’t looking to build a business on a grand scale–he simply wanted to grow his personal Los Angeles-based medical practice and provide for his family. Today, Bosley is not only the global leader in hair restoration, it’s the largest cosmetic surgery practice in the world. Two dozen Bosley physicians practice in 72 offices throughout North America and the company is eyeing further expansion into international markets.

Vice President of Marketing George Fettig has headed all of Bosley’s marketing initiatives for the past decade, a decade which has seen the company double in size. With a 30-plus-year career bridging brand marketing (he’s worked with such household names as Dial Soap, Armour Meats and NordicTrack) and a stint working directly for business icon Lee Iacocca, ERA Board Member Fettig offers a unique and fascinating perspective on the direct response business, as well as candid insights into one of the industry’s most enduring success stories.

Electronic Retailer: So few companies make it to their first anniversary–to reach your 35th is beyond impressive. Could you take us back to the company’s earliest days?

George Fettig: Dr. Bosley would be the first to acknowledge he really didn’t have a “vision” in the classic sense. He simply wanted to take his personal interest in the emerging medical science of hair transplantation and build a successful local medical practice right here in Beverly Hills, to help patients and build a good life for his family. Thirty-five years, 200,000 patients and hundreds of millions of dollars later, it’s fair to say that he’s satisfied those goals.

ER: Why the interest in hair restoration?

GF: Dr. Bosley did have hair loss in his family and, as he says in his commercials, he is a patient, but I don’t think that’s what drove him. He’s simply an entrepreneur at heart. He’s a dermatologist and spent years in general dermatology before learning about this technique, which he then significantly refined and made his specialty.

ER: What was the competitive landscape like at the time?

Bosley also offers a full line of hair-growth products, including the Bosley LaserComb.

GF: When Dr. Bosley opened the practice, there were very few physicians offering hair-restoration procedures–perhaps half a dozen across the country. He was truly one of the early pioneers and one of the first to recognize that the artistry of the procedure was as important as the actual medical science. Producing a natural look was his forte and differentiator. Back then, the primary “solution” to hair loss was wigs or hair pieces; Sy Sperling’s “Hair Club for Men” was the only nationally branded solution.

ER: What were some of the company’s early challenges?

GF: When Bosley opened its doors in 1974, advertising in the medical industry was frowned upon. In fact, prior to the ’70s, doctors were prohibited from advertising by state laws. Advertising was seen as incompatible with a doctor’s professional status. This prohibition extended to attorneys, as well.

In the mid-’70s, the ban was challenged on First Amendment grounds, and overturned by a slim margin. But despite the change in the law, most doctors still shunned advertising. Negative sentiments about advertising among the medical establishment were deep-rooted. It was in this hostile environment that Dr. Bosley decided to advertise his new service to the public. And because of this advertising–and his commitment to providing excellent medical care–the Bosley hair-restoration practice grew rapidly. The growth has never stopped.

The other major obstacle in the early days was the public’s negative image of hair transplantation. During the ’70s and ’80s, many new doctors moved into the field, perhaps to capitalize on demand created by Bosley’s advertising strategy. But back then, the technology was quite different than it is today. Hairs were transplanted in unnatural groupings (as opposed to Bosley’s technique of transplanting much smaller groupings in an artistic way), with results that were anything but natural-looking. Of course, these were the transplants that were very visible to the public and created an enormous PR problem for the industry.

Dr. Bosley pushed forward, though. I guess it was the quality of the procedure and the consistent and compelling DR messaging that allowed the business to succeed in spite of this stigma. Dr. Bosley’s primary message is one we still use today: “When patients tell me they’ve never seen a good hair transplant, I simply tell them, ‘That’s because you can’t see a good hair transplant!’”

ER: Tell us a bit about your early marketing strategies. Did Bosley pursue a direct-response strategy from the start?

GF: Bosley employed direct-marketing practices from its very first newspaper ad in 1974. The company recognized that the tracking of individual responses, in order to maximize what was then a fairly meager ad budget, was essential to financial success. In the ’70s, with offices in a few major markets, local newspaper and Yellow Pages advertising was sufficient to drive local demand.

In ’80s and early ’90s, the company had become large enough and widespread enough to support ads in regional magazines as well as a few well-targeted national publications (primarily bodybuilding, fitness and airline magazines). But Bosley was 100-percent direct response–right from the beginning. In fact, we still use essentially the same offer 35 years later: a 45-page guidebook and free informative video (now a DVD, of course). Patients wanted to be educated and informed back then, and they still do today.

ER: When did the company first test the waters of DRTV?

GF: John Ohanesian–Bosley’s CEO for the past 20 years–had the initial vision to create a truly national cosmetic surgery practice. He reasoned correctly that television advertising could take the company and the brand to the next level. So in 1992, Bosley produced its first infomercial. John told me that many industry “experts” informed him that introducing a $10,000 medical procedure with a 30-minute late-night infomercial was paramount to corporate suicide, certainly risking the company’s reputation. But John believed that if the show was produced at a high quality, including honest patient testimonials with compelling results, and if it featured Dr. Bosley himself, it couldn’t miss. He was right. We’ve now been on the air continuously for 17 years.

We learned a lot from those early infomercials. Creatively, we learned to always keep the production values very high (we shot on film for the first 15 years or so), the testimonials real and compelling and to deliver the message in a professional, informative way. We were promoting an important medical procedure. There was no place for cheesy scenes showing women falling all over guys with their new hair–that became clear to us early on. Our customers needed real information about a serious medical decision. The show had to reflect–and respect–that.

We also discovered the value in having an in-house call center with thoroughly trained patient-service representatives. Ours is a particularly complicated process, requiring a lot of listening, consultation and education–and a long call time. The callers, mostly men, can be nervous and apprehensive. Training, monitoring and mentoring of our patient services team was a key to success. When we brought the function in house, our conversion rate doubled. Dr. Bosley would frequently walk the floor himself and provide on-the-spot training.

ER: What are some of the most important ways DRTV has evolved over the time you’ve been on air? How did you adapt?

GF: After more than 25 years of watching direct-response infomercials and commercials (and frankly, being duped by many!), the consumer has grown more jaded, skeptical and suspicious, and at the same time more savvy, educated and intelligent about the purchase decision. The direct-response industry–for the most part–has responded with better products and more honest, intelligent and effective advertising. The ERA has played an important role, encouraging self regulation and, when necessary, taking action to remove offending advertisers from the Association and reporting fraudulent product claims to the FTC.

Another way the industry has evolved is in the sophistication of response analysis. We’ve always tracked leads, of course, and calculated media efficiency ratios, but today’s technology allows us all to be so much smarter in the ways we allocate media dollars. For example, we now use a hosted call-center solution that allows us to integrate our toll-free numbers directly to our database through computer telephony integration. So we no longer have to rely on our agents to enter campaign codes; the system does it in split seconds, with near-100-percent accuracy. The end result is more efficient agents and more efficient media buying. With 800 different 800 numbers in use–and 30,000 to 40,000 calls every month–you can only imagine how valuable this technology is to Bosley.

ER: Yours is truly a multichannel marketing strategy–would you mind outlining some of the elements for us?

A new line of Bosley Professional Strength products will be available in more than 30,000 salon locations.

GF: Bosley utilizes all of the major DR channels, and we are testing emerging technologies, as well. Bosley’s primary channel remains DRTV. Infomercials still deliver very well-qualified leads with high conversion rates. However, the infomercial strategy is not totally scalable for us. We also run short form to increase brand exposure, but more importantly to generate more leads. As you might expect, those leads are a little less informed and convert at a lower rate, but then again, they cost much less to acquire. At the right cost-per-lead, we are pretty much agnostic between infomercial and spot.

Of course, online marketing has become critically important to the overall acquisition strategy. In fact, nearly 50 percent of Bosley’s overall revenue is tied to an online lead in one way or another. The majority of our website traffic is generated by liberal promotion of Bosley.com in all of our offline advertising (TV, radio and print).

While the Internet provides countless advertising formats and opportunities, not all are appropriate for Bosley. For example, mobile advertising, while technically exciting, is not yet appropriate for us, because of its inability to deliver an information-intensive ad to a broad consumer base. Likewise, community-based social media platforms may not work for Bosley, since hair-restoration patients are not as likely to share their successful results with the community. That said, we are testing the waters.

Our remaining web efforts include SEO–optimizing our website to maximize quality traffic and conversion–PPC advertising, cost-per-lead advertising (generating leads through e-mail and affiliate marketing), social media (including our own “Battle Against Bald” blog) and display advertising, which we use sparingly.

The final strategy is mining our database of over one million names. The decision cycle for hair restoration is lengthy–several years, in many cases. It’s critical to our business that we stay in constant touch with these patients and leads, through a well-coordinated, constant flow of telephone, e-mail and direct-mail communication. It takes powerful CRM software and a dedicated staff to manage the process. We have both.

ER: How do you pull the right levers to keep all of these channels working together synergistically?

GF: We hire the right people. Our marketing director, Steve Aquavia, has the perfect balance of creative and analytical skills. Steve and his staff constantly monitor results from every lead-generation category. We look at cost-per-lead, mix ratios, conversion rates and cost-per-procedure. Steve reports weekly and we discuss what shifts need to be made to maximize short-term results. We constantly test, evaluate and then re-set the dials. It never stops.

ER: I understand that you’re launching a line of branded products. Could you tell us a bit about this initiative?

GF: We’re taking the Bosley brand to new channels of distribution. Earlier this year, we reached a licensing agreement with a salon-products company to produce a full line of “Bosley Professional Strength” products. Our plan is to have these products sold in over 30,000 salon locations over the next several years. Salon stylists are the most trusted source (other than a doctor) for information and advice on thinning hair. This expansion to retail will further expose the Bosley brand name to millions of men and women with thinning hair. The synergism with our base business is clear.

ER: To what do you attribute Bosley’s longevity?

GF: As a company, every Bosley team member, from the patient service representatives to our senior counselors to our incredible medical staff, strives to meet or exceed the consumers’ expectations set in the advertising message. When you do that, you create satisfied patients, generate repeat procedures and stimulate positive word of mouth.

ER: What are some of the other future plans for the brand?

GF: With the economic downturn, we’ve had to focus on cost containment, improved efficiency and more effective advertising. However, we’ll continue our efforts to extend the Bosley brand to relevant product categories. Beyond that, I think you’ll see the company turning its attention to further expansion internationally.

October 2009 – Channel Crossing: Online

The Internet Finally Comes of Age–For DR

By Michael Pierce

DR short-form advertising strategies are changing dramatically with the emergence of the Internet as a viable marketing channel. With sales of more than $200 billion in the United States and an expected growth rate of 10 percent over the next two years, the Internet is serious business. In the last five years, Internet video has been replacing online ad strategies such as PPC and traditional SEO as a vehicle to grab a slice of this growing pie. Add in the fact that the Internet is now the gateway to mobile marketing and it is easy to understand why serious conversations about how to integrate online video into DR campaigns is now taking place. The main issue today for campaign managers isn’t whether to use Internet video, but how.

As a director of DR commercials, I must admit I still get excited each time I see my work on TV. Sadly, though, TV isn’t what it used to be. With the advent of DVRs, on-demand programming and the 20-percent increase in the number of people watching programming online this year alone, TV continues to become a weaker and more fragmented medium.

It’s no wonder, really, since the Internet allows the best of both worlds for the viewer and advertiser alike. Viewers choose only what they want to see, when they want to see it, while advertisers have the luxury of marketing to a more specific audience. Whereas TV is a “lean-back” environment, the Internet is a “lean-forward” experience filled with people eager to be served offers, entertainment and information.

About a year ago, I was taught the gospel of Internet video advertising and marketing by Erik Craighead, founder of Video Army, LLC, and longtime Internet guru. Over the course of a few weeks, Erik enlightened me as to what was happening online. We ran scenarios, tested videos, looked at case studies and evaluated current campaigns. I was so enthused that I proposed that my company (Mutiny Pictures) and his become partners to bring true Internet marketing and advertising to the DR world. Erik agreed and VAMP (Video Army Mutiny Pictures) was born.

Since that time, we have launched campaigns for well-known and lesser-known companies alike. Some campaigns have focused on a national audience while others have focused on a region-by-region basis to better serve a franchisee philosophy. In either case, it is always thrilling to see our clients dominate Google’s organic search results, infiltrate a competitor’s search space online and outperform TV sales. Today, we offer a well-rounded system that gives DR campaigns the ability to do targeted video advertising, distribute their commercials virally and within social media communities, and to use video with keyword strategies so our clients quickly enjoy placement within the highly coveted organic search results.

Online Video Advertising in Practice
Targeted video advertising is one of the best ways for a DR brand to re-purpose their existing commercial online. One approach is a performance-based, roll-over video ad model. Roll-over video ads are a great way to showcase a product or service. First, a video ad is served to high-quality websites within an ad network. This gives advertisers control over where their spot plays and assurance that it won’t be placed on a website they find objectionable. Secondly, as a performance-based system, clients only pay for each time their ad is actually viewed. There simply isn’t any charge for an impression. So if an advertiser has a target mark of 200,000 views of their commercial, they might receive 15 million impressions of their video ad for no additional charge.

Another impressive aspect is that the cost-per-view charge for a video ad (when a consumer actually views the spot) is usually less than most PPC strategies such as AdWords. When a video ad is served, it can be designed to cover the user’s current webpage, giving the advertiser a captive audience. A consumer then has the option to click through to the advertiser’s website at any point during the ad, taking them to a URL of the marketer’s choosing for no additional charge.

A host of metrics is provided daily, allowing performance to be refined. Better-performing websites can be used more and non-performers can be eliminated. And if the total views contracted aren’t delivered, the difference can be refunded to the advertiser.

Other online video advertising strategies include leveraging video to establish and grow a consumer base via social media, using video to help with product “tone control” and ad placement within online video networks such as Hulu.com, thus making DR available within primetime programs such as NBC’s “30 Rock” and many others.

Online Video Versus TV
The benefits of online video advertising become even more clear when compared with other traditional mediums, particularly TV. First of all, TV for DR is usually not primetime inventory. Many ads are exhibited in late night or overnight slots where ads frequently get preempted and the audience is not guaranteed. A brand pays for the estimated audience determined by a group like Nielsen, but there is no guarantee anyone is watching. With TV, even if the ad is served, it may never be seen by the consumer–and no one will ever know. The potential lead might get up for a snack, make a phone call, be asleep or simply fast-forward through the ad.

In short, with TV, you pay for the impressions with no guarantee of views. If a consumer does engage your ad via a call center, you then incur another level of billing that far exceeds online e-commerce charges. With that said, I firmly believe that our clients still need to be on television, but they need to integrate those campaigns with an online strategy. In a perfect world, a client utilizes television to build brand awareness and set the table for more efficient sales via the Internet. After all, the key to success in any form of advertising is frequency. But while we do indeed see a spike in sales activity when TV is combined with Internet strategies, excellent conversion rates can also be achieved without TV.

No campaign is the same, and I firmly believe that each client strategy should be treated more like haute couture, rather than with an “off-the-rack,” one-size fits all philosophy. Whether a brand is in its product launch or extending itself into yet-uncharted waters, considering a multitude of tactics is the best play. These are very exciting times for online video marketing and no industry is better-positioned than DR to leverage new concepts, ideas and strategies, harnessing them to reach new consumers.

Michael Pierce is the founder of Mutiny Pictures and a pioneer in online video advertising strategies. He can be reached at michael@mutinypictures.net.

October 2009 – Channel Crossing: Social Media

DR Marketing and Social Engagement

By Chris Peterson

If you have any doubts about the growing importance of social media today, consider this: If Facebook was a country, it would be the eighth-largest in population, just ahead of Japan. Two-thirds of the world’s Internet population visit social networks. More than 100 million YouTube videos are viewed every day. Flickr now has one photo for every two people on the planet. More than 3 million tweets are broadcast on Twitter every single day. Social media now accounts for 10 percent of all Internet time.

The good news is that customers using social media want us marketers to participate. In a Cone research study on business in social media, 93 percent of social media users believe a company should have a presence in social media. But “presence” doesn’t necessarily mean advertising with a strong CTA. That’s akin to walking into a party of people you don’t know and announcing from across the room that you want to sell them something.

Integrating social media into your overall direct response strategy is not difficult–but it does require a different mindset. It means engaging in these platforms in a manner that delivers value, with sales as a happy by-product. That’s not exactly direct response marketing, but it’s still measurable and potentially very effective. Let’s consider two areas that direct marketers feel very comfortable with: acquisition and conversion.

Conversational Acquisitions
There are some very straightforward ways to acquire customers using social media. You can simply place banners or links on various social media sites. Or you can create a sponsorship or host a particular area within a social media site. Unfortunately, these tactics rarely pay out. Either the underlying cost structure is too high or response rates are too low–or both.

For a more effective strategy, consider what is happening on these sites. These are groups of people with shared interests who are communicating with each other frequently. There is a social connection or common interest that is at the root of the communications–and the conversations represent the most valuable asset, not the impressions.

So how do we get into the stream of all these conversations? First, we can establish our own presence on various sites, which is often a very simple exercise. The challenge is scale. You may end up putting a lot of energy into engaging with the seven people who happen to find you on Facebook.

A second option is to harness the social power of your existing customer database–to get to the group of highly social people online who tend to be the “connectors.” They know a lot of people and pride themselves on the vast networks they have built. They are customers who like to be heard and who are also willing to advocate on your behalf, assuming they have been treated well.

You can identify these customers a number of different ways. As a start, external databases that aggregate social data can be overlaid on your customer database. You can identify who in your customer database has a Twitter account. Establishing presences on social media will attract them. You can also invite your customers into referral programs where you can help them look like an expert or a helpful resource in the eyes of their friends.

Simply bribing your customers with incentives to refer other customers may not be the most effective way to garner referrals. Response rates are often higher when you focus more on a customer’s achievements and status. For example, Adobe Software uses a series of valuable guides that are passed along to friends to garner referrals for photography software. The key is to think about how you can fuel interactions between your customers and their social networks that puts your products in the spotlight while making the customer look good. For companies with larger databases or with products of high value, these types of programs can be very successful. In some cases, these programs can yield the lowest CPA when compared to other media channels.

As an example, consider a company that sells a product for $150 and executes a four-month referral trial. If there is a customer database of 250,000 and three percent refer an average of two customers over four months, that’s $2.25M in sales. If the pilot costs $100,000 to $150,000, the ROI is 15 to one.

Converting Social Interactions
Not long ago, direct response marketing was very direct. You ran ads and counted calls. Now media, especially DRTV, drives both direct orders and research. There are a significant number of responders who prefer to first confirm your claims by consulting their peers.

Peer reviews often rank very high in search because so many people rely on them for purchase decisions. If someone is considering a product, it’s pretty easy to locate reviews written by other customers to get the unvarnished truth about products and services. Unfortunately, when a customer has a bad experience, one of the easiest ways for them to vent is in peer reviews. You may then have a disproportionate number of negative reviews from a small group of customers. All of this has an effect on conversion. If your media sparks research and your customers are bumping into negative content, then they may not buy.

The first step to improve conversion is to perform a social media audit of the conversation and content about your product. By parsing peer-review data, you can gain an understanding about what issues you may have with your product or customer service. You can also use this data to help improve your overall rankings.

If you want to improve review ratings, then turn to those same customers we talked about above–the social advocates who are in your database. If you proactively invite customers to write reviews on your behalf (without telling them what to write), you will generally get positive reviews. The overall effect will depend on the volume of existing reviews, but sometimes products with only a few reviews have one or two really negative reviews that drag the scoring down.

Austin’s Park, a family entertainment park in Austin, Texas, had a handful of reviews on various local review sites like Yelp. Some were old and negative. The park then printed a message on the back of all park receipts that asked customers to write reviews about their experience on various review sites. When they brought a printed review back, they got a free pass to the park. The effort garnered 15 to 20 new reviews that were very positive. It was a simple effort that dramatically changed the online chatter about the park.

Measuring the exact impact on conversion from these types of tactics can be difficult. But if you believe that online reviews and online conversation are affecting purchase behavior, then these efforts are well worth it. Investment in managing the effect of online conversation tends to be small when compared to your overall media spend.

Chris Peterson is president and managing partner of R2C Group, one of the nation’s largest direct response agencies, headquartered in Portland, Ore. He can be reached at cpeterson@r2cgroup.com.

September 2009 – Channel Crossing: Online

Testing and Structuring DR Offers

By Bob Greenstone

It will come as no shock to you to learn that the Internet is changing the direct response business. But how it’s changing the business may surprise you. Everyone knows that more and more DR sales are closed online instead of by phone. You may also know that properly managed search marketing can deliver enough incremental sales to turn an otherwise marginal direct response campaign into a hit.

But what you may not know is that the Internet is revolutionizing the way savvy marketers structure and test offers–helping them reduce uncertainty and have confidence that they are launching campaigns with the right offer the first time.

Consider the old way of testing offers (which many marketers still use). You create a commercial. You cut two or three different offers–all at once if you have foresight. If not, each re-edit costs more money and uses up more of your precious resources. But that isn’t the worst of it: The real dollars are spent putting media behind the offer in order to gather enough data to see if you’ve outperformed your control. With media costs on the rise, this is a wasteful and frustrating process.

ONLINE BRINGS ADDED SAVINGS
Well, the Internet has changed all of that. I know because I’ve tested more than 200 offer combinations in the last year using an Internet-based methodology my company pioneered called “Predict-A-Hit.” While the name implies the methodology can tell you what’s going to work on DRTV (it can), a second important thing it can tell you is what offer to test in the first place. Without giving away any patented or proprietary information, here’s how it works:

A DRTV marketer selects and sources a product, writes a script and comes up with a few potential offers. That information is then used to create a Flash-based website that looks just like the product site of a DRTV campaign. (This is a real site that takes real orders–there’s just no video or TV media yet.) Next, the site is replicated two or three times, each featuring a different offer. Finally, an e-mail blast is distributed to a portion of our in-house list comprised of consumers who’ve bought DRTV products online in the past, splitting the test between the different offers and measuring the response for each.

Even marketers who are skeptical about Predict-A-Hit’s ability to, well, predict a hit, have seen the light when it comes to this aspect of the methodology. And while we like to say this method can save marketers $50,000 to $100,000 (the estimated cost of creating and testing a campaign), smart marketers have also realized it can save them a more modest $25,000 or so every time they use it to test an offer (that’s my estimated cost of editing and testing media).

From my vantage point, I have been a keen and interested observer of the state of the art in DRTV offers–what works and what doesn’t work. Here are four important things I’ve learned.

1 Product is king. Nothing earth-shattering here, but many marketers have forgotten this. In fact, the product is something like 60 percent of the potential success of any campaign. It’s tempting to believe that offer changes can turn a frog into a prince. But if the product is not grabbing a consumer, you can soup up the offer as much as you want–even give it away for free. People still won’t respond. It’s not just the functional product itself, but the specific styling, packaging and name that also matter. We’ve all heard of products that tested and failed with one experienced marketer only to be picked up, re-named and re-styled by another marketer and successfully brought to market.

In our testing, we have seen this to be true of a product’s name. One of the great things about online testing is the ability to do randomized, simultaneous testing of variables like names. A homogeneous e-mail list can be split and mailed at a single point in time with two identical offers, but two different names. We have seen differences of as much as 100 percent in response using relevant, licensed brand names vs. a generic product name.

2 The offer is queen. The idea is that the offer is a close second in importance to the product. By “offer” I mean the price and the bonus, but each variable is worth testing independently. If the product accounts for as much as 60 percent of success, the offer will account for as much as 30 percent, in large part because it will strongly influence the amount of total revenue you will be able to generate.

At a minimum, a marketer should consider testing multiple price points and a BOGO (buy one, get one) offer, if at all applicable. Sometimes the results we see are surprising. As a general rule, lower price points are working better than higher ones because of the economy. But every now and then, a higher price (say $29.99) works. Online testing allows marketers to discover this quickly and cheaply and, more important, avoid leaving a lot of money on the table.

On the other hand, I’ve seen $10 offers double results. The only way to know which way to go is to test. So what do you do if you know you could get better response from a $10 offer, but you can’t figure out how to make the backend work because the starting price is so low? Do a BOGO. The double shipping and handling delivers the same or more revenue than a straight offer at $14.99 and you get the benefit of increased response from the perceived enhanced value.

Of course, many times a BOGO offer doesn’t make sense and you’re better off with a straightforward bonus item. Here again, though, I’ve observed a shift from totally free bonuses to bonuses that are free in price, but with an extra charge for additional shipping and handling. That extra bit of revenue can make a big difference to a campaign and, in many cases, has a minimal impact on response.

3 Deluxe offers are critical. Whether you sell a single unit or use a BOGO offer, you can bring your project to the next level of success by implementing a deluxe offer. Such offers are the number-one driver of backend revenue after the main offer. Yet, I constantly see backend programs that fail to include this simple option. Maybe it’s because people think a deluxe offer has to be complicated. But “deluxe” is a loose term that can describe any number of improvements to the main offer. Some examples include: a larger version of the product, a version constructed from better materials, a package that also includes accessories (batteries, AC adapter, carrying case) and so on.

4 Creative is important. Effective creative is an important factor in a campaign’s success, based on what I’ve observed. It’s just not a miracle worker. You’ve got your product and your offer. Now you need to communicate it cost-effectively to the marketplace. First and foremost, the benefit of greatest value–your unique selling proposition–needs to be crystal clear. Shout it, underline it and repeat it. There are many competent production professionals who can help you get this right. In my tests, such creative elements can account for as much as 20 percent of your success formula.

To experienced DRTV marketers who have enjoyed even greater success, none of the above will be new. These principles have been true since the beginning of DRTV–give or take a few percentage points. What is new is how rapidly and cost-effectively we can sort out the details, running the required experiments and identifying the big opportunities using only the Internet. If you’re still doing it the old-fashioned way, you are at a serious competitive disadvantage and may end up being the next marketer who fails with an item only to see someone else pick it up and make it a big success.

Bob Greenstone is CEO of Permission Interactive Inc. in San Diego, Calif. He can be reached at (619) 858-1333, or via e-mail at bob@permissioninteractive.com.

September 2009 – Column: Industry Insight

The Time is Now for Social Media

By Chris Rosica

Are you wary of social media? Put your mind at ease. Social media is nothing more than a modern version of word-of-mouth marketing–and a tool to protect your image and reputation online. So, whether you feel ready or not, the time has come to embrace what the digital world has to offer. Once you understand the two primary benefits of social media, you might be surprised to discover how your products, services, brands, company and CEO can benefit from this powerful medium.

Managing a CEO’s, Company’s or Brand’s Image
The major search engine algorithms rank social media as highly relevant and important. It’s no wonder that when you put my name–Chris Rosica–into a Google search, you’ll find LinkedIn and Facebook (two social networking sites), a blog I write for ERA (blogs are another form of social media) and my Twitter account (Twitter is a micro or mini blog–again, social media) near the top of the results. This shows how social media can be used to bolster your Search Engine Optimization (SEO) efforts and manage what is being said about a CEO, brand or company.

We often create individual profiles that are professional and credible for executives and company principals. This can help manage online content regarding his/her name and ensure that the right image is portrayed. Similarly, company and brand profiles and Facebook Fan Pages can be employed to manage the online conversation regarding the corporate entity.

You’ll Sell More Product
There is no disputing that Search Engine Optimization is one of the most underutilized tools in the direct response space. It’s curious, considering that SEO–aided by social media–can not only protect reputations, but also get product information atop the search engines without paying for key words (e.g., Google Ad Words). This can be for phrases that relate to brands, company searches and for those that are general product descriptions, such as “ab workouts.” This visibility from SEO can measurably convert visitors into orders or sales.

Consider social media as a means to protect your online reputation and support your SEO efforts. The evidence is clear. Google places too much emphasis on these outlets to ignore this powerful channel.

Chris Rosica is author of “The Authentic Brand” (www.TheAuthenticBrand.com) and CEO of Paramus-NJ based Rosica Public Relations (www.Rosica.com), which specializes in online and traditional public relations and marketing, including online reputation management. He works extensively in the direct response, consumer products, beauty and lifestyle categories. Rosica is also a featured Inc. Magazine blogger. He can be reached at Chris@Rosica.com.

September 2009 – Feature: A Hyper-Efficient Market

Transitioning from click-fraud detection to traffic-quality assessment

By Richard Sim

Online advertising–a medium where a tremendous amount of data is readily available and performance can often be measured down to the penny for a given ad–is on the verge of a revolutionary shift. Ad buying and selling is rapidly evolving toward a “hyper-efficient” marketplace driven by near-perfect information and real-time transactions.

Buyers and sellers are increasingly leveraging technology to make informed decisions to meet their particular performance requirements. Meanwhile, data storage costs are going down, database technologies and analytical tools are becoming more powerful, processing speeds are getting faster and online ad spending is growing year over year. These trends are creating a “perfect storm” for online advertising and revolutionizing the way the industry buys and sells inventory.

Armed with high-powered, data-driven systems, cutting-edge machine-learning techniques and predictive-modeling methodologies, a new class of ad sellers, marketers and solutions providers is rapidly emerging to capitalize on this new opportunity. Much like the emergence of hedge funds and the automated trading desks of Wall Street in the 1990s, the online advertising industry is experiencing a dramatic transition in which access to data and the tools to leverage that data are separating the sophisticated, efficient clearing houses from the outdated, speculative arbitragers.

One of the key enablers of the development of a truly efficient ad marketplace is the increasing use of analytics to predict user intent. Predicting user intent has historically been a core component of measuring traffic quality for the purpose of eliminating invalid or fraudulent traffic, but the focus is rapidly shifting toward optimizing the positive end of the quality spectrum to drive better ad performance.

In the Beginning, There was Click Fraud
Click fraud can be defined as the act of producing clicks or impressions that have no economic value to the advertiser due to malicious intent on the part of the clicker. A click can be fraudulent when the clicker has no intention of converting, giving the advertiser no chance to reap a return on the investment in that click. Click fraud clearly reduces marketers’ ROI, as ad spend is funneled to malicious perpetrators in lieu of facilitating the acquisition of legitimate customers.

To date, ad sellers have addressed the issue of click fraud with varying degrees of success. Each of the major search engines–including Google, Yahoo, Microsoft and Ask.com–has settled or has pending litigation on click-fraud-related cases brought by advertisers. Almost all ad sellers have an in-house filtering system to rid their network of fraudulent click activity. However, the amount of time, energy and resources required to keep up with the dynamic nature of online threats is an increasing burden, especially as it forces trade-offs between growing the business versus investing in cost centers.

In recent months, click fraud has re-emerged as a top concern for consumers and marketers alike. Facebook is facing widespread advertiser complaints about undeterred click fraud in its network. Microsoft recently filed a $750,000 lawsuit against a family of three for committing competitive click fraud. The FTC, in an unprecedented move, recently shut down the operations of the Pricewert/3FN ISP, known as a safe harbor for extremely malicious entities involved in online crimes such as child pornography, click fraud and spam. It’s clear that click fraud remains a serious threat to online advertising. And as ad dollars continue to shift from traditional media to online, this threat will only loom larger.

Why is click fraud such a difficult challenge for the industry to address? There are several reasons. First, click fraud, like any online threat, is highly adaptive in nature. While fraudsters commonly take the path of least resistance when targeting vulnerable networks, they do adapt as needed when options run dry. Customers have reported blacklisting IPs and user agents leveraged for malicious attacks only to find that new ones pop up within minutes.

Second, the black hat community is highly networked and collaborative, and readily shares data about vulnerabilities and successful fraud strategies. Evidence of successful fraud campaigns (such as checks received from ad networks) are commonly touted in black hat forums and websites, along with detailed reports on how these campaigns were executed. This level of collaboration and information sharing is yet to be replicated on the security and defense side. Finally, click-fraud detection is simply very difficult to accomplish. Click-fraud detection fundamentally boils down to answering the question, “What is the intent of the person who is clicking on this ad?” Clearly this is not an easy question to answer, and the answer is difficult to validate.

These challenges have created a market opportunity for companies (like mine, Anchor Intelligence) to emerge and provide enhanced protection and security for ad buyers and sellers. Anchor Intelligence’s flagship product, ClearMark for Traffic, is a click fraud detection system, which, at its core, has a sophisticated machine-learning and rules-based system designed to predict user intent. ClearMark enables search engines, networks and publishers to protect advertisers from fraudulent click activity by identifying invalid ad clicks in real time. Customers are empowered to reduce these threats by withholding payouts to the fraud’s perpetrators and evicting fraudulent publishers from their networks while preventing advertisers’ budgets from ever being negatively impacted.

The Next Generation: Traffic Quality and Predictive Analytics
As data and analytics have grown in sophistication and scale, cutting-edge marketers have realized that addressing click fraud is only the first step toward optimizing ad spend. Marketers have recognized that applying the same data and analytics toward identifying, understanding and capitalizing on the entire spectrum of traffic quality is the most lucrative opportunity available to their organizations. As a result, Anchor has recently been encouraged by our customers to leverage the predictive analytics of ClearMark to assess the entire spectrum of traffic quality, including high-value clicks.

Traffic quality is a measure of the value of a click or impression along a continuous spectrum from good (likely to convert) and bad (invalid and/or fraudulent). Traffic quality depends on a combination of interdependent factors including user characteristics, the context in which a user is interacting with an ad, the ad creative and, of course, timing. The more information that is available about each of these factors, the better the optimization potential.

Companies like ours with the ability to detect whether a user who is clicking on an ad has malicious intent can also apply this technology to predict whether the intent of a user is authentic and furthermore, if that authentic intent is relevant for the advertiser. As customers have recognized the game-changing opportunity present in applying technology to assess and optimize the entire spectrum of traffic quality, companies have begun to enhance their intent-prediction capabilities to change the way online advertising is bought and sold.

In the not-too-distant future, an advertiser will be able to make ad-purchasing decisions based on the predicted value of a given click or impression to that advertiser, as opposed to how it’s done currently–based on general prices set by disparate marketplaces. Many of today’s standard targeting frameworks are founded on the assumption that applying known characteristics about populations of users enables advertisers to improve the performance of these ads over untargeted ads. These frameworks have been successful not only because they improve ad performance, but also because they make sense. It would be hard to find anyone who would argue against the notion that males between the ages of 35 and 45 who make over $100,000 per year are more likely to buy a luxury car than the average user.

However, those obvious dimensions are unlikely to have sole predictive value when measuring expected performance. Going forward, we believe that advertisers will also be able to target inventory based on “value tiers” (groups of traffic dynamically identified based on their propensity to convert), rather than limiting themselves to standard targeting frameworks like demographic, geographic and behavioral targeting. These value tiers will incorporate standard targeting parameters in addition to a limitless number of other dimensions that have a direct impact on a particular ad event’s propensity to lead to conversion for a given advertiser. And the more access to data and analysis about both obvious and non-obvious dimensions an ad server has, the greater the expected lift it can generate.

While this concept may sound somewhat audacious, Anchor Intelligence and its customers have already begun to partner together to seize the opportunity of traffic quality assessment and targeting–improving the performance of ad inventory by leveraging intelligence about traffic quality.

For ad sellers, this has not only helped eliminate poor quality traffic from their networks, but also enabled them to capitalize on their highest quality traffic sources. Leveraging data and analysis about various dimensions such as IPs, user agents, ad placements, behavioral profiles and websites, the performance of advertising on ad networks and search engines can be improved by scoring ad events on a continuous spectrum of traffic quality. In fact, by leveraging data typically unavailable to traditional ad buyers and sellers, Anchor Intelligence has enabled search engines to enhance ad-matching decisions to improve quality scores from advertising partners and ultimately improve advertiser ROI.

Characteristics such as the ratio of the ad footprint to the content footprint on a referrer site, the types of browser plug-ins installed on a user’s machine and the ISP that provides a user’s Internet access are all data points that impact the likelihood that a given ad event for a individual advertiser will lead to a conversion, but are essentially ignored by standard targeting methods.

Not only can ad sellers leverage traffic quality intelligence, ad buyers can improve performance by supplementing standard targeting dimensions with non-obvious metrics that also impact conversion probability. As most advertisers and ad servers know, historical conversion is one of the most reliable indicators of expected performance. However, conversion data is not always readily available for marketers to leverage. We have worked with some of the largest online advertisers to optimize their bidding strategy for head, belly and long-tail keywords by building out conversion probabilities even in cases when historical conversion data does not exist.

By leveraging a machine-learning algorithm using our extensive reputation database, proprietary network intelligence and traffic-based observations to score each inbound ad click and optimize keyword bids, the performance of advertisers’ ad spend can be improved five to 10 percent in a matter of weeks.

Our company and others have just scratched the surface of leveraging predictive analytics to assess traffic quality for ad buyers and sellers, but early results are extremely promising. As search marketers around the country scrutinize advertising expenditures and opt out of low-performing and stale campaigns in an effort to maximize ROI, ad sellers and buyers can now capitalize on the traffic quality of each ad to ensure that every click or impression results in positive value for the business.

The days of media buying through personal relationships and handshakes over expensive rounds of golf are quickly disappearing. The market as a whole is embracing a shift toward a hyper-efficient marketplace. A new crop of data providers, audience-measurement companies, yield optimizers and ad exchanges have introduced new capabilities to facilitate information exchange and real-time decisioning.

Companies like BlueKai, Acxiom and Experian are offering access to their unique datasets to optimize targeting. Other audience-measurement companies like Quantcast, Compete and AudienceScience are providing detailed profiles of audience types to facilitate enhanced targeting. Yield optimizers like Pubmatic and Rubicon Project are introducing real-time decision-making capabilities at the time of an ad event to optimize publisher payouts. And finally, ad exchanges like ContextWeb and AppNexus are creating open platforms to facilitate data sharing and more efficient marketplaces.

Each of these camps promises to introduce efficiencies to the existing ad buying and selling process. Anchor Intelligence intends to leverage its technology platform, data footprint and its proprietary analytics to predict user intent and capitalize on the emergence of a hyper-efficient marketplace. For search marketers seeking to optimize their online spend in the wake of an apparent resurgence of fraudulent attacks on their ad dollars, a holistic understanding of traffic quality will enable them to not only survive these challenging conditions, but in fact thrive while their counterparts lag behind.

Richard Sim is vice president of product and marketing at Anchor Intelligence, a traffic-quality solutions provider utilized by ad networks, search engines and advertisers. Sim holds an MBA from the Wharton School of Business as well as a BA in Political Economy from U.C. Berkeley. He can be reached at richard.sim@anchorintelligence.com.