S T P (?)

I came across this inspiring note by Norm Rose, the 26 years travel industry veteran. His blog is compendium of interesting articles on travel technology, emerging trends and latest happenings. In this particular article, Mr Norm has covered Expedia’s new approach (basis Dara Khosrowshahi’s address at PhocusWright conference, Nov 2007). This might not sound rocket science but pretty much what we have always been discussing about. Though written in Nov 2007, but is still valid..

Expedia has 3 focus areas…

> Email: Make it more focused and targeted. Email has tremendous potential of upsell opportunity

> Segmentation: content based segmentation. Premium groups, no cancellation/change fees or other services

> Search Experience/Personalisation: New algorithm will send people to a specific hotel property, therefore increasing the likelihood of conversion.

Thus Expedia’s leap from being impersonal to a more personalised interaction. I saw lot of Amazon in their approach, emailing, algorithm, personalisation etc. You can read his full article here.

As an emarketer, I’m sure most of us have always been smitten with the Google bug, Search Optimisation Search Engine Marketing other display related communication to reach out to our target consumer (talk about segmentation, targeting and positioning). I’m also sure that very few of us would have looked internally, at our own database, our own consumers and found effective ways of marketing.

Banking folks are a great example and market according to clusters lifetime value etc (alas, they might be around for long). However, the other service industry players such as travel and retail e commerce still have to long way to go.

Truly, in the context of e-Marketing, the three pillars of marketing strategy- Segmentation, Targeting and Positioning (STP, as we call it) has a new P- Personalisation. Practicing this formula on Search (whether SEO or SEM) is relatively easy. All we need to do is to marry the keyword (read as search intent) to the product offering. But, what Expedia is talking about is the next level. This will marry the customer level data (from CRM) to the content to enhance conversion. And we don’t have to look elsewhere, but our own data and integrate this to deliver the lasting consumer engagement. I’m reminded of a scene from minority report, where Tom Cruise, while walking in a mall is offered a proposition basis his Retina scan.

Sounds very simple, eh! But who cares, as long as, we have Google 🙂

Cheers!

Internet- A Sales Channel or a Branding Medium?

A food for thought, it didn’t strike me even when Google was making a presentation on Branding strategy. Spends more on building brands, as the cost of conversions on a brand keyword would be the least (roughly 5-10 times more than your average conversion). So invest in brand and reap benefits, increase your ROI and lower the cost of conversion. Perfect theory, instantly buyable. Another large part of their presentation was on how the brands will be built online- Content, display ads, RIAs video ads. You name it and it is on the internet. As a marketer and a category leader what would you do? Where would you put the money and how much.

Lets go a little deeper, and recall the definition of brands (a difficult one and to my mind one of the very misued terms). A brand is a sum total of Product’s Physical attributes and its experience and has a name. A strong brand should be able to conjure images and experience (good/bad) in your mind. It is the holy grail of marketing, and in an ideal state, if your brand is big enough, you don’t need to advertise and waste monies (but you do that till you get there). All our B-school course, our strategy is around how to build great brands (Mr Aarker has written 4 books on this theme and Mr Kotler tome must be in its 11th edition by now). However, we marketers are still pondering over on how to do it. More so, how to do it online. Or should we not?

Lets consider this small example, TV has 70 million households, and more than 500 channels. The black box has been the greatest invention for marketing so far (in my opinion and have no hard feeling with my other online loving folk). Experiments have proven that a communication has a greater impact and lasting impression when sound and Vision are in tandem. And then came the other inventions Computers and Mobiles (also with screens). And so it happened that someone (and followed by a number of whitepapers) announced the birth of second and third screen (please note that the first screen was television). And marketing was to be dominated by this genre.

In US it started about 20 years back and now they have 50% internet penetration, Singapore is 60% and Taiwan is 90%. For India, I only know the number of users and it also varies greatly, 25 Mln as per comScore, 35Mln as per IAMAI and 45 Mln as per NASSCOM. In short, though our sheer number is high, our penetration is very poor (I’ll update the penetration figures as soon I get it). In India, internet is still not a mass medium. Please consider the time spend by todays youth on each medium (Source Business World Youth Report 2006, IAMAI 2006)

TV: 124 minutes/day
Newspaper: 30 Minutes/day
Radio: 84 minutes/day
Internet:61 Minutes/day

People do spend time online, where does the communication stick and occupy that little space, which creates a brand. Video ads, Social community, RIA, Viral, Flash Movies and webisodes are the answers. Huge engagement, huge interaction and best of all it is by choice and recommendation (by search engine). But is this good enough to create brands? Good enough to create recall and not to use the search engine to come to the website? Will it be a talking point?

Lot of brands have done it, and have been hugely successful. Google didn’t do any advertising (and maximised PR to its advantage). eBay utilised the online community and so did YouTube and MySpace. Orkut is very popular in India and they did it with 0 advertising.

And the most differentiating factor of our medium is the measurability. Internet is one of the few mediums that can define ROI (Direct Marketing is the other). So now we can use it to define goals and plan backwards to derive the ROI. The campaign have set goals and marketers can now be smarter and more accountable. However, this brings us back again to our moot point, can it create brands. At least in India can it replace TV. And will an emarketer choose Internet whole heartedly to drive the strategy to build brands?

CPM/CPC or CPA?

The other day I had a tough time negotiating with one of the big online publisher. “We sell only on CPMs”, the publisher said and were ready to discount the price by 20%. CPM is the usual discussion starter for any media negotiations and vary from publisher to publisher (at times can be as high as Rs.500). CPM stands for Cost Per Million, but in reality is only cost per thousand (CPT). Let me illustrate with an example

If you buy 1 Million impressions on Yahoo at Rs.350 CPM, means that at the end of the campaign you will have to pay Yahoo
1,000,000
_____________x350= 350,000 Rs.
1000

The other way to handle the negotiation is to get a fixed spot in prime real estate, at a fixed cost. e.g if you block the DHTML position (LHS position below the header). You might have to pay Rs.200,000 and would generate say 3 Mln impressions. See the following example to access if effective CPM might be a good idea to take a fixed position.

200,000
___________x1000= Rs.67
3,000,000

Thus indicating that given monies the same, Rediff is a better buy.

Most of the publishers keep revising the rates, depending upon the popularity of that position. internationally, it the third party auditing sources like comScore or Neilson net rating that corroborates this, however in India, it might be decided by the availability of the inventory (which brings us to the second most used term in discussion “Our inventory is sold out” ;). How many come to the website, what is the rightmatrix for measurement, time spent/Pageview, audience profile is a different discussion and Pandora’s box. Check this article.

CPM is the starting point of any discussion and can actually multiply into lot of mathematics. The first such matrics is GRP, which brand advertisers will find most relevant. You might recall that (like television)

GRPs= Reach x Frequency

comScore has a special tool in its module that will help you to access the reach and frequency of your campaign. I’m not familiar with Neilson Netrating (as they don’t have their services in India), but I’m sure they will also have this standard tool. This matrix will help you to synergise online campaigns with the other mass media component. However, the online world has a different brand dynamics. You might note, the first trigger of an offline campaign results in search for the keyword/website. Please note that this is an inexact science and as of now has no valid data point to corroborate assumption :).

There are other bunch of guys who swear by SEM. It is only by trial and error that you will find the solution to this misery and find that optimum Offline and Online mix.

CPM also brings us to the next big currency- CPC. You might get this standard reply from a big publisher- “We don’t sell on CPCs ;)” or “We can lower the CPM”. All they mean is that they don’t have the right technology to support CPCs. Let me illustrate CPC by example. If you buy 1 Million impression on Yahoo with Rs. 3.5 Lacs as the outlay and a fixed spot on Rediff Home page for Rs.3 lacs, how would you measure the deal.

One way to do this is to use the Media Planner reach and frequency through comScore and come about a GRP number (which a brand guy should).

However, if you happen to be a marketing manager of a website, where traffic is paramount and you need visits to increase the bottomline (with your bottomline at stake), you will consider clicks. Say Yahoo creative has a an average click through rate of 0.6% and Rediff has 0.3%. The number of clicks that you will get from respective Publishers is as under…

Yahoo….. 1,000,000 x 0.6%= 6,000
Rediff…. 3,000,000 x 0.3%= 9,000

CPCs will be as under

Yahoo…. 3,50,000/6,000= Rs.58
Rediff… 3,00,000/9,000= Rs.33

Indicating that Rediff real estate works better and is more cost effective to drive the click traffic (maybe Rediff should sponsor my blog). Please note that the numbers are only indicative and for the sake of discussion.

As a performance advertiser, you would want a real estate that drives traffic and converts, not necessary a property that gets you eyeballs. CPC when used will remove this doubt from a planners mind (a smart marketer will further better this by using a better performing creative and up the CTRs). The benchmark CPCs (and effective CPCs) should be in the range of Rs.3 and upwards depending on the category. If you are jobs, it is easy and becomes tough for a luxury product/service.

In the performance marketing space the “IN THING” is the CPA (cost per acquisition), which a further distilled version on CPCs and effective CPMs. The most expected answer from a Publisher will be- “What is CPA?” and “There is a policy against CPAs”. As a smart buyer you will chance upon and start the CPC discussion with the publisher again.

Truth is, CPA deals are a potential source of loss for a publisher, unless he is in a dire need to sell his inventory. By far, Google and Other Search engines will give the Best CPAs, followed by Affiliates (if your price and conversion rates are attrctive). Another fact of the matter is that a publisher would need huge investment to CPAs, MSN has Atlas, Komli has it own technology and so does Yahoo (but they still have to start monetising it). Let me illustrate it with one last example. Suppose Yahoo campaign converts at 0.5% and so does Rediff. The cost per conversion will look as under

Yahoo Total conversions= 6,000 clicks x 0.5%= 30
Total Cost= Rs.3,50,000/30= Rs.11,667

Rediff Total conversions= 9,000 clicks x 0.5%= 45
Total Cost= Rs.3,00,000/30= Rs.6,667

Indicating that Rediff drives much cheaper conversions (Now Rediff should definitely sponsor this blog;). This however depends on a number of factors, but most importantly what a publisher must realise is that most of the conversions is brought about by Non-prime real estate or the remamant inventory. This opens their inventory to a completely new set of clientele and huge potential to monetise their inventory. Check out this mediapost article…

Please do note that the smarter you buy, the better you can justify the value and at the end of the day it your numbers and board meeting that matters!!