An Answer To “PPC or SEO?”

On the /r/PPC subreddit (where I’ve picked up more than a few clients — hi there!), someone asked about whether to invest in PPC or SEO. This was the answer:

These kinds of questions are just confusing for new advertisers.

The answer is that it depends on your goals, budget, and market. If you have infinite budget and funding, then the answer is “do both and invest lots into both.” Almost everyone doesn’t, so you have to come up with a plan that matches the circumstances of the company.

Additionally, depending on the market and the skill level of the practitioners, the time frame for payoff can be very different. Although the typical statement is that SEO is a long term investment, it can often deliver payoff quickly. It depends entirely on the market.

I would say, like Perry Marshall and others do, to start with a pared down PPC campaign, get data on customer behavior, use that data to inform which keywords you go after in SEO/general marketing, and proceed from there. It’s easier to get data faster with PPC, so it helps to start with that before going full throttle into SEO.

Other people on the subreddit (which is almost entirely made up of professional PPCers) tended to agree. Thinking that you can advertise a business only using PPC is usually going to not work, outside a few oddball markets.

Developing a durable competitive edge requires using  more than one marketing channel. Anyone who tells you otherwise is just trying to make a fast sale.

Speaking of Perry Marshall, I’m going to steal the 10 step order he gives for building out marketing for most websites from his excellent 80/20 Sales and Marketing.

Here it is (from page 82):

  1. Google AdWords
  2. SEO
  3. Other PPCs like Bing and display advertising
  4. Email promotions
  5. Social media*
  6. Affiliates
  7. Direct Mail
  8. Banner ads and ad networks
  9. Press releases
  10. Print advertising, TV, and radio

The * is just to indicate that social media doesn’t really work very well, or is hard to manage profitably, for a lot of product categories.

The reason why the channels are in this order really has to do with the level of control that you can exercise over them. AdWords provides you with more granular control over what search terms that your ads appear on. It also gives you live data that you can use to find out which words you can craft an offer for that results in them pulling out their credit cards.

Print, TV, and radio are all both expensive and powerful. Although the aggregate spending on print has plummeted (less so in magazines, because they’re targeted to niche markets), it’s still a heavy hitter. But it can be a risky one to jump into without all the foundations in place.

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.

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.

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.

How To Save Money On Marketing With Online Surveys

Online surveys are an under-appreciated tool for saving money on your marketing budget.

While larger companies tend to use them with gusto, apprehensions about cost and other factors tend to scare away people with small budgets. The irony here is that the people who really need to use them the most tend to use them the least.

The two main vendors that I recommend are:

  1. Google Surveys
  2. SurveyMonkey

My personal preference is for Google because it’s better integrated into their ad products for publishers. Website owners can also use their satisfaction measurement widgets for free if you don’t customize the settings.

SurveyMonkey tends to be the better choice if you need to have detailed questionnaires filled out.

Both of these give you flexibility to survey existing customers or prospects in a target area. It’s easiest to get results with factual queries about demographics that you can’t necessarily get from the Census website or a research tool like Wolfram|Alpha.

I believe that using surveys to attempt to forecast product demand directly is usually a mistake, because people will tend to make incorrect predictions about their own behavior. What it is useful for is to gauge simple consumer opinions and to gather some factual data that might have some material impact on your marketing plans.

You can use this sample size calculator to determine how much a useful survey will cost in conjunction with the vendors suggested above.

Some things you can use a survey for:

  • Measuring the impact of your display advertising by testing brand recall (hold surveys before and after a campaign in a target area to determine whether or not it worked)
  • Learn more about a particular market and their purchasing habits
  • Shape the language that you use to reach the surveyed population
  • Decide whether or not a given market or website is worth advertising to at a certain price

And a lot more.

The reason to use surveys throughout a marketing campaign is to reduce the risk that you spend a bunch of money on a stunt that doesn’t work to a market that never wanted to buy your product anyway. If you’re testing a new website, for example, you can use data collected from a small market to prepare for a roll-out into a larger one.

Instead of advertising a new website to the entire United States, you can pick a single market, test and refine the offer, and then roll it out to an expanded target area once you’re confident that it sells.

One of the cool things about the internet is that this kind of method used to only really be within reach for larger companies. Now anyone with a computer and a connection can do it.

It’s also a handy way to make changes in the subjective mood of your website visitors easier to quantify. Metrics like bounce rate and time on site are only coarsely related to consumer sentiment. Their responses to natural language queries will tend to give you richer material to work with.

When you’re designing your surveys, follow these guidelines:

  • Yes/No questions require a smaller sample size and will tend to give you better data.
  • Questions that ask the customer to either remember their own behavior or predict their own behavior will tend to give less reliable data.
  • Questions about preferences regarding something that’s on the web page they’re on right now will give you better results.

Long surveys will tend to need some sort of incentive to encourage people to fill them out. They can also be used for lead generation purposes (which just means collecting their e-mail so that you can solicit them later). A restaurant, for example, might offer a free dessert coupon for people who provide their e-mail and fill out an online survey.

Interesting survey results can also be a dirt-cheap way to generate material for a press release. The sample size doesn’t need to be huge for simpler questions. Journalists love these kinds of stories because it lets them put a number in the headline, counts as news, and makes them seem more scientific. It can also portray your company as a thought leader in your industry, not-coincidentally resulting in positive mentions for your brand name and the key people involved in conducting the study.

How New Entrpereneurs Need to Think About Marketing

Marketing and advertising are an ongoing expense for any business. This is most obvious in small businesses that serve local markets. In some cases, if competition is low enough, almost no sophisticated marketing is needed. Additionally, many companies that occupy an attractive location barely need to spend anything on marketing at all. Once the signs are posted, non-specialists can often handle any marketing tasks that come up. The bartender who can make the the funniest chalk drawings can scribble something on a board that sits out on the curb, and that’s more than enough to get people in the door.

For everyone else, whenever it’s a competitive market, and almost all markets are competitive, specialist marketing is necessary to keep business coming in and to maintain the customers that you already have. If you build it, they can’t know how to come if they have no clue that you built it, why they should want to buy the thing you built, and how they can get that thing even if they do want to buy it.

Marketing is an ongoing expense. The spending will usually need to go up when attempting to displace a competitor or grow, and it can be safely held steady when there are few immediate competitive risks to the business. Advertising is a method that reduces the risk that your message will never be seen. Non-paid marketing always runs a risk that it will go unseen, making it so that the message received by the target customers becomes garbled or never understood. That’s not to say that it’s not a good thing, also. It just comes with higher risks.

While it’s true that there are many high-risk, low-cost marketing stunts that you can take (and I’m all for them) that don’t cost much money, they’re both high-risk and usually non-repeatable. Even people who make ‘viral videos’ for a living usually can’t repeat them for the same brand in short order.

While some may buy ads to flatter their vanity, the real reason to do it is to reduce the risk that your business will fail. The typical mistake that new entrepreneurs make is to focus entirely on product development to the exclusion of marketing. The entire budget (if there is one) sinks into product development with minimal effort to determine whether or not there is a potential demand for the product, and even less for generating that demand and fulfilling it. Eric Ries nailed this problem in The Lean Startup, and explains how to integrate marketing with product development in a startup.

Don’t make that mistake. Develop a real plan to make sales before you begin to accumulate so many fixed costs that it becomes impossible for you to execute on anything significant.

In Avertising, Go Where Your Customers Are

If you’re trying to catch fish, it’s a good idea to steer your boat to where the fish are. You don’t go fishing in a chlorinated swimming pool.

In the same way, whenever you’re selling something, you want to start by selling it to where your customers and most likely prospects are already. In the real world, that means picking a location that has significant relevant foot traffic. Online, it means looking for the organized discussion groups and websites that are already enthusiastic either about your product or your product category.

Because much of advertising today is still targeted to broad audiences, there’s a tendency for people to kick off campaigns that are too broadly targeted to succeed.

Depending on what you’re selling, where your customers are will be different. If you’re selling a video game, you’re going to want to go to an appropriate subreddit or create one for your own company. If you’re selling real estate, you’ll want to look at local publications, discussion forums, and events to understand your area better. If you’re selling a fitness product for women, you want to find blogs and forums where women talk about working out.

Not only will this give you a direct window into what your target market is talking and thinking about, but it’ll also give you ideas for where to target display ads and other paid media. It will always be more effective to go after the people who are most ready to buy first before pursuing broader markets.

This also goes for social networks like Facebook. Instead of the broadest possible demographic targeting, you should start your test campaigns with more specific slices of people whose interests overlap with your services. This can save you a lot of money.

Once you have profitable campaigns running against your target market, you can start expanding with riskier tests into broader groups.