July 2010 – Online Strategies: Online Insights

Social Media and SEM: Friends or Foes?

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

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

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

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

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

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

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

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

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

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

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

July 2010 – Online Strategies: Brand Protection

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

BY FREDERICK FELMAN

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

June 2010 – Online Insights: Retail

Conquering Amazon

Third-party sellers currently account for approximately 30 percent of Amazon’s sales. Having reported growth of 68 percent in the first quarter of 2010, Amazon is definitely a rising star to which smart retailers are hitching their wagons.

With a marketplace like Amazon, there are certain tricks to the trade that can help online retailers get their piece of Amazon’s 95 million-plus active buyers. Read on to find out the five hurdles that online retailers run into when selling on Amazon–and the best way to overcome these obstacles and maximize Amazon sales.

Hurdle 1: Adding New Products to Amazon in Bulk
When retailers add new products to Amazon, they are required to provide a considerable amount of product information, including image, gender, item dimensions and much more. Now, imagine you have 20,000 new products that you need to add at one time–the task becomes daunting to say the least.

Luckily, there are several ways to go. Amazon provides retailers the option to list each product individually using either Amazon’s Seller Central or Amazon Desktop. Both solutions provide a variety of screens and questions to ensure that the retailer provides all the required and recommended information about the product. Retailers must include as much product information as possible within the recommended fields to increase their visibility and indexing.

For retailers with a slew of products to upload, there are category-specific spreadsheets that can be uploaded in a single operation. Also, time-pressed retailers can send their inventory list to a third-party solution provider who will manipulate the data and upload it to Amazon.

Hurdle 2: Understanding Which Products are Live, Which are Not–and Why

After providing your inventory information to Amazon, it is always possible that some products will not list for a variety of reasons, which may be as simple as a mistake in data entry. With large inventories, finding those products, identifying what’s wrong and fixing the error is not easy.

Assuming you used an inventory spreadsheet to upload a large quantity of data to Amazon, any products that cannot be listed will be identified in the processing report in Seller Central. Each product will be listed with an error code and error reason. Retailers can group these errors and then manually work through them. Once the errors are corrected, you will need to re-upload the inventory information and re-check for errors.

Hurdle 3: Matching Products to the “Best” Listing

In many cases, products (typically soft goods) will have multiple product detail pages on Amazon, each with slightly different information. As a retailer, it may seem advantageous to be the only retailer on a page. However, a “better” listing will direct more traffic to that product and thus increase your sales.

The difficult part for retailers is determining which listing is the best listing. To confirm that your products are listing to the product detail pages you want, review the title, image and product attribute data supplied by Amazon’s catalog. Select the product page that best defines your product and the search terms that a shopper would use to find your product.

Hurdle 4: Helping Buyers Find Your Products by Optimizing Search

Amazon’s search system, accessed from any page on Amazon, is the primary method buyers use to locate products. Buyers typically search for words that they think of as related to the product they want to find. The Amazon system will return relevant products based on those words in a page of search results.

Retailers can drive traffic to their product listings with strategic search terms. Each product can be associated with 250 characters of search terms broken down into five lines of 50 characters each. More than five individual search terms can be submitted; each term is separated by a space.

For example, a product titled “Intelligent Air Pressure Leg & Arm Massager” might include search terms such as “therapeutic pressure point,” “massage spa relaxation,” or “back body heating.”

When you are thinking about search terms for your products, there are some key points to remember. First, Amazon already searches the words in some of your product information, so you do not need to repeat the following:

• Title;
• Brand;
• Designer;
• Manufacturer;
• Manufacturer part number; and
• Standard product ID (UPC, EAN, GTIN).

Next, the system does not search within your bullet points and descriptions, so those are often words to consider. Here are a few additional hints:

• Utilize all the search terms you can for every product;
• When entering several words as a search term, put them in the most logical order;
• Do not re-use words in the search term fields;
• Use detailed product names;
• Minimize use of abbreviations;
• Use legitimate alternate spellings and synonyms;
• Do not use misspellings as search terms. Amazon’s search engine compensates for common customer misspellings and also offers corrective suggestions;
• Do not use quotation marks in search terms; and
• Use only relevant search terms.

Hurdle 5: Winning the Buy Box

Location, location, location. The Buy Box increases retailers’ sales exponentially. Being selected to own the Buy Box requires competitive pricing and meeting a variety of conditions.

Factors in winning the Buy Box include: low price (including shipping), consistent availability, high volume, low refund rates, good customer feedback and low returns (A-to-Z claims). When a retailer meets or exceeds all these conditions vis-a-vis their competitors, they are granted the prime real estate. Retailers should pay close attention to product availability and how their prices compare to the competition’s to help improve their Buy Box chances.

Other factors that have been linked to increasing retailers’ Buy Box opportunities include participating in the Fulfillment by Amazon (FBA) program, through which all your inventory is packaged and shipped by Amazon. Because Amazon can control the delivery time, that is factored into the algorithm for choosing Buy Box winners.

ChannelAdvisor’s customers have seen 75 percent growth on Amazon to date. These results are within reach for retailers selling on Amazon, provided they take the appropriate steps and clear the hurdles.

Scot Wingo is CEO of ChannelAdvisor, a leading provider of online channel management solutions and services. He can be reached at media@channeladvisor.com.

May 2010 – Online Insights: Affiliate Marketing

Choosing Your Affiliate Program Structure

Affiliate marketing. It’s an essential ingredient of any online marketing program for a direct response, catalog or e-commerce company. In the early days of the Internet boom, companies like LinkShare and Commission Junction helped hundreds of e-commerce sites launch affiliate programs.

These dedicated affiliate programs often accounted for eight to 10 percent of a site’s sales and were essentially the digital equivalent of a commission-based sales force. They were made up of numerous sites that joined specific advertisers’ affiliate programs and displayed banners and text links that connected them to that advertiser’s e-commerce site. Sales that resulted from the traffic sent to the e-commerce sites generated millions in commissions–based on a percentage of each sale–for the affiliates. These transactions were reported and paid through third-party affiliate tool providers like those mentioned above.

Later, seeing a demand for performance-based marketing, CPA (cost per acquisition) networks began to emerge and often have been described as a type of affiliate marketing. These consist of e-mail marketers and highly trafficked publishers that could generate immediate sales volume when given an offer with a high perceived value. These networks focus on the long-term value of a customer and publishers are typically paid a flat bounty per customer. Many of the offers include free trials, free-with-purchase promotions and other offers designed to stimulate an impulse purchase.

These two broad categories of affiliate marketing are still thriving today and can be used exclusively of each other or jointly. Determining whether either program is right for you can be confusing. To help you with the analysis, I’ve set forth the advantages and disadvantages of each below:

Proprietary Affiliate Programs
These traditional affiliate programs offer a number of significant advantages. There are a wide variety of powerful tools that help you produce, distribute and manage multiple creatives and offers. Similarly, you’re able to manage multiple offers across a broad range of merchandise without undue effort.

Proprietary affiliate programs can, however, come with significant set-up costs and there can be a substantial investment in IT resources in order to implement the program. You’ll have to devote in-house manpower to manage the program or pay fees to a third-party management team. Finally, these sorts of affiliate programs often require a long-term commitment, since the affiliate recruitment process takes some time–you’ll need to be patient as the program develops a critical mass.

CPA Networks
Conversely, performance-based CPA affiliate networks require little in the way of set-up fees and can generate a high volume of sales in a relatively short period of time. No long-term commitment is required and you might find the program to be an excellent customer acquisition driver.

You will have to monitor your affiliates. Some may over-promote offers via e-mail and generate SPAM complaints. You also may find that offers remain in circulation beyond the intended period of time, resulting in customer complaints and a negative impact on your brand. CPA networks are often targeted for fraudulent orders. Finally, to make these programs work, you may find that offers need to be very specific with a high perceived value.

Best Practices
Consider the following established best practices in implementing and managing either type of affiliate program. With proprietary affiliate programs:

• Develop multiple types of creative: Text links, e-mail templates and banners.
• Put significant focus on merchandise data feeds. This type of traffic often yields the best customers. Optimize product description copy for keyword density and consider reducing your SKU count to focus on items that are competitively priced.
• Tier commission rates to reward top affiliates/publishers.
• Hold “virtual affiliate summits” to gather feedback from affiliates and keep them active. The affiliates that remain active are a valuable asset to your company.
• Consider lowering the minimum commission. Many affiliate programs do not issue checks unless at least $50 in commissions are earned. This results in many affiliates not getting payments every month and could cause affiliates to shift to other programs.
• Be consistent in your cookie duration. Most programs allow a cookie to last 30-45 days before it expires.

Regarding performance-based CPA affiliate networks:

• Focus on offers with a great deal of mass appeal.
• Do not get into bounty bidding wars. Ultra-high bounties will actually attract fraud and scam artists who will try to flood your site with invalid orders.
• Avoid having your offers “hosted” on other websites; this results in a loss of control over fraud prevention.
• Be careful when partnering with CPA networks that give incentives to consumers who take offers. This type of network can sometimes yield a poor quality customer with high return rates and low repeat order rates.
• Put strict time limits on your offers and make sure to do a post-campaign analysis of customer quality.
• Make sure to post clear terms and conditions for club and auto-shipment offers. This will help minimize customer service complaints from customers who misunderstood the offer.
• Make sure to display valid testimonial information to help establish credibility to a wide audience that is being introduced to your offer for the first time.

Key Points To Remember
Either type of affiliate marketing can prove to be an effective and critical part of your overall marketing mix. In addition to everything that has been discussed, I suggest five key points to guide your management of affiliate marketing programs:

Honesty - The temptation to cut corners on affiliate marketing can be strong, but the negative backlash from a poorly communicated offer can be very damaging.

Supportiveness - Your affiliates are an asset that can be called upon when you need to address declining sales or to cost-effectively launch a new product category. The flow of information must always be two ways. This will result in retention of your best affiliates and the establishment of a good reputation in the industry.

Forward-thinking - Use offers promoted through affiliate networks that position you for future cross-selling and upselling.

Simplicity – Keep it simple. Avoid complicated commission structures that confuse affiliates and take their focus way from driving traffic to your website.

Creativity – One of the most common complaints from affiliates is being fed “stale” offers. Take advantage of seasonal periods, new products and other promotional events to continually maintain fresh creative for your affiliates. This will inspire and motivate them to promote your offers.

Summing up, if you are a direct marketer, affiliate marketing should be a part of your marketing mix. Companies that do their homework when mapping out an affiliate marketing plan are often successful and avoid pitfalls that can make the channel challenging.

Michael Dell’Arciprete is a marketing executive who has sold over $500,000,000 in merchandise and services on-line. He can be reached at dellmj@aol.com.

December 2009 – Online Insights: Online Advertising

Understanding Brand and DR Synergy

Management wants to see immediate results from marketing investments. And why shouldn’t they? Long-term investments in brands are hard to measure, so why not focus on what is measurable and generating strong return now? The problem is that companies that overlook retail branding sacrifice both long-term and short-term margins. Investments in brand campaigns might not get credit for helping the bottom line, but over time those companies that invest brand dollars can see a measurable lift in direct response ROI versus the companies that don’t.

Historically, such contentions have been hard to measure and harder still to leverage in systematic, data-driven ways. With the advent of new tools, new ways to measure and much more rapidly quantifiable media, this is all changing. Not only can we directly assess the financial effect of branding, but we can also make sure that branding campaigns and direct response efforts work together to drive better results for both. And not next year or next quarter, but right now.

Strong Brand Association is Key

How do we know brand investments provide better returns? My company, Rocket Fuel, runs display ad campaigns for a wide variety of retail marketers on our proprietary online ad network. Nearly all are focused on driving immediate and measurable sales. We see these results in real-time, and use them as input into our technology platform to tune the campaigns, better find the right target customers and deliver results.

As we started running these campaigns, we began to see wide variations in success among advertisers.

Companies who have made large investments in building and establishing their brands are seeing great results–often a ten or even 20 times return on their advertising investments. Companies entirely focused on immediate response, without similar brand investment and equity, are seeing much lower returns on similar tactics–as low as two to three times spend, or worse. But they are happy with these results, even though much higher ROI could have been achieved by reaping the benefits of investing in long-term brand value.

Why did some advertisers get great results and others didn’t? Of course there are wide variations in creative, messaging, offers, target, landing pages and consumer interest in products offered. While it’s challenging to hold all these potential variables constant, if you look at enough campaigns, you will start to see a persistent pattern emerge. Retail ad campaigns backed by strong brands tend to perform better than those without strong brand associations. Typically, we see differences of three to five times better performance for strong brands over weaker ones. One top women’s fitness apparel brand achieved 10.3X ROI within a single month: for every dollar they invested they were seeing more than $10 spent in their online store. Similarly, a top brick-and-mortar, high-end fashion retailer achieved over 20X ROI.

We’ve also noticed that this isn’t restricted to strong brands developed solely through traditional offline brand-building efforts–several online-only brands reached their cost per action (CPA) goals at very high volume. For corporate marketers, it seems clear that a marketing investment that makes your direct response spend three to five times more effective would be a worthy one.

It’s All About the Analysis

With the advent of new tools and capabilities online, we can go one step further and not just measure the connections between brand and direct-response advertising, but also use that knowledge to make both campaigns work better. Here’s how it works:

Every marketer is familiar with using test and controls to understand causality between different kinds of tactics, creative and the like. My advice is to use a similar methodology to understand and leverage the connections between brand and response marketing.

First, a marketer needs to run tightly controlled brand and response programs with integrated data and analytics so results can be looked at across the programs. The advent of online technology tools allows for much more rapid feedback and analysis (typically on a daily basis) for both kinds of marketing. The right analytics and data can yield valuable insights, such as helping marketers understand if a consumer who sees a strongly messaged “brand ad” for a major retailer, engaging with themes such as trust, quality and beauty is then more likely to respond to a response-oriented message (i.e. a specific offer or incentive). You can also test and drive better brand engagement by understanding more about the audiences that respond to specific offers.

Take a Holistic Approach

By tightly controlling these kinds of programs, marketers can then start to evaluate how the programs are affecting each other. Coupled with careful analyses of the audiences under evaluation, marketers can start to optimize each program together as one integrated effort. Ideally, marketers should be able to optimize both brand and response campaigns not only to be effective in and of themselves, but also to make the other more effective as well.

In other words, direct marketers can tune brand campaigns to make sure that they drive brand metrics to achieve response-oriented results. And response campaigns can be adjusted so that we learn how to best take advantage of the brand engagement we are driving, and drive more of that as well.

Such an integrated set of programs would create much more value for marketers and their companies. The tools to do all of this exist today, but must be assembled for this purpose. The barriers to transforming your marketing efforts are not technical, but systemic. Too many marketers have brand and response budgets, personnel, objectives, etc. siloed into separate organizations or agencies so that it is nearly impossible to leverage these kinds of synergies. As an industry, we must challenge ourselves to continue to make all marketing accountable. The companies that do this systematically will take marketshare from those who don’t.

Richard Frankel is president of Rocket Fuel, Inc., a hybrid ad network that drives ROI for both brand-oriented and direct-response campaigns. He can be reached at rfrankel@rocketfuelinc.com.

December 2009 – Online Insights: Platforms and Support

Getting “SaaSy” With Hosted Marketing

Although, by many accounts, the economy is beginning to show signs of life, it is impossible to ignore the fact that this past recession was deeper than what we’ve experienced in the recent past–and it will take longer to recover from. Customers will still worry about their spending and businesses will continue to look to cut costs. Marketing challenges haven’t changed at all–they’ve just become far more intense.

Retaining existing customers is critical for businesses to survive in this difficult environment. At the same time, as consumer spending increases, attracting new ones amid constrained marketing resources will continue to be challenging. Pressure will mount to optimize marketing spend and to show concrete results. This puts organizations in a tricky position, forced to find a balance between the impact of their marketing and the cost. At the same time, maintaining timely and relevant communications is paramount. In this regard, Software as a Service (SaaS) has become a more attractive option for businesses looking at marketing solutions.

SaaS marketing solutions are implemented and externally hosted by a third-party vendor to improve the effectiveness of marketing communications while minimizing associated structural IT costs.

SOFTWARE SUPPORTING MULTIPLE CLIENTS

One of the fundamental challenges facing SaaS (and therefore people charged with writing articles about SaaS) is that it means different things to different people–anything from one application hosted on a single external server to cloud-computing platforms that serve thousands of applications from a number of data centers. However, the most commonly accepted definition of SaaS is software that is deployed on a vendor’s infrastructure and allows clients free, remote access to all the functions of the deployed software. I’d take the definition further than that, though, and specify that true SaaS is a single instance of software supporting multiple clients.

The key to retaining and obtaining customers, particularly when they are likely to be tightening their grip on their wallets, is to know more about who they are, what makes them stay and how to get them to spend more. Large, untargeted campaigns are not going to yield strong results and certainly won’t reduce costs; businesses need to be intelligently targeting their customers, enriching the quality of their data by analyzing the results of campaigns and communicating through a range of different channels. Marketing channels must match the ones that customers use. The best way of doing this is to deploy a marketing automation solution.

AUTOMATED SOLUTIONS

Because of the need to minimize spending, businesses may be wary of deploying new software. Although in-house solutions can be tailored to meet specific company needs and are, therefore, very effective, there is typically a long implementation process relative to SaaS, and the company may not want to invest the time and money required to integrate the new software into its IT system. The most immediate benefit of SaaS is that because it is externally hosted, it’s ready to go almost instantly. Rather than having to wait for IT to ensure everything’s synced up and working, marketers can get access and take complete control right from the start. As a result, the business starts seeing a return on investment quickly. What’s more, the vendor handles maintenance and ensures uptime, significantly lowering operational costs.

Deployment of an automated marketing solution, either in an on-premises or SaaS environment, requires that a marketing database structured around the business be in place. A marketing solutions provider will supply not only the tools (either SaaS or on-premises), but can also provide the database in an out-of-the-box format that rapidly supports the solution. Customization of the out-of-the-box database effort may be required, but try to keep it simple to maintain a cost-effective and manageable solution going forward.

SaaS is a maturing technology. Just half a decade ago, the infrastructure was not quite there for SaaS to support applications above a certain size, and the applications could not handle the amounts of data that enterprises demand. However, the sophistication and reliability of SaaS applications have improved tremendously. Gartner analyst Sharon Mertz explains: “The popularity of the on-demand deployment model has increased significantly within the last four years. Initial concerns over security, response time and service availability have diminished for many organizations as SaaS business and computing models have matured and adoption has become pervasive.”

COMMON CONCERNS

So with all the benefits that SaaS offers, why doesn’t every business use it? One reason is that businesses are reluctant to hand over responsibility for their data to a third party. But outsourcing of data is a well-trodden path for marketers: businesses often have third parties hosting their databases, so doing the same for marketing software doesn’t require a huge leap of faith. The important thing is that organizations choose a vendor with experience, a good reputation and a successful track record–in short, someone they can trust.

Another common concern lies with the flexibility of SaaS applications. Hosted software has a reputation for being rather vanilla–marketing solutions offering standard, basic functions. The argument goes that once the solution is deployed, it cannot be further customized. This is not entirely true. Investing further in the solution means both it and the applications used to access it can be tailored to better fit the specific requirements of the business.

While the benefits of SaaS are many, it’s important to note that the approach is not for everyone. SaaS for marketing is still a young sector, although vendors are aspiring to continually supply more and more functionality through SaaS. Organizations should be able to implement marketing solutions either as SaaS or on-premises deployment, with flexibility to move from one environment to another based upon individual business circumstances. It can therefore be more effective for an organization to work with a vendor that can support either a SaaS software and data environment or an on-premises one. Typically, a vendor supporting both will maintain a service staff capable of coming on-site to support any required configuration and customization. Ultimately, SaaS will be right for some businesses and not appropriate for others. It is important for each organization to examine their specific needs closely before making the decision.

That being said, many organizations are adopting SaaS-delivered software for digital and e-mail channels, combining cost-effective software access with a low-cost communications channel and paying for what they use. This growth is helping more and more marketers see the benefits of SaaS and serves to inform them of the pros and cons of the approach.

Although SaaS marketing software solutions are still developing, the benefits they offer–an efficient marketing approach based upon managing data, both online and off, as well as with tools to exploit that data at a minimal cost–cannot be overlooked. And with the recession still being felt by everyone, it’s something well worth considering if you want to win more customers–and retain them longer.

Curt Bloom has 20 years of software business development experience and is president of smartFOCUS, providers of direct marketing solutions across all channels.

December 2009 – Online Insights: Paid Search

Reaching Post-Holiday Shoppers: The Search Begins

The holidays may be “the most wonderful time of the year” for retailers, driving 25 to 40 percent of yearly profits in just one month, but that doesn’t mean the sales boom has to stop on December 25th. In fact, if you plan your post-holiday online marketing strategy correctly, the weeks after Christmas will bring a second boom in sales as gift-card shoppers and deal hunters flood websites in search of bargains. Over two-thirds of consumers take advantage of post-holiday sales, making these critical days in December and January a great time to clear out your remaining winter inventory and expose new buyers to your brand for the very first time.

One of the best ways to maximize post-holiday sales is to use paid search to drive traffic to your site. Google found in its 2009 holiday e-commerce study that 82 percent of Internet users find search engines “extremely or very useful” in making their purchases.

Who are Post-Holiday Shoppers?

Let’s step back and think about what consumers expect from the post-holiday shopping period. First and foremost, they want deals. Generally, people who are shopping a few days after receiving tons of gifts will be motivated only by great bargains; they don’t “need” to buy anything. Second, millions of shoppers will redeem gift cards or exchange unwanted gifts for credit to choose new items. Third, unlike the frenzy of buying for other people leading up to the holidays, in the post-holiday period, shoppers are mostly shopping for themselves—looking to pick up those items they wanted but didn’t receive, or to stock up on family essentials.

Also, think about your post-holiday goals. Of course, you want to get rid of excess winter inventory left over from the holiday season. But do you also want to promote some of your back-catalog or long-tail items? What about increasing sign-ups for your e-mail list or rewards program? Are there ways that you can capture these shoppers again and again, for example, by offering in-store credits for online purchases of over $100?

Thinking about your post-holiday marketing plan from both the consumer and the retailer perspective is a great way to get a head start on your post-holiday search marketing strategy.

SEM Tips for Boosting Post-Holiday Sales

Once you’re ready to create a post-holiday paid-search campaign, consider the following best practices to boost both sales and ROI performance:

Recalibrate your bids for non-holiday traffic. During the holidays, online merchants typically see increased traffic, conversion rates and sales, as well as higher-than-normal average order values. As a result, competition and bids for popular keywords usually increase during the run-up to the holidays. In the post-holiday period, you need to anticipate the shift downward in terms of conversion rate and average order values that results from consumers returning to their everyday habits. If you don’t, you may find yourself bidding more than you should for keywords based on ROI data from the period of holiday over-exuberance. An easy way to avoid this problem is to either look back to the period one year earlier to see how keyword prices changed as a guideline, or simply to exclude the most recent data from your bid calculations. While this means starting over, if you are using a tool which factors recent data heavily into bid calculations, you will be able to adjust your bids within just a day or two to quickly take advantage of the change in season.

Factor in costs of goods sold to make accurate bids. During post-holiday sales, consumers expect big discounts. Combined with the fact that most retailers are trying to clean out seasonal inventory, prices on many goods will hit rock-bottom levels. That means if you don’t factor in your cost of goods sold to calculate a net profit margin, you may be overpaying for some of your keyword terms. Use a paid search management application that captures your true profit margin, and then bid based on those findings. To take it a step further, consider grouping your keywords and building bids based on profit-margin targets. This will allow you to maximize your profits and deplete seasonal inventory by aggressively bidding on keywords for heavily discounted products, while still reserving a reasonable margin for the products you are introducing in the New Year.

Update your keywords and ad copy to reflect post-holiday sales. This might seem like a no-brainer, but it’s important to point out that you should bid on keywords and write ad copy that directly reflects your post-holiday promotions and discounts. Bid on keyword terms such as “After Christmas Sale” and “Post-Holiday Sale,” and include copy in your ads such as, “Sales Starts December 26th” or “Up to 75 Percent Off Starting December 26th.” Get creative with your keywords and ad copy, keeping in mind the typical consumer post-holiday behaviors discussed above. Try creative such as “Now Get the Presents You Really Want: Post-Christmas Sale” or “Gift Cards Burning a Hole in Your Pocket? Sale Starts Today.”

Watch out for stock-outs and adjust the keyword mix accordingly. In the post-holiday period, stock-outs are commonplace, especially as you clear out seasonal inventory you don’t plan to replenish. Monitor inventory levels closely to turn keywords off as soon as associated products fall below a certain inventory threshold. Sophisticated paid search management applications automate this process for you by analyzing a feed from your product catalog and inventory levels, and correspondingly adjusting or eliminating bids.

Clean up your campaigns for the new year. The shift from holiday to post-holiday is a tremendous opportunity to clean house and start fresh with search marketing. Take this opportunity to remove inactive ad copy that resulted from holiday testing, and identify ad groups that are missing creative altogether and associate new copy to them. Typically, after months of testing and optimization, your campaign structure may have grown unwieldy, and will need to be reworked. Review your ad groups with an eye toward relevance and the number of keywords per group. As a rule, you should have no more than 50 keywords per ad group. Restructure your ad groups to ensure associated copy is highly relevant. This will not only help your quality scores, but it will also make it easier to perform testing and optimization in the new year.

Just these few adjustments to your paid search marketing program can have a tremendous impact on your bottom line. One large retailer we work with followed many of these best practices last year with great results. The retailer excluded holiday-specific click and sales data when calculating bids on keywords, and used our bid-management solution to calculate and update bids daily using their most up-to-date performance data following the holidays. The retailer also tweaked keyword buys based on shopping trends and modified creative to reflect promotions. The result was a double-digit increase in post-holiday ROI year-over-year, with comparable spend on paid search. In this case, the end of the holiday season gave them a great reason to celebrate!

Matt Lawson is director of marketing at Marin Software, a leading provider of enterprise-class PPC management applications. He can be reached at mlawson@marinsoftware.com.

November 2009 – Online Insights: Paid Search

Case Studies in Brand Defense

By Steve Jillings

Aggressive marketing tactics from competitors are nothing new, but successful brands are facing pirates of a new kind in the world of search engine marketing. As direct marketers move from traditional advertising to integrated advertising platforms with significant spend in both offline and online marketing, they need to be aware of pitfalls that can translate to millions in revenue lost to competitors.

Search engine marketing is one of the highest-stakes categories in interactive marketing, simply because it is one of the most prevalent and most accountable forms of online marketing. According to a recent report by Forrester Research, the interactive marketing spend will near $55 billion by 2014, with search engine marketing accounting for more than $31 billion of that total.

SEM Trademark Infringement
The search marketplace has grown rapidly, and as direct-response and other marketers grow their online presence, most will find their search space increasingly crowded with unwanted infringers. These infringers are intent on using a company’s own hard-earned brand recognition and trademark to re-direct potential customers to purchase the infringer’s product.

Here’s how it works. It’s a well-known fact that direct-to-consumer advertising drives buyers to other channels. And the number-one place TV drives them to is search. When a consumer goes online to purchase the product they saw on TV, they often start by searching for the product’s brand name on Google or another search engine. In spaces crowded with infringers, some or all of the results that appear in the paid search area of the search results page will be advertising from the competition–or, potentially worse, the brand’s own affiliates. If the infringer’s offer or ad copy is compelling to that consumer, what started as a search for a brand they saw on TV may turn into a purchase of a competing product and lost revenue for the major brand. With millions of search-engine users looking for products and services each day, this can have a tremendous cumulative negative impact on a company’s bottom line.

Click Cost Inflation
The infringer is often a known competitor, or an affiliate of a competitor, or sometimes a direct affiliate of the primary brand. If not managed carefully, even affiliates who should be finding customers elsewhere for a brand can make the situation worse by infringing and competing with that brand for its own customers.

The crowding and competitive bidding that is part of SEM trademark infringement essentially raises the click costs for all parties, in addition to preventing brands from taking full advantage of their offline marketing investments. In an environment of tightening budgets and increased pressure for ROI, click inflation makes it even more difficult for online marketers to justify their investment in search and other interactive media and demonstrate that they’re getting results.

Managing a Brand in PAID Search
The worst part is that trademark infringement is often done without the brand even knowing about it. Clever competitors and affiliates can buy your brand’s keywords in ways that make it very hard to track. They can bid for branded keywords in specific geographies (geo-targeting) or during certain times of the day (dayparting), when or where they don’t think the brand will be policing their own branded search results–if they’re policing these results at all.

Sadly, the vast majority of advertisers are not managing this issue well today. Understanding the complexity of infringement, coupled with the challenge of monitoring and managing the issue, makes it difficult to address in-house. And few search or interactive agencies are equipped with the right tools and high-level expertise needed to combat the problem.

The courts are just starting to address online trademark infringement, but there is a long way to go. Major brands like Geico, American Airlines and others have tackled the issue in the courts, but it’s rare that brands have ended up with satisfactory rulings. Just last year, Tiffany challenged eBay for using the term “Tiffany” to trigger a search. But the courts ruled in favor of eBay, determining it could continue to trigger searches using another company’s trademarked name.

Marketers don’t have to be on their own to police use of their trademarked brands online, but they need to choose their tools and partners carefully. There are tools that exist today to help with some aspects of monitoring, but few full-service solutions are readily available. Because of the lack of a turnkey solution on the market, our own company, Vantage Media, has developed a proprietary brand management suite called Brand Defender to address the issue on behalf of clients.

Fortunately, since paid search is one of the most measurable forms of advertising, the right solution can offer dramatic ROI. When managed correctly, the impact of protecting a brand online is easily quantifiable as infringers are removed from the picture. For client Auto Insurance Specialists (AIS), one of California’s largest auto insurance agencies, we developed a Brand Defender program that successfully removed 56 infringing bidders from AIS branded-search queries. These efforts translated to a more than 100-percent increase in sales volume year over year with a significant decrease in costs. For client Allied Van Lines, the world’s largest moving network, Vantage Media successfully removed more than 50 infringing bidders from Allied branded-search queries as part of a comprehensive search marketing program that led to a 600-percent increase in qualified sales lead volume.

Whether delivered by a compelling infomercial or other DR media, the sale clearly starts with that all-important first impression. The DR campaign can act as a catalyst to the online conversion, turning that impression into a purchase. But there are more and more pitfalls and traps in a complex search environment, one that demands a sophisticated approach that is nimble in response to the constantly changing search landscape. Clearly, there’s a growing need in the search engine marketplace to control the branded-bidding environment so that potential customers don’t get tripped up and lost along the path to purchase.

Steve Jillings is the CEO of Vantage Media, a leading performance search-marketing firm. He can be reached at sjillings@vantagemedia.com.

September 2009 – Online Insights: Legal

Affiliate Marketing: Caught In The Crosshairs

By Jeffrey D. Knowles and Thomas A. Cohn

Affiliate marketers have long operated anonymously, under the radar screen. They publish content such as blogs, reviews and a wide variety of other types, traditionally with banner ads containing offers and links to advertisers’ products. For every consumer who clicks that link or purchases the advertiser’s product, the affiliate is paid a fee, either directly from the advertiser or indirectly through a network.

State attorneys general (AGs) have recently stepped up their investigations and begun law enforcement actions against both online merchants and the affiliate marketers who drive online traffic to them. How did affiliate marketing get to this point? And how can affiliate marketers and those doing business with them such as advertising networks and online merchants, avoid raising the ire of law enforcement?

RECENT ENFORCEMENT ACTIONS
Several years ago, both federal and state law enforcement agencies began to notice the concept of affiliate marketing. In 2005, the Federal Trade Commission (FTC) brought CAN-SPAM actions against seven adult website companies, alleging that they violated the CAN-SPAM Act because they paid affiliate marketers to use deceptive e-mails to drive online traffic to the defendants’ pornographic websites. The combined civil penalty amounts in these cases exceeded $1.6 million, but the affiliate marketers were not named defendants in the actions.

The AGs also began to take action on the affiliate marketing front. In 2007, the Florida AG announced a $1 million settlement over allegedly deceptive “free ringtone” online marketing campaigns. That year, the Florida AG also announced a group of investigations of other online affiliate networks using allegedly deceptive offers for “free” or “complimentary” mobile content (such as ringtones or wallpaper) to enroll consumers into monthly subscription plans, without describing the prices and terms of service clearly and conspicuously.

Two of these matters recently settled: the Florida AG within the last year announced two $1 million settlements with online marketers of mobile content, requiring the companies and their affiliate marketers to follow guidelines on the disclosure of material terms in its online marketing of mobile content.

The FTC sued affiliates directly for the first time earlier this year, alleging that the defendants purchased “sponsored links” that appear on the results pages of Internet search engines when consumers search for “making home affordable” or similar terms. The defendants’ ads, which prominently displayed the full government website address “www.MakingHomeAffordable.gov,” then appeared among the search engines’ results. Consumers who clicked on the advertisements were not directed to the website for the government program, but were instead diverted to websites that attempt to sell paid loan modification services. These commercial websites, which are not affiliated with the government, required consumers to enter personally identifying and confidential financial information, and then either offered loan modification services or sold consumers’ personally identifying information to companies that market such services.

Although the FTC did not name these commercial loan modification websites as defendants or allege they were engaged in deception, it did allege that the affiliate marketer defendants were attempting to defraud or scam homeowners trying to use the government site, by falsely implying through search results that visitors were being sent to the government’s website.

Several recent enforcement actions only underscore the perils of affiliate marketing. Various state AGs have cited the role of affiliate marketers in their latest actions against online promotions, and these may be followed by other AG actions and possibly FTC law enforcement against merchants, affiliates and/or networks that either engage in deceptive advertising, or knowingly assist and facilitate it. In addition, affiliates’ unauthorized use of celebrity and news media images and marks is increasingly subjecting them (and the online merchants to which they link) to charges of trademark infringement, false endorsement and related allegations, under both state and federal law.

So what can online merchants, advertising networks and affiliate marketers do to reduce their risk of being targeted by state or federal law enforcement agencies? The following “top ten tips” (while not exhaustive) should be applied by affiliates–and by merchants and advertising networks–to avoid regulatory problems that may arise from affiliate marketing:

AFFILIATES
1. Ensure that affiliate advertising of any merchant’s products or services is truthful, substantiated and not deceptive or unfair.

2. Do not publish “flogs” (fake blogs) or other false content, false or unsubstantiated product claims, or offer incentives to consumers in return for their response to any ad, unless the offer’s terms and conditions of the offer are clearly and conspicuously disclosed.

3. Do not publish fake news articles or other fake media titles, without clearly and conspicuously disclosing that the content is an advertisement.

4. With respect to any endorsement (third-party promotion of an advertiser’s product to consumers), do not publish false or unsubstantiated endorsements, and be sure to clearly and conspicuously disclose any material connections with the merchant and/or the network.

5. Do not infringe on the personal rights, trademark, copyright, patent rights, service mark or any other intellectual property right of any third party mentioned in published content.

MERCHANTS AND NETWORKS
1. Enter into written agreements with affiliate marketers, requiring that all affiliates publishing content designed to drive online traffic to the merchant abide by all state and federal consumer protection laws and regulations including the FTC Act and the CAN-SPAM Act.

2. These agreements should also require affiliates to comply with the FTC’s Endorsement Guides.

3. These agreements should also require that affiliates not infringe on the personal rights, trademark, copyright, patent rights, service mark or any other intellectual property right of any third party.

4. These agreements should also require that affiliates clearly and conspicuously disclose the terms and conditions of any incentives, points, rewards, cash or prizes promised to consumers in return for their response to any advertisement.

5. Agreements must provide that any affiliates who violate these laws, regulations and guides shall be terminated by the merchant or network, and shall forfeit any commissions earned in the course of committing such violations.

Given recent law enforcement developments, everyone in the online advertising stream, from merchants to networks to affiliates, should follow these tips to avoid getting caught in regulators’ crosshairs.

Jeffrey D. Knowles manages Venable LLP’s Government Division and heads the firm’s Advertising and Marketing Practice Group. He can be reached at (202) 344-4860. Thomas A. Cohn is of counsel in Venable LLP’s New York, NY office. He can be reached at (212) 370-6256.

ERA 2009 D2C Convention