Dave Eckstein
Just in case you’ve been living under a rock for the past few years, paid search advertising is presenting a new set of challenges to advertisers and the “traditional” media sales team.
It is a viable option in a vastly growing local media space, one that offers ease of use and measurability. It’s a little strange, however, that ease-of-use and measurability have taken preference over good old fashioned “results”.
Let’s consider what paid search intends to do — what any advertising is charged with — to provide a clearer path to the next qualified lead for local businesses. It’s that simple.
If I am a jeweler hoping to land my next Tag Heuer shopper from Google, chances are stacked against me if I am a paid-search advertiser, at least versus my “organic search” competition. When online consumers click on a search engine result (i.e. your typical Google results page) they will click on an organic search position 75% of the time, and on paid positions only 25% of the time. In other words, 3 out of 4 searchers prefer the left side of Google to it’s “sponsored” right side.
Okay, so only 25% percent of search referrals come from to paid leads. “I can live with that,” says the local business owner. Not so fast. Another 10% of those who do follow these paid leads immediately leave the target site, and … those that do stay spend less time on the target site (less time, that is, than their organically fed peers). Oh, one more thing: fewer of them return to the advertiser’s site after that initial landing. In the end, only 3% of those leads convert to customers. (Most of this info was shared in AdAge’s Search Marketing Fact Pack, 2008).
In other words, the numbers are stacked against us in paid search.
Let’s simplify the math a bit. Assume for a second that your client has to decide between dedicating their limited resources to having a high organic search position (SEO) or a high paid-search position (SEM). For most local businesses it’s one or the other, if either at all. The focus on SEO (organic leads) will lead to 4-5 times as many conversions as paid leads. When done right, SEO costs a lot less per lead.
So businesses that use paid-search must be doing something wrong, right? Not necessarily. Just like there are some successful local cable advertisers out there, there are also paid-search advertisers who have found some success. But they are likely spending more than they have to per customer.
Paid-search advertisers buy a set of keywords for their business in Google AdWords or other search engine (chances are, it’s Google). After all, advertisers know which battles they need to win most. Right?
Well … not so true. Fact is, too many businesses are still buying keywords they shouldn’t waste their money on. It’s a catch-22 for some. There are really two types of keywords to buy. Advertisers can purchase the keywords they technically already own (for example, their company, brand, trademark, or other exclusive term). Those tend to be relatively cheap, as they are the only “bidder” in most cases. FYI, a shocking 75% of online advertisers who use paid search buy their own trademarked keywords, according to SEMPO.
The alternative isn’t any better: advertisers can enter the bidding war for the real keywords … the ones that people actually search on in their local market. These include automotive terms (”used cars austin”), legal terms (”personal injury atlanta”), home contractor services (”plumber sacramento”), financial services (”mortgage seattle”) and other similar products & services.
Have you checked the prices of these real keywords in your local market? If not, do so right now. Take a look. It’s a real bidding war in some areas.
That lawyer you work with … the one that is spending a nice chunk of change in AdWords every month … what is the logical argument that demonstrates the chance for her to decrease the cost of client acquisition?
Here’s where we can start: The average cost of keywords in Google’s AdWords program for legal terms runs about $25 per click in the local market. You can find this out for your own market on Google. (FYI, testing this in your own market is free, so if you don’t try this, you’re consciously deciding to sell at a disadvantage.)
| |
Keywords |
Avg CPC |
Volume |
| |
seattle personal injury attorney |
$33.80 |
880 |
| |
tampa personal injury lawyer |
$31.89 |
320 |
| |
dui lawyer pa |
$28.96 |
1300 |
| |
fort worth personal injury attorney |
$25.39 |
320 |
| |
criminal lawyer omaha |
$18.11 |
58 |
The table above demonstrates the costs associated with paid leads using the legal sector as an example. We can also see the monthly volume that comes with this purchase. (There also appears to be a lot of drunk drivers in Pennsylvania, for whatever reason!)
All joking aside, that lawyer from Tampa could spend over $10,000 a month; the one from Seattle could throw $30,000 into their monthly AdWords budget. Is this an efficient means to generate leads?
Let’s just assume for a second that none of these $25 clicks abandon their mission, all of them return to the site willingly, and that 3% convert into customers. In other words, let’s assume a blue-sky scenario. Even in a perfect world, that’s a lead acquisition cost of $833.
Back up the bus one minute for a critical point: That $833 cost is on a customer who is in a completely different phase of engagement. They’re further down the funnel. In other words, by the time somebody is searching online, they are essentially in the market. That’s a very ripe customer. Our cost-per-customer must be lower at this stage of the game to make this work. I can’t spend $833 on the low-hanging fruit. I’ll probably put myself out of business. When we do the math and take the hundreds of specific searches required to get my one qualified lead with paid search, and multiply it by the cost-per-click, the high disapproval rating from that survey starts to come to light.
Now, the question begs, even if my current campaign is successful, what alternatives to paid search will actually make my advertising more profitable? In other words, how do we drive down that lead acquistion cost?
We’ll answer that in the Part 3 of Searching for Answers … but here’s a hint: Local media sites have the firepower to produce organic leads, just by virtue of the volume of traffic that is currently generated. This approach can serve referrals both from a station website and “unsourced” referrals from offline advertisement … all with extreme cost-efficiencies.
A local media outlet has that ability to generate more traffic on the dollar, both virtual and physical traffic. We’re still interested in that, aren’t we?
SOURCES: Advertising Age Search Marketing Fact Pack 2008, SEMPO Survey January 2008, Compete / TNS Media 2008, ComScore 2008.
Dave Eckstein does not play shortstop and was never the MVP of the World Series. He is a partner in the firm ESA & Company, based in Red Bank, New Jersey.
Guess what?
According to a lot of experts, times are tough. Taking the pulse of a local market or two (or 200), you wouldn’t get much disagreement in stating that the economy isn’t exactly bullish right now.
That must mean it’s a great time to be selling broadcast television.
How’s that?
Let’s take a quick look at two types of local destination business owners circa 2009. It won’t take us very long to determine a good approach for your next sales call, should you happen to be sitting across the desk from one of them (and you should, as often as possible today). Both advertisers, by the way, are perfect candidates for broadcast and internet advertising.
The first type is looking to cut expenses. They need to keep the business running. They are also absolutely certain they are overspending somewhere and need to cut costs today. They’ll object to the media sales call on the simple premise that “this is not the time I need to think about adding expenditures.” What they might also be saying is this: “I’m cutting my advertising by 20%, so my 2009 plan needs to work 20% better.”
What if you presented a simple plan to get that accomplished? A homebuilder advertising in the “Sunday Times” might be paying 3-4 times per lead than they should be. Yes, they certainly are if we do the math. Could we show them a plan which, at the very least, maintains the total exposure of their campaign, and costs a fraction of their current ad budget? If so, you’ve just erased a big objection and helped them to cut costs.
The second and more viable type of business is that one that is smelling a huge opportunity. They are not as uncommon as you might think. Many fortunes have been made at the moment the economy was hibernating.
Here’s why: everything is on sale.
Think of the stock market for a second. Say what you will about prices hitting historical lows, stocks spiraling down the sink, and equities trading at small P/E multiples. The opportunist knows that she can scoop up a deal at or near the bottom of the market. It doesn’t matter if she times it perfectly, she knows how the market works and will reap the profit. Because nearly everything is on sale.
The same is true about market share when the economy goes soft for a quarter, or two, or three. The longer the economic contraction, the fewer voices are asking for the consumer’s business. If we started the recession with 10 viable furniture stores in a local market, over time, one or two of those stores may “decide” to go out of business. Others will decide to choose option one above, looking to micro-size their ad buy; some will cut their ad budget out of the equation all together.
That means we now have a fraction of the competition presenting a message in the market place today. Instead of 10 active “voices”, we might have the equivalent of five or six.
Meaning the ones that advertise in a recession are buying their market share at a discount. That same advertising dollar will acquire more share-of-voice today than it did at this time last year. This is a mathematical reality that the most successful businesses have exploited to fuel growth.
Sure, there aren’t as many customers buying a room-full of furniture today as there were a few years ago. But the pie shrinks and expands with every economic cycle. We create the opportunity for real growth and significant profitability when we help a business acquire share, regardless of the economic cycle.
When and to what degree the economy recovers is anybody’s guess. But the very simple reality exists that as a business owner, if I head into a recession with 10% market share and head out the other side with 15%, I have greatly increased my probability of success … and my multiplied my net profit too.
Broadcast television and the local internet answer the bell on both sides of the coin. Whether our next call is with the business owner in maintenance mode (”cut my budget but maintain my share of market!”) or the one in growth mode (”I want to buy share on the cheap”), no local media mix can deliver the buying efficiency of broadcast and the internet. It’s a mathematical lock.
In short, the well-equipped media salesperson never sees a bearish market as an excuse for current performance. They smell the opportunity.
Looks like we’ve got some work to do, thank goodness.
PS: Please keep in mind, this same approach works in good times too!
Dave Eckstein does not play shortstop and was never the MVP of the World Series. He is a partner in the firm ESA & Company, based in Red Bank, New Jersey.
“My prospects aren’t coming to the table because of the economy.” Sound familiar?
Actually, “the economy” is exactly why they should be willing to take a meeting. The real reason they’re not coming to the table is more a function of our behavior. It’s not their fault, nor is the economy to blame.
The moment we start asking for 15 or 30 minutes of their time, what they are really hearing is “Hi … Looking for the chance to increase your ad budget?” I realize we’re not saying as much, but when thoughts of prolonged economic contraction are swirling around, they’re unlikely to hear a pitch for an investment into the one area they’re looking to cut the deepest: their advertising.
A salesperson sent me an email the other day with a quote on it that was very appropriate for the times:
The man who stops advertising to save money is like the man who stops the clock to save time.
How true. Too bad that alone probably won’t work to get the meeting, because it makes a lot of sense.
Here are three direct ways to recession-proof your sales pipeline. If the hardest part of your job has just become “prospecting and getting the call” … you have company. We hear this not just within our industry, it has become the mantra of many in B2B sales today.
Technically, it is more of an excuse than a mantra. Here’s a way around the problem.
1. What we’re saying:
Okay, so maybe it’s a function of what we’re saying or what the business owner hears. But let’s take a look at how we can present it better. Assume we have a prospect spending $100,000 in their annual budget, which consists of the local paper and cable TV. After all, aren’t these media “cheap” or “proven”?
Well, not if we really look closely. We could very easily buy a similar amount of impressions against the same target demographic (yes we can) for half the pricetag on any broadcast station. In a midmarket station with a CPP around $50, that budget would buy 2,000 GRPs. The relative media cost (on a per-point or per-thousand basis) of print and cable versus all the key demos is at the very least double what it is for broadcast … and we’re being generous here.
Be bold. Leave no doubts that you have a plan that will actually lower their ad budget by 25% for 2009 while delivering more penetration to their target audience than their current buy does. State this point clearly when setting the meeting. When you work the numbers with most advertisers, you’ll see that this is actually a gross understatement.
2. What we’re leaving out:
More times than not, recessionary periods invoke knee-jerk bunker mentality behavior. “I need to stay close to home today,” says the advertiser. Sounds safe, but that is the riskiest thing I can do as a business owner today. First and foremost, market share is “on sale” today for nearly every business category in the local market. Equally important is the demonstration of how the right buy will make up for the dearth of shoppers in the market. If there are 20% fewer shoppers out there today than there were at the same time last year, why wouldn’t I want to make up the difference with a more efficient media buy against a larger geographic footprint? That’s where the missing 20% are sitting right now, not hearing our message. Let’s talk to them for cheap!
3. How we’re prospecting (the numbers game):
There are really two conversion ratios (not one) in any sales process: My ability to get the meeting, or meeting ratio, and my ability to get the sale, or close ratio. In softer economic times, poor sales performance is more a result of a lower meeting ratio than a lower close ratio. Using round numbers here: in a stable economy, if my meeting ratio (those who agree to meet with me) is 20%, and my close ratio is also 20%, then I need 25 prospects to get a deal done. During this recession, if I can’t make #1 or #2 above happen, my meeting ratio will suffer because it’s “tougher” to get the meeting. Let’s say my meeting ratio drops to 10%; now I need to get 50 prospects to make that same deal happen. That’s my only alternative if all else fails. You can work the math with your own numbers, but you’ll be surprised how many times this answer comes up: “I need to double my prospect list.” That’s really not a scary prospect, for most salespeople it may just mean getting in front of one more qualified decision maker a week.
Here’s a blunt statement of fact that give us every reason in the world to try at least one if not all of the above approaches: All three are true regardless of the economic climate. So, the question shouldn’t be whether or not to try them, but why we haven’t done this a lot sooner?
After all, salespeople who are quick to tab “the economy” as an excuse aren’t really sales people.
Dave Eckstein does not play shortstop and was never the MVP of the World Series. He is a partner in the firm ESA & Company, based in Red Bank, New Jersey.
Adam Armbruster for TVWeek
In a down-tracking market it’s all about market share. As marketers, in order to help build clients’ profits from year to year, we need to help them increase their fair share of the shrinking market. Only through immediate and bold market-share increases can you expect to beat last year’s earnings.
Where do you start?
First off, understand the “total” market-share opportunity. For example, if your company earns $10 million in sales in a market that consists of $100 million in total annual industry sales, then growing market share is somewhat simple. You hold only a 10% market share. There is a significant market-share growth opportunity of $90 million. Moving from a 10% market share to a 15% market share is plausible because of the tremendous upside and the potential that many of these competitors may not try to counter your advertising plan.
Conversely, if your company earns $10 million in sales and the total market industry sales are $15 million, it may be much more difficult to grow since all of the competition combined holds a very small percentage of market share and the cost of growing incrementally may outweigh the cost of advertising. It just so happens, however, that most companies fall into the former category.
How can you take this same $10 million company’s profits up in a down-tracking market?
If a company’s current ad plan consists of newspaper, radio and direct mail in equal percentages and you shift those dollars to a television- and Web-based plan, the company’s actual ad dollar would increase in buying power 500% in almost any U.S. TV market.
Its ad dollar would buy five times as much impact as in the prior media plan because the efficiencies of broadcast TV married with the Internet simply cannot be matched.
Now let’s assume the market opportunity is down 25% from last year, and let’s further assume that consumers are 25% less likely to buy now because of economic concerns. If these factors exist, then launching the same media plan as last year is doomed to failure.
It takes bold and decisive action to compensate for a down-tracking market with a hesitant buyer. It takes a threefold to fivefold increase in impact to overwhelm the negative factors working against your campaign.
We have auto, furniture and home service clients that are up 10%, 20% or even 30% in profits today because they took the steps to make these media shifts last year when the marketplace was already cooling. They eliminated wasted ad dollars on niche media and instead looked at raw buying power on a cost-per-thousand basis. This year they are enjoying the benefits of their foresight.
What can be done to build share in a down market?
Be original. Your television creative look needs to have its own texture and style. Having the same look as your competition is a sure way to be perceived as wallpaper in the world of television. Take a chance, be a little clever, daring and different, and the viewer will come right along with you.
Examine your TV buys. Look for cases where you drifted from the proven basics of adequate reach and frequency. In days where less has to buy more, having too many programs or too many TV stations on a buy can severely hamper your sales results.
Only advertise high-demand products or services. Some managers want to build sales volume on slow-moving products or services, so they will ask us to promote these lines exclusively. This is not recommended, since promoting an unpopular product or service in a slow economic window can actually reduce your sales and profits. Appearing as if you sell only the worst choices is not a desirable niche in your market. Go with the popular options and promote yourself as the first-choice destination for them.
Watch the competition for weaknesses. I recently met with a client who had followed our recommendations perfectly for the last two years. As a result, he exceeded last year’s profits, his market share is growing by the month and he has been able to increase his prices. Why? Because as he was moving his direct-mail and radio dollars to TV and the Web last year, his competition was simply cutting ad budgets.
As competitors were reducing their market impact, he was increasing his by 500%. A competitor called him and offered to sell his business to my client, telling my client, “I see your ads everywhere I look.” Little did this competitor know that my client’s cost of advertising is lower than last year; it’s just that the impact is so much greater.
Ask for the business. Including a sense of urgency in your TV commercial is one of the most important components, yet many advertisers overlook this major element. For example, if you advertise to a marketplace and don’t have a deadline in your commercial, aren’t you just selling for your competition? Always ask for the order in your commercials. Case in point: Some recent political ads didn’t even clearly ask viewers to vote for the candidate featured in the commercials. How do these things get missed?
Offer a real value. Now is not a wise time to cut price. Improving margins is critical in a down market. Now is the time for innovative merchandising and cross-selling. Banks do this by offering free checking with a CD purchase. Furniture stores offer a free mattress with the purchase of a bedroom set.
It has not ever been about price, it’s always about value, and Americans are the world’s best at spotting deals in any economy.
Adam Armbruster is a senior partner with Red Bank, N.J.-based retail and broadcasting consulting firm Eckstein, Summers, Armbruster & Co. He can be reached at adam @ esacompany . com or 941-928-7192.
Ready to sell against paid search?
All precincts are almost done counting. And the results don’t look good at all.
No, I’m not talking about red states, blue states, or any political election. I’m talking about October’s retail and media numbers.
Many indicators point to last month being the worst October in 40 years, in terms of consumer and retail activity. A similar trend is occurring in the media world, as if we aren’t all aware.
One area of advertising that looks as if it’s not affected by this economic contraction is paid search. Companies are pouring more into their search engine marketing (SEM) efforts today than ever before. ComScore has Search-marketing expenditures pegged at $14B for 2008, while local search alone will be up 50% to $3.7B, with more growth on the horizon. It is a large and growing component of internet advertising, which at the local level is the fastest growth medium. Must be working, right?
The stark reality is that most traditional media sales teams are not equipped to sell against paid search today. Every day, we sell in a competitive field which includes cable, radio, newspaper, direct mail, yellow pages, outdoor, etc. But there is very little evidence that broadcast stations are doing a good job to counter paid search. Given its current growth trend and our clients’ welfare, this is a huge void in our capacity as media salespeople.
Paid search will be tomorrow what cable television is today. How big could that number be, exactly? Consider that today, local cable does about as much as an average broadcast station with a product that is clearly inferior for the destination retailer.
Stated another way … how many new business prospects have you met recently that have stated they’re using cable today because it’s the “cheapest” alternative?
“Well, I’m getting a great deal with my current cable buy, it’s priced at $10 a spot … can you beat that?”
Sound familiar? Now, take that same logic and add the phrase “$2.50 per click”. Can you see where this is heading?
Cable television has been around for decades, and in most markets, we have only just begun to correctly position the broadcast product against local cable. In too many situations, we talk about our #1 news product and local cable’s penetration, instead of pointing to glaring differences in cost efficiencies. An eerily similar challenge (and opportunity) is staring us in the face with local paid search.
Of the total budget going to paid internet search, 13% of it is coming as a result of lower broadcast TV spending, while 64% is coming from a reduction in newspaper, magazine, and DM spending. Somebody must think paid search provides a better avenue to find a lead. Does it?
Many advertisers use paid search today … but not all are convinced it works. In fact, just the opposite. A SEMPO study revealled that only 13% of advertisers think local search “works great”. Three times as many (38%) labelled their experience as “okay” or “unimpressive”. There are only a handful of reasons that can explain such a negative skew of opinion: it’s not working the way they thought it would. Why is that?
It comes down to cost per lead. Cost per customer acquisition. Whatever you want to call it, the actual return delivered by this medium is either no better (chances are, it’s worse) than their traditional media plan.
Paid search click-thru rates down 33% during 2008. Source: Rimm Kaufman Group
One place to look is recent paid search performance. The old adage is true: Live by the click-thru, die by the click-thru. Paid search must live and die by click-thru: it’s the Holy Grail of this highly-measurable medium. Paid search click-thru rates have fallen by more than a third since summer, meaning that the paid position advertisers bought — the one that used to generate 30 leads — is now generating 20. The advertiser has a few options here:
- Wait 50% longer for leads
- Buy up 50% more positions
- Be satisfied with selling 1/3 fewer items
- Find another solution that works better
Simply stated, search engines are displaying more ads to users (on average) before winning a click.
I’m not arguing against paid search altogether. For a few business models it has been a goldmine. The ease and manageability of it is a strength. But, at least today, highly successful SEM campaigns are the exception rather than the rule, especially in the local market.
Good advertising is about reducing the cost of customer acquisition. A successful paid-search campaign is predicated upon an highly-efficient CPC (cost per click) buy across the right targeted keywords. And at the local level, that alone is presenting advertisers with a new challenge.
The opportunity is huge here, and we need to make sure we have all the facts to help our clients, and ourselves. In Part 2 of Searching for Answers, we’ll look at the true nuts-and-bolts of paid search, and how to position the local broadcast station in light of this.
Dave Eckstein does not play shortstop and was never the MVP of the World Series. He is a partner in the firm ESA & Company, based in Red Bank, New Jersey.
The many events over the past few months, particularly those in recent weeks, will have a profound and long lasting effect on consumer shopping habits. Here are a few quick points.
- Research tells us that these are troubled times…potential financial collapse, high gas prices, big-business closings, mortgage foreclosures, and more, have created a seismic shift in consumer shopping behavior that will have permanent ramifications.
- The losers…mid-tier companies with moderate “ho-hum” appeal. Today, large chunks of consumers are searching for answers on how to adapt. Therefore, retailers must respond to the changing consumer value equation…the elements that drive value have changed.
- Who do you trust? That’s the question the “results now” consumer is asking. People are shaken to the point where the lack of trust in institutions, and in a growing Global environment, has never been lower. There are exceptions in the retail world, and those exceptions are being rewarded tremendously. How well do you know the key elements of trust that can increase sales?
The dynamics are already there, and the shift in consumer buying habits is clearly evident. It will be more so during the upcoming holiday season. Retailers must start to adjust now. This holiday season is not expected to generate large sales increases (The NRF projects a 2.2% lift). Thus, retailers must recognize the need for new tactics that will help to grow the business during the near term, and beyond. The top priority will center around a strong value position…not just an emphasis on “sale.” This must be coordinated with a concerted effort to build customer trust, and artificial acts aren’t the answer.
A dedicated action plan is essential…one that recognizes the new consumer priorities. Just remember that this will continue well beyond the upcoming holiday season. Be ready. Use every available resource to increase your knowledge and understanding of the consumer buying behavior in your market. Positive action will increase the probability of success.
William “Mac” McDonald has worked as a Senior Retail Marketing Specialist for over 40 years, focusing on consumer actions that affect retail tactics and strategies. An advisor to the National Retail Federation (NRF), Mac can be reached at Mac@ESACompany.com.
We now know with a very high degree of confidence that frequency works wonders for local advertisers.
So do most of the advertisers.
But the phrase “frequency works” needs some clarification, because advertisers could reach a frequency threshold in a timely window … and still be wasting money. They look at a proposal on a piece of paper and see that they’re getting an average frequency that surpasses the desired threshold, so all looks good, right?
Well, no.
What tends to happen in many ad campaigns is that, while the average frequency might be a 3.5, the distribution of that frequency is a little too wide to generate the desired results.
An example may illustrate this point. Let’s say there are 100 people in my market who are looking to buy a Toyota Camry this week, and I’m a Toyota dealer looking to get some frequency against those Camry-shoppers. I get my 3.5 frequency. However, 50 of the shoppers have seen my add six times, and another 50 of them have seen it once.
That still averages out to a 3.5, doesn’t it folks?
It doesn’t take a lot of number crunching to figure out that there’s a lot of waste in just reaching a frequency threshold without proper distribution. In the example above, I get my 350 impressions delivered to the 100 Camry-shoppers … however, a full half (175) of these impressions are wasted. Nothing like driving up my cost of doing business!
Although the example above is complete hyperbole, it demonstrate exactly what’s happening with improper media placement. Many advertisers and agencies are still shopping on rate and disintegrating a retail platform that would otherwise work very well. Good advertising reduces the acquisition cost of new customer. Our example above would raise it.
The right approach is to “stack” the buy, such that we distribute the frequency. That way, a much larger portion of the audience is closer to our desired average (the hypothetical 3+ frequency we stated above). This elimates a lot of waste and ingrains the message in a broader audience. This math will deliver on the lot too, as more ups visit the Toyota store, and the cost-per-car-sold (the “PVR”) declines.
There is another way we need to do this, which we aren’t right now.
The internet affords us the ability to “frequency cap”, and as an industry, we’re just not doing it. Why not? Frequency capping is a simple concept. It sets an upper limit that will stop delivering an impression to a specific visitor (over a timeframe) once that visitor has reached a specified limit.
This also distributes our frequency more evenly, and extends our message to a larger audience. I have fewer visitors getting eight, nine, or ten impressions. Therefore, the ad is seen by a larger audience with a more even distribution.
Frequency capping is included as a standard feature in many CMS platforms today. Oh, and it’s probably one of the least-used of the features too.
An online ad may target a similar audience of Camry shoppers as noted in the broadcast example above, and look to attain a 3 frequency against an army of 100 shoppers. However, without frequency-capping chances are very good I’ll waste about 50% of my buy.
When we get it right, whether on-air or online, the end result is retail success. More specifically, the business that has an evenly distributed frequency greatly increases its odds of drawing more customers per dollar of budget.
Isn’t that “good advertising” stated in its simplest terms?
To learn more about evenly-distributed frequency and other media tactics that make advertising success more predictable, please contact ESA & Company today.
Dave Eckstein does not play shortstop and was never the MVP of the World Series. He is a partner in the firm ESA & Company, based in Red Bank, New Jersey.
(Adam Armbruster for TVWeek)
I’ve been watching with great interest the technology development of the “smart TV.”
By “smart TV,” I mean a television set that allows us to apply Web marketing within a live TV commercial—a very exciting concept. We’ve already reviewed some early equipment development, but the most interesting project we’ve seen so far has been one developed by BrightLine.
With integrated TV and Web tools, BrightLine has been able to create live, real-time, Internet-based viewer interaction with a television commercial.
What could be better for a viewer and a marketer than a live give-and-take through a commercial?
Imagine watching your favorite television program and seeing a message for a product that you want to buy. You then press a specific button on your remote control and almost instantly an e-mail appears in your laptop or smart phone with all of the advertiser’s Web site information, store hours, specials and contact information.
No more writing down Web addresses from TV ads. No more looking in the phone book for the phone number. No more clicking on Google or Yahoo to search for the product or business.
We caught up with BrightLine CEO Jacqueline Corbelli and asked her a few questions about the smart TV phenomenon. Most importantly, we want to know how it could be a game-changer for television/Web marketers.
TelevisionWeek: Does BrightLine represent the smart TV of the future where interactive advertising is concerned?
Jacqueline Corbelli: BrightLine isn’t the smart TV of the future; rather, BrightLine owns the singular method, first-hand insight and expertise marketers must apply to transform conventional television advertising into smart TV. For years the focus where interactive television is concerned, and the media has helped reinforce this perception, has been, “When will the standard scalable technology arrive on the TV scene to really enable ITV advertising to take off?” While the reality is that market-leading advertisers have been getting beyond the standardization and reach challenge and exploiting what’s proving a very malleable ITV medium—to feed an urgent need to raise both interactive and traditional TV advertising effectiveness—for a few years now.
What makes it smart TV is the ability to bend the various digital TV technologies available to connect with target digital TV audiences and inspire them to get more involved with a particular brand or product. BrightLine’s method, extensive insight and design capabilities make that possible and, more importantly for our clients, easy and convenient, often with better results than the Internet can generate on its own.
TVWeek: What application within smart TV have you seen successful?
Ms. Corbelli: The beauty of smart TV is that there are a multitude of applications and features, and when mixed and matched to feed observed behavior, they can drive maximum impact for a diverse array of brands and messages in the marketplace. Marketers are no longer restricted to 30-second units, which given the broad range of marketing messages and objectives out there can be quite limiting. Instead, smart TV allows a whole new level of integration and customized ad experiences that can be tailored to the objectives of each marketer individually, in ways that feed observed viewer behavior. For example, some target demographics are particularly responsive to games, whereas others care more about sweepstakes. With smart TV we can pick from a growing menu of applications to craft what’s emerging as the ideal interactive experience for each.
TVWeek: How does BrightLine see these applications and the medium changing the TV advertising landscape?
Ms. Corbelli: When approached in very deliberate ways that specifically recognize the role of actual, observed consumer behavior, the TV medium is becoming a means for marketers to invite viewers into a compelling organic experience that happens to be advertorial in its content. First-hand data from over 50 custom-designed digital television experiences proves that viewers don’t as a rule have a preference for programmatic over advertorial content when the quality of the content is high and the nature of the experience fits hand-in-glove with their viewing habits. Aside from the growing quantitative evidence we have to illustrate this point, the qualitative evidence we’re generating is further reinforcement—the longer viewers spend actively engaged in some form of TV dialogue with a brand/product, the higher their recall and intent to buy. Over time this will lead to a better mix of media and content that raises the bar on quality and, with it, overall ad effectiveness.
All of this begs the questions: If we will soon have the television and Web tools to captivate a buyer immediately, will there still be a need to buy direct-mail ads, magazine ads or even radio ads? Would we really need any other electronic media? Once television/Web commercials are streamed smoothly onto our phones, would we still need any other signal? Suddenly FM radio seems like it’s from the Dark Ages.
Adam Armbruster is a senior partner with Red Bank, N.J.-based retail and broadcasting consulting firm Eckstein, Summers, Armbruster & Company. He can be reached at adam [at} esacompany {dot} com.
Your life just got a little easier. Or did it get more complicated?
Nearly everyone carries a cellphone today. Some also bring along a camera, an internet device, a PDA, a notebook, and other tools to get the job done – or just as entertainment. These tools are paths to communication, and can also serve as a distraction.
Whatever the case, Apple did a nice job of putting them all together in the palm of your hand.
No, Apple really didn’t invent anything here, and this not just another straw on the heap of praise for the triumph of the iPod. Love ‘em or hate ‘em, there is a lesson to be learned from Apple that applies to your job in broadcast sales.
Apple’s success has been achieved through intentional simplicity. What the Honda Motor Corporation brought us in the 80s and the Extra Value Meal brought us in the 90s has found its way into technology, into our pockets, our purses, and our hands. Simplicity.
This isn’t just about the simplicity of design, which the iPod and iPhone clearly demonstrate. Simplicity of choice. That’s the key here. Consumers crave it.
Would you like the 8GB or 16GB?
It’s really the same question you get when asked if you’d like to supersize your Big Mac meal.
If you’re wondering what in the world this has to do with television sales and retail success at the local level, it has everything to do with it.
Let’s back up to the 1980s, when the big three automakers were assembling hundreds of different vehicles, each with their unique chassis, trim lines, engine sizes, etc. Not to mention the myriad of colors, options, and packages that can be heaped atop those decisions. Wait a second, which one of those came with the cargo net?
Back then, Honda said, “Yeah, we have your favorite color here somewhere. Plus, you get to pick from the base model or the EX!” What a concept.
McDonalds and it’s fast-food brethren employed the same stroke of simplicity on its menu. Now you can drive up, say “Number 3 with a Coke please” and drive to the second window, where they will promptly hand you the incorrect order. All joking aside — the real point here is that simplicity yields sales.
What ever happened to mass-customization?
In his book Paradox of Choice, author Barry Schwartz notes while scanning the shelves of his local supermarket that he counted 85 different varieties of crackers. But Schwartz’s research extends way beyond Ritz and Saltines. He has clear evidence that when consumers are presented with fewer options, they buy more. Whether we’re talking crackers or televisions or new homes.
Guess what? Advertisers are exactly the same way. Maybe even to a stronger degree.
Those of you who attended our 2006 heard the Pulte Homes story. Pulte, one of the nation’s largest homebuilders, recognized that of the thousands of variations of homeplans and styles they offered, a vast majority of buyers picked and built among a finite set (roughly eight) of the plans.
So what did Pulte do? They decided to concentrate the bulk of their advertising efforts around those eight models, and market share soared. Less is more (it always was, and always will be).
Here’s where this carries over to sales. Yes, “options” are a great thing to have … especially if you’re a stockbroker. But if you’re running a company, you have to worry about rent, employees, inventory, debt, and cash flow. When it comes to your advertising, you’re not looking for a laundry list of options. You’re looking for an answer.
A quick corollary to the above point of simplicity. There are two types of people you meet in sales calls. The first type are good at spending budgets (marketing directors, assistants, and other committee members). The second, and more important type, are setting budgets. Ninety-nine times out of 100, these are your business owners. These are the people whose attention we must be seeking.
Budget-spenders (non-decision makers) will love all the options you present. Here’s why. They are reporting back to somebody who needs to make a decision. The spenders can “re-package” your options, adding considerable weight for their own bias (some options may be accidentally left off the list … imagine that!). They’ve proven their worth and justified their position. Then, “they’ll get back to you with a final decision.”
Stop me if you’ve heard this one before.
Budget-setters, our true customers, love answers. They want you to tell them, in the next 15 minutes (or less), how to increase profits. And the best part is … you have that answer already.
Sure, they can still decide if the $199 monthly payment in the creative is market-bearing, or if the female voiceover fits. But truth be told, their media decision should be singular. Because the question at hand is also very simple.
Here’s the question again, in case we’ve missed it: “What’s the best way to increase market share and profitability with my advertising?”
And here’s the answer … it begins and ends with the proper selection and usage of media. It’s all about choosing the clearest path to the consumer (read: most cost-efficient) and presenting a simple yet resounding message that demonstrates the value of the destination store.
There is a trend in the broadcast industry — as there is in every sales industry — to oversell the optional. While it’s essential to know and love and demonstrate confidence in what you sell, presenting a myriad of options deteriorates confidence in the primary option. It’s more an exercise of “saying what we’d like to say” instead of “saying what the business owner needs to hear.”
Yes, business owners think about their advertising, some very intensely. But more options tend to lead to fewer decisions.
As the father of a young family, I took the plunge a year ago and bought a new minivan. Though I’d like to think I was the primary decision-maker here, let’s be honest … it was my wife. But together, we came to a very quick conclusion when comparing the Honda Odyssey with the Toyota Sienna. Both are great vehicles, and I’m sure we’d be happy with either. But I can say without a shadow of a doubt that choosing the Honda felt much better once we began navigating the labyrinth of options and models available from Toyota.
Again, Toyota is a marvelous company, and sells lots of cars. Lots of minivans too. Apparently, no two are exactly alike!
And therein lies the secret to all of this: fear of loss. Business owners, just like consumers, feel the fear of loss stronger than the euphoria of gain. Being presented with too many options gives one the sense that maybe they could’ve done better in their decision. JD Power’s own “post-purchase” reports underscore this trend. Brands with a myriad of options tend to sink over time, while the iPods and Hondas of the world stick close near the top. Too many options leads to lots of second-guessing, tweaking, and usually a decline in performance because of the inherent risk introduced by these very same options.
While it’s always healthy to consider the options and have a few contingency plans available for changing market conditions, presenting the best alternative to the business owner will increase your close ratio … and improve your own profit margins in short order.
Now, if I could only decide which tie to wear.
Dave Eckstein does not play shortstop and was never the MVP of the World Series. He is a partner in the firm ESA & Company, based in Red Bank, New Jersey.
Okay.
Get a cup of coffee. Prepare to get really upset.
An article from a well-read media publication recently espoused the “cost efficiencies” of cable zones over local broadcast television.
Pardon the look on my face … but … “Excuse me?”
Not only does cable do a great job selling this concept, but the media industry rag fails to realize that the terms efficiency and local cable can not be printed legally on the same page or in the same edition.
Is somebody at a TV station going to call attention to this? Or will we let it slide, just like all that biz we let slide to cable? Either nobody read the article closely, or the broadcast industry is grossly misinformed about a critical point here.
We sat with an attorney, let’s call him Ben Had, not too long ago. Now last time I checked, an attorney needs to pass the bar. This requires weeks of studying. Ben is definitely not a C-student.
So, how many Ben Hads are giving cable $50K-$100K annually? How many are in your market? (Double that guess.)
How many Ben Hads really understand that maybe fixing their message will be nothing more than a waste of precious time because their media math is so flawed?
How many broadcast television salespeople have gotten in front of a couple dozen of the Ben Hads of the world and simply asked for a cable invoice … and then wagered lunch that their station could reduce the ad budget … while driving up the audience … thereby reducing the advertiser’s acquisition cost … and as a result, increase the advertiser’s profits?
How is it then, that something as simple as the proper parameters of media cost-efficiency can confuse somebody so bright? Our lawyer said that cable was cheaper, because “the spots only cost $10.”
Ben then went on to say that he has never gotten a phone call from this campaign, but because the contract is “non-cancelable”, he’ll just have to live with this mistake, honor the contract, and then right the ship when he can. Why does this happen?
It happens because broadcast television has chosen to let cable do their thing and not be held culpable for their advice and actions.
Folks, we are being out-sold, hoodwinked, and laughed at by cable.
Questions:
- What is local cable billing in a mid-sized market (e.g. 50th DMA)? Is it $5 million? Is it $7 million?
- We could surely grab 10% of this in short order. This is a fact. How quickly would $500K swing a share point in your direction? Adjust the math for your own DMA. It all works.
- What is the average local advertiser spending annually on cable in a perceived “non-cancelable” contract?
- How many of these folks can point to cable and say, “Yup, that cable stuff is just rocking my phones off the hook”?
- How many of these folks truly understand that they cannot afford cable? How many have been told as much?
- How many cable reps actually understand that they are driving up their clients’ acquisition costs?
- How many TV salespeople are using their DVRs to record cable in order to develop a prospect list of broadcast-wannabees?
- How many TV salespeople really understand and can speak articulately to this point of cable CPMs?
We prepared a spreadsheet for a client to illustrate that, while the local broadcast CPM was $3.57, cable was “clearly” giving him a better deal with more spots, a cheaper cost per spot, zoning, targeted spots in some fancy-schmancy home show, bonus spots, AND (drumroll please) production … all for a measley $186.77 CPM. Yes, there may be a touch of sarcasm mixed in for good measure.
How cool would it be to sell your 6am News at a $186.77 CPM clip? Wouldn’t that equate to roughly $3,300 per spot in our 50th DMA? Heck, we could deep-discount the bookends for $1,500 a pop and retire early!
Obviously, some of our local advertisers struggled through math in school, because they clearly seem to have fallen prey to the same hoodwink that countless others have gotten slammed on. But is their math bad, or is ours? (By the way, slammed is a term that actually originated in the business world in the late 80’s when hustling long-distance phone salesteams would call you, offer the world via switching to their plan, and then “slam” you or your business into some lame program that actually costs more than your prior phone bill. Sounds like cable ripped a page out of that playbook … or hired a few of those salespeople.)
But I digress. Back to the point.
Why would a local business want to pay 52 times more per thousand to reach the same potential customers? That’s like buying a week’s worth of audience for the price of a year. Bargain!
Does the soccer-mom who watches HGTV also watch your news? So therefore does a local business owner know that he/she has the choice of reaching these soccer-moms at single-digits per thousand or triple-digits per thousand?
Do we even need to get into the standard deviation inherent in these numbers? Given the standard deviation as noted by NSI, could it be that maybe, there’s the outside chance, that at times nobody is watching cable? I’m sure that statement may get a few former long-distance salespeople to post a comment to this rant!
Steps to take as a broadcast manager:
- Get really mad (I’ll try to keep it clean).
- Start with the conference room … I believe I saw a DVR sitting on the shelf.
- Record all the “shelter programs” because those are the ones that seem to get local owners excited.
- Record all sports programming because, again, that’s what seems to get the local business owners excited. Our lawyer friend paid $250 per NFL game … a game that airs only in specific zones … what is this poor guy’s CPM … we should know this folks!).
- Be fluent in this concept and the math involved, and instill the same in your team. Each salesperson must be able to confidently articulate the sizable difference in cost-efficiencies to prospects and clients alike.
- Stay angry (again, my apologies).
- Develop a cheesy name for this sales department cable crusade. What about Disable Cable in ‘09, or better yet, Let’s Go Kick Some Cable Backside Now So That We Can Make Some Money in ‘09 (this one is a bit longer but would look awesome on t-shirts to be worn by the sales department on casual Fridays).
Maybe for all the Catholics out there, we could send an email to all the cable advertisers in our market simply asking them if they might know when their cable rep last went to confession! Sorry, but I was taught by the ruler-wielding Fr. Saint Laurent and his hefty sidekick Sister Imelda that stealing was clearly, and still is by the way, a sin.
Capturing this extra point of share will save your future clients loads of money, and make them more profitable. Should help you sleep better, regarldess of your religious affiliation.
Or, maybe as an alternative, we can avoid rocking the ship. Because the status quo seems to be working fine for both us and the advertiser, right?
Better yet, why not call them up, and ask them if they’re interested in increasing their profits with little-to-no effort in the near-term? That might do the trick too.
And, you might just get a free lunch out of it.
Roland Eckstein is the Managing Partner of ESA & Company, an advertising consultancy that accelerates profit and growth for local businesses.
