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Groupon - Group Buying Comes of Age?

2010-04-19T18:00:00.000-07:00

I was reading Kara Swisher's BoomTown article today about how Groupon now has a valuation of over $1 billion and just raised $135 million in their most recent fund raising round from Digital Sky Technologies and Battery Ventures. I couldn't help thinking back to the roaring late 90's and some of the group shopping sites that predated Groupon. What did principals from companies like MobShop and Paul Allen's Mercata think of the obscene valuation Groupon has generated in 2010?

Luckily, I didn't need to go far to find out. Jim Rose, the founder and CEO of MobShop, is a former colleague, and knows a thing or two about trying to make a go of it in the group buying space. But, I didn't even have to send Jim an email to solicit his thoughts as Connie Loizos of peHUB had already beaten me to the punch. As I expected, Jim feels that Groupon is definitely overvalued and he pointed to two primary areas of contention he has with the Groupon model.

The Recession Economy
Jim rightly points out that Groupon's tremendous growth and extremely willing participation by its advertisers is likely significantly influenced by our recession economy. Profits have taken a back seat to simply keeping the doors open, and advertisers have fed very price conscious consumers a steady stream of unsustainable deals. Would Groupon grown like it has if we were still in the go-go era of 2005, when your crazy uncle's trailer property down by the river was worth $250k?

Supply and Demand
What will happen to all the deals Groupon advertisers are offering if we start seeing sustained growth in the economy and significantly stronger jobs data. If I am a plumber in Denver, flush with work, am I still going to be willing to offer a $10 service call offer that is 1/5th of what I would typically charge? Can Groupon continue to source a supply of significant discounts in a healthy, growing economy?

Differentiation
Jim has some valid points, and they certainly would make me pause if I was considering an investment in Groupon. However, Groupon has several and significant differences in its business model from its Dot Com era predecessors. While I have no doubt that MobShop and Mercata would have fared much better in today's established ecommerce environment, as sites like BackCountry.com's SteepandCheap.com have shown, there are still fundamental issues that would put it at a disadvantage to Groupon.

Get Local
The real difference maker with Groupon is that it is local. Local works, we know this and one has to look no further than Craigslist for validation. Sure, I might have considered buying a new Honda Civic via MobShop (they actually tested this) today if I thought it would save me money, but there is something simply inherently more appealing in seeing deals from stores and services I frequent on daily basis. This is especially true if they are really big deals.

The local aspect also gives you much greater supply. While you might not be able to entice Sony to blow out Vaio laptops on Groupon, you can certainly attract a lot of local service providers and vendors when you show them some hard data on how many customer they can acquire. A small local gym here in Seattle was recently featured on Groupon where they offered a blowout deal on a 30 day pass. A friend who is a trainer there told me they had over 1400 sales. This is not Bally's, this is a 6k square foot yoga and personal training gym. I have no idea how this will fare, but it shows you what can be done with Groupon and a local offer.

Well Socialized
MobShop didn't have Facebook and Twitter. Not even MySpace, remember them? Groupon has Facebook, Twitter and for us old folks, an email link. So, let us look at that gym example. I see the smoking gym deal and want some company as I sweat our the demons doing some hot yoga. I instantly post it on my Facebook account and Tweet it to my followers right from Groupon. Folks that I might barely know might be sweating next to me in hot yoga next week.

Local and social are a powerful combination. Is it a $1 billion + combination? That remains to be seen. Groupon is profitable though, which gives it at a significant leg up on just about every other web start up, in 2000 or 2010 for that matter.
Can local and social keep the advertisers active and offering killer deals to the Groupon masses, even if the economy improves?

Honda Product Planners, Meet Social Media...

2009-09-03T17:14:00.001-07:00

Car launches on Facebook. A no brainer right? Lots of exposure on the Internet, warm fuzzies clogging the Honda corporate Facebook page. Thousands of new FB friends forming a line to buy the latest out of Japan.

Honda apparently thought so, and tried to develop a lot of hoopla over the launch of their new 'cross-over' version of the venerable Accord sedan, the Crosstour. But, apparently the Crosstour is not living up to the designers aspirations and the feedback they received from their focus groups.

You see, unlike that full pager in AutoWeek, that 30 second spot during tonight's college football season kick-off, or even that search ad for the term "cross-over," social media is a two way medium. And sometimes, as more and more marketers are finding out, you aren't going to like what you hear. As this AutoBlog post demonstrates, Facebook can quickly become a PR nightmare.

First, the page has been inundated with negative comments about the styling of Honda's new pride and joy. This would have been bad enough, especially after Honda touted the FB launch for the car. Unfortunately, it also appears whomever is managing this page for Honda hasn't read social media marketing 101, and is dutifully engaging those with the negative comments with replies trying to defend the honor of the Crosstour, drawing further attention to an already unsavory situation.

But then, someone went and committed the ultimate sin of social media marketing. A Mr. Eddie Okubo chimes in with some niceties about the new Crosstour and how he would "...get this car in a heartbeat." Finally, some good feedback you might think. But apparently the looks of the new Crosstour are so offensive, one of the visitors found this comment to be a little fishy and perhaps...gasp, corporate! Sure enough, a Mr. Akitomo Sugawara thought so and did a little digging. Sure enough, in the second reply to Mr. Okubo comment (the first one also stated it sounded like he worked for Honda), Mr. Sugawara outed Mr. Okubo as a manager of product planning for Honda's light trucks division. He even posted a link to Mr. Okubo's Linkedin profile confirming the nice detective work.

So, what are the lessons from Honda's social media experiment? If you are launching a potentially controversial product with FB, you better think twice about the type of publicity you might actually receive. Are you prepared to highlight the positive responses you receive and ignore and/or spin the negative ones to your advantage?

The second lesson is never, never ever, think you will fool the Internet ladies and gentleman. Nobody likes to be played or to have the wool pulled over their eyes. And boy do they really hate it when corporate America tries to do this. It is quite simply the fastest and most effective way to destroy your social media program and your marketing credibility in general.

For Honda, perhaps next time they use social media higher upstream in the product life cycle. Maybe inviting select FB friends to preview upcoming Honda design elements via a collaborative online focus group?

What Is Old Is New Again

2009-07-27T17:01:00.001-07:00

Chitika is making news today around the tech world by reporting their June study which shows Microsoft's Bing is realizing a 55% higher CTR for their paid search ads vs. Google (and 21% higher than Yahoo).

While this is definitely something to note and keep tabs on, it is amazing to see the media pick this up and run with it. Perhaps it is the Microsoft PR machine flexing it's might or just tech reporting that is more PR re-crafting than actual reporting. Where has the critical thought gone? Another topic to cover at a later date.

So, here is what we find at issue with this report:

1. We have no historical reference data to see any delta here between Bing and any previous iteration of the Micrsoft search engine

2. The sample time period encompasses a major brand relaunch with lots of advertising dollars and lots of new folks checking out Bing for the first time, hardly a strong control test

3. That a Microsoft search engine has a higher CTR on paid placements than Yahoo and Google is very old news

Point #3 above is the one we want to dwell on. We remember research going back at least as early as 2004 that basically echos the numbers that came out today in the Chitika report. MSN had the highest rate of clicks on paid ads, Yahoo was in the middle and Google was far 'behind' its rivals.

A lot of this comes down to gender, demographics, psychographics and the general user behavior style of a particular search engine. The other component is of course how the paid ads are displayed relative to the organic listings.

Look at this report on search engine user behavior developed by Harris Interactive in 2005.

"More than 50 percent of men said they know the difference between the two forms of search while about one-third of women said they can tell. Fifty-seven percent of men said they prefer natural listings while 32 percent of women said they don't prefer one over the other."

And here is a late 2007 article quoting a Hitwise study.

"A recent study carried out by Hitwise showed that 55% of Google users are male, whereas 58% of MSN users were female. Did you know that paid search listings are most likely to be clicked on my females and organic ads are most likely by males."

And a data chart from that article.

Women
Click on Organic Ads: 56.9%
Clicked on Paid Ads: 43.1%

Men
Click on Organic Ads: 65.4%
Clicked on Paid Ads: 34.6%

So, it is obvious that a higher paid search ad CTR has been a long running mark of the Microsoft search engines. The only news today seems to be that Bing hasn't changed anything.

And the big question is what does this mean, if anything, to a search marketer? Does MSN require a radically different approach as the CTR delta reported might suggest? Or, do search marketers just need to alter and or optimize their programs toward taking advantage of the higher female market share it provides? We think it is the latter.

Google Still Wins with an 0-3-1 Record

2009-06-29T16:25:00.000-07:00

So, what does Microsoft have to do with Bing to get people to make the switch away from their Google habit? Give them money? Oh wait, they have already tried that.

Catalyst Group of New York just did a small (sample size) but very in-depth study of Bing v. Google as reported in this article on TechCrunch, the results are pretty interesting.

The 12 person study group rated Bing higher than Google in three of the four categories, and basically tied Google in the fourth. Relevance of results was that fourth category, and perhaps this is why why Google isn't sweating a study like this even though Bing dominated in visual design, organization and filter features.

Why? Because Google knows that you need to beat them in every category in order to really put the hurt on them. And you probably need to do it convincingly. So, even though Bing put up a 3-1-1 record, they still lost this series in the eyes of the panel group.

Relevance is incredibly important, and probably the biggest reason why anyone would consider switching search engines in the first place. Google didn't invent the search engine, they simply made relevance so much better than their competitors that people had to check it out. Once they used Google, they started to fall in love with simple user interface, the easy ability to filter and organize results, the whole package.

Bing has 3/4 of the package. Not enough to entice folks to go through the hassle of removing that Google toolbar that has occupied their browser for the last four years and then find and install a Bing toolbar. Not enough to get people to start saying "Google is your friend" on Internet forums. Not enough to kep Bing on the lips of millions of consumers around the world once the launch marketing budget runs out.

But this wasn't the most interesting piece of the study to us. The TechCrunch article as well as a number of other outlets that reported on this missed one telling bit of visual info that could prove a thorn in Bing's financial side.

If you look at the heat maps below from the Catalyst study, take a look at where the primary focus was on the Google map vs. the Bing map.

Lots of eyes on the top 1-3 paid search listings on Google, but for Bing the eyes are drawn to the organic results. We had noted what seemed to be a dip in CTR and overall traffic for our Adcenter clients since Bing was launched, but we were willing to accept that this might only be because of the number of new people testing the service instead of doing their daily search chores so to speak.

Now, after seeing these results, we aren't so convinced. Google is really good at making money from Adwords, and they know how to feature a high bid ad in order to get the highest CTR. Simple enough to copy for Microsoft with Bing. But, did they not get this memo, or is it a strategic decision made to sacrifice short-term Adcenter profitability to garner greater market share?

Our clients aren't to upset at this point, because they have seen a lift in organic results from Bing so far. And conversions resulting from free traffic are an ROI pleaser to say the least. But, what will this mean to Adcenter if it is a substantial impact? Is this an actual strategy or just indicative of the new Bing UI?

We will be watching this one to find out.

The Alternative to Increasing Affiliate Commissions

2009-05-07T11:17:00.000-07:00

Affiliates, from CJ to Linkshare and beyond all seemingly have one desire in common, increased payouts. And like coddling spoiled offspring, all too often advertisers are more than willing to give it to them.

How do you break this cycle as an advertiser and how do you keep core affiliates happy without increasing their commission rates?

Why is it important for an advertiser to say no to increased pay-outs? Simply put efficiency, because in the end, customer experience will make or break you as an advertiser. Affiliates are acquisition channels, pure and simple. They serve as a vessel by which a new customer is introduced to your brand or they reinforce what said consumer has already experienced.

Joe Consumer won't notice that you gave an affiliate a 2% commission increase. But he will certainly notice if he sees an attractive, timely offer, in a contextual setting that directs him to an optimized landing page.

Increased pay-outs are good for affiliates. Improving your program efficiency by optimizing offers, creative, and landing pages is good for affiliates, advertisers and the end consumer.

For a good volume affiliate, the type you would give a commission increase to in the first place, a nice bump in CTR and conversion rates is going to have a greater impact to their bottom line than a small commission increase. Let’s look at a hypothetical example and do some math.

The Scenario: Your average order size is $100 and your payout is 20%. Affiliate A generates 10,000 impressions, 1000 clicks (10% CTR), and 100 orders (10% conv. rate) per month for you, earning $2000 per month in commissions.

If you increased the payout for Affiliate A to 22%, they would then be earning $2200 per month. Your CPA for that particular affiliate would rise from $20 to $22.

If you optimized Affiliate A's creative and offers, and provided them a targeted landing page, you increase their CTR to 12% (1200 clicks) and conversion rate to 12% (144 orders). Their monthly commissions at the standard commission rate of 20% would then be $2880. Your CPA remains $20.

Sure, it takes quite a bit more work to go the later route and optimize your program efficiency, but in the end all parties end up winning. Your affiliates are happy because they are better able to monetize their site traffic and marketing efforts. Advertisers are happy because they are able to maintain margins and keep CPA in check. And most critically, your customers are happy with the whole experience and have a stronger perception of your brand.

Social Media: Aqusition vs. Product Marketing

2009-01-27T11:04:00.001-08:00

The allure of social media, the irresistible force of marketing nirvana in 2009. Why have you forsaken so many with false promises of targeted customer acquisition, branding power, and revenue generation?

As Zachary Rodgers points out in his aptly named article on Clickz.com from 1/5/2009, Brands Struggled With Social Media in '08, all is not rosy out there for brand and direct marketers mining this channel for gold.

To save the effort of a click, the Cliff Notes are that even though some very powerful brands have dropped very large sums of money into social marketing initiatives, the payback has been underwhelming to say the least.

How many success stories have you experienced advertising with Facebook, MySpace, and YouTube? How about colleagues in the industry? The tests we have run and the stories we hear from others often begin with "lots of impressions" and end with "terrible ROI." For the companies that actually are concerned about things such as ROAS, revenue impact and brand image, there are mounting concerns about the applicability of social media as an acquisition channel.

Is the concept of social media and commercial integration flawed? Perhaps, but we think that too many marketers are looking at social media as an acquisition marketing medium, an opportunity to reach vast and untapped market. Sure, Google would love you to spend money on their ads that pop-up under YouTube videos. Facebook wants badly for you to advertise your contextually relevant product or service on member pages. But, if you have spent any time on either property, you know just how annoying those YouTube ads have become and just how invisible those Facebook ads have always been.

Instead of trying to integrate your brand into established social media properties, we believe the real opportunities (and actual measurable results) lie in integrating social media technologies into your own infrastructure, a product marketing approach. Integrate YouTube based product showcases into your site and show real life customers in action. Create a product review comment section where customers can Tweet about their new purchase as they use it in real-time. Implement the ability for like minded customers to develop a Facebook groups based on your service offerings.

Implementing social media applications into your web experience will strengthen user experience, create greater brand immersion, and ultimately improve your conversion rates and viral penetration.

Google Drops Yahoo Like a Bad Habit

2008-11-05T16:24:00.000-08:00

So, the awkward couple that was Google-Yahoo has succumb to peer pressure (okay, regulatory pressure) and broke up. Well, actually Google broke up with Yahoo, but who cares right? Oh yeah, all those investors who could have sold to Microsoft at $33 a share probably care (Yahoo closed at $13.92 today).

How Mr. Yang and Co. were able to placate some very big time investors with a measly $500 million in forecast revenue from the Google partnership was an amazing sales job to begin with. Now, it has vaporized and Jerry must be thinking he should have stayed retired or at least checked his ego at the door when negotiating with Microsoft.

A mass email from Yahoo EVP Hillary Schneider a few minutes after reading about the break-up this afternoon demonstrated Yahoo’s lack of customer awareness on the subject. Why she or anyone else at Yahoo felt the need to reassure any advertisers after this news got out is perplexing. Most advertisers I had spoken with on the topic were hoping this would be the ultimate outcome. The last thing anyone wanted to see was a less competitive marketplace and a stronger Google.

Back in July of this year, I was treated to a convoluted presentation by a Yahoo SVP about how this partnership was all going to work out strategically and logistically for Yahoo, and what the impact it would have been to advertisers on their search platform. It was quite frustrating as I and others in attendance tried to get basic questions answered, but were either rebuffed in the guise of legal disclosure issues or simply by Yahoo admitting their plans were not yet flushed out.

There were two very clear things that emerged from this meeting however. 1) A lot of Yahoo internal people, both rank and file and executive level had serious questions of their own regarding the Google deal. 2). Yahoo executives either had no clue how they would actually implement the Google program or they knew the plans they had in place would not sit well with core advertisers.

In the end, it all comes down to what really was the core driver behind this partnership to begin with. Was it a jab at Microsoft for not meeting Yahoo ridiculous demands during the purchase negotiations? Perhaps it was a ploy to get them back to the bargaining table? The $500 million in forecasted annual revenue was nothing to sneeze at, but hardly anything that was going to move Yahoo stock price more than a couple of points in the positive direction.

For Google, the benefits were obvious; they got to stick it to two rivals at once and make more money and capture more market share in the process. It would have been a brilliant deal for them. However, once the federal regulators got involved, you could sense that the honchos at the Googleplex didn't feel the incremental revenue share volume was worth harming their brand with advertisers and making the jobs of their D.C. lobbyists more difficult. It was easy for them to pull the plug and tell Yahoo they needed some alone time.

Mr. Ballmer, the bidding is to you at $21 a share...

Chrome Already Losing Its Luster

2008-09-04T07:52:00.000-07:00

So, it has only been a little over a day and half in the life of Google's new browser, and the privacy advocates and Internet hardcore are coming out of the woodwork. Concerns are high and could hit fever pitch very soon over just how much data Google will be tracking from your use of Chrome.

The issue is developing so fast that it is already hitting the mainstream media, already being reported and addressed in local newspapers. So, what is all the concern about? Don't IE and Firefox both track data? The newer versions of Firefox use keyword suggestion similar to the Omnibox feature that Google stated to CNET would send keystroke and IP address info back to the Googleplex. Google also admitted to CNET that they would keep 2% of that data on file to help improve the system. The interesting tidbit is that Omnibox will actually track your keystrokes even if you don't hit enter to engage in a search query.

On the flip side, a little company in Redmond this last week released its own updated beta of IE 8. Contrary to the building steam of fear and anxiety around privacy and Chrome, much of the press about IE 8 has been focused on its easy to implement privacy protection features. InPrivate Blocking and InPrivate Subscription features of IE 8 are already being jokingly referred to as "porn mode" by tech bloggers. By using the InPrivate Blocking mode, you are not storing browsing or search history, cookies, and it even clears your cache for you at the end of the session. Sounds like a perfect testing browser to us.

So, you have to new browser launches (and the latest update to Firefox came out this week as well) on what appears to be divergent paths. Microsoft appears to be winning the positive PR battle so far. The broader question is how will potential security concerns impede Chrome adoption?

Even as a professional internet marketer who relies on much of this type of technology, the sheer amount of data Google is collecting these days is starting to concern me. To date, we have been very open to letting Google into our computing lives with search, desktop search, Google Apps, Maps etc. In Q4 '08 Android based phones will become available, and how far are we from a Linux based Google PC OS?

That is a lot of touch points in a person's life, and the amount of data that can be collected is staggering. Data provides a immense power and is the catalyst engine for creating an extremely lucrative platform of corporate wealth. It seems, in the broader sense that Chrome is just another step in Google's march to face some anti-trust troubles of their own.

The iPhone Impact

2008-07-16T11:36:00.000-07:00

Last September I blogged about the impact of the iPhone on mobile commerce. In that post I focused on the fact that the iPhone browsing interface was so efficient that it could make irrelevant the very young and often over-hyped mobile e-commerce movement. When you can browse so efficiently from a mobile device, why would you need special mobile specific programs?

In a recent MediaPost Search Insider Blog post (free registration required) Matt Greitzer of Avenue A/Razorfish discussed a several months old release from Google claiming that they received 50 times more search requests from the iPhone than any other mobile device. Mr. Greitzer continues to put this in perspective by noting that the iPhone, while extremely popular, is not the dominant player in the market place. Long blog post summarized, the iPhone is so much better than the competitors at browsing that it is resetting expectations and creating a philosophical shift on how people will use mobile devices in the near future.

I witnessed this first hand over the weekend. My wife and I were flying to DC with her business partner for the Cooper-Hewitt design awards luncheon. Severe thunderstorms in and around DC forced us to divert to Pittsburgh as we were low on fuel after circling in a holding pattern for an hour or so. After several hours on the ground, we were released back to the runway to try again. As we taxied out, the pilot came on the intercom again and announced we were yet again on hold. We really needed to be in DC by 10 am the next AM and we were getting panicked.

It was a full flight and we were last minuted additions so we were all sitting separately. I with my Samsung BlackJack, my wife and business partner with their first gen iPhones. My wife and I started texting each other trying to figure out an option if we couldn't get out that night. In the space of a few minutes her business partner had found a rental car and hotel online via her iPhone and had emailed them to us. Even though I run the latest Windows Mobile 6 at 3G speeds (vs. the much slower Edge of the first gen iPhones) that would have taken me at least 10x longer on the BlackJack. The iPhone interface and Safari browser is just that much better. No special mobile sites or tools needed! Luckily, we are in the air a few minutes later, but that iPhone session could have saved us critical time and was incredibly convenient as we sat on the runway.

With the introduction of the latest iPhone 3g last week, I suspect that the lead iPhone has already in this area will only grow wider and wider. Congrats to Apple and a cautionary tale to any start-up reliant on years of highly specific mobile commerce business to come their way.

Microsoft Can't Even Find Straws to Grasp at Using Live Search

2008-05-22T16:58:00.000-07:00

A joke of a headline of course, but it I think it accurately captures the miserable state of things at MSN with the Live Search product. I just got my latest Hitwise monthly newsletter in my inbox a few minutes ago and it highlights just how bad things are going over in Redmond.

Here is the sobering data for Live.com product and marketing execs. Year over year search share for the month of April has slipped from 8.46% in '07 to a shocking 6.26% in '08. A whopping 26% decrease in market share in the past year. Yahoo, Microsoft's on again off again acquisition target? They only slipped 2.2% in the same period. Unsurprisingly Google has swallowed up most of these fleeing percentage points on their way to a nearly 68% market share. However, lowly Ask.com posted strong gains both year over year going from 3.69% in April of '07 to 4.17% in'08.

So, how is Microsoft combating this glaring issue? With gimmicks of course. Live.com is now the search engine that pays you back for your online purchases. In essence, MSN is vying to position itself as the worlds largest incentive based affiliate. Heady times these. You know you are going out on a limb when your home town tech columnist is already lampooning your efforts.

How is it that a company with $50+ billion in cash has to resort to paying people to use its search engine? This is something that a hungry start-up would attempt as a marketing ploy to drive visitors to their new search technology. It has never been more clear why Microsoft so desperately wants to buy Yahoo.

Microsoft and Yahoo: 1 Year and lots of hyper later.

2008-05-19T18:15:00.000-07:00

Today, not only did I realize we have been terrible about posting to our blog lately, but more critically, that this Microsoft and Yahoo acquistion/merger/partnership story is well over a year old.

Ichan haz Microsoft? We can only hope.

The latest rumors flitting about the news sites and blogs are that Microsoft is interested in taking a baby step and acquiring Yahoo's search business. This interesting tidbit comes on the heals of news that Yahoo has been exploring outsourcing of its paid search business to Google.

Obviously, Yahoo outsourcing their search advertising to Google would immediately kill any potential deal with Microsoft. Ballmer needs that search business...bad. So, one has to wonder if this isn't just a Jerry Yang special aimed at bring Microsoft back to the bargaining table with a boosted bid.

It hardly seems to make sense that Yahoo would outsource their search advertising business to Google considering the investments they have made in the Panama platform in recent years. Yahoo's problem isn't the Panama architecture, it is their traffic quality. Put simply, Yahoo needs more higher quality traffic. I just don't see how Yahoo could expect to be in a superior financial situation by outsourcing search advertising to Google. They could obviously save a bundle by laying off the myriad of folks in engineering, sales and support at YSM, but this would be a short-term gain at best.

And now we have Microsoft apparently interested in 'dating' Yahoo by purchasing YSM. Panama is a superior platform to Adcenter in most respects, but it certainly isn't on par with Adwords from either a usability of efficiency standpoint. And what exactly would Microsoft be buying? YSM in its entirety, including running search advertising on Yahoo's web properties? Would they be foolish enough to purchase only the Panama platform leaving Yahoo still able to outsource the search advertising on their properties to Google?

Regardless of all of this speculation, two things are for certain when and if something happens here. 1). There are going to be a lot of lay-offs at MSN and Yahoo. 2). Google will not lose any sleep.

Bitten by the Hand That Feeds You

2007-12-10T19:24:00.000-08:00

When does it become a conflict when an advertising platform provider advertises its own services taking up valuable inventory? When you are one its customers fighting it out with said ad platform for a particular piece of real estate?

The scenario: One of our larger clients has had great success using Google's placement-targeted campaigns with a particular web property. Recently we noticed impressions, CTR and overall conversions dropping significantly from this placement. Upon further investigation, we were getting bumped from that lucrative spot. Normally we would expect a competitor or similar service to be the culprit. Not this time, Google themselves are acing us out with their own Adwords promotion, hence the title of this post.

We have spent the last few weeks trying to recapture the spot with increased bids, switching between the CPM and CPC model, all to no avail. I fear Google has also found a spot it finds lucrative for Adwords sign-ups. Given that Google has some serious cash to throw at acquiring new customers for its primary revenue stream, we are probably out of luck, at least if we want to maintain something resembling an actual return.

Our client's product doesn't compete with Adwords, and oddly Google isn't pushing its most relevant product to the content of this web property. So, how do you beat Google on its own network? Hopefully in a few weeks we will have that answer.

The Alternative Path to Mobile Commerce

2007-09-01T15:50:00.000-07:00

What does it take to change the game in mobile commerce? Most companies have focused on ways to cater to mobile devices, with their inherent hardware and software limitations. Europe and Japan are light years ahead of the US in this area, however their mobile commerce activities are limited in scope and require significant hardware and software infrastructure.

So, what is it going to take for mobile commerce to really take off? After spending an hour with my wife's new iPhone the other night, I now know the answer. Beyond the unflinching cool factor, something struck me almost immediately as I surfed around on our home wi-fi network. With its impressive browsing capabilities, some far superior to desktop browsers, one could easily engage in normal ecommece activities on normal non-mobile web sites.

To test this theory, I timed a mock purchase with the iPhone and my laptop on one of our client's site. Even as a total newbie to the iPhone interface, I was able to complete the transaction in just two and a half minutes longer than my laptop. If I had tried it on my Blackjack, I would still be trying to get my credit card data entered as I write this.

Sure, buying a soda via Bluetooth from a vending machine would be fun and cool. But shopping for some new tires for my car while on the bus home would actually be useful and a time saver. I ask, what is the faster, more efficient way to foster mobile commerce in the United States? Massive infrastructure investments, or making iPhone like appliances the new standard and as ubiquitous as a camera phone?

Broad Match - Ever Broadening

2007-08-08T16:07:00.000-07:00

When does a term become overly 'broad-matched?' People seem to be finding out lately, especially those with large campaigns covering many product categories.

It is getting bad. With ads jumping campaigns, and in some cases jumping completely outside of logical relevance all together. When a customer searches for "nike shoes" and is shown an ad for Birkenstocks, or worse yet, acne cream, you know there is a problem.

We have seen issues with over enthusiastic and just plain awkward broad matching now with our clients in ever increasing regularity. It is a troubling trend and one that still shows that the power of the almighty dollar still appears to win out over quality user experience.

Google, Yahoo and MSN are all guilty, so the finger must be pointed at the industry in general. But the real question is just how prevalent this issue is right now. Our search reps certainly know their is a problem, but no one seems willing to guess or admit to just how much of an issue this is.

All of this begs several questions of just how much of an impact this is having on quality components in ad positioning. Obviously, using our previous example, a Nike query is going to generate poor CTR if shown a Birkenstock ad. We know that CTR is a major component now is determining ad positioning. How much are we paying for inaccurate broad matching? How is it effecting individual bids on the keywords effected?

Kudos to Yahoo

2007-06-06T09:34:00.000-07:00

Matt Cutts made an interesting comment in one of his recent blog posts, regarding the inequity of media coverage that the core search improvements at Google get relative to the whiz-bang new services such as Street View on Google Maps.

In brief summary, his argument (and we agree with him) is that just because the media isn't covering it, doesn't mean that Google isn't working on it. He cited many examples of continuous refinement and innovation on core search products of which most, if not all of us, likely haven't heard of.

So, we want to dole out some kudos to Yahoo for working to improve their YSM product for advertisers. As I was leaving SMX Advanced on Monday evening I checked my email on my mobile only to see email confirmation of a rumor I had heard at the conference just minutes before. Yahoo announced a new quality-based pricing initiative for their search network.

In short, with this initiative, Yahoo will be discounting clicks you receive from search network partners which are deemed less than top quality. We won't go into specifics as you can click the link above for more info, but this is definitely a welcome change and improvement for YSM clients.

We have worked with Yahoo network quality folks before and have had great experiences taking care of issues with our clients. So, this is a further improvement that likely automates much of the work this team used to have to accomplish manually in the past.

So, even though we ripped Yahoo a little in our last post for not being at the same level feature and performance wise as Adwords, improvements like this will go a long way in retaining and attracting advertisers. Nice job Yahoo!

The Microsoft-Yahoo To-Do

2007-05-13T19:47:00.000-07:00

As one might expect, the media world reacted with great frenzy a couple Friday's ago, when out of the blue the imminent purchase of Yahoo by MSN seemed to become a formality virtually overnight.

Yet, by the end of the day, the deal was dead according to many of the same outlets that reported the "intense" talks just hours before. It was amusing to think of all the pundits out there scrambling to write in their blogs and online columns, trying to put their own spin on the merging of these two industry giants. Then, only to find out that before they had finished their first paragraph, their thoughts were alreadyirrelevant and old news. Such is the speed of the information highways these days.

But the real story is this. Microsoft and Yahoo aren't ready for this marriage. Before Microsoft and Yahoo can start a serious relationship, they should really consider some serious introspection and self-help programs for their respective ad programs. Anyone who thinks that either company can compete with Google simply by joining forces has never clicked mouse inside adCenter or the Panama interface.

And isn't that what it really comes down to? How well these two companies can monetize search traffic? Neither can hold a candle to Google's dominance in this sector. How would Microsoft-Yahoo, with a combined market share still some 15 points lower than Google, be expected to compete any better in the foreseeable future?

While Panama and adCenter both offer demographic targeting options and some other potentially promising features Google is lacking, neither platform is as robust as Adwords or as proficient in generating ROAS. Google is simply bigger and better. Until something is done by Microsoft or Yahoo to legitimately challenge the superiority of the Adwords platform, how is some minor market share increase to a less distant #2 player going to shift ad budgets away from Google?

Podcast Advertising, Beyond Niche?

2007-01-10T21:57:00.000-08:00

That is the question that came to mind while doing some recent research. Will the podcast medium every provide large commercial 'branding' opportunites for someone like Proctor and Gamble? If not, is that necessarily a bad thing, or is it really a good thing?

With estimates that podcasts today are reaching a grand total of 3 million active users, and that only 10 million people have actually ever experiemented with this medium, it is not likely that major Madison Avenue clients are clamoring for inventory. There are however 70 million people with iPods, and eMarketer predicts the total podcast audience will be 25 million in 2008. A lot of captive ears, as yet unharnessed.

Podcasts as a viable medium really isn't the question however. The larger challenge is figuring out which companies can benefit from the brief voice overlays and sponsorship spiels that are the primary inventory at this time. If Coca-Cola is launching Diet Coke 2.0 for example, would it even be worth it for them to consider podcast advertising. In other words, is there critical mass enough for a large brand to justify advertising a main stream product in a podcast?

Right now, the answer is likely no. And that is good news for the SMB market, niche products, and the buzz builders. Where P&G fears to tread, there is ample opportunity for savvy marketers with focused and appealing products.

Until Clear Channel starts muscling in on the podcast world, there simply isn't enough critical mass or clearly defined inventory to make it an efficient medium for a mass marketer. There is however a great deal of focused content that is a perfect fit and free of noise for the right product or service.

Social Distortion

2006-10-12T17:16:00.000-07:00

ClickZ ran an article today about the convergence of social media and ecommerce. The firm Compete, which developed the report, even went so far as to attempt to coin a new term "social commerce."

This is likely no shock to anyone who has read the news in the last six months, as there are a lot of attempts currently underway to monetize consumer generated media (CGM). Google's acquisition of YouTube at a not so paltry $1.65 billion shows that there is definite belief this concept has legs. Google wasn't buying YouTube for the traffic and new customers. YouTubers are of the Google generation, and probably don't remember the days when "You got mail" was a buzz phrase and you 'searched' Yahoo by navigating through a myriad of categories. Google was buying a potential revenue goldmine, or at least what they hope will be one.

But to marketers everywhere, the question must be is using someone else's CGM platform and content any different than traditional media advertising, other than an extra layer of targeting? Comments from Compete execs quoted in the aforementioned ClickZ article seem to downplay the role that YouTube and other mass appeal CGM properties will have. We agree with their theory that the best CGM is your CGM.

By hosting the CGM platform and leveraging your own brand, you retain an overall balance of control, while still fostering community and sharing. Corporate blogs and forums are a great example of this. Tesla Motors has a very well read blog about their upcoming Tesla Roadster, a fully electric sports car, based roughly on the Lotus Elise platform. Not only does the Tesla blog have it's own rabid fans, but the blog is often linked to in other forums appealing to everyone from gearheads to environmentalists.

If you have a product of mass appeal to the Gen Y crowd, you can probably see some good results using one of the broad CGM platforms like YouTube and MySpace. But what if you attracted your core customers to your own community, let them post videos wearing your clothing or drinking your energy drink? Then you made it easy to invite their friends to join the action. All of this sudden you have a captive audience of loyal customers, and you have run of the network yourself.

Welcome to Propellant

2006-09-25T14:41:00.000-07:00

Online marketing is a fast changing environment, with new ways to reach customers added seemingly overnight. Our blog will focus on the latest news, trends, strategies, and technologies driving online marketing...but translated and tuned for our clients business.

We look forward to your comments.