There is a surge of deal sites on the internet and I don’t think it’s a good thing for businesses. Groupon, LivingSocial, Facebook Deals, Google Offers, Woot, Gilt Group and on and on, all get too much credit for the services they provide: It’s not that hard to give stuff away for cheap on the internet where spreading information is as simple as a click. Retailers have gotten caught up in all the promotion hype of these businesses and have trained customers to be very price sensitive and to not buy anything until it’s on sale. I’m very skeptical of whether these flash sales and deal networks really add value to the business: sure they are getting a ton of volume quickly but are they getting more customers? It’s my opinion that the people who use these deal sites could care less about being return customers and are more interested in jumping to the next business that gives them a deal. Take a look at the growth of the query Coupon Code from Insights for Search:
From a study posted on the Google Retail Blog: 25%, the majority, of people who “Like” brands on Facebook do so for discounts.
The amount of people researching online before they buy is going up: one study shows “58% of Americans now reporting that they perform online research concerning the products and services that they are considering purchasing,” and another says, “34% of customers research online and then went to the store to purchase the products.” The more prolific these deal sites become the easier people doing their research will find them and the harder it will be for a company to sell something at full price.

Here are a few ideas on getting the most out of Google Adword’s remarketing:

Remarketing to everyone who visits your site can be wasteful and expensive since there are a lot of visitors who bounced immediately after visiting. No matter how many ads they see they have no interest. You’re better off remarketing to those people who showed a higher level of interest by visiting multiple pages. To do this create a Custom Combination that includes tags from more than one page. In the New Custom Combination screen, select all audiences from one tag and then create another list that includes a separate tag.

Like in this example for a site that sells both women’s and kid’s products, this custom combination will include only people who have visited both a women’s page and visited a kid’s page, no bounces.

AdWords remarketing also allows for reactivation campaigns where you target people who have purchased in the past with a message to get them to come back and purchase again. Create a new remarketing list and click the Select From Existing Tags radio button. Whatever you call your conversion, or “action name” will show up. Select it, and give it a 90 day duration. Then make another remarketing list the same way but this time give it a 60 day duration. Then make a new custom combination where you select all of the 90 day audiance and none of the 60 day audience. This way you will retarget people who have purchased 90 to 60 days ago. The maximum membership duration for your cookie is 540 days, so if your product is a seasonal one, you could message past purchasers over a year after they purchased to remind its that time of year again to come back and buy.

Chances are most people who buy from your site, buy the same day they visit. So sending them a remarketing ad as soon as they leave can be a waste and is going to give your retargeting ads more than their fair share of credit. Waiting a day before showing them ads can help you weed out those people who would have come back and bought the same day anyway. Setting this up is just like the tip above but instead of using your conversion tag, use any of the tags you have set up on your site. Make the membership duration for one of them 1 day and then make a new custom combination that excludes all audiances from that 1 day list. Now your ads will show to people after one day has past.

Your AdWords budget is a little different then a traditional marketing budget because it changes based on your average order value and your cost per conversion.
Think about it: if you got $50 for every $40 you spent, how big of a budget would you want to have? You would want to have the largest budget you could possibly have because the more money you spend, the more money you make right?!
Traditional advertising budgets spent on billboards, TV or magazines have no way of knowing how much money is being made back on your investment – hence the reason for having a budget.
Below is my AdWords Budget Calculator built in excel for calculating the sweet spot for your budget. Feel free to download it at the bottom of this post.

So the first thing you need to decide is how much a sale is worth to you – weather it’s the worth of one lead, the margin you make on a sale, or the value of a visit – I call it the average order value. Next, you determine your cost per conversion. This is derived by cost divided by conversions. If you’re just starting out you won’t know what this metric is in your AdWords account since you need to accumulate some clicks and conversions. But you can still use the tool to make a goal for your cost per conversion.
Once you start playing around with the calculator you’ll see the relationship between these metrics and your revenue. The more you can decrease costs to get that average order value to go up, and the more you can optimize your AdWords campaigns to get that cost per conversion down – the more revenue you make. Obviously no matter how large of a budget you have, at some point there won’t be enough demand, in the form of searches triggering your ads, to allow you to continue to make more money. This is where expanding your keyword lists comes in and the process starts all over again.

Download AdWords Budget Calculator

I dig the 100+ Old Spice Man videos made by marketing agency Wieden + Kennedy, targeted towards individual social media people. They fit pretty close to what I imagine that future of advertising online will be like – I wrote about it previously in my post Rocket Ship Marketing.

You can read that post for more detail on what Rocket Ship Marketing is. In this post I want to point out how what Wieden + Kennedy did fits in with the Rocket Ship idea.

1. They made over a hundred videos. Instead of one big Rocket Ship, or one big idea, they did hundreds of mini rockets. These are cheaper, fail faster and uncontrollable; therefore they were able to spread out and find their niches.

2. More videos makes for less risk. Some worked better than others but since none of them individually required a big investment it didn’t matter. All of these niches in the long tail together were enough to be equivalent to being a big budget hit but without the risk of just being one idea by itself.

3. The Old Spice ads are very personalized, made to individual people. Instead of making something that tries to target as many people as possible (one big Rocket Ship), which makes for bland and unremarkable ads, they were hyper-targeted and super relevant (many small Rocket Ships). When the intended recipients received these messages they let everyone know about it. That’s what relevant targeting does. It’s not perfect for everyone but for those who it is perfect for, it delights them and it spreads.

4. They gave up control. According to the article on Read Write Web, “Proctor & Gamble exhibited incredible bravery in allowing his team to write marketing content in real time, with little to no supervision.” Usually the brand wants to own the message and all appendages to it. But in the Old Spice case, they let go and allowed people to comment, re-send and participate with it. This can be scary (what if it backfires and gives the brand a black eye?) but at the same time its the only way to let multiple ideas go out, be discovered and send back what they find.

With cost of production going down thanks to improved technology and the increasing ability to target very specific audiences, I think this model makes a lot of sense: 1. Make a bunch of mini-rockets each with a specific message for a specific group. 2. Fire all the rockets at once. 3. A few rockets are bound to miss but don’t worry, you’ll quickly find out which ones suck and you’ll be happy you didn’t invest everything into that one idea 4. Measure the results and discover which good ideas are spreading. 5. Give more money to the good ones that work and less to the bad ones that don’t. 6. Repeat.

Inspired by Avinash’s last post on ensuring a clear line of site with web metrics, I took a stab at creating a web analytics framework for a medium sized eCommerce site. This theoretical site is using the following marketing channels: paid search (brand and non-brand keywords), comparison shopping engines, affiliates, email, display advertising and social media (Facebook and Twitter).

I tried to figure out where each of those channels would fit into the what matters most diagram from Avinash’s post (I know I’m missing some so I left an empty space below each segment for additional ideas), and then those channel’s strategies, KPI’s and KPI Targets.

Click to Enlarge

I really enjoyed this exercise and get how effective this would be for any organization to get everyone on the same page. It gives the people at the top an accurate idea of what the site is really worth and it gives the analysts a direction to start doing segmented analysis to discover problems to fix what directly affect net income.

Download the Web Analytics Framework.

I think the correct way to do marketing, or the way the current landscape demands, can be explained using a metaphor having to do with comparing advertising to a rocket ship:

Whats Wrong With Big Rocket Ships (AKA Traditional Advertising):
1. Traditional rocket ships are big, complex and are explicitly designed to be controlled. These design requirements result in a huge increase in their cost and complexity, and decrease dramatically the probability of the success for the mission. Likewise, a traditional marketing plan is made to be as big and encompassing as possible. Since there is so much riding on it, the marketing must be controlled. With rocket ships and traditional marketing plans, it’s make it or break it.

2. A Rocket ship uses 80% of its fuel in lift off. Once it gets past the lift off stage its pretty much on its way. Likewise, it takes 80% of the marketing budget to launch a new campaign before it has a chance at catching on. What if the idea is a dud and you can’t tell until  after spending 80% of the budget?

3.With the rocket ship costing so much money and taking so much time, it needs to be successful. Traditionally we are continually looking for a “hit” in advertising, something that will spread and become part of pop culture. While trying to predict the likely success of a chosen brand message being a hit, inordinate amounts of money and energy are spent, often, all in vain. Who knows what will be a “hit”? Nobody.

The Solution To The Traditional Rocket Ship Is Replacing It With Hundreds Or More Mini-Rockets:
1. Mini-rockets are cheap to make and launch. And since you don’t have to rely on only one to succeed dramatically well, they don’t need to be built in with fail-proof security and reliability (the reason why traditional rockets cost so much and take so long to build.)

2. Continually measuring the mini-rockets as they go, you can build on the ones that are working and cut back on the ones that aren’t in real-time. Having a budget split up this way allows you to not waste more money than is needed before cutting back on ideas that aren’t working. By relinquishing control, the mini-rockets would be on their own, only bothering to send back whatever they discover.

3. No one knows what is going to be a hit. It’s also hard to tell which demographic will best respond to any particular media. But you stand a better chance at finding a hit with a hundred estimated guesses at a dozen different demographics than one big idea. Then, after launching the multiple mini rockets, you  can let the data tell you which one is the best and continue to fund that one.

This strategy requires the brand to forgo the single-minded brand proposition and embrace long tail thinking. Every brand has more than one potentially ideal consumer. But the big rocket ship’s only option is to target one demographic broadly to capture as many people in that demo as possible. This creates a bland campaign that doesn’t resonate perfectly with anyone since it’s trying to attract as many people as possible by being broad. Targeting the “edges” of the tail instead of the masses, or “head” of the tail, requires narrowing your list down to those most likely, most interested people and ignore everyone else.With mini-rockets you can target very specific demographics with a very specific message. Sure, the amount of people you are reaching is less but your chance for success is higher. This is also much cheaper. Target a dozen different demos and try sending a rocket to them all. These smaller niches, in aggregate, can be composed of as many people as the “head” of the tail and stand a better chance of accepting and spreading your brand.

The app Shopsavvy for the Android and Redlaser for the iPhone are pretty sweet. With the iPhone 3GS you can use its video camera to capture a barcode, then the app shows you price comparisons for that product online as well as comparing the price to other stores near you.

This makes me think of all the cool things grocery stores could do if they harnessed the internet’s data collection and social networking abilities. A few ideas:

1. Grocery stores already keep track of purchases with their loyalty cards when you check out, why not share that information with the consumer? Give the customer a personal page on their website that shows their shopping habits and make recommendations like Amazon does – 90% of people who purchase Cool Ranch Doritos also buy Cherry Coke.

2. Being able to see everything that you have purchased and the quantity of what you have purchased would help you plan your shopping better. Like what Mint does for personal finance, you would know more accurately how often you need to buy milk. You could see pie charts that show you how much of your food purchases are made up of candy.

3. With more data, grocery stores could give highly relevant and targeted coupons designed individually for the consumer. With enough time the grocery store will know which kind of offers – buy one get one or % off – and on which products incentivize customers to buy. They could figure out that my cookie of choice is Oreos and any discount below 20% off won’t make me buy, but as soon as an offer comes for 30% off Oreos, I’m there. The store could effectively maximize every purchasers buying ability.

9. Brands could set up loyalty products for each of their items. Your 10th Kraft purchase gives you 10% off your next purchase of cheese.

7. Or how about instead of going through a checkout line you put your cart through a conveyor track, like an x-ray machine at the airport, that scans all your items immediately and gives you the price.  No more paying price checkers and no more lines.

8. Or, what if your fridge had bar scanners on the side of it so that it knew everything that you had in the fridge. It could tell how often you take things out so it would alert you if some food was about to expire soon. If you needed to go grocery shopping, just push a button on the fridge and have it print out everything you have run out of, or better yet, send it to your handset.

5. What if every time you put an item in your cart, a digital read-out of the total price of everything in your cart was displayed on the cart handle; take something out of the cart and the price goes down. This would be awesome for customers to be sure they weren’t spending too much while picking out the groceries. Of course, grocery stores probably like that we don’t know how much everything costs until we get to the check out line. But think off all the cool stuff you could do:

6. Supercook is an online tool asks what’s in your kitchen and then uses that information to provide dozens, if not hundreds, of unique dishes that you probably would never have thought of on your own. What if the grocery store kept track of what you put in your cart and gave you ideas of what dishes you could make while in the grocery store  – add Country Crock butter and Pace Picante Salsa, and you have all the ingredients you need to make zesty enchiladas.

4. Looking at the data you could tell in what order most purchases happen in. So they find out that statistically, after people buy meat, the next thing they buy is beer. Up-sell by placing selected items next to, or in-between the meat and the beer for that purchaser to see like barbecue sauces or beer coasters.

10. Let customers connect with other customers who buy similar things. Looks like you buy a lot of spices and ingredients, would you like to join a recipe community in your area? You BBQ a lot, compete in your local community cook-off.

Maybe some of this stuff seems a little too much big brother, but I would let companies know my purchasing habits in exchange for relevant coupons, food suggestions and insights to my food buying habits.

Great talk at TED by Clay Shirky:

In a world where media is global, social, ubiquitous and cheap – in a world where the former audience are increasingly full participants – in that world, media is less and less about crafting a single message to be consumed by individuals, and is more often a way of creating an environment for convening and supporting groups.

What an exciting world we live in. The ability to create movements, be heard, and make things happen has never been easier. Now it’s about asking the question, what do you want to create?