• “The China market is 1.3 billion people. We only need 1% of the total population to buy our widget…”
• “My idea is a Web 2.0 social networking site. How do we drive traffic? Easy - we’ll make it viral!”
• “We will JV with Wal-Mart!”

Budding entrepreneurs, follow these tips and thank me later after you get your cool million in VC funding.

1. Estimate bottoms-up, not top-down.
2. There’s no free marketing in this world.
3. Unless you have got a signed agreement with anyone, don’t say it.

End of rant.

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http://www.techcrunch.com/2009/03/22/why-advertising-is-failing-on-the-internet/

Advertising online is ‘failing’, so it seems.

Before I tell you what I think of that, check out this screen cap of one of my own ‘online advertising’ campaigns which I have been running on semi-autopilot since last August.

I have blanked out some details in there because frankly I don’t want anyone else to know what this source of traffic is. But if you have done enough marketing on the Internet then you will surely recognize it and know what type of traffic I am talking about here.

This is in one of the most competitive niches on the Internet, where Google’s PPC cost per click is about $2. For this volume of traffic (about 140,000 clicks), I would be paying the big G some $280,000. Shudder.

So how much I paid for this traffic then? Let me see…to date - $253.40. 

And I’m getting quality stuff, mind you. I get people who are pre-sold and pre-disposed to buy what I want to sell - unlike PPC traffic, which is as cold as a well digger’s arse.

Banner advertising? Long dead. Beware anyone who wants to sell you banner spaces or ‘impressions‘ for any amount of money.

PPC? It could work, but only if you are able to convert traffic to leads before you get them to buy anything. Direct linking to merchant pages? Dead, since the “Google Cash” days back in 2002.

(I would only use PPC as ‘affiliate bait’ on my OWN products and aggressively bidding on my OWN product name as a longtail keyword - but that’s a tactic warranting another post elsewhere).

If you define ‘online advertising’ as banners and Google ads - yes, I’d agree with you that it is holding on its last breath.

Companies with huge marketing budgets (cheered on by their clueless Madison Avenue ad agencies) will continue to fight it out in this weary battleground - spending money on PPC and banners, getting eyeballs from click-happy people with their wallets firmly in their pockets.

Meanwhile, ‘underground’ direct response online marketers will continue to get all our eyeballs elsewhere for cheap, and build high ROI niche businesses with 90%+ profit margins.

And by the way, my EPC is 40.3 cents, so do your math if you want to know how much we generated on this campaign alone.

Now come to think of it, the more people believe in the “death of online advertising” hype the better it gets for the rest of us. There will be less clueless, misled newbies to deal with.

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“Your marketing message is very wordy…”

That’s something that I hear very often.

People read long articles and thick books. Why? Because they are interested.

The more interested they are, the more they will read. 

If you find people interested in what you offer, they will hear you out.

If you ’shorten’ your marketing message then you are doing your offer a huge disfavor. 

And if you don’t tell your story sufficiently, you won’t sell.

Nobody will give you their money just because you’ve got a short, snappy and clever slogan. You need to tell your story. 

You need to tell your customers that you understand what they want.

You need to convince your customers that you have got the solution that they need.

And to do that, you need words. Lots of them.

Sure, there will be people who will complain when they see your long-ish copy.

And that’s fine - those are not your customers anyway. 

If you do your targeting right then your readers will savor over every word you write - whether it’s 500 words or 5,000 words.

Now if you’re a marketer and if you “hate” long marketing messages, know this.

You are not your customer. So stop thinking that you are.

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Francis is a good guy and I learned a lot from him - he always had good stories to tell and interesting experiences to share. He was definitely one of the better bosses I have had in my career.

If you are on LinkedIn and interested to network - then feel free to add me. My profile is here.

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Liferati.com

My pet ’side project’ Liferati.com has made a leap in terms of progress when my team* had a day-long mastermind session at the hallowed offices of TEQ in Kelana Jaya where we laid out in greater detail the four-month development plan. Kenny took a picture of the whiteboard (see picture) and remarked prophetically, “This is going to be historical.”

*My team - Kenny (project leader cum designer extraordinarie), Aznin (number cruncher), Suraya (business consultant), Jason (.Net supernerd #1), C.Y. Yip (.Net supernerd #2) and me (The Tyrant)

This project is a magnum opus of sorts for me - the sum of the knowledge from all the projects I have done in my relatively short lifespan as a marketer - community building, social networking, life cycle segmentation, list building, affiliate marketing, direct response - all rolled into one.

I see the project as a natural progression of Web 2.0 technologies where social networking is given a definite, real purpose. Yes, there will come a time where a social networking platform ceases to be ‘generic’ (Facebook, anyone?) and adopt a more niche approach with specific targeting in terms of both user segments and purpose.

My stretch goal is to make this site ROI *right from day one* - something might seem to be impossible but all indications from our modeling showed that this could be done. Difficult, but doable.

JamTank.com

It was with JamTank I jumped headfirst into internet ‘businesses’ (no, it didn’t make me a millionaire, although it did ROI-ed many times over) - since then I have graduated from selling banners to slightly more ‘advanced’ Internet marketing tricks and tactics. JamTank was never meant to be a moneymaker, so I was happy to leave it as it was while I honed my marketing chops at my other sites.

It was at JamTank that I sold my very first banner for a couple of hundred of bucks - my very first sale ever. The feeling was exhilarating to say the least.

(I have since stopped selling banners as they are probably the most ineffective traffic drivers, side-by-side with traffic exchanges and safelists. Having said this, there are some ‘marketing consultants’ who call me up from time to time trying to broker banner deals for their clueless clients!)

JamTank had quickly emerged as one of the biggest music communities in Malaysia, and with the ’success’ came the usual hate mails and abuse that I had to deal with on a daily basis. It was a thankless job, but I have never expected gratitude anyway so it did not bother me and my team that much.

This site remains perenially in my backburner, and I have promised myself time and again to put in more time and energy to build it up and market it ‘properly’. On the side, being the “CEO” of JamTank does have it ‘privileges’ - I still get invites to cool parties and concerts from time to time. Free booze…

Internet Marketing

My other side Internet Marketing projects have since gone into full-blown mode until I have considered employing people to run them. December also has turned up to be my best month across all the important metrics - both in terms of both traffic and conversion.

The mind boggles at the sheer upside potential of this baby - I’ve only developed a very basic marketing funnel of acquire-frontend-backend and the growth has been staggering (averaging +50% month-to-month for the last three consecutive months in 2008). 

Now I haven’t even started optimizing the funnel - segmentizing the leads, split testing the squeeze page, testing multiple price points. Currently I am signing up a new user every few minutes at AWeber (see screenshot) - and this is done via my second draft of a very ugly squeeze page. I could only imagine the results if I even improve the conversion from each stage (acquire-validate-convert) incrementally at +1-2% points - it could well mean doubling of the business. Powerful stuff.

–

These three side projects take up most (if not all) of my weekend time, as during the week I am still preoccupied with this dotcom I am engaged with on a permanent basis. 

I cannot really divulge the stuff that I do there here (sorry) - but I’ve been doing what I know best - online marketing and testing.

Obviously I cannot shout at everyone here the way I do when I work with my (long suffering) teams at Liferati.com and JamTank.com - but I am trying my best to adapt to the situation of working in a team consisting of people who has got multiple priorities and different points of view.

This is a challenge which I accept as part and parcel of a ‘permanent’ desk job with predictable pay at the end of each month.

Which in all probability should well be my last.

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“The way
to
make something
valuable is to
make it
hard to obtain.”“The way to make something valuable is to make it hard to obtain.” - Mr Profound Marketer

I did some analysis to track the end-to-end conversion process for one of my Internet projects to identify the bottlenecks (and subsequently improve on them). As one would expect, the conversion from opt-ins to sales is usually the lowest (as this is the ’steepest’ step that a customer would take in the whole process from start till the end).

My analysis showed up some really surprising results - the sales conversion rates were well above normal, but the signup CONFIRMATION rates weren’t.

I drive my traffic almost exclusively to squeeze pages - I still subscribe to the ‘old school’ thinking that before any selling can be done, a consistent & repeated contact process with the customer will need to first be established. The effectiveness of squeeze pages has somehow gone down the drain during recent years but as of now it still works for me, at least from a marketing ROI standpoint. (It is interesting to note that the ‘grand-daddy’ of squeeze pages - Double Your Dating - has since changed into more of an information portal).

To comply to CAN-SPAM, my list is built via double opt-in. My confirmation rates stood at 76%, which is slightly lower than industry standard of 78.1% (AWeber - Oct 2007). Did some digging and found that the verification lead times are frustratingly slow - passing the 80% mark only in 3 hours.

I subsequently introduced a “countdown timer” in the signup Thank You page in order to create some urgency in the confirmation process. On the page, the optin ‘bribe’ would expire if no confirmation in five minutes. The result - 80% in 15 minutes! (See chart below)

Scarcity As A Motivator

The biggest challenge in introducing scarcity in an online business is that it is not ‘built-in’. The resource (the freebie for the opt-in, or the product that you’re selling) is not ‘depleted’ in any real way - unlike a set of CDs which could be limited since they are physical products.

In addition to scarcity, “social proof” is another strong marketing lever which will boost sales in any business, offline or online. I will blog more on how to use social proof together with scarcity to create strong ‘pull’ for your products.

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It has been awhile now since I last blogged. July was a hectic month for me - I had three projects that I needed to close by the end of the month. Yesterday I spent a whole day at a seminar - and managed to jot a few thoughts to write on the blog during breaks.

In the span of 30 days, I had rolled out a new information product and started a new blog in my niche as part of my direct response ‘pet’ experiment. It was a simple minisite with a short sales letter. I drove some test traffic to it and saw a conversion of ~2%, which is at par with industry average. Nothing spectacular really, but good enough for the first iteration.

My other product (which is coincidentally my very first) is now converting healthily at 6.6%. I remembered back when I first rolled it out (2 years ago) I had ZERO sales, which absolutely stumped me. Since then the copy has been revamped (much of it swiped from Paul Myer’s  - still one of the copywriters that I look up to), the tacky graphics removed (words sell, not pictures!) and the offer improved (reduced the front-end price, but introduced an upsell).

The conversion rates have since taken off. Currently the ROI has hit 1:30, which is fairly typical of a fairly successful online direct response copy. I am still grappling on how to scale this up (Hire a link builder? Drive cheap placement-targeted PPC traffic?), and at the low price point (since it’s a front-end product) it’s not suited for an affiliate campaign.

On the ‘offline’ front, I am going on to do some work for a dotcom based here in Malaysia. A market leader in its niche, it has been one of the (very) few success stories here from the ashes of the dotcom bust back in 1999. What attracted me to this company is its database which runs into the millions (I could profitably monetize a list as small as 1,000, so imagine the possibilities of a 1,000,000 list size). With the right slicing and dicing of the database, there is much contextual marketing that could be done.

Meanwhile, Liferati has been put on the backburner as Kenny and myself are busy with our own projects (Kenny is leading the revamping of a lifestyle portal of a major telco here in Malaysia). Last weekend we managed to spend some time at our office in downtown Damansara to brainstorm about the Contextualizer engine (more here) - picture of me above doing just that.

Our partners at Urekalabs (brothers Razlan and Roni) have embarked on an exciting new project dubbed the ‘Google Killer’ on a novel way to monetize video traffic which is gaining prominence with the likes of YouTube and DailyMotion. Without divulging much of the details, I think it’s a  brilliant idea and the commercial upside is simply enormous. They absolutely deserve all the venture capitalist cash they could get.

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I have blogged about the life cycle segmentation model at my pet project Liferati.com here -

http://liferati.com/blog/2008/06/segmentation-model/

The basis of Liferati is the ability to segmentize users in ‘real time’ using website analytics in order to deliver contextualized content as well as recommended affiliate products.

I have worked on a life cycle model when I was in Procter & Gamble where we developed a direct response strategy for one of the consumer products. Reapplying this to another business (in B2B setting), we crafted a direct mailer strategy to build customer loyalty which reported double digit ROI.

In the case of Liferati, I am banking on the ‘portability’ of the model into the Internet realm, based on the underlying belief that humans use the same purchase decision-making process - online or offline. This remains an untested hypothesis, which I hope to validate by building and testing the prototype.

I have designed the diagram to be self-explanatory, but I will blog about this in later posts. This is also the first in the series of Marketing Mindmaps that I intend to publish.

DOWNLOAD HERE: Life Cycle Segmentation Model - PDF | JPG

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Finally, got around to watch Derren Brown’s Something Wicked This Way Comes video. Filmed at Hammersmith in 2005, he performed his mentalism ‘tricks’ which were centered around one premise - that you can subconsciously plant ideas into people’s minds through your words.

I have always wondered about the effectiveness of the persuasion tactic of “covert suggestion”, having first stumbled upon it when someone sent me some materials by Ross Jeffries called “Speed Seduction”.

While I found certain techniques to be useful (for example, anchoring), I have doubted the usage of some verbal ‘trickery’ which plants ideas in the target’s minds.

One of the more famous Ross Jeffries ’speed seduction’ lines have been “Standing on the bridge, I looked at the river below me“. The operative phrase here is “below me”, which suggests the idea of oral sex in the mind of the target.

I have known people who claimed massive success with women using this ‘technology’. A particular technique, called the October Man Sequence surfaced a couple of years back and caused a minor stir in the “seduction” community. Ross Jeffries himself said that using this technique was akin to “bringing a nuclear bomb to a gunfight“.

The question of ethics come into play when you use tricks like these to influence your target to unknowingly make certain decisions which are in your favour.

Now, morals aside, mentalism techniques such as these could well be the next ‘frontier’ as far as marketing is concerned.

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The concept of customer segmentation really is a simple one - group your customers together according to a set of defining characteristics.

What the marketer wants to achieve from the segmentation exercise is to develop plans (or product features) that best appeal to the different segments.

Therefore, it makes good sense to first segmentize your customers before developing plans. As we marketers all know, segmentation often comes as an afterthought…especially when our plans are not working as we expect them to

You don’t need Bain to tell you how to segmentize your customers…

The simplest (and most common) way to segmentize customers is via demographics (age, sex, income, race, hair color…).

Often, demographic-based segmentation would lead to rather simplistic marketing plans which are relatively easier to execute (especially when the plan revolves around placing ads on TV. In such a case, all the marketer needs to do is to book the time slots corresponding to the appropriate TV programs watched by the target demographic).

The slightly more complicated method would be to cluster customers via their needs (or in marketing jargon, ‘psychographics’).

For example, in some Asian countries, lighter skin is a desirable trait for many women, and hence the need for ’skin whitening’ facial cleansers and moisturizers.

Here, marketing plans tend to get trickier to execute. Unlike demographics and physical traits, “needs” are not immediately obvious to the marketer.

Needs-based segmentation is perhaps the reason behind the multi-billion dollar industry that is market research. Multinationals are paying companies like Nielsen, Synovate and TNS to find out what their customer needs, and to check if their products fulfill those.

The Archimedes heel of this method is the fact that people buy what they WANT and not what they NEED. Big difference.

The third method - the most advanced of the lot - is paradoxically easiest to perform, as long as you’ve got some basic marketing analytical tools in place.

User life cycle segmentation - this is Marketing 2.0, folks…

User (not product) life cycle is the mapping of the ’stage’ at which the user is at as he uses a product. The basic premise behind this method is that at different life cycle stage, the user will have correspondingly different needs.

An example would be a credit card holder fresh out of college. It would be a fallacy to assume that his needs would remain unchanged as the user enters different life cycle stages). The effective marketer would track the evolution of his customers over time, and therefore craft plans that would pinpoint their specific needs based on their behaviors at each of the life cycle stage.

The idea of “pinpointing user needs based on life cycle stage” is the cornerstone of one of my web-based projects - LifeRati.com. Given the inherent ability of the Internet to capture user and usage data, it makes analyzing and clustering users in real time possible. This is real time segmentation we are talking about here, folks!

User life cycle is probably one of the most underdeveloped concepts in marketing, and very surprisingly so.  Much of my work over the last two years were based on life cycle marketing strategies, and given the dearth of information on the topic, much of the effort was wasted on trial and error.

I will talk more about life cycle segmentation strategies in my next blog post - and some of my personal learnings and mistakes so you can avoid making the same - so stay tuned!

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