Chief Marketing Technologist by Scott Brinker

Google bets HUGE on advertising everywhere

2009-11-09T22:11:37-05:00

These past few weeks, I've repeatedly remarked that social media marketing — while a glorious and wonderful phenomenon in its own right — is unlikely to be the death of online advertising.

This has not been a popular position. In fact, I was feeling a little lonely out on that limb.

But today, I had some company join me. And not just any company. Google, the great masters of the Internet universe, happily crawled out on this limb with me — with $750 million to purchase AdMob, the leading mobile display advertising company. (The branch is sagging under the weight of all that cash. Either that, or I need to cut back on the cheese dip.)

This is Google's resounding vote that, while app stores are nice for occasional $0.99 revenues here and there, the real business of the online world — extending into the now fully blossoming (finally!) mobile market — is advertising.

Assuming that this deal closes (more on that in a moment), this will mean that Google will be even more of an advertising juggernaut than ever before:

AdWords for PPC sponsored ads on the most popular search engine;
AdSense for ad placements in the longest Long Tail content network;
YouTube for video ads in the largest online video community in the world;
DoubleClick for managing advertisements at enterprise-class scale;
Google TV Ads for bringing AdWords sensibility to television ads;
and now AdMob for mobile advertising with web display ads and app display ads;

When you line it up end-to-end, that's a tremendous paid media portfolio.

I'd say the phrase "Internet dominating paid media portfolio," but that's probably not what Google wants to hear — as there's already talk about Google-AdMob antitrust issues.

It will be interesting to see how that debate evolves.

However, their intentions to make this acquisition still count as a vote for a long and prosperous future for online advertising.

It's ironic. Google has a reputation of being a very engineering-driven company, not a particularly strong marketing culture. Yet in the battle for the future of advertising, they've become the staunchest advocate of its survival and rebirth.

How finance hobbles marketing innovation

2009-11-06T08:12:40-05:00

When it comes to innovation and new market opportunity — why some companies harness those forces to catapult to riches and glory, while otherwise good and strong leaders stumble and fall — the smartest guy I've ever met is Clay Christensen.

The chart above is from an article Clay wrote a year or so ago, Innovation Killers: How Financial Tools Destroy Your Capacity to Do New Things.

You might be saying, "I'm in marketing, not finance..."

But stay with me on this, because this chart gets to the heart of the problem in dealing with disruptive innovation. And, as you've probably noticed, the entire marketing world is in the middle of a colossal cluster-flock of disruptive innovation.

When a company is trying to decide whether to do something new — hire new people, adopt new tools, develop a new channel, or invest in any new project of any significance that's different than the status quo — someone usually ends up doing a cash flow analysis on it.

Maybe they try to calculate its net present value (NPV) or internal rate of return (IRR). Or maybe it's just an informal estimate: how much will we spend versus how much will we get back and when.

Maybe you do it. Or your boss does it. Or someone from the finance department does it.

But someone "runs the numbers." And the fate of the project hangs in the balance.

Here's where a terrible mistake often occurs:

In the above chart, line (A) shows the expected trajectory of investing in the new project: you're going to lose some cash in the short term, as you spend on your investment, but then eventually it will generate more cash back to the company.

So far, so good.

The mistake is with line (B): assuming that if you don't invest in this new project, your existing cash flow will remain the same.

The reason this is a mistake is because it assumes that everything will stay the same. "If we don't do anything different, we'll still make the same amount of money this year that we made last year."

And in a market beset with disruptive innovation, that's not likely to be true.

The more accurate assessment is shown with line (C): if you do nothing, your existing cash stream is likely to decline.

That's where Clay's "innovator's dilemma" springs from, catching otherwise good companies by surprise. If they're making good money, there's a powerful incentive to stick with the status quo. By the time they realize that revenue from the status quo doesn't actually extend forever into the future, they can be in a tailspin. At that point, it's too late.

Clay isn't suggesting that you don't run the numbers on pursuing new ideas — and neither am I.

Rather, his point is that you need to compare the investment in innovation against the risk of doing nothing. That risk is not zero.

Prefer a marketer's take on this?

Seth Godin wrote a more down-to-earth version of this in a post on apparent risk and actual risk:

Apparent risk is what gets someone who is afraid of plane crashes to drive, even though driving is more dangerous.

There is more opportunity in marketing now than anytime in the past 40 years. But you have to act to take advantage of it.

The policies and organizational structure you put in place 5 years ago for web marketing are now woefully out of date. They're holding you back. You've got to innovate them. Which means you've got to navigate around the innovator's dilemma and make sure the people running the numbers are running the right ones.

To paraphrase Gene Kranz of Apollo 13 fame, "Status quo is not an option."

Study reveals issues with search ads -- trust and usefulness

2009-11-02T06:56:21-05:00

A few weeks ago, I launched an informal survey to ask people what they thought of PPC search advertising, hoping to peel back a bit more of the curtain of their sentiments and beliefs. As promised, I'm happy to share the results with you.

Well, maybe "happy" isn't the right word.

As you'll see, the feedback about search advertising is not particularly positive — although on the bright side, it does leave considerable room for improvement.

I segmented respondents into two groups, those who work in marketing (the orange bars in the charts below) and those who don't (the blue bars). This was an important distinction, as marketers tended to have a very different perspective on this subject — not surprisingly, a more positive one — than everyone else.

Right away we see a big split: 33% of marketers said they frequently pay attention to the ads when searching on Google, Yahoo! or Bing. In contrast, only 4.5% of non-marketers claimed such frequency; instead, 68.2% of them responded that they never or rarely do so.

So perhaps marketers have a "professional interest" in the ads — but most everyone else is trying to not pay attention to them. I can't say I'm surprised by these results, as the popular sentiment against advertising is no secret. But I am disappointed that search ads — theoretically, a great mechanism to efficiently match people and providers — may be failing to connect with searchers in most situations.

Along those lines, I asked respondents if there were circumstances where they were more inclined to pay attention to the ads. For non-marketers, 63.6% reported increased attention when looking to buy something specific, which I interpret as relatively late in the buying cycle. Only 22.7% focus more on the ads when learning about a new idea or concept; and a mere 18.2% do so when trying to find answers to a problem. I believe you could interpret those situations as the earliest moments in potential buying cycles, where formative opinions are being shaped — yet here's where people seem to be least inclined to consider signals from advertisers.

Curious about the rationale behind this avoidance bias, I asked people for the reasons why they avoid the ads on a particular search. Just focusing on non-marketers, the top responses were (1) don't want to buy anything, (2) don't think advertisers will have anything useful for me — that one raises some concern — and (3) don't find the information in the ads to be helpful. (How helpful can 135 characters of a text ad be? Can we do better?)

But the big alarm was that 40.9% of non-marketers said that they don't trust the advertisers. Which is apparently a well-founded suspicion, because 47.9% of the marketers answered the same!?! This is a core issue. If you're an advertiser, let there be no doubt that trust is the biggest hurdle you face at first contact with your ad — and what happens after they click on it.

Finally, we get to what I thought was the most interesting question: asking people to pick the words that describe how they feel about search ads. For non-marketers, the top choices were: annoying, distracting, and — again, red flag! — untrustworthy.

The top choices of marketers? Helpful, untrustworthy (?!?!), and efficient. Perhaps marketers were interpreting these ads as being helpful or efficient to their marketing efforts, rather than an assessment of the ads themselves. Although "efficiency" seems questionable given some of these answers. And untrustworthy pops up again among the very people creating the ads.

I also found it notable — for improvement — that only 1 in 10 people considered search ads to be creative or persuasive.

Of course, an informal survey like this should be taken with a grain of salt. But I suspect that these answers have a ring of truth to many of you — how would you have answered these questions?

Yet seeing these sentiments and beliefs quantified helps to illustrate the challenges advertising and marketing faces. Even search is not immune from the backlash that a generation of bad ads and shady marketing tactics has wrought.

The optimist in me, however, believes that this is an opportunity for good marketers — and the services such as Google that attempt to connect them with their audience — to do better and address these shortcomings and default ill will. As Seth Godin might say, it's an opportunity to be remarkable. To achieve that, trust and usefulness must be top priorities.

Thank you to everyone who participated (n=92).

Risk in PPC vs. social media marketing

2009-10-26T18:42:06-04:00

There's an argument that's been circulating in social media marketing circles about how "dangerous" it can be for marketers to rely on pay-per-click (PPC) advertising, as compared to more organic ways of building traffic.

You know, social media doesn't have to be positioned as the destructor of advertising to justify its existence.

The gist of the argument: a deep-pocketed competitor can come along anytime, say flush with VC cash, and outspend you. One day you were at the top of the sponsored links, bidding some reasonable CPC — and then suddenly you're shoved down the list. Addy Warbucks is bidding CPC's in the stratosphere. There's no way that can be profitable for them, it's just sheer irrationality. Yet you're suffering for their recklessness. You either have to live with your lower ranking or jack up your bids beyond what you think is reasonable.

The implication: social media marketing is safe from this kind of irrationality. If you want a defensible way to win customers, invest in social media instead of advertising.

I'd like to offer up a counterpoint.

First, is this a real risk? I'm a tad skeptical. Since there are generally 11 page-one slots in a typical search keyword auction, and the inherent difference in click-through rates (CTR) between the top slots is not enormous, a single irrational competitor can only do so much.

So they take the 1st slot and you take the 2nd, and in the process you bid strategically so as to make them pay full price for their ridiculous bid. Note: your price for Google ads only depends on the bids of the people below you, not above you, so your price is not affected. Let them burn through that capital while you keep your optimized net CPA (cost-per-acquisition) and comparable CTR.

One bidder doesn't change the whole game in sponsored search. It would take a whole group of cash-rich, irrational bidders to knock you out of the running. And then, if there are really that many other players at higher CPC bids, can you write them all off as "irrational?" After all, despite the amusing stereotype, I'd wager that most VCs and funded entrepreneurs have incentives to behave rationally. Aggressive, yes. Irrational, no. There's a difference between those two adjectives.

However, for sake of debate, let's put that aside.

Let's assume that, yes, PPC has the risk that a marauding herd of super-rich lunatics can bid you off the island of your favorite keywords at any moment.

I contend: social media marketing suffers from the same risk.

If I've got a boatload of money and I want to own the top organic search engine results (SERP) for a particular keyword, there are a wealth of tactics I can employ my capital towards to achieve that goal. I can't buy links directly — well, I can, but that's black-hat, not a stable strategy because if Google catches you, they will punish you harshly.

But I can buy links indirectly:

hire a research firm to crank out original reports relevant to the keyword, study after study, and then promote them free online ("link if you like!");
hire a group of super-coders to develop cool web or iPhone/Android applications that are relevant to the keyword and make them available free with ways to encourage people to share them and link to them;
make a deal with a celebrity in the industry (or in the pop culture scene where appropriate) to participate in a blog or video blog series, again promoted to generate links;
hire lots of talented people to blog, tweet, comment, and fan-page relevant content, all attributed to the company — note, I'm not suggesting spam but rather a flood of real content, the sort of real content you'd produce if you could afford to hire a platoon of really great social media mavens;
reward your social media "supporters" with a private invite-only concert by Weezer or whatnot, encouraging lots of blogosphere and Twitter buzz;
launch a conference or independent organization around the keyword topic to further generate organic interlinked content in the desired keyword space;
contract with great writers to publish books on the topics of your main keyword space, promote with free copies, leverage Amazon's PageRank positioning to your benefit;

And so on.

The irrational competitor's strategy: overspend on as many of these tactics as necessary to build up a tremendous amount of link juice and subscribers and followers, and then leverage the bejesus out of that base for the promotion of all future content. Again, I'm not talking about anything black-hat — this is just about spending your way to the top, buying socially exciting content and content-making capability.

Specifically spending more than is rational on these tactics.

If you were rationally trying to build your social media marketing presence in the face of such an onslaught, you could very easily be swamped out of the picture.

You might argue that overspending on social media is a harder, more expensive proposition than doing the same with PPC. Perhaps. But the consequences also have greater longevity. PageRank sticks around a heck of a lot longer than the top slot in the sponsored links box. With PPC, as soon as you shut off the money, Google shuts off the ads. But organic listings persist into the future.

Also, a single competitor can generally only win one ad slot on a page — but if they're clever and aggressive in their social media strategy, they can acquire multiple organic links on page one of the SERP. One competitor can conceivably push you off the page entirely, if they set their cost-is-no-objective sights on it.

I rest my case: it's not true that PPC advertising has an "irrational spender risk" and social media marketing doesn't.

They both have that risk. Although that's probably not the top risk that people should be worrying about in either case.

To be clear, I'm certainly not advocating that you should do advertising instead of social media marketing. Rather, I believe that they are both components of a healthy digital marketing strategy, and that you should invest in each relative to their ROI for your business.

If PPC advertising can give you great return, use it. If blogging, tweeting, and Facebook'ing can give you great return, use it. Invest in each to the degree it makes economic sense. They're not mutually exclusive. To the contrary, they can actually be quite synergistic... but that's a post for another day.

What if advertising were dead? Really?

2009-10-21T16:35:31-04:00

Here's a brain teaser for you:

1. Most people claim to dislike advertising on the web. I know, display advertising is probably despised more than less flamboyant search ads. But in my recent survey, 71.4% of the respondents who don't work in marketing claim that they never or rarely look at the sponsored search ads on Google or Bing. (Interestingly enough, even 31.6% of the people who do work in marketing made the same claim.) Many participants identified the words "annoying," "distracting," and "untrustworthy" to describe how they feel about the ads.

2. Some gurus claim that social media marketing will supersede advertising. Instead of spending money on advertising, they advise marketers to invest in blog posts for SEO rankings, catchy YouTube videos, the nurturing of fan pages on Facebook, and so on. Some go so far as to suggest eliminating advertising entirely (PPC bad, SEO good).

So far, so good, right? Logically everyone should stop advertising and engage purely in social media. But here's the paradoxical conundrum...

3. Almost all of the social media platforms are advertising supported. The only reason there is a Google search in which SEO can thrive is because advertisers foot the bill for essentially all of Google's infrastructure, operations, R&D. Similarly, YouTube and Facebook — largely funded by investors so far — all expect to cover the majority of theirs costs by selling ads. Even Twitter can't avoid revenue forever, and advertising remains a likely mechanism.

Huh.

Given those premises, how can you not conclude that the Internet as we know it is doomed to fail? In other words, if social media marketing really succeeds at banishing advertising, then there will be no media in which to socially market anymore.

Not possible, you say? Economically, it's actually quite rational. Why would anyone pay to advertise when most people ignore ads and that investment is "obviously" better spent on producing social media content and conversations? And why would for-profit companies run these social platforms if they can't generate any revenue?

What are the possible outs?

Users start paying for services directly. You can use Google, but you have to pay $15/month. Same goes for pretty much every web site or service that is advertising supported today. There's some talk that Apple's AppStore for the iPhone has proven that this model can work. Although, I know quite a few app developers, and none of them seem to be making all that much money. Certainly the big media folks tried that road — e.g., online subscriptions to The New York Times — and it didn't end well for them.

The web platforms sell their profiles of everyone. Google, Facebook, YouTube, etc., track everything you do, and then they sell that information to the highest bidder. Marketers won't directly advertise on those system — no one pays attention to the ads, right? — but they will use this information for trying to target you in other channels, or for market research, or for, I don't know, outright blackmail. Seriously though, is the relinquishing of everyone's privacy worth the incremental value it could give marketers? Is there even enough value there for the marketers to cover the expenses of the platforms?

Government or NGO's take over the platforms. Hey, it works for Wikipedia. Theoretically, I suppose Google, YouTube, Twitter, Facebook, etc., could be funded by tax dollars or donations. Maybe that's the ultimate egalitarian computing society of the future. But realistically, it's hard to imagine. Have you seen the health care debate here in the US lately? Yikes. I have a hard enough time getting someone from Google to respond to my emails already.

None of those options sound pretty. So, how about this:

Advertising isn't really going to die. As Mark Twain famously remarked, "The reports of my death are greatly exaggerated." Even if they won't admit it, maybe enough people find advertising relevant in enough circumstances — consciously or unconsciously — that it is in the economic interest of advertisers to continue. Maybe those social media gurus are incorrect in their predictions that social media will replace advertising — maybe it will end up complementing it instead. Maybe, in a strange way, the dynamics of social media marketing, as it matures, will be closer to advertising than those gurus might like to imagine.

Honestly, I think a lot of advertising today is not very good, and the negativity and backlash it's generated is reasonably justified. However, I also believe that advertising can and will evolve. It needs to become more useful, taking a place in the world where people can generally appreciate it and not despise it.

Yeah, I know, that sounds like a stretch. But not nearly as much of a stretch as the alternatives.

I don't think it's an easy mission. But it's the mission that I think marketers and marketing technologists must tackle. The survival of the web just might depend on it.

Marketing operations and the Predator -- lessons for marketing technologists

2009-10-18T16:57:35-04:00

How is marketing software like the military's UAV (unmanned ariel vehicle) attack planes, such as the Predator?

That's what I was wondering when I attended a seminar last week by Professor Mary "Missy" Cummings, the director of the MIT Humans and Automation Lab. Previously, Missy was one of the Navy's first female fighter pilots for 11 years, and then she went on to earn a Ph.D. in Systems Engineering. Her lab now studies challenges with improving automation in situations involving "complex, multi-objective models with lots of uncertainty." Such as UAV battle missions.

Or modern marketing operations?

One of the first examples Missy gave was how a team of two or more people are required to remotely fly a single UAV today. (Yes, it's like something straight out of a Tom Clancy novel.) In the not-too-distant future, however, the military would like to reverse that operator-to-plane ratio and let a single person control up to four UAV's simultaneously — each focused on its own particular objectives, each subject to ever-changing conditions in the field, yet all interdependent in the outcome of the overall mission.

Now that's starting to sound more like the digital marketing world I know. Except with missiles.

Missy shared a wealth of ideas on the intersection of human factors, computer science, and psychology, four of which I found particularly relevant to marketing technology:

1. In complex, multi-objective missions, great decision support is as valuable as — maybe even more valuable than — execution control.

Using software to help you place ads, create landing pages, and automate email drip campaigns is helpful. But as the scope and complexity of your mission grows, the real power is being able to visualize decision support information for what is best to execute, not just how to execute it.

Although web analytics and business intelligence software are increasingly sophisticated, they still have a tendency to get disconnected from day-to-day operations. Marketing teams often work in a mode where the implementation of tactics happens in a separate environment — and at separate times — than the analysis of the relevant data. Instead, analytics should be built-in to more applications, integrated more tightly, to make front-line execution more cognizant of pertinent patterns and trade-offs. Opportunities and disasters spring up quickly, and reaction time — and a propensity for the right reaction — can be a huge competitive advantage.

2. Automation bias can be a dangerous consequence of relinquishing too much control to the computer.

Automation is appealing because it promises to make our workload more manageable. We can delegate tasks to a willing software agent and focus on "more important things." The problem, however, is that we cannot delegate responsibility for the outcome. Algorithms, no matter how good they are, still have a long way to go before they recognize problems and opportunities with the same kind of intuition that we humans do. Automation bias — the tendency to set-it-and-forget-it and assume that the software is making the correct choices on our behalf — is a complacency that's easy to fall into (e.g., check a box to let Google optimize your AdWords campaign for you). But when the software makes mistakes, they can go unnoticed until the negative effects snowball into a crisis.

This is not an easy problem to solve, as there's an inherent tension between the benefits and the risks of automation. There are a number of ways to help though — such as good visualization, real-time feedback, management-by-consent or management-by-exception mechanisms, etc. One way to view this challenge is to model automation using the SRK framework, which breaks behavioral and cognitive tasks into three categories:

skill-based behaviors that require little conscious attention and follow a very consistent pattern — for instance, the skill of riding a bicycle, or running an A/B test on a landing page and picking the winner;
rule-based behaviors in which rules and procedures are used to select a course of action in response to an external event — such as exiting a building in a fire emergency or scoring a lead
knowledge-based behaviors are the highest level, where we reason under uncertainty, drawing upon our experience and intuition to achieve larger goals.

Automation of skill-based tasks is often safer and easier than automating rule-based decisions — since the latter depends on accurately grasping the full context of the situation. However, the automation of knowledge-based behaviors is almost always a perilous idea. Marketing, like battle, is rarely a deterministic venture.

3. Software for execution and analysis is useful, but the really big gains come from teamwork and collaborative processes.

When there are multiple people in the loop, each with separate yet highly interdependent jobs, possibly spread across different locations, the biggest problems arise from coordination. So many of the "message mismatch" problems we see at ion — where a company's ads and keyword buys don't align with their landing pages — are a result of disjointed communication between the people working on each of those pieces independently, without a common frame of reference.

Software can facilitate better coordination by, first and foremost, enabling all contributors to see the same information, as it's updated in real-time. Google Docs has made a big deal of this sort of collaboration, but you can achieve it in more domain-specific applications too — such as in landing page management software. In addition to letting people share a common frame of reference, software can also help manage the workflow, like the system of traffic lights on a city grid. But be careful! Badly coordinated traffic lights can slow things down to a crawl, and bad software workflow sucks.

Frankly, this is a dimension where people and process management are more important than technology. Bring everyone together and brainstorm how to better systematize the flow of tasks, how to speed up the cycle time, and how to better share knowledge — both in the moment and in the big picture.

4. The real barriers to adopting new technology are usually cultural, not technical.

The biggest hurdles in bringing in state-of-the-art software — in marketing or in the military — are not technical integration issues so much as they are cultural integration issues. Organizations develop comfortable and familiar ways of doing things, their norms. New technology, particularly revolutionary new technology, challenges those norms with new ways of doing things. People often resist these changes and seek to compromise adoption, often defeating the potential that such new technology offers in the process.

The best way to overcome this is for companies to recognize this tendency at the start of the adoption process and consciously strive to minimize it. Just as IT people are used to integrating with legacy databases or legacy servers, managers bringing in new software should explicitly address legacy processes and legacy thinking. Software vendors can help by providing training and consulting services — not just on the operation of their products, but on best practices for successfully integrating it culturally. Such consulting is probably not one-size-fits-all, but tailored to the cultural environment of the adopting organization.

Revolutionary software should be designed with this challenge in mind, helping people bridge from their old mental models to the new ones. Otherwise, the most amazing capabilities of their revolution run the risk of being buried under the inertia of the status quo. (Probably a greater risk than the competitive risk that most start-ups envision.)

Of course, the stakes aren't as high in marketing as they are in military operations — hey, it's only your career that's on the line. :-)

Social media marketing stole my woman and ravaged my cattle

2009-10-10T17:02:03-04:00

Forgive me, I was going to title this post something more subtle like, "Social media's sin of omission," but as a blogger shamelessly vying for your attention, I find myself succumbing to the very social media marketing arms race of "say what?!" that I want to push back on.

I know, as a marketer, it's politically incorrect to be anything less than doe-eyed ga-ga about the Wonder Bread that is social media. And to a certain degree that's justified. Social media has given customers more power, visibility, and voice — all great things! — which has helped many good and deserving companies gain recognition and caused many not-so-good companies to squirm like worms on the YouTube hook.

However, every now and again — and with greater frequency as of late — social media advocates take a ride on the Hyperbole Train to Sillyville and suggest that businesses should only use social media to build their market. The rallying cry is that push marketing such as advertising is dead — or at least badly wounded and limping to the nearest bar — while pull marketing, such as organic search engine optimization (SEO) and social network interactions on Facebook and Twitter, is now the reigning champion of the marketing world.

Frankly, that's like expecting your old college roommate — who once helped you schlep two duffle bags into your 8x12 closet of a dorm room — to come over and now move your family of eight from New York to California. For free. Including grandma's antique grand piano and those big pots on the patio.

Marketers who cede the heavy lifting entirely to the crowd cloud, do so at the risk of not moving at all.

I can prove it mathematically.

But first, just so I don't have my marketing license revoked — or have someone bludgeon me with a hardcover copy of Chris Brogan's Trust Agents — let me reaffirm that there are plenty of things that social media is spectacular at:

an incredible feedback mechanism to hear from prospects and customers;
a bonding mechanism to build better relationships with people across distance;
a delivery mechanism for useful or entertaining content to your fans;
a force multiplier mechanism to boost successful products and marketing;
a social enforcement mechanism to encourage your firm to do the right thing;

These are all solid reasons for a marketer to love social media.

However, what I don't think social media is particularly reliable for is getting the word out for new products or services, especially for small to medium sized organizations.

This was going to be the "sin of omission" that I originally envisioned for this post. Social media marketing advocates share two kinds of anecdotes: those of good companies who were rewarded for their fine participation in social media and those of bad companies who were punished for failure to respect the social Blitzkrieg.

What is omitted are the stories of good companies, who genuinely embrace social media, openly sharing good stuff with the community, warmly engaging with anyone who saunters into their social network... yet who get very little return from their endeavors.

And, just to clarify, by "good companies" I mean organizations that include remarkable people and products. They're doing legitimately great things to make the world a better place, and they're happy to blog and tweet about it, commenting and friending in every relevant venue. They're good social media citizens.

Yet still it's hard to move the needle.

See, for every Gary Vaynerchuk who's crushing it, God bless him, there are hundreds or thousands of others who are walking the walk, but on more of a treadmill than a victory lap. Maybe that's because Gary is way better than most. Or maybe he caught a wave at the right time in the right place. Or both. Either way, I have high regard for the guy.

I just don't think "be like Gary Vaynerchuk" is a practical marketing plan.

The problem is the math (isn't it always?). As more and more people invest their energy into contributing to the social sphere, the social sphere gets noisier and noisier. It's like the East Village on a Saturday night, multiplied by a million. While people's abilities to produce content has exploded, our ability to consume content, in any way that's truly meaningful, is still quite limited. The cacophony of choice is a dizzying wall of sound.

Cutting through that pandemonium — even with a remarkable product or service — requires one or more of the following:

a Looooooong Tail focus on very specific niches;
ever more ridiculously provocative ideas and hooks;
an incredible stroke of luck and/or sheer genius;
judicious use of "other" marketing than social media;

The Long Tail is wonderful, but the farther out you go, the harder it is to achieve scale. Ridiculously provocative ideas are a vicious cycle, as each needs to be more outrageous than the last to stand out, and they can have undesirable side effects — such as now my blog is going to show up for lunatics searching for "ravaged cattle." Great, there's a niche. As for incredible strokes of luck, play the lottery. But as a professional marketer, more predictable work is required.

The "other" kind of marketing — advertising, email, conferences and events, channel promotions, sponsorships, and PR via more exclusive channels — is the only reliable and scalable option.

Don't take my word for it, though. As social media advocates are fond of emphasizing that actions speak louder than words, look at how social media thought leaders themselves — and vendors selling products in that space — promote their own brands:

speaking at, sponsoring, and organizing conferences about social media (i.e., event marketing);
traditional publishing of books promoted in bookstores and on Amazon.com;
advertising said books and conferences on popular sites and search engines;
collecting email addresses and engaging in permission marketing and marketing automation (more vendors than individuals);
having one-to-one discussions with people to win business (i.e., sales);

I don't think that's hypocritical — that's exactly what they should be doing. Okay, maybe a tad hypocritical for those who have declared "other" marketing dead, but then again, here I am taking a swipe at social media through a blog post that I'm hoping will be indexed, tweeted, bookmarked, and dugg. (Kind of a weird existential loop. If only Descartes were alive to proclaim, "I blog, therefore I am" — or Blogito, ergo sum in the original Latin.)

My point is that social media marketing is not the destructor of "other" marketing.

To the contrary, social media marketing is immensely synergistic with other marketing vehicles — so long as the marketer is genuine and the company is good. I think some of the most exciting innovation in marketing is the integration of social media tactics and channels into other vehicles such as advertising, billboards, email nurturing, and the ever-imminent blossom of mobile marketing.

Every organization should embrace social media marketing for what it is — which is great — without falling for unrealistic myths of it as a silver bullet. It's a necessary, but not sufficient, component of sustainable success in the new marketing world.

Everything in perspective.

Survey: what do you think of search advertising?

2009-10-08T23:32:15-04:00

I have two favors to ask of you. (Is that a bad way to start a blog post?)

I'm doing a small research project on what people think of search advertising — both marketers and non-marketers — as part of a graduate seminar at Harvard on intelligent interactive systems. There are some intriguing hypotheses I have around search advertising, which I promise to share soon... but I don't want to influence your answers for a few questions I want to ask first.

I've put up on SurveyMonkey an extremely short poll of 5 questions: What Do You Think of Search Advertising.

My two favors to ask are:

1. Take the survey yourself. It will only take a minute to answer 5 multiple choice questions, and you'll be in the drawing for a $50 gift certificate from Amazon.com.

2. Share the link with others — including people you know who aren't marketers — and ask them to participate. You'll gain karma points with them if they win the $50 gift certificate. And, by helping to broaden the responses, we'll all benefit by being able to examine better results.

Here's a shortened link for use on Twitter (hint, hint):

http://bit.ly/43iYLb

I might recommend the following tweet:

Harvard study: What Do You Think of Search Ads? http://bit.ly/43iYLb 5 questions, $50 drawing

The survey OPTIONALLY asks for the respondent's email at the end, just so I can notify them if they win the drawing. Aside from that purpose, I promise not to do anything else with those email addresses — I won't use them myself and I certainly won't give them to anyone else. Once the survey is done and tallied, I'll delete them.

Once I've got the results in, I'll post them here — along with some of those hypotheses I alluded to earlier.

Thank you for your help!

23 strategic factors in search marketing bids

2009-09-26T12:33:00-04:00

As part of my adventure in academia at Harvard to explore new ideas in marketing technology, I've been taking a class on the intersection of economics and computer science. It's an incredibly vibrant research area these days, particularly because online advertising auctions such as Google AdWords have provided a fruitful real-world application for software-driven market mechanism design.

One of the topics that comes up a lot is the objective of making a system "incentive compatible," or "strategyproof," such that it's in the best interest of the participants to be truthful. In the scenario of a keyword auction, that would mean that advertisers would be incentivized to bid their true value for that keyword — and have that truthful bid work out best for them — rather than trying to second-guess their competitors or the auctioneer.

Now, Google AdWords — which uses an auction mechanism known as a Generalized Second Price (GSP) Auction — is known to not be strategyproof. You could argue whether that's a feature and not a bug. However, like it or not, it is the world in which search marketers must ply their trade today.

Thinking about the dynamics at work there, I started a list of the strategic factors that can influence how people bid on these auctions and thought it would be worth sharing.

First, there's a whole category of bounded rationality factors:

don't understand how the Google auction process works;
not worth the resources (time, money, computation) to calculate bids accurately;
don't necessarily know the true value of a click from a particular keyword;
emotional bidding, such as "ego bidding" or knee-jerk reactions to competitors;
value of a bid/click changes dynamically since last time you calculated it;

There's another category of externality factors, especially surrounding the brand dimension of search marketing:

value of the impression (even without the click);
competitive participation in a particular keyword (who's there, who's not);
value of position relative to competitors (leaders, followers, value players);
interplay with organic results;
competitor seeking to harm you (or you harm them) with bidding amounts;
parallel bid on an alternate search engine (e.g., Bing, Yahoo!);

There's also a category of creative factors:

the ad creative itself, both in content and visual cadence;
the influence and interplay of the creative of competitive ads;
Google checkout button, value of visual distinction;
use of dynamic keyword insertion;
value of offer to win the click (i.e., discount or free giveaway);
interplay with post-click marketing;

And finally a category of optimization factors:

portfolio optimization, picking bundles of keywords to maximize overall ROI;
using geo-targeting to optimize bids within selected areas;
taking advantage of a competitor's bounded rationality;
impact of broad match vs. phrase match vs. exact match;
optimizing and/or leveraging quality score metric;
click fraud influencing the number of clicks and one's real net CPC;

I'm sure this list is incomplete, and each of these factors has been beaten to death in better blog posts than mine, but it's interesting to me to think of the meta-patterns at play here. How good is current software, such as Clickable and Efficient Frontier in weighing these factors in search marketing management?

Are there other factors — or entirely new categories — that you'd add?

The greenfield of marketing software

2009-08-14T05:47:04-04:00

Yesterday, I had lunch with Dharmesh Shah, co-founder and CTO of Hubspot and a friend of mine from MIT. Since we both run software-as-a-service (SaaS) start-ups in the marketing space, I always enjoy catching up with him because, even though we're pursuing different product visions, there's a lot of overlap in the challenges and opportunities we face in the market.

One of the observations that struck me in our latest discussion is how different software is in the marketing space than in its supposed kissing cousin of sales.

In SaaS, Salesforce.com is pretty much a living legend. The adoption rate they've achieved, across small businesses and large enterprises alike, is astounding. They have tens of thousands of customers — and are essentially the dominant player in sales force automation and, to a large degree, the CRM market.

In contrast, the marketing automation space has no lack of serious players — Eloqua, Aprimo, Alterian, Unica, Marketo, Pardot, etc. — as well as related firms, such as Hubspot and my own company, ion interactive, which specializes in landing page management and optimization (more broadly, post-click marketing). Yet if you were to take all of the customers of all of these companies combined together, they'd be measured in the thousands, not the tens of thousands.

Why is there an order of magnitude adoption gap between marketing and even just one, albeit very successful, sales software company?

A few theories to contrast marketing and sales software:

Salespeople have been using software for a couple of decades now to track their contacts. Not to say that Salesforce.com wasn't brilliant with their SaaS implementation — they did an incredible job — but programs like Act! and Goldmine had laid the groundwork years before. Getting salespeople to adopt Salesforce.com didn't require them to convince people of an entirely new category of software for their businesses. In contrast, much of the software being offered to marketers is entirely new — most marketers have never used marketing automation or landing page optimization.
There's a reasonable amount of homogeneity in the structure and tasks of sales. Not to say that there aren't differences from one company to the next, or one salesperson to the next, but I'd venture to say that there are far more similarities than differences. In contrast, marketing is a more diversified discipline, with more specialist roles. Consider that under the label "marketing" you have public relations people, brand managers, creative directors, database marketers, graphic designers, event managers, copywriters -- the whole strange and wonderful split between marketing agencies and marketing departments -- and that's not even considering the new roles that the web has birthed (see next point). There's a lot variation in how companies run marketing too, where the motivation to be creatively different than the competition is deeply rooted in marketing's worldview. It makes the goal of "one software to rule them all" much more complicated.
Every aspect of business has been changed by the Internet, but some more than others. Sales has been impacted by the web, to be sure, but for the most part sales today is a lot like sales was 10 or 20 years ago. Its skill set, tactical toolbox, and strategic thinking are largely the same. In contrast, marketing is in the middle of a complete whirlwind of creative destruction — as things like print advertising, direct mail, and trade shows are fading and whole new channels and vehicles of search marketing, social media marketing, post-click marketing, mobile marketing, and email marketing are emerging. Marketers are overwhelmed by the speed and scope of these changes, which makes it more difficult to define and adopt any one specific solution.
When it comes to sales force automation and CRMs, you pretty much know who the competition is: Salesforce.com, Siebel/Oracle, SugarCRM. In contrast, because marketing software is such a new space, and one that is very much in flux, the competitive lines aren't as clear. For instance, while ion maybe has two or three direct competitors in landing page management, there are probably two dozen companies that overlap in partial ways, from PPC campaign management to website optimization to behavioral targeting. All of these companies are trying to define the market according to their worldview, competing as much on memes and nomenclature as they are actual product features. Unfortunately, this noisy battle over framing the market(s) often becomes a cacophony for marketers who are trying to sort out exactly what they need. To a certain degree this is an embarrassment of riches — marketers have a wealth of choices at their feet. But choices can be hard to make.

There's certainly a lot of good news in this prognosis. The opportunity for marketing software is wide open. It's a safe assumption that eventually marketers will widely adopt software for their entire range of strategic and tactical missions. My opinion is that there will be many different winners in different categories, with interoperability driven by web services and semantic data. Other people predict a more consolidated outcome, akin to Salesforce.com.

The upside of having no dominant reference model yet is that innovators and entrepreneurs can give their imagination full reign. Because many of the problems being solved are entirely new problems, they're ripe for creative and original solutions.

The downside is that sorting this all out is still a challenge for marketers and vendors alike. But what a spectacular challenge to tackle.