Having less clicks in an advertising campaign can be both good and bad, but not for the most obvious reasons. It is important to remember the business objective behind the advertising so that when you create an advertising campaign, so you can use the campaign to reach those objectives. It is important to measure those objectives and it is important to try to improve your results. There are times when fewer clicks can be good for meeting a business objective. So lets talk about clicks.
Generally when you develop a Google ad campaign, your ads are shown on Google as a response to a search, and you pay when people click on your advertisement. (generally meaning that they are taken to the particular landing page on your site where you try to convert that click, and that specific interest in your products and services into an action – a sale, a registration, brand building or whatever)
The theory behind developing your advertisement is to develop the ad that converts the highest possible percentage of ad-views into ad-clicks. Here is an example: If you have 1000 people search for “Buick Regal” in Winston Salem, NC, and you sell Buick Regals in or near Winston Salem, NC, and you develop an ad campaign, you want to get a high percentage of those people to click on your advertisement. You might have a text based ad campaign that says something like this current campaign from Vestal Cars:
If you click on Vestal’s advertisement, you come to an inventory page that shows their current inventory of Buick Regal automobiles. That seems well formatted, well directed, and as effective as possible. If someone is searching for a Buick Regal to purchase, Vestal Cars is showing them exactly those cars, in that location. If a potential customer searches for that, and clicks that, Vestal has done everything right to (a) convert views to clicks, and (b) convert clicks to action. In this case, the business objective is to sell cars. To sell cars, they need customers to consider their cars, to look at their cars, to visit their car lots, and ultimately to find a car they want. Vestal Cars wants to get people who are already searching on Google for a particular car to see their inventory of that car. Their thought is likely that a person searching for a particular model of car is apt to be interested in that particular car. In the nebulous world of search-advertising, that is a pretty logical assumption, and I think their well-crafted advertisement is as likely to sell cars for them as anything. I’m not sure why they’re returning 2010 Buick Regal information instead of 2011 Buick Regals, but apart from that very minor quibble, I really like their advertisement. For the most part, they have done it right. In their case, a higher click through rate will likely support their business objective – and fewer clicks would be bad.
Google’s Adwords are a very effective way to advertise, and per-click charges make billions of dollars of revenue and profit for Google each quarter. Large companies spend millions of dollars on campaigns annually, and for particular events. (AT&T spent more than $8m on the iPhone 4 release, and BP spent more than $3.5m for “oil spill” related searches recently.) Those companies, however, are really enormous.
There are cases in which smaller businesses, and entire categories of smaller businesses might not want someone to click their advertising. Think about that. For particular categories, an absolute minimal % click rate might be optimal. For these businesses advertising campaigns, fewer clicks would be wonderful. Why? Why would you develop a campaign to target less clicks? That campaign would be done where less clicks is a more effective way to support the business objective. What would that look like?
Here’s an example where the fewest clicks possible produces the best results – the most optimal business results.
Although that is good, not for the obvious reason, it is also bad, and also not for the most obvious reason.
I recently put together a campaign for Twin City Towing. Their business objective was to increase their volume of towing. To do that, they want Google advertising to increase calls to Twin City Towing for people who want Towing services and the other services that they offer: Here are the two advertisements that I put together as part of this campaign.
This campaign was designed to target searches that were done in and around Winston Salem, NC for about a dozen terms like “Auto Towing” “Local Towing” and “Tow Truck.” All of this is pretty straightforward. I also targeted the advertisements for good placement. 
Here is my most important point: A perfect response to this advertisement would be someone who saw the advertisement and called Twin City Towing to get towing services. (not a person who clicks through to Twin City Towing’s website.)
Because the advertising is charged per click, I want great placement on the advertising, and I also wanted the highest response to the advertisement for people, but I also want the lowest possible click conversion. Here are possible response rates and their implications: If there is a click through rate of 2%, and 100 advertising impressions shown at a cost of $1.00 per click, my cost to reach 100 potential customers is $2.00. If I have a 20% click rate, my cost of reaching those same 100 potential customers is $20.00. (or, for the same $20, I can reach 1000 customers.)
Think about this: If a business wants someone to CALL for a tow – why bother getting them to click to a website that tells them what to call? Why not simply include the phone number in the advertisement? Including the phone number in the advertising means that a stranded motorist who does a mobile phone search for tow truck doesn’t need to click through to a website, he needs to call a tow truck. Including the phone number saves the customer a step. It is simply more convenient for someone that needs to get towed, and that should increase business. This is a case in which a lower click through rate simultaneously gives customers what they want while increasing business more cost-effectively. So what has the response been for this ad campaign? From August 31 to September 6, 2010, here are the actual raw statistics:
Impressions: 959 – Clicks: 4 – Click-rate: 0.42% - Cost per click: $1.29 - Total cost $5.15
For most campaigns, that would be an extremely low click-through-rate. If the campaign continues at this rate, a theoretical advertising budget of $100.00 could last for almost 20 weeks and reach almost 20,000 people. If the business has added two tows this week, their cost for adding each tow will be approximately $2.57. That is extremely cost-effective advertising, built on a counterintuitive philosophy of Less Clicks.
So – that seems good, but it is actually both good and bad. Where is it bad? Earlier I described search advertising as nebulous. The downside of advertising for a response that does not result in a click is that without other changes, it will be impossible for Twin City Towing to know, based on their call volume, and also impossible based on Google’s advertising campaign statistics if particular towing calls are actually coming from Google Advertising. If there is an increase of call volume from towing customers, it might be cyclical, it might be due to a decrease in car reliability. It might come from Bing, or Yahoo, or perhaps the yellow pages. Because the response is NOT click-based, the perfect response to their Google advertising produces zero in specific and measurable statistics.
So is this a good ad strategy? Would it also work for cab companies? Would it work for other business segments? Are there better ways to quantify how this ad campaign meets the intended business objective?
What do you think?
September 7th, 2010
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Are you stale? Is your business stale?
I was in a wonderful quaint gelato shop earlier this evening – Café Gelato. I enjoyed the chocolate and amaretto gelato, and I was amazed to see the clerk there (Sarah) reading a copy of “Always On.” For those who haven’t read it, “Always On” is a slightly dated but very useful book that describes the impact of the internet on marketing and advertising, from a customer perspective. 
Always On” talks about looking at the customers viewpoint, listening to the voice of the customer, and it was fairly predictive, even though it is a few years old now. 
The book does NOT explain how the Old Spice guy could put about a hundred videos on YouTube, and DOUBLE sales of Old Spice products… But the book explained how that could be done, before Old Spice executed it. The book emphasized the importance of customer-focused advertising and marketing. That is absolutely essential.
So back to the question – Are you stale? You may never want to ask the question, “Are you stale?” It sounds like a negative question. Nobody wants their business to be stale, nobody wants to be seen as unchanging, static, or inflexible. Nobody wants to be wearing an five-year-old dusty suit or dress and nobody wants to give the appearance that they are caught in the 20th century. But what about your business? Is it stale?
You might not want to ask that question either – so try asking this: “Are you fresh enough?” Think about what that means. Are you new enough? Are you current? Are you fresh? Are you fluid? Are you flexible? Are you responsive? Most importantly, are you as fresh as you need to be to keep your current customers, and deepen your relationship with them? Are you as fresh as you need to be to get new customers? Ultimately, are you as fresh as your customers want you to be?
If it is important to be fresh, and important to not be stale, how would you measure it?
This is pretty easy. If you have never asked this question before… you are stale. If your website hasn’t changed in 6 months, you are stale. If you haven’t tweeted this month, you’re stale. If you’ve never put a video on YouTube, you are stale. If you are only now realizing that Facebook has gone from 53 million users to 500 million users in the last two years… you are stale.
If you put a new sign up at a brick-and-mortar business every three years, that might be frequent enough to keep it fresh. But the internet is always on. The news cycle is always on. Advertising and Marketing is always on. The great effect that has is that 
social media, internet and all of its tentacles are a living breathing thing that works for your business 24 hours a day, every day, every week. The not so great effect is that if your business’s online footprint is stale, your octopus might as well be wearing a five year old dress.
Is that an unattractive picture to paint?
Fixing it is up to you. Painting it is up to you. It is up to you to make your online marketing and advertising fresh. Make the decision to ensure that your online presence is always fresh. Keep it fresh. Be fresh. Your customers will know, your revenue, and your success will reflect that.
DO something about your online presence. Do it today.
September 4th, 2010
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There is an important equation for the competition between Google and Facebook.
Google and Facebook are both enormous companies, both are Internet companies, and both are at their core, fueled by competitiveness and greed. Sure Google has that “Don’t be evil” philosophy that was their corporate value at one point. I think Google abandoned that when they joined Verizon in the destruction of net neutrality.
But that is not the issue here.
The issue is a string of Tombstones the people erect at Google’s feet, as if Facebook has vanquished it at something. These are ironic and irrelevant tombstones, and thoroughly inaccurate and deceptive. Adam Rifkin wrote a good one yesterday on ”Why Google has no Game.” His main point was that Google doesn’t really get social engagement. His underlying idea is that social engagement is a sort of be-all-end-all of internet value.
My initial reaction was that he was wrong. I read comments on his blog like this one: “if Facebook shut down today it would not impact on my life in any tangible way. However, if Google shut down, I’d be in deep trouble!” (attributed to Kullar)
I agree with that, and would take it a few steps further.
For me – I would miss neither, but by a narrow margin, I would miss Google more, and here’s why. Google does things with the Internet, on the Internet, to the Internet and for the Internet. Facebook wants to be its own “internet.” That strategy didn’t work for AOL. Facebook is inherently more profitable than AOL because Facebook tries to be its own “internet” without the costs that AOL had in creating its own content. But that is a moot comparison because AOL isn’t AOL anymore. A better question to ask is whether Facebook more profitable than Google. Is it? No. absolutely not and it is not even close.
Why is Google more profitable? Facebook screams “We have 500 million users.” but users don’t translate directly to profitability. Google is more profiable because it is just inherently more valuable. Why? Because Google has enormous data on what people DO, around what people WANT, and around what ultimately inspires people to ACT – essentially Google knows who, what, where, when and to some extent, why people want, what they want, what they do about it, and what causes or inspires them to act – across the entire scope of the Internet. (not just Facebook’s 500 million members – but the ENTIRE internet) Facebook only has data around what people SAY on Facebook. I think Google’s data is inherently more valuable, more relevant, and I think it will only sap their energy if they chase Facebook. I don’t see any benefit for them. Where is the profitability in chasing Facebook? Particularly when Facebook is a mastadon, big, plundering, and at some point, Facebook’s sub-glacial pace and lack of creativity and profitability will doom it to extinction. Google has all that data, and as the icing on their profitability cake, they really know how to monetize their data.
I think it is all about money. Follow the money, the revenue and profits. In that regard, Facebook is not really any competition for Google at all. People have been surprised by estimates that Facebook’s 2010 revenue could be as high as $1.2b. This is so surprising because Facebook’s 2009 revenue was estimated at $800m. ON that view, Facebook has increased income by 50% year to year. That seems great, but there are two critical issues with those numbers. One is that Facebook’s numbers are unaudited. It is a privately owned company, so there’s really no hard firm way to know if those revenue numbers are accurate. The second and more important problem with those numbers is that they are only stating REVENUE… not Profits, not Income.
How does that compare to Google? A quick glance at Google’s AUDITED and reported numbers shows that Google’s Q2 revenue was 6.8b – their revenue for 2009 was $23.6b
Google’s net income was >$6.5b in 2009. That is INCOME. Profit. That is actual money that they made. Here’s another interesting statistic.
Google’s Q1 and Q2 revenue last year was about $5.5b each quarter.
Google’s Q1 and Q2 revenue THIS year was about 6.8b each quarter.
To put this in another perspective -> Google’s QUARTERLY INCREASE in revenue this year over last year is about $1.3b. To emphasize, that is the INCREASE PER QUARTER, and it exceeds Facebook’s annual revenue estimates.
Google is chugging along at a roughly 28% profit rate. Again, since Facebook is privately owned, nobody really knows if Facebook has ANY profit, or what their profit rate might be.
So – what is the Google vs Facebook equation? $ = G > F. It is that simple.
August 26th, 2010
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I read an interesting article at Computerworld this morning: “Ready for 2020? Advice for every career stage.“
It discussed the differences between different ages of technology worker, and the different interests and abilities. I thought the article had an interesting conclusion: that different workers had different challenges to face. It went on and on about how recent graduates don’t have experience and certifications, and how cell phones are more important, etc. That is obvious. Another article I read recently in Think Big Be Big showed that mobile DATA traffic exceeded cell phone PHONE/VOICE transmission traffic every month in 2009.
It is a wired world and I recognize the differences in the newest texting generation, but I completely disagree with the conclusion of the article.
Since I started working with technology around 1982, there has been a constant drumbeat of change. Every piece of technology impacts business. Someone needs to communicate it. It changes constantly. The points where technology creates advantages moves instantly and frequently. Those change elements are constant.
The offshoot is that technology professionals have to keep a relevant skillset, develop skills for whatever is coming next, understand when, where, why and how “their” technology provides value, and understand how to communicate all of that. That means that with a common set of skills, technology professionals can be unemployment proof. These skills are the ones that provide value no matter what the flavor of the month is.
Here are 7 skills that will help unemployment-proof a technology professional:
1) A love of learning and willingness to learn.
2) An understanding of the impact that technology and business have on each other.
3) A willing acceptance of change in all its forms.
4) An ability to communicate and translate business and technology.
5) A professional willingness to do what needs to be done, when it needs to be done.
6) An ability to demonstrate and showcase your skills.
7) An ability to learn from mistakes and use that learning to prevent new ones.
If you have these, your personal professional competitive advantage will ensure you are constantly employable and constantly employed. I’m not saying that a short sighted company won’t downsize you. I’m just making the point that with this skillset, you will have other companies ready and eager to onboard you if that happens. You will provide value across the technology and business spectrum. That’s a formula for unemployment proofing.
Can you think of other things? Do you disagree? Let me know
August 23rd, 2010
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I’m a fan of Bob Parson’s charisma and his videos. I think they explain powerful, simple, intelligent ways to improve business, to succeed, and I like it that he gives advice to anyone who wants it, whenever and wherever they are willing to listen. He is also a former Marine, an 0311, I suspect – and I respect his service.
You may not know Bob Parsons, but you know his company. Bob runs GoDaddy.com. You’ve probably heard of them, seen their Superbowl advertisements, and their spokespeople. You might not know that he was also behind Parsons Technology - Bought by Intuit for $64 million in 1994.
In short, he is a proven entrepreneur.
In his video blog Episode #36, “FOUR FACTS YOU MUST KNOW (if you’re going to sell anything)” he lays out 4 secrets for creating the sorts of enormous successes he is used to building. He lays out these success secrets, but he could also explain the dark side of his secrets. they are …
FOUR FACTS YOU MUST KNOW (to make your business fail) His secrets lead directly to 4 things NOT to do.
His FOUR FACTS, paraphrased, are:
1) A business cannot succeed by being exactly like its competitors.
2)People resist changing buying patterns.
3) To succeed, Give customers compelling reasons to change their buying habits.
4)Being better is not enough, you must let your customers know that you are better.
So – these are each great ideas. I do not disagree with any of them. I think it is important to also highlight the dark side.
1a) If you are exactly like your competition, and nothing good separates you from your competition, why should anyone use your products or services?
2a) Help your customers make you their habit.
3a)DO NOT give them compelling reasons to change their buying habits once they are a loyal customer. Do not give them compelling reasons to pick someone else if they are a prospective customer.
4a) If you don’t tell your prospective and current customers why you are better, they will never know, and they will not become or stay customers of YOURS.
What do you think? Are there other business maxims that mean more when you consider their polar opposites? Why? How can you use them to help you with YOUR success?
August 16th, 2010
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If you are working for someone else, anyone other than yourself, your job is temporary. It may last 30 years, but it is temporary because you are working for someone else. You may lose your job. You would need a functional crystal ball or a time machine to know when your job might end.
Given this challenging economy, and the fear that comes from having a temp job in a difficult time, you may ask yourself, what can you do? This is a complex question because it is really several questions:
- What can you do to keep your current job?
- What can you do to get your next job?
- What can you do to get a new job at your current employer?
- What can you do to have the most job security?
I don’t like asking questions without answers, so here are some answers to these 4 questions. Here are my 4 brief solutions:
What can you do to keep your current job? You can be so valuable that you your employer cannot do without you. You can become the best known, the best educated, the best qualified for your job, and as long as you are not the CEO of your company, you can become trained, certified, educated and experienced at doing your boss’ job, your co-workers’ jobs. But there is more to it than that. You need to help your managers and executives KNOW that you are the most well qualified, the smartest, the most creative, in short, you need to make sure that the people responsible for hiring and firing YOU, know that you are the very best at everything that you are the best at.
What can you do to get your next job? First, figure out what and where your next job will be. Figure out what you want to do, and who you want to work for. Find out what that person or company needs, and figure out what YOU can do to contribute to their success. When you are looking for a job, it is NOT about you, it is about what you can do for someone else. Know what that company needs and be the person who can do what is needed.
Hired!
What can you do to get a new job at your current employer? Here is an important thing to remember. The company that you already work for is likely to be the best place to find a new job. There are two great reasons for this. The first is that they know you. They know your performance. They know your skills, your abilities. They don’t have to figure out anything about hiring a new employee, adding a new person to their payroll, onboarding a new person. The second reason is that for you to get a job at a new employer, your package of knowledge, skills and abilities have to be so overwhelmingly positive that you are worth the risk. Look where you are at, talk to people. Find your opportunity!
Which brings us to my 4th solution.
What can you do to have the most job security? The answer to this question is simple. Work for the one person in the world who would NEVER fire you. WORK for YOURSELF. Find a passion, develop your abilities, learn something unique and valuable, start your own company. Provide something new, something great, something unique, something creative. Figure out what gives you your own unique and personal professional competitive advantage, and figure out a way to profit from it. Charge what you are happy receiving, work at what you are proud of and carve your own niche, whether it is microscopic, or enormous.
If you know what you CAN do – your next question is, what SHOULD you do? That is an answer for another day.
July 29th, 2010
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Fortune Magazine interviewed Jeff Bezos recently in Seattle. He drew a difference between Kindle and the iPad – “I think there are going to be a bunch of tablet-like devices, its really a different product category. The Kindle is for readers”
“Amazon accounted for about 80% of all electronic book sales last year” Amazon reported a profit of $299 million last quarter, and electronic book sales are a huge component of that. Amazon has about 600,000 books available, and sells, on average, about 24 eBooks per year, per Kindle. I understand the Kindle. (I may understand it better than investors, who have lowered Amazon’s stock since the recent Kindle price cut.) Amazon’s profit from the Kindle works like Gillette’s profit from selling its latest razors. The razors don’t matter. Sure, Gillette makes money from the latest, but the blades are the real source of profit. That article suggests it, but it is easier to understand when you realize the math behind 24 ebooks per Kindle, per year. Apple hasn’t released numbers for their iPad, but the iPad isn’t limited to books. It can download apps, music, books, and every other “blade” that Apple can make available to it.
So – back to the Ipad. 
From a technology perspective, from a capabilities perspective and from every other perspective, it is crystal clear that there is nothing unique, revolutionary or special about the iPad. I didn’t understand why Apple would build it or why users would buy it. It made no sense to me. The market slice is between Kindle, Nook, Droid, iPhone, Netbooks and PCs is razor thin. Why build and position a device between them?
Yet, for some reason, iPads sell, amazingly. Why? I’ve tried to make sense of the iPad. I’ve tried to figure out why and failed repeatedly. Is it the existing user base? Certainly that has a lot to do with it, but if you already have an iPod touch, an iPhone, an iPod, and an Apple Mac, do you really need an iPad? Conversely, if you have an app, or a song and it is already in the iStore, do you need to sell to the same user-base that’s already bought it? When you’ve seen Microsoft’s Origami succeed at nothing and it was essentially the iPad minus Apple’s marketing, when you’ve seen Dell and HP fail to sell touchpad computers in any real volume, and when you already have iPod, iPod touch, and iPhone – why put the money into development of an upsized iPod touch-like “me-too” device.
I’ve found the answer in a most unlikely place. I was amazed when it finally clicked. I was reading Eddie Alterman’s editorial in the July 2010 Car and Driver magazine. I thought it was such an odd place for digital and technology enlightenment. Shoot, it was in the PRINT version, and I couldn’t find a link anywhere to a web-version. The interesting thing were his thoughts about the iPad. He sees the iPad as the cutting edge slicing the distinctions between print and digital media. The iPad is a “convergence of print and digital values (that) will give writers, editors and art directors all kinds of opportunities to deliver more engaging, more entertaining and more useful stuff.”
The iPad is an animal that eats brand new kibble. Media wants to feed it. Media wants it to succeed. For every small-town or mid-market newspaper that has canned its entire local news group. iPad might be an answer for all the people who want media in the 21st century to find a way to be profitable. Eddie suggested how this one device acts as a shining star lighting up a dark sky – beating back the gloomy futures that writers feared. Creators of content and consumers of content can converge at the iPad. In that place it makes enormous $ense. For media that wants to feed the iPad in a quasi-desperate sort of staving off extinction gasp, iPads, Nooks and Kindle’s are magical. Still – does the iPad make sense for Apple?
Of course, and it goes way beyond Amazon’s philosophy for the Kindle. Look at it this way: If you could sell 3 million razors in the first 80 days - you might not need to sell any blades at all. At this point, I could buy a fair netbook for $300, a kindle for $169, and have two devices instead of an iPad. Those two devices would enable me to read anything, go wireless, Skype, run a bunch of programs, and generally do a dozen times what the iPad does. So, in those terms, the iPad makes no sense. Somehow, Apple sells millions of “that which makes no sense.” That makes enormous financial sense for Apple. iPad = $$$$$.
Do they truly have no competition able to compete with their marketing prowess and consumer evangelism?? Why not? What do you think the next Apple media-consumption device will be?
June 29th, 2010
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Mark Cuban is a billionaire, and is also a big fan of Reed Hastings. I am a very big fan too,
– because Reed has a strategy for competitive advantage that cannot be duplicated or beaten by any inauthentic company. Reed’s strategy is here, and also on SlideShare.
Mark points out one key element of Netflix success is that ”almost no customers leave cable for Netflix” That is important because it means that subscribers value Netflix in addition to cable. But why not? The most important competitive advantage that gets to the heart of “why.” The complete question – to be articulate – is WHY do customers value Netflix, and why will they continue to value Netflix?
Reed reveals that on slide 21 with a simple yet effective philosophy. His philosophy is to provide the best customer service. He stakes Netflix’ success on the ability to be a service of choice, to perform with and deliver to Netflix’ customers, to lead customer satisfaction across all of his current and potential competitors. He understands the amazing depth of competition coming at him from all directions. He understands where his business is going. He thinks that having the best customer service will be his singular competitive advantage.
Even if other companies never get the value of superior customer service, it would be to everyone’s advantage if they would try. It worked for Zappos, it is working for Netflix. I guess the real question is why WON’T other companies try harder?
In this presentation, Reed gives a great overview Netflix’ history of customer service leadership, and their go-forward strategy for “running fast” as he puts it. For Netflix, running fast is a race to provide the best customer service. They win when their customers win.
I like that and admire pretty much every business that uses innovation and superior customer service as a competitive advantage. Unfortunately, I suspect the effectiveness of superior customer service as a competitive advantage is only valuable because it is so rare.
How could that be changed?
June 4th, 2010
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I was reading Kyle Lacy’s guest post in Dan Schawbel’s Personal Branding Blog this morning. In it, Kyle talks about reading Seth Godin’s blog post: “Sing It”. That feels like a horribly derivative place to begin. But neither Kyle nor Seth focuses on the right kind of Passion.
Passion is essential and it is elemental. Passion comes through crystal clear in writing and in life. Passion pushes words out like the Old Faithful geyser – prolifically, frequently and most of the time it pushes them in the same
direction, with great forceful power. Passion is fire below the geyser. Without passion, writing becomes a slow dripping faucet, simply irritating listeners, creating nothing but distraction. That provides zero appeal for the writer, and translates to zero appeal for readers. Without passion, ANYTHING you do will work in sort of the same way. Think about that. Without passion, you are just going through motions that you don’t even care about.
Passion is essential, necessary and sufficient. It cannot be simulated or faked and like Tom Cruise said about Porsche in “Risky Business”, there is no substitute. Kyle writes in his blog post, “Devote time and energy to the process and you will experience return.” That is wrong because it misses the point. I think it is important to:
Find a process that inspires you so that time and energy flow out with passion. Find a subject that stokes the creative fires under your personal geyser until the pressure forces your ideas out – repeatedly, powerfully and prolifically.
February 18th, 2010
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One of the most difficult things to do in business and in life, is to Sell. It doesn’t matter what, or why, or where, or in what context, or even to whom. It is very difficult to sell because under almost all circumstances, when you sell something, you are getting someone to pay for something. They are paying with currency, with time, with attention, with something that they already value. That payment has existing and perhaps intrinsic value to them, but the thing they are buying, or buying into – it only has potential value. At its heart, the act of selling, is giving someone the confidence that the value they will receive equals or exceeds the value they are voluntarily giving up. To sell someone requires that they have faith. That is the singular reason why it is difficult. You are getting someone to give something that they know is already their hand for something that might be in a bush.
Mark Cuban recently wrote an insightful article asking “Why have so many internet people lost touch with reality.” His point, distilled to a sentence was: “Content changes, the value of content changes, and those changes require reevaluations of where value comes from and the business models that harvest that value – and some executives don’t understand.” He was discussing the value of search, the value of information, the value of aggregation – and how, when those values shift, it is important to keep up. Competitive advantage and value is available for people who read the tealeaves of the changing internet accurately – with regard to content quality, information, aggregation search and sales. With regards to content, that means finding the value at the intersection of these qualities:
(a) timely, intelligent, reliable content
(b) thoughtful management of that content
(c) structure that is helpful, useful and functional
(d) interested users (information consumers)
(e) unique elements
I think that interesting, deep thought in people who can eloquently communicate is nearly extinct. So it is a winning formula to find a way that information consumers can reliably find useful, functional, intelligent unique content, services or products when they need it. The reason it is important to give consumers that sort of information was aptly described by Jonathan Schwartz (the former Sun CEO who playfully resigned via haiku) wrote this in his blog:
“why is the search business so valuable? Because it’s an exceptionally efficient means of harvesting intentionality – if a consumer is searching for “flights to Cairo,” the odds are good she’s in the market for a trip to Egypt. That intent represents a ton of value for the airlines, hotel chains and car rental companies that serve travelers to Egypt. Whoever first recognizes that intent can broker a relationship between the traveler and those businesses, and charge a healthy toll for the privilege (that’s the heart of on-line advertising). A discount airfare to Cairo, presented alongside the results of a “flights to Cairo” search, has a far higher likelihoodof generating a ticket purchase than an unqualified billboard or ad in a newspaper. It’s easier to find needles in haystacks when the haystacks are sorted by needle count.”
I love his idea of sorting haystacks to find needles and his concept of harvesting intentionality… Search is a great business because it is constantly evolving and constantly producing value. It is one of the many ever-changing things about the internet. There have been search leadership changes since the internet was created – and at various times the quantity of total search has gone to various search engines. I’ve personally gone from AltaVista, Yahoo, to Google, and over the years used at least a dozen other engines and aggregators – Excite, Hotbot, Dogpile, and many others.
There are two constants to search engines:
1) It is ENORMOUSLY easier to discuss and theorize about “sorting haystacks by needle count” than to it is to actually sort them.
2) Although it is easier to find needles in haystacks when you can sort the haystacks by needle count – the easiest way to find a needle in a haystack is to have a great big powerful magnet in a world of great big metallic needles and non-metallic hay.
For a consumer trying to find something, search gives an idea of which haystacks might have needles. But from the search engine company’s perspective, we live in a world where haystacks are consumers, and needles equate to a really nebulous “purchasing-intentionality.” Jonathan Schwartz discussed harvesting them. Mark Cuban discussed harvesting them. Google, currently, is harvesting that as well as anyone because they have a sort of magnetic control. (and a >85% market share)
Mr. Schwartz was correct in pointing out that people searching for “flights to Cairo” are probably considering a trip to Egypt… but he could have gone further and added that people searching on weather forcast in Cairo might also be interested in that trip. There are long lists of haystack sort algorithms that come from search engine activity. Advertisers, marketers and SEO experts and savvy business people have analyzed tha for yars. How about “hotel reviews in Cairo” or Searches for Egypt Air CAI”. Getting access to this sort of intent enables Google and Bing to harvest the intent.
The intent, however, is not the sale. The intent is not the trip, or the purchase. So – what is MY point?
Harvesting intent has amazing value, but harvesting action is a more valuable objective. Harvesting interest is great, but businesses wants results. A business wants to harvest sales. The closer the intent is to the action, the more intrinsic value that intent has. Bing has named itself a “decision engine” because they want to be closer to the action than the intent. If they can produce on that, their data will grow exponentially. From the reverse perspective, if Google or any other SEARCH engine really wants to maximize the revenue from their search data (to clearly enumerate how organized their haystacks are) they need to get more ingrained in the entire purchase process. Bing is investing in that process now, and Yahoo has had an internal shopping site for years. It seems a missed opportunity that the data from years of running Yahoo’s shopping site doesn’t seem to have given Yahoo any significant competitive advantage.
Microsoft’s failure to acquire the complete Yahoo, although not necessarily a good thing for Microsoft if it would have been completed at the astonishing $44 billion that they first offered, ultimately means that Microsoft can’t use Yahoo’s internal data. As a condition of Microsoft’s agreement with Yahoo,
“The agreement protects consumer privacy by limiting the data shared between the companies to the minimum necessary to operate and improve the combined search platform, and restricts the use of search data shared between the companies. The agreement maintains the industry-leading privacy practices that each company follows today.”
Microsoft wants Bing to be a decision engine. Why call it that? To me, that subtitle suggests an engine for harvesting decisions -
for harvesting action. They probably wanted Yahoo’s data to provide magnetism to their Bing. Not having that data doesn’t mean they can’t give Bing that quality, that value, that ability - but they must still transparently, logically, clearly and reliably aggregate activity, and more clearly connect search activity to harvesting intent to predicting and facilitating sales. That will be serious paradigm shift. I almost named this entry “When a piece of metal hits a magnet it makes a “Bing” sound.” That may yet be a more appropriate title. It will be important to keep up with the changes, going forward.
What do you think? Drop me a note.
February 5th, 2010
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