Category Archives: DataBase Marketing

Lab Store: AdSense Finally Works!

DataBase Marketing, Lab Store, Web Analytics

I have a very long history with PPC marketing.  When GoTo finally syndicated their ads to Yahoo, I thought, man, this is brilliant, this is what will make web advertising work.  Advertising at the point of demand (the search), with scale because syndication removes the site-centric orientation.  A direct marketer’s dream, let the testing begin!

AdSense, however, has always been a poor performer for the Lab Store (and many other commerce businesses).  AdSense is really a banner ad with lipstick on it, only marginally attached to the point of demand by context, and not by action.

We’ve tested it many times and always with the same result – unbelievable numbers of impressions and no sales.

In the last test cycle, we finally stuck pay dirt.  Behold, AdSense finally delivering value to the Lab Store:

(click to enlarge)

As you can see, we started out with a Cost / Conversion of about $155.  This ain’t going to work, because the net value of the customer generated from “context ads” is only about $65.  We’re literally losing money every time we make a sale.  But this time around, Google finally provided all the tools we needed to optimize this system, namely:

1.  More advanced control over site selection. 

In the earlier stages of this capability, we could not kill some sites without killing others, so it was not as flexible as we needed.  The most I could find out about this issue was it had something to do with the nature of the AdSense distribution agreements.  As of this summer, something had changed and we had finer levels of control.

The first thing we did was to kill any sites in Social Media land (primarily MySpace), which is where you get the first dogleg down in Cost per Conversion.  Then we continued to selectively prune more sites with the same profile as MySpace – tons of impressions, worthless traffic.

2.  Ability to change pricing models.  

Google allowed us to go from impression pricing (CPM) to click pricing (CPC).  Since we now had pruned the site list down to the most relevant, we were able to jam the price we would pay per click way above the equivalent CPM Google was getting from us before this change so we could own the real estate.

Look what happened – the next dogleg down in Cost / Conversion, finally stabilizing between $4 – $5 per new customer. 

This cost we can live with versus the net customer value of $65.

I know some folks may concern themselves with advertising higher up in the “funnel”.  Gee Jim, what about “awareness”?  How do you reach folks that don’t know about you, folks not searching for your products?

The answer is in the chart above.  I can’t afford to generate awareness, it costs too much.  Generating 400,000 impressions on MySpace basically creates awareness among people who are not interested.  I’m sorry, but I simply don’t see any value in that.

That’s what the mass media are for.

We have tons of high-ranking site content that generally addresses the awareness issue, if a person is casually interested enough in our category to do a simple search.  If they are not interested enough to even search, then why would I want to advertise to them?

I only want to advertise to people who are interested in our category.  Pull, not Push, if you know what I mean.  Relationship Marketing.

Just a beautiful business model I tell ya, this advertising at the point of demand.  As long as you only have to pay for the real demand, that is.

Thanks for making the changes, Google.  Some implications for display ads as a result of this test are discussed here.

How are your AdSense ads doing, have you been able to optimize them to profitability?  Or have you abandoned them completely?

The next post in this series is here.

Marketing is the New Finance

DataBase Marketing, Web Analytics

That’s OK, you can spit your tongue out now.

Not my words, but those of Hal Varian, Google’s chief economist. I think what he is saying is Marketing is about to undergo a performance (ROMI) revolution. Here’s the context for the quote, from the WSJ:

“I think marketing is the new finance. In the 1960s and 1970s [we] got interesting data, and a lot of analytic fire power focused on that data; Bob Merton and Fischer Black, the whole team of people that developed modern finance. So we saw huge gains in understanding performance in the finance industry. I think marketing is in the same place: now we’re getting a lot of really good data, we have tools, we have methods, we have smart people working on it. So my view is the quants are going to move from Wall Street to Madison Avenue.”

Varian recently took questions over on the Freakonomics blog that are an?interesting read. On analytics, check this out:

“If you are looking for a career where your services will be in high demand, you should find something where you provide a scarce, complementary service to something that is getting ubiquitous and cheap. So what’s getting ubiquitous and cheap? Data. And what is complementary to data? Analysis.”

Amen, Brother.

Check out the rest of the questions and Varian’s answers on the Freakonomics blog.

Natural Born Clickers

DataBase Marketing, Web Analytics

Did you catch the research piece published a couple weeks ago about the behavior / demos of folks that click on display advertising? You can read the whole thing here, but for the sake of getting to the point:

“6% of the online population account for 50% of all display ad clicks”

“heavy clickers skew towards Internet users between the ages of 25-44 and households with an income under $40,000”

“more likely to visit auctions, gambling, and career services sites”

The incredible conclusion the purveyors of this Research for Press Release come to is this: you should still buy display advertising, just don’t measure the value of it using clicks, because “the branding effect of the ads is what’s really important.”

Wow. So, the first thing I want to know is this: where were these ads running? Because where they run has everything to do with the demos; the sites create the demos, not the ads. Did they run on NetZero, for example? Any other free to almost free access systems? Because if the audience won’t pay for the service, you get the audience quality you deserve.

Another thing that would be really interesting to know is the demos of folks who click on PPC ads  Want to bet more upscale, higher income, older? Again, it’s not “clicking” that is the issue here, it’s how the ads are delivered; the network creates the audience.

If the above data is without network bias, my guess is this: the 6% of people that generate 50% of display ad click are people that are bored because they have no jobs. And those people click on ads because they have nothing better to do. They’re “surfing” the way the web worked pre- decent search engines, when you found out about other sites by clicking on ads. An ad meant there was a site somewhere other than where you were!

Now, most folks that have any kind of intent at all use a search engine.

That brings us here: if the majority of clicks on display ads are generated by people who are jobless and bored, then is there any real Branding effect worth talking about from display ads?

In other words, what if the entire audience for display ads is younger and low income, just because of the stupid, untargeted nature of the format / distribution. Some of this audience clicks a lot, because they’re bored and have nothing else to do.

The desirable audiences are off using a search engine, because they have purpose and intent.

So if you run a gambling or a job site, it makes a lot of sense to do “Branding” with display ads. Likewise, debt-related. LowerMyBills.com comes to mind, the banners with those idiotic dancing women to get your attention. Here kid, click this.

But if you sell Expensive Vodka? Luxury Cars? High End Toys? Electronics? Do the targets for those products even see banner ads unless the site is super-targeted?

What if display ads are only seen / paid attention to by “aimless surfers with no purpose”. Gee, that’s an audience I really want to create a Brand impression for – regardless if they click the damn thing. In other words, what if the Natural Born Clicker (NBC) demo is not just of a segment, but of display as a whole?

Otherwise, why didn’t they give the demos of the non-NBC clicks or exposures? Instead, they compare to “total U.S. online population”. That’s a Research for Press Release slight-of-hand trick. What we need to know are the demos of the “light clickers” and the demos of the “exposed” – people who saw / remember display ads.? Not the entire?online population.

Unless, of course – gasp – these demos are the same as the NBC folks.

Most people are too busy to pay any attention to irrelevant display ads in the first place. They use search and completely ignore the side bars where display ads run on a site.?

Active, lean forward, get it done folks focus on the content.

Kinda makes you wonder…

Your thoughts?