Why Clients Overlook Direct Response Advertising

When most people think about advertising, they think about TV commercials.

They’re the most obvious type of ad. They have the highest production values. The ads are often entertaining (even if they don’t improve sales). And they’re the easiest format to talk about with other people.

Direct response ads, on the other hand, tend to be made fun of. They’re the goofy infomercials on TV, the ads that show up next to your search results, or remnant ads that make crazy claims about magic berries or collectable coins.

They’re also written into things that are part of the fabric of everyday life that you might not even think about, but are critical for many blue chip brands. Coupons, special promotions, unique phone numbers, catalogs, loyalty programs, newsletters, and other methods are used to get customers together in a more measurable way.

The dichotomy between ‘brand’ and ‘direct response’ advertising is generally over-stated. The go-to man that most experienced advertising people choose is David Ogilvy to explain how to bridge the gap:

“We Sell Or Else”

Creativity is one of the most-abused words in advertising.

What clients need to know is that the end of advertising is not to be creative. It’s not to make funny ads. It’s to make sales. Every other proxy metric is not relevant relative to sales. Brand awareness doesn’t matter if you’ve made everyone both know about your brand and hate it.

When creativity is employed in advertising, it only makes sense if it leads to more cash for your business.

The difference between direct marketing and general marketing is that direct marketing has a direct connection to the selling process. It’s always possible to directly attribute sales to that particular ad, which makes it possible to do more accurate testing.

The direct response ad acts like an automatic salesperson. It either closes the deal or it doesn’t. If a direct response ad doesn’t out-earn its costs, it gets fired in the same way that you’d fire an under-performing sales rep.

Part of what Ogilvy argued for was to treat even general ads as if they were direct response ads. You can often tell the difference between a well-made ad and a bad one by whether or not the ad actually asks the viewer to do something at the end of it.

The one and only thing that makes advertising different from other kinds of media is that it’s designed to drive action. Any jerk can make up funny slogans that don’t actually get someone to do something. What you’re paying for is to measurably change the behavior of your target customers. Not to feel like a clever client for commissioning a piece of media. The media is just a means to the end of making more sales.

In industry jargon, this is the ‘call to action.’ If there is no call to action, the only way to measure the impact of the ad itself is to conduct awareness surveys and other metrics which are imperfect in terms of being able to establish impact on sales.

Big Corporations Aren’t Advertising Like You Think They Do

Marketers often cite Proctor & Gamble as the gold standard for product development and product marketing. What you don’t see when P&G wins awards for creative TV commercials is that it’s all connected into a more sophisticated back-end with an enormous direct response element. They test their TV commercials against internet components, print coupons, and store sales. Their ad agencies are not just coming up with big, creative ideas — those ideas are being held accountable using a mesh of direct response methods that collect a ton of data.

The boring coupons are there to back up and test different product lines, calibrate pricing, test packaging, and gather demographic information to help other aspects of their marketing.

Where small businesses tend to go wrong in emulating the creative ideas that they see on TV and hear on the radio is in going for the big idea without that back-end of data collection to support it.

What this usually results in is thousands or tens of thousands of dollars spent on design, logos, and other methods without any sort of accountability built into the system. On the other hand, there are some advertisers that ‘get it,’ using call tracking, coupons, and other methods to hold their general advertising accountable to their bottom lines.

Establish Direct Response Campaigns First

So, the trouble is not necessarily that small businesses tend to try to emulate the big guys and fail: it’s that they misunderstand what the big companies are really doing with their budgets.

It’s also not entirely accurate for direct response partisans to slag on Super Bowl commercials for being expensive and difficult to measure. It’s an enormous waste of money if it’s not backed by the before-mentioned mesh of direct response efforts that can help the company measure the impact of its other spending.

By establishing direct response campaigns first, you can discover what kind of language, imagery, and selling points resonates with your customers. One of the first questions I ask all my clients is what kind of language that they use to close sales, and what language customers use when discussing the product. When you have established direct response ads that make sales, you can transplant those words and images to general advertising, and those general ads (like TV, radio, display, and print) will be more likely to improve your bottom line.

Are Social Media Cynics Correct?

The Ad Contrarian thinks that most of the hype around social media is false.

Is he right?

To recap his arguments:

  • Most people are not interested in having conversations about brands.
  • Those conversations are not meaningful drivers of sales.
  • Spending money on big social media initiatives is likely to backfire.

I broadly agree with his thesis here:

You can see this most clearly on Facebook. Facebook calls itself a social medium, but its advertising model is good old-fashioned paid advertising plastered all over the page. Compare the number of paid ads you see on your Facebook page with the number of “conversations about brands.”

YouTube calls itself a social medium but it sticks pre-roll (mostly recycled TV spots) everywhere it can.

The reason is clear: marketers are finding that they can get more value out of these websites by treating them as avenues for advertising, not conversations.

People have cared more about commerce privacy than many people have anticipated. People don’t want to have all their purchases shared. They also would rather talk about their friends than about brands, especially when those brands are day-to-day consumer products with established brand awareness like Pepsi and Budweiser.

Facebook’s dramatic curtailment of Pages, essentially turning it into an ad product, is an admission that users are not biting with respect to the great-social-media-revolution.

While you might be able to bribe people into liking pages or commenting on things, what tends to perform better is traditional advertising translated to a digital format.

Just because your magazine-style ad is on Instagram does not make it especially ‘social’ or different from a magazine ad, even if it has a calculated lo-fi look to it. Just because people are using a social media website’s ‘comment’ function on your ad does not make it terribly different from a real life verbal comment, although the former might be able to travel a little farther than the latter.

The sales pitch that you could ‘reach customers for free’ on social media increasingly rings hollow, as every platform curtails unpaid access to their services for businesses, and demands a cut through new paid advertising channels.

Social Media is Still Media

Where I think this can be misleading is in discounting what I call intent-based social media. ‘Intent’ is the key word in search marketing, and it’s really a key word in social marketing as well. You just have to ask yourself if the group of people that you’re marketing to have expressed an interest in your product category.

If the answer is ‘yes,’ then you should target them. If the answer is ‘no’ or ‘I don’t know,’ then you should avoid going after them unless you’re a major brand advertiser.

There are dedicated communities all around the internet that just discuss products. Going to these communities which have advertised their interest to evaluate products still works.

There are legitimate enthusiasts who do actually want to talk about your brand extensively. It’s just that your product can’t be a commodity, because commodity products are boring — there just isn’t much to discuss about them. Complicated products with high price points for their category are fun for people to talk about. Simple, cheap products are boring, and bad topics for discussion.

While these communities of enthusiasts are enabled by technology, they’re not caused by technology. Niche magazines and newsletters have existed for a long time. It’s now easier to find these groups than ever.

Amazon.com is built around user reviews of products, which includes verified purchaser badges to discourage fake reviews.

What these groups do is less to drive sales of your brand directly, but to act as evaluators for your marketing. If there is any discrepancy between what you promise and what you deliver, enthusiasts will tell their friends about the disconnect. They’re gatekeepers, in the same way that professional reviewers were (and still are in some markets) gatekeepers. If your marketing and advertising matches with the product, they will let you pass through to the larger market. If there’s a mismatch, they will run interference on you and drive up your costs, perhaps higher than the product is able to bear.

If they like your product, the customer will drive down your sales costs. If enough people don’t like it, they will drive them up.

This is the same as it’s always been, but technology makes it easier to survey and read customer opinion without going through the additional hassle of hiring specialized researchers.

A Contrarian Take On Print Advertising

Newscorp CEO Robert Thomson provoked some scoffs among the technology elite today by proclaiming that print advertising will begin to command higher premiums again, amidst skepticism about digital advertising.

The article buttresses this point by taking some pot shots at Buzzfeed for low content quality, and pointing out that the assessment has been shared by WPP, which also expressed optimism about print.

The chatter about this on the web is essentially taking Thomson out of context. He was also speaking about the value of premium digital properties to advertisers, of which the Wall Street Journal in particular owns one of the most successful properties on the web.

It should be pointed out that not all print advertising is quality advertising. Free newspapers tend to have terrible ads put down on low quality paper. They have to be low quality, because the only ads that can succeed in a free paper have some kind of direct response component to them, and the majority of local advertisers don’t know how to get the most out of direct response advertising. Because it’s free, advertisers can’t get accurate circulation numbers from free publications.

A similar dynamic is at play with free websites.

The key difference is really about premium content as compared to free content. When the content is paid, advertisers know the circulation numbers accurately, they know the demographics of the subscriber base accurately, and they don’t have to rely on sophisticated audience modeling to figure out who sees their ads.

This is another reason why cable TV still commands high ad rates: those subscriber numbers are accurate, and for better or worse, the viewers trust the stations on which the ads appear to provide a consistent level of content quality.

The web is still a young medium. Hypertext, the language of the web, was developed to make the lives of academics easier: it was not created to be a media platform. Google itself was built on the basic idea behind the web, which is that the link is a metaphor for the academic citation, and that a broadly-cited article by prestigious authors and publications is probably more relevant to researchers.

This is partly why people are moving towards consuming more news using apps, rather than through websites directly. The web was built to make citations simpler. It was not built to create a magical media consumption experience. Although the web’s being used for many more things than it was ever planned to, its essential structure was not built with the needs of advertisers in mind.

Newscorp and companies like it know much more about the business of premium media  than almost anyone else.

Arguments about print versus digital and TV/radio versus digital tend to be more tribal than based on the fundamentals of what the publications are, how they reach people, and how it impacts the functioning of the advertising.

Advertisers have to think harder about analyzing different mediums and different technologies to reach customers. The real conflict should not be about print versus digital, but premium versus free, and applications versus the web.

In general, ads against applications tend to be more reliable than ads placed on the open web. The most successful digital advertising platforms are ads against web applications. Google Search is a web app. Youtube is an app. Facebook is an app.

The advertising with the most mixed track record is web display advertising placed on web sites that charge nothing to users. Enormous amounts of energy has gone into trying to get digital display advertising more worthwhile, and there have been some successes — but the overall attitude among publishers has been one of disappointment.

A lot of work still needs to be done to justify higher ad rates for online display ads. Newscorp and WPP are just recognizing that fact.

The Mistake That Hurts Most PPC Ad Accounts

Trying to do too much too soon prevents progress from happening

Default settings lead new advertisers astray

The default settings on Google Adwords do new advertisers no favors. It’s easy to make the mistake of setting all the keywords to broad match and to optimize for clicks, because that’s the way that it’s set up to encourage new advertisers to do.

If you’re an enormous company, you can afford to waste tens of thousands of dollars a month or more just figuring out how searchers are looking for your related terms and how they interact with your sites. For most people, who work for small to medium businesses with less than $20 million per year in revenue, that kind of poorly targeted spending isn’t sustainable.

The result of using a lot of broad match keywords is that, without preparation, you waste your budget on an enormous number of irrelevant search terms that are unlikely to convert at a low budget level.

Google at a fundamental business level cares much more for the needs of advertisers that spend millions of dollars a month or more. Those major brands can afford to spend inefficiently, because they often have such broad offerings that the incremental lifetime value of an additional customer is enough to justify wasteful spending.

For most people, or just major brands that want to get a real advantage over the competition, it’s necessary to be more aggressive in controlling the risk on the account.

You have to look beyond what the keyword planner tells you to bid on

What’s easy in Adwords is to use the Keyword Planner pointed to a product or service page, take the keywords that it suggests at face value, and then to put them together into ad groups that make intuitive sense.

While this can work for certain products and certain terms, in most cases, especially when the budget is tight, it’s not likely to generate results without a lot of spending and tweaking over time.

Keeping it simple to start increases your chances of keeping it profitable

Complex accounts have more points of potential failure

When budget is constrained, the account has to be positioned less aggressively at the beginning. The budget should be concentrated onto keywords that are already converting or are likely to convert due to close match between what customers are looking for and what your business is offering.

Using more qualifying language in the copy, such as price information, or using intrinsically qualified formats like Shopping ads, can help you reduce the risk on new campaigns.

Get the higher margin offerings selling first

Additionally, it’s critical to make smart choices about what you start advertising for when you have a lot of products or services available at your website. It’s easier to advertise high margin products with direct response advertising like search ads — the reason for this is that it’s much more challenging to go through the keyword discovery process to completion when you’re selling a mixture of high and low margin products. You have more margin to give up before you start making a loss on each sale from a new customer.

Customers have no idea what your margins are, and they may very well wind up preferring your highest margin items due to factors that aren’t related to the price. The point is that you have more margin to work with when you’re building the account to start with, and it’s easier to get to success. Once it’s selling, it’s a simpler process to optimize from there than it is to try to optimize ads for products that aren’t selling at all.

How to build out from early success

Start with exact match, then broaden from the keywords that convert

The goal of search advertising, for most companies, is going to be to make sales rather than to just grow traffic to your site. Because of the way that keyword match types work, it’s going to be easier for you to broaden the account at the points where it’s already converting. In that way, you can re-invest profits into figuring out other exact match and phrase match keywords that you can separate into high-performance ad groups and even campaigns of their own with separate budgets.

This differs from the typical method, which the majority of search advertisers use, in starting with a lot of broad match keywords, occasionally stumbling into something that converts, at far greater expense than a more cautious, measured, data-driven methodology.

Capture the visitor as a customer to decrease the cost of each new sale

If you think about the businesses that you’re loyal to, in most cases, you probably had to make at least one purchase before you saw the relative higher value of that merchant as compared to its competitors. People may not even realize what unique value you offer until they buy multiple items or services from your company.

Encouraging repeat engagement through social media, newsletter subscriptions, and loyalty programs will help you get more from the rest of your advertising efforts. By making sure that your company is doing this at the same time as its other advertising efforts, you can get more from the traffic that you attract, and keep a longer sales funnel running.

Risks and Returns In ‘Pure Play’ Digital Marketing Strategies

Marketing strategies that rest on a single channel of customer acquisition have become much less popular over the last couple years. There are various reasons for this: the internet is becoming more of a settled business environment, there’s more competition on every conceivable channel, and service providers like Google and Facebook have taken to charging more money to businesses who are trying to reach customers using their services.

Whereas in 2010 or 2011, a company like Zynga was able to use viral recommendations to fuel rapid growth at a low cost, changes to platform rules across all services have made it so such strategies are no longer feasible for companies operating at any scale without a carefully considered strategy and well-executed tactics.

Anyone who relied on a pure play strategy over the last several years can tell you how they’ve had a major impact to their business from an update to the Facebook Newsfeed algorithm of a Google Search update like Panda or Penguin.

If you’re relying on a sole source for incoming traffic, here are some points for your consideration:

Knowing the risks

  • You’ll see an immediate drop-off in organic traffic or a spike in your cost per acquisition without warning. It can be as quick as one day to another.
  • You can have your company or a website that you own penalized by the service, with limited recourse available.
  • The service provider that you’re working with may not be capable of adapting to changes in the sole service you were using to generate traffic.
  • Your websites may need to be restructured significantly to handle changes that you can’t control.
  • All your revenue can be shut off without warning, leading to cash flow issues.

Understanding the potential returns

  • Using one service to drive traffic makes for a simpler overall marketing strategy.
  • It can be cheaper to manage up-front.
  • It requires less learning to remain current on.
  • It’s easier to find and hire experts in a sole marketing channel than it is to find generalists with high expertise in all the channels that they use.
  • It’s cheaper to optimize traffic coming in from a single source.
  • Requires less investment in alternate landing pages and customer on-boarding sequences.

Making better decisions about your marketing mix

In general, pure play strategies have more potential returns in the short run. They can also generate superior long-term results if and only if you speculate correctly about future policy changes in the marketing channel that you’re using.

For long term management of your marketing risks, it’s better to rely on a mixture of traffic sources appropriate to your campaign goals. Unless you have reliable moles working in all the major online platforms (which is a good idea), you have to hedge your bets. Comparing customer acquisition costs on different channels by running frequent tests will also help you to increase the effectiveness of your spending.

The larger the company, and the more significant the spending, the broader the mix that generally needs to be used.

New Keyword Research Guide Live at iSpionage

Today, my article on how to find highly profitable keywords to advertise against went live on iSpionage under the editorial direction of Joe Putnam.

It’s given me an opportunity to put into words a keyword selection strategy that I’ve gathered from both personal experience managing accounts and reading some of the best books and guides that I’ve been able to hunt down on both paid search and SEO.

Joe was very helpful in putting together the topic and has shown a strong interest in building up the search advertising community. I look forward to writing more frequently for the company to help them raise the bar of quality overall commentary about the industry.

Why Revenue Is A Critical Decision-Making Tool for Entrepreneurs

Procrastinating on bringing a product to market and starting to generate revenue harms your ability to make intelligent marketing decisions.

The reason for this is that revenue is itself a critical signal that helps you determine how to dedicate your efforts and create a budget, even on a short term basis. Even taking pre-orders for a product that isn’t released yet can help you to put some meat on the brittle bones of a demand forecast.

The amount of money that you can spend on marketing is infinite, but spending money intelligently requires an approach that’s consistent with the amount of revenue that each expenditure brings in. Selling is inherently a reality check: it means you can start recording critical metrics that you can use to then decide what you should spend across which channels to build your business.

Some of the most important numbers you want to establish are:

  1. Cost of customer acquisition
  2. Average lifetime value of a customer

With those two numbers, you can then move on to segmenting different sections of customer and determining how much money and effort you can expend to make each sale or acquire each new customer. Anything involving money is more important as a metric than anything regarding traffic and conversion rates. The latter two don’t mean much of anything if it’s not connected to the core accounting metrics that are common to any business.

If there’s no revenue coming in, you can stress out over the design of a website, how much to spend on ads, how much effort or money you spend on content, and how much you focus on other forms of promotion without actually driving bottom line results in a sensible way.

As soon as revenue comes in from any source, you can start trying new things to augment that existing stream of money, even if it’s tiny to begin with.

Especially for new businesses, the money is worth more than the value that’s printed on it. What matters more is that the money is an objective source of information about market conditions. Even when your employees are salaried or you’re doing everything yourself, tracking your time is critical. You can use software to do it, but paper can get the job done too, if that’s what you prefer using.

Don’t be busy just to feel busy. Record what you’re doing so that you know what you’re working on (and what your employees are working on) is driving business results. You’ll get more return on your effort in a more consistent manner when you do.

3 Ways To Avoid Being Baffled By Metrics

With all the tools available to measure customer behavior on your websites, it’s easy to become baffled by metrics. What gets measured gets managed, and because it’s so easy to automate measurement, it’s easy to become overwhelmed by all the opportunities to manage what you’re measuring.

There are a few guidelines that you need to follow before you start obsessing over all the various traffic counters that you have available to you.

#1: Identify Your Key Performance Indicators

Key performance indicators (KPIs) is a marketing jargon term that means the sole numbers that you use to determine the success of a campaign or website. Where most people go wrong how they handle their metrics is to fail to pick a KPI that’s consistent with their business goals. A typical mistake is to optimize a website for raw traffic rather than a meaningful goals like:

  • Generating high quality leads
  • Driving newsletter and social media subscriptions
  • Buying products and services on the site

Raw traffic, even for publishers that earn money by the pageview, is usually only going to be the denominator for a more meaningful conversion rate. However, because it’s the easiest thing to measure, and the simplest thing to boost, it’s what often gets focused on at the expense of other more meaningful business metrics.

Having a clear KPI to work towards makes it easier to plan out projects, create budgets, and assign tasks. When there is no KPI, people tend to putter around in an undisciplined manner. They may even start scheduling countless expensive meetings to attempt to reduce all of the chaos in their work.

#2: Respect Statistical Significance

To gain certainty on any statistical measurement, you need to ignore your natural instincts to assign enormous importance to sample sizes that are too small to be mathematically meaningful. Any study must have a sufficiently large sample size to return meaningful data. The more elements that you are testing at once, the larger the sample size you must collect.

You can still use smaller amounts of data: you just have to assign it the appropriate weight in your decision making process.

#3: Incorrect Analytics Configuration

Setting up your measurement system tends to be a development afterthought. In many cases, when small changes get made to the system, something can break in the measurement system without anyone noticing. Putting aside some time each month to examine your existing installation for issues is a sensible maintenance task.

If you’re using Google Analytics, taking the time to go through the Google Analytics IQ study guide — or a similar technical manual — will help you to identify issues that might be present on your website and fix them in a cost-effective manner. Whatever you’re using to measure your marketing, read the instructions and do the work to verify that it’s in working order.

Ensuring that you use tracking codes for all of your marketing efforts that build links will also help you to be smart about how you measure your work.

With these common problems out of the way, you’ll be ready to measure the right things and act on the knowledge.

Creating eCommerce Product Descriptions That Sell

eCommerce is the mail order business ported to the web.

The added functionality that the web has does not always lead to increased selling power. It can reach a broad audience, and simple tools drop startup costs to next to nothing, but the fundamentals of how the business works are very well established.

The catalog and mail order business is centuries old. There are established conventions that don’t make the transition to the web perfectly, but more of them do than people tend to realize. Other similar sources of inspiration for improving your sales include television product sales programs like long infomercials and QVC.

Don’t scoff: those methods are tested for response rates and conversions.

[Read more…]

How To Protect Your Adwords Account Security

Handing over the login credentials to your Adwords account to an outside agency should make you feel nervous.

Even though I know people do it, there’s no reason for you to give your login and password to anyone at all. If you follow these steps, you’ll improve your security and permit you to make more extensive use of outside help on all of your accounts. Similar processes are also available on Bing ads and for other major ad platforms.

If someone asks for your login credentials, you should report the person for phishing. If everyone in the paid search community is looking out for threats to security, everyone benefits.

Ask Them To Invite You From Their MCC

The way that you can have someone work on your search account without jeopardizing your security is to ask the person to instead invite you to share credentials through their My Client Center account.The only information that you need to provide is the 10-digit account number in the upper right hand corner of your screen.

If they don’t have an MCC, ask them to sign up for one. The process only takes a few minutes, and a Google phone representative can walk the person through it if they’re having trouble.

This is a feature used by agencies in the Google Partners program (like us) for both convenience and security.

Once that happens, the agency will invite you, and you can decide what level of access that they should have. If they’re only evaluating your account to make recommendations, you can give them ‘read only access.’ This will prevent them from making any changes to the account that could result in charges to your credit card. If you want to revoke the access later, you can do that.

If you decide to permit them to manage the account later, you can set it so that you need to review any changes made before they go live.

Turn On Two Factor Authentication For All Accounts

The next most important move you need to make is to turn on two factor authentication for all the Google accounts that have access to the Adwords account. You should also ask your point of contact with any outside agency that has access to your account to use it also.

The benefit of this is that anyone who wants to access your account will have to enter a code sent by text message. What this means is that even if your login and password are stolen, an attacker will not be able to access your accounts so long as they don’t have access to your SMS account as well.

While this isn’t fool-proof, it significantly increases the difficulty of hacking your account. The majority of criminals will look for an easier target if your account is protected by two factor authentication.

For convenience, you can also set it to trust certain machines. This will be slightly less secure, but reduce the annoyance of needing to check a phone every time you need to log into the account again from a certain machine.

Use A Business Credit Card For Account Payments

This one is the last backup to prevent unauthorized charges to your accounts. If everything else fails (say, a rogue ex-employee accesses your systems), Google’s phone support (or your assigned sales rep) should be able to help you to identify the wrongful charge and potentially get a refund.

If that doesn’t work, using a credit card instead of a debit card or bank account to processes payments will allow you to dispute the charges in case of fraud. In general, it’s easier to recover your money if you’re using a credit card than it is with other methods that debit directly from an account.

Final Comments

The PPC marketing ecosystem enjoys a better reputation than many other fields in internet marketing and advertising. Whether it’s deserved or not is up to the continued good behavior of its participants. Not everyone follows the best practices available in security, and it doesn’t necessarily make them bad people.

That trust can be strengthened by encouraging agencies, clients, and consultants to improve their security practices as much as possible. Security breaches in some parts of the industry can have a negative impact on everyone, driving up prices, increasing risks, and reducing profits. Passwords suffer from some inherent security weaknesses, and reducing reliance on those as much as possible makes business better for everyone.