Local Retailers Win When They Optimize for Local Search

modifiedA related article entitled “Local Search Marketing, Accuracy Trumps Distribution” may be viewed on CMO.com

Retail success has long been largely dependent on physical location. Selecting commercial space requires consideration of many factors including demographics, socio-economics, competitive proximity, traffic patterns and more.  Multi-location retailers apply a great deal of strategy when opening a store.  Mall retailers will swap locations when premium space becomes available so that they are more visible to consumers passing by.

Today, however, location means more than capturing the passer-by.  Location also means being found by the digital searcher.  70% of consumers research local products and services on a desktop and then use their mobile device to get where they want to go.  A consumer that has decided to visit your store is in buy-mode.  Will they find you?  Did you take steps to ensure that a consumer would know that you changed locations in the mall?  Will your store be located where the “X” marked the spot?  Is the premium location really premium if a consumer shows up at the doorstep of another business instead of yours?  How much revenue will you miss out on?

I recently shared the results of our original research, which examined local search behaviors of more than 1,000 consumers in the United States. We discovered that consumers are frustrated with location search. The frequency of time that a consumer is led to the wrong destination using web-based directions is unacceptably high.  The impact on brands is significant and you have the power as a retailer to prevent a negative experience with your brand.

If a consumer can’t find you, especially when they are ready to buy, what is at stake? Revenue for sure, but brand loyalty will also suffer as a result of a negative experience.  We actually found that 73 percent of consumers say they lose trust in a brand when the online listing shows incorrect information. Specifically, 67 percent lose trust if they get lost walking or driving to a location.

Our research showed that 56 percent of consumers rely on Internet search engines to find retailers. Therefore, you should pay attention to optimizing Internet search engines with location data that will help customers find you.  Search engines are powerful mechanisms for capturing and converting prospects into customers.  The availability and accuracy of searchable information online about your business is paramount to building and sustaining a solid customer base.

The Mobile Video Ad Serving Frontier

Mobile advertising technologies are swimming in an incredibly fragmented space right now in terms of streaming content and integrating paid advertising.  Mobile is the wild-wild west of online advertising right now.  It is the final frontier of video, which is arguably out there today already.

While we scramble to figure out which cell phone we want to carry – the iphone or something that comes close to it – people with content are racing to figure out how to get it to you while making a buck doing it.  We know it comes down to either a subscription model or an advertising model, and the latter is the most likely path. Continue reading

Direct Response is upon us. Live with it and ‘Fill a Need’

So how hard has the recession hit online advertising?  The growth of the industry has grinded to a crawl in comparison to almost every consecutive year going back to 1996.  Some say 3%, some say 6% and some even say 0%.  But not all sectors match this trend.  Search is projected to push a 15% growth in 2009.  In general, affiliate and lead-gen spending is also expected to continue to grow at a similar pace.  Yes, the recession is impacting spend levels this year, but it is how advertisers are spending their dollars that is really what has changed. Continue reading

Advertiser Control Over Ad Spend and The Swinging Pendulum

There is big pendulum swinging over who controls spend in Online Media.  The economy has taken a swinging nose-dive and everyone is looking for signs of fall-out.  One thing that is for certain, Advertisers are aggressively taking back control over their spend.  There will be budget cuts of 15% of more across the board in Q4.  The place where those cuts are starting is anyplace where an ROI can’t directly be derived.  If a publisher can’t prove a return they will lose the spend.  Response-based advertising is probably the most insulated area of the industry.  This means a push from CPM towards CPC and CPA, even for display.  Advertisers will be driving the pricing models and publishers will have to buckle in order to sell inventory.  With less money to spend, more pressure to perform, hundreds of publishers and networks competing for the reduced dollars at hand…advantage advertisers.

Here is the story…

My good friend, Jonathan Ewert says that every four years there is a great big pendulum that swings in our industry.  On the end of that ball is the influence factor over who controls the dollars in Online Media.


In the late 90s it was clearly the advertisers who had the control.  As they began to test the new medium and brought dollars to the internet in increasing amounts, advertisers tested all kinds of mechanisms that the publisher could come up with.  But it was the advertiser that dictated what measured performance, what the price they would pay and what services they expected in terms of campaign management and reporting.


Then the pendulum swung in the other direct – towards the publisher – as online media shifted from “new media” to internet advertising.  “Standards and policies” were written.  Publishers started driving pricing; and ad server utilization, campaign management provisions and acceptable reporting became organized and structured according to what Publishers were willing to provide.  Advertisers had to start working with what was available, throwing more resources and time at managing the diversity that clients were demanding which made the process of managing internet advertising increasingly more expensive.


Competition for inventory rose steadily once again following the recoil of the bust and price inflation followed.  The explosion of ad networks broadened advertisers’ options and the result was a drastic overload on resource requirements to manage just a single campaign.


While all of this was going on, Search outpaced display as advertisers began to recognize the value of response-based advertising and Google’s climb to the top of Everest was off to the races.


Fast-forward to the beginning of 2008 and you had topped-off CPMs, somewhere between 200 and 400 ad networks (depending on who is counting) and Google controlling 60+ % of the addressable Query stream on the Internet – 90% collectively controlled by Google, Yahoo and MSN. 


Throughout the first-half of 2008, prices hit all time highs in search as traffic growth online slowed and competition for popular keywords rose.  CPMs for targeted quality display inventory trumped the last four years and publishers began to push to reclaim inventory from the networks that had been previously aggregating and watering down their value.


Then the big ball started to swing.  With the advertiser no longer able to increase spend in search without compromising ROI and publishers reclaiming display inventory in order to elevate CPMs, something had to change.  Additional factors at play, aggravating the situation, was the continued consolidation of search (think Google’s increasing share of the Market – the Yahoo deal, Google running on ASK, etc.), the intense-resource demand on advertisers associated with managing disparate data sources, and publishers trying to push CPMs while a massive number of networks commoditize eyeballs. All of this equates to the advertisers almost hitting a breaking point.


Then the economy took a swinging nose-dive and everyone started to run around asking themselves what is the fall-out result for online advertising.  Is this the next bust?  Here come the layoffs.  How many VC-backed companies are going to go under which have promised huge returns with no revenues to prove it?  One thing that is for certain, Advertisers are aggressively taking back control over their spend.


You can figure there will be 15% cuts in budgets across the board in Q4.  At least that is what some of the larger advertisers are talking about and that is what some of the networks are already hearing.  The place where those cuts are starting is anyplace where an ROI can’t directly be derived.  Lookout publishers – if you can’t prove a return you’re going to lose spend. 


Response-based advertising is probably the most insulated area of the industry over the next 2 to 4 quarters given our economic environment.  Advertisers have to advertise to keep generating business, but branding online is going to suffer.  This means a push from CPM towards CPC and CPA, even for display.  Advertisers will be driving the pricing models and publishers will have to buckle in order to sell inventory. 


Furthermore, diversification of spend across less expensive, higher-returning publishers and networks will also draw attention.  This means that advertisers who have hit the asymptote of their returns on Google or the major display ad networks – when spending a dollar no longer returns $1.50 but now returns $1.25 – will start to look elsewhere to maintain their margins.  With smaller budgets to spend, ROI pressure will become intense.  We may even begin to see performance-based commissions between advertisers and agencies as competition for control over the spend increases between agencies.  Certainly this will be a likely case in the SEM arena.


So the pendulum, which started to swing in the beginning of Q2, went full tilt when the market dove.  Advertisers now hold the cards and publishers and networks that recognize the truth will step up and work with them to maximize the value of their relationships given the pressures present in the economy. 


With less money to spend, more pressure to perform, hundreds of publishers and networks competing for the reduced dollars at hand…advantage advertisers.

The Ideal Online Advertising Campaign, Direct Response with Behavioral Customer Re-Targeting. How to Get a Greater Share of Your Advertiser’s Budget


Okay, so it’s a mouthful.  But all of my previous posts which have distinguished customer re-targeting from behavioral targeting, redefined BT as event-based targeting and attempted to diffuse the FTC complaint have led to this.  I am going to describe the workflow that puts first party ad serving, customer re-targeting and direct response online advertising into practice.  Re-targeting generates recurring revenue, decreases the CPA of online advertising campaigns and demonstrates significant reasons for increasing the online advertising spend by allocating direct marketing budgets to re-targeting initiatives.


 


The first step happens outside the realm of the online advertising campaign.  It takes place before the planning or strategy sessions or even before the budget is set.  The first step is first-party cookie writing.  As I described in my last post, How Does Re-Targeting Work? an advertiser has to segment its existing audience and set cookies to distinguish users for the re-targeting process.  


 


This sounds complicated but most often it is already done.  A retailer like an LL Bean will have already done this.  It knows who its customers are and has modeled them out by various types.  Amazon.com has you pegged by preferences.  Yahoo has you cookied if you maintain your stock portfolio on their web site so that they can recognize you when you return.  Forget about Microsoft!  Your bank does it too.  Pretty much anyone that you interact with online, with whom you have identified yourself, sets a cookie to further classify you.  Classification helps a site recognize you when you return so you don’t have to login, they pre-populate the user field, they dynamically serve content to you that is more suitable to your preferences, they optimize your experience so that your time is not wasted.  Are being tracked?  Yes but it is not invasive.


 


But there are other reasons to set first party cookies as well.  If you are going through a multi-step registration or application process, a first-party cookie can be set at each stage to indicate how far you have gone in the process.  That way if you leave, and later return, you can be ear-marked and taken back to where you left off.


 


So the first-party cookie writing process has to be in effect and, depending on the universe to be targeted, the cookie must be propagated out on to the Internet so that it may be effectively recognized through the re-targeting campaign.  This is usually about a 30-day lead time on the ad campaign. 


 


The traditional media planning process has to be conducted.  Sites have to be selected, negotiated and buys need to be made.  That’s all good.


 


Then there is the strategic media planning portion.  Unlike with traditional online advertising – and/or Direct Response online advertising – it is no longer just about prospecting, branding, messaging and generating leads and opportunities.  Re-targeting introduces an order of magnitude of complexity to the planning process because you have to think about messaging to existing customers in addition to the traditional planning you do involving prospecting.


 


Think for a minute about a three-month campaign that involves 10 core sites.  You renew on each site each month because those sites consistently perform well.  Popular sites get repeat visits.  Therefore if a site consistently generates strong leads for you, your previously acquired leads are also returning to those sites.  But while you are continuing to advertise there you are paying to re-prospect your previously acquired leads at the same time.  A portion of your message is falling on deaf ears.  Existing customers, previously acquired leads that bailed on you and people that have seen all of your ads and have never responded continue to see your ads over time.  You pay to continue to re-prospect them.  What is the composition of that audience?  The longer you advertise there, the higher it gets.  Maybe its starts off at 5% but it grows and could become 25% or higher over a few short months.


 


So with re-targeting you now have the opportunity to say something to your previously acquired leads, your customers and any audience that you can identify. 


 


For the sake of an example, and as we usually do with most of our DirectServe clients at TruEffect when they first start working with re-targeting, let’s just say that you create three segment types of a known audience for re-targeting.


 



  1. Frequent shopper (weekly)
  2. Moderate shopper (monthly)
  3. One-time shopper

 


So in addition to the campaign planning that will take place for acquiring new leads, which may have a number of messaging strategies and associated creative, we now must also do the same for each of these three audiences.  Multiple messages and creative must be planned and tested for optimization throughout the campaign to maximize response.


 


When the campaign is finally setup there will be four simultaneous campaigns going on across the same set of inventory.  The three segment types listed above, plus the prospecting type for unknown users who are not already carrying the advertiser’s first party cookie.  If you decide to use behavioral targeting to pinpoint events to drive more specific prospects you may have additional campaigns as well.


 


What will you see when you execute on a campaign with re-targeting?


 


(1) Audience composition


 


First of all, and for the first time, you will be able to measure the percent of your advertising audience composition.  You will now know who of the people that you are showing banners to are existing customers and who are prospects.  Not only that, but you will know what kinds of customers they are.  Ads will be displayed according to the cookies that exist.  So cookie type #1 (Frequency Shopper) will see creative group #1 (Targeting Frequent Shoppers) and so on.  And your impression reports will tell you not only how many times each banner was played but based on banner plays, what percent of your advertising audience is comprised of each type of person.  Overall, what percent of your advertising audience is comprised of existing customers vs. non-customers across every web site and network that you advertise on will become clear. 


 


This is very compelling information as the longer you advertise, audience composition may become a factor that impacts your media buying decisions.


 


(2) Re-target vs. Non-Re-Target Click-thru Rate


 


You will be able to distinguish the click-thru rate results of each customer segment type as well as prospect types.  What you will find is that like with your traditional online advertising campaign, you will be able to optimize click-thrus over time.  You will also be able to do the same with your re-targeting.  At TruEffect, we have consistently found re-targeting tends to have an incrementally higher click-thru rate than prospecting response rates.  If you think about this, it is pretty logical.  You are messaging offers to existing customers to drive repeat business.  It is a lot easier to get an existing customer to come back and do something than it is to get a new customer.  So the click-thru rate comparison will be a strong indication of re-targeting success.


 


(3) Post-Click Results of Re-targeting vs. Non-Re-Target


 


Here is where things really matter.  If the direct response campaign has a post-click success metric that is about generating a sale or action, then revenue is the success metric and the CPA is calculated based on that amount.  Generating recurring revenue or generating new revenue hits the cash flow statement the same way.  But when you can take your online advertising campaign and convert a portion of it into a customer penetration campaign you will please a lot of people in the marketing department at the advertiser. 


 


Dollars spent re-prospecting a deaf audience will now go towards driving recurring opportunities, cross-promoting and up-selling products and bringing customers back to the transaction cycle.  The CPA for the online advertising campaign will drop significantly because the revenue attainment of the campaign will go up incrementally. 


 


Is it a lot of work?  It takes brain power to figure out what you are going to say to three different customer segment types.  It takes strategic thinking to come up with multiple messaging strategies to motivate customers to re-transact.  But marketers do this everyday.  Direct Marketing is a huge initiative.  And the internet is already a massive DM medium.  Re-targeting introduces DM to online advertising and offers the opportunity to expand campaign budgets exponentially.  Think about that as an agency.  If you can prove to an advertiser that you can drive recurring revenue, you can demonstrate that you should have a greater share of the direct marketing budget!


 


 

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