With frienemies like this, who needs eneriends?

Woody Allen famously wrote, “And lo, the lion will lay down with the lamb. But the lamb won’t get much sleep.” A similar arrangement has led to the coinage of the word “frienemy,” to describe magazine and newspaper publishers that have entered into an agreement with their online nemesis Google. In this agreement, Google is auctioning unsold print ad inventory to select AdWords clients. The arrangement seems to be benefiting both parties more than they expected.

According to a MediaPost report, the sales of print advertising through Google has far outpaced expectations:

Google plans to expand its pilot program next year. The system, which Google has been testing since November, allows advertisers to bid online for daily newspapers’ remnant print ad inventory.

During initial testing with 100 advertisers and 66 newspapers, the volume of ad sales tripled Google’s expectations, according to a story first appearing Wednesday in The Washington Post. That report echoed comments made earlier this month, at the UBS global media conference, by James Conaghan, the Newspaper Association of America vice president for business analysis and research. Conaghan told analysts and media at the conference that Google had sold in three weeks all inventory it expected to sell in the program’s first three months.

Plan on seeing more examples where online marketplaces broker print media space. What this unlikely collaboration means for the ink-and-paper industry is anyone’s guess. Got any ideas?

 

With Google for Print it’s all about reach

Last year Google tested their ad auction concept in the print advertising space. Bill Wise in MediaPost had a theory for why this pilot wasn’t a huge success. In a word: “scarcity.”

Google AdWords succeeds because there are only so many people searching for a term on any given day, and therefore only so many ad impressions than can run in front of this audience. It’s a finite supply of ads, and one that is perishable from one day to the next. Auctions are a perfect way for Google to optimize ad prices.

But printed publications are different. If a newspaper or magazine sells more ads, they can print more pages to accommodate those ads. (Do you remember how fat Business 2.0 was in the heady months before the Dot Com Bust?)

Google failed last year, but they aren’t giving up. They’ve just announced a deal that will include placement of select Google AdWords participants in The New York Times, The Washington Post, The Boston Globe, the Chicago Tribune and many more. Later in this test they plan to expand into weekly news magazines.

It fascinates me that they are looking at getting involved in the very medium whose circulations they are helping to shrink. In the last six months the average circulation figures of daily newspapers have fallen another 2.8 percent, according to Dan Mitchell of the NY Times. True, he tries to put a positive spin on this news, citing a statistic that if you factor in online versions of the publications, readership is actually up significantly. But that actually helps to make my point: Why isn’t Google satisfied with running their ads on the fastest growing portion of the news business?

I can only think it’s reach. And I don’t mean just readers. I’m thinking portability.

Until this county develops a taste for news delivered to a cell phone or PDA, ink on paper is still the most reliable way to follow Americans into the many nooks and crannies of their day.

I’m only half joking when I speculate that Google may have realized that their AdWords were doing wonderfully in the American office and den, but were failing miserably in the bathroom.

The persuasive power of a map

David Ogilvy called direct marketing, “My first love and secret weapon.” I feel the same way. The power of a handful of direct marketing techniques has turned so-so campaigns into winners for me more times than I can name. One such technique is including maps in direct mail and email marketing messages. I’ll break the marketing power of geomapping into two tips.

#1 Don’t just tell consumers that they should visit you — show them how, as specifically as possible

Social psychologist Howard Levanthal conducted some experiments in the 1960s to see if he could persuade Yale University students to get tetanus inoculations. In his efforts to see if mailed brochures would work better using fear as a motivating factor, he stumbled upon something more persuasive.

He included a change in the booklet that boosted response from 3% to 28%. As reported in “Effects on Fear and Specificity of Recommendations Upon Attitudes and Behavior,” in the Journal of Personality and Social Psychology (1965), he and his fellow researchers included a map of the campus, with the Health Department office circled, and the times when inoculations were being offered.

In other words, he made visiting the health department more real to the students by showing them how it fit into their lives and their schedules.

With digital printing, you can do one better: You can produce maps that include two dots: You are here and Here we are. I’ve used this technique, and it’s not easy when you’re mailing to a lot of neighborhoods, but seems to be well worth the effort.

#2 Tell them how close they are to you

People don’t look at maps until they are curious about what you have to sell. But you can help them grasp how easy it is to reach you if you tell them right in the headline. If they are closer than they thought, that’s great news. And to quote Oglivy again, “All advertising is news.” Here’s an example of one such headline:

We had the challenge of informing residents living near a community hospital that they should go there for the vast majority of their healthcare needs. The hospital, which was tucked away in a residential neighborhood and was easily overlooked, had witnessed much of their business being drained away by a neighboring medical center.

Our opportunity to start winning this business back came when we were hired to promote a series of open house events (by we, I’m referring to a team I led in a “former life,” as they say in business). The events were to celebrate a complete redecoration of the public-facing areas of the facility.

The headline of the mailing was blunt: You’re less than 10 minutes away from award-winning healthcare. We could say this honestly because we had done drive-time calculations, and created three versions of the mailing. One stating the above, and two others saying 5 minutes and 15 minutes. The database with drive times told us which mailing to use for each address.

When the first event rolled around, it was fascinating to watch people arrive, with mailing in hand, to claim the promotional item we were giving away. They needed to take a tour and turn in the mailing in order to get their gift. That, of course, meant that we could read their names and addresses off of the cards, and add these prospects to a customer relationship management (CRM) database. From there we could re-mail with other offers and news.

It was definitely a group of pospects worth re-marketing to, for these three reasons: 

  1. They were responsive. The response rate for the group closest the hospital was 3.7%.
  2. They loved us. Many raved about what they saw, saying things like, “It looks more like a hotel lobby than a hospital!”
  3. They were now truly our neighbors. Thanks to the geomapping technique, they all knew exactly how to find us.

Scrutinizing the long tail of Halloween

Jon Krouse is in a perfect position to help me test a hypothesis about long tail behavior. A co-founder of OnMilwaukee.com (a rare success story among regional online communities), Jon recently joined BuyCostumes.com. This is the world’s largest online retailer of costumes. As you can imagine, the month of October is major crunch-time for him.

Nonetheless, when I instant messaged him the other day to see if I could test an assertion from Chris Anderson, Jon was willing to help. Anderson is a Wired editor and most notably the author of The Long Tail. He contends that for companies with virtual inventories, just about any item they post for sale — no matter how obscure — will sell (i.e., be downloaded for a price) at least once every three months or so. Using sales statistics from Rhapsody.com, he made it sound like this was nothing short of an immutable law.

That’s for virtual inventories. Anderson admits it’s a little trickier for companies with real ones. That’s the case with BuyCostumes. I’ve visited their warehouse, which stores over 13,000 very real SKUs. Yow!.

Companies like this must mark down some items teetering at the tip of the tail before they finally sell. Carrying costs are a constraint that virtual inventory merchants simply don’t have. But the fact is, even real inventory items sell with some price manipulation. Or so Chris Anderson contends. I wanted to know for sure, and asked Jon.

He reported that minor adjustments to price do indeed make the most obscure costumes and accessories sell. Sure, there are the rare dogs, but priced properly, nearly all SKUs generate profits. This is huge, because the number of items offered is a precedent for the industry.

Imagine how many items a bricks-and-mortar costume shop can physically stock. Now consider that at one time quite recently, conventional wisdom was that no one wanted more selection than could be held on a really well-stocked costume shop’s shelves. Or, for that matter, in music store’s bins, or along a bookstore’s stacks.

The web, with its power to categorize, search and suggest, has exploded that myth. Which would mean little to a company like Jon’s if the demand for these products wasn’t so large.

How many sales are anticipated in the next couple of weeks for this humble little online costume shop?

“At our busiest, we’ll be doing 20,000 orders a day*,” Jon reports. Tune in November 1 to see a photo featuring the costumes that my wife and I chose and wore at Jon’s Halloween party, the first in his and Peggy’s new home. 

*It never hurts to advertise. BuyCostumes has major private label deals with major retailers, plus an effective search engine optimization and pay-per-click advertising strategy in place.

Commerce sites ignore branding at their peril

Real estate on a web site is precious. That’s one reason why many e-commerce sites cram as much merchandise as possible into the home page. You can’t blame them. Shoehorn one more offer onto the page and you see sales of that item go up. But does this practice erode overall sales?

The research of Kevin Hillstrom looked at overall sales from pure selling sites (example) vs branding sites (example) vs hybrids that split the difference (example). The sites evaluated were those taken from the largest businesses represented in the Internet Top 500 retail sites.

I was most interested in how hybrid sites would fare in the study. Although these hybrid sites featured home page offers, they also used much of its real estate to reinforce the brand. White space was more common, and often these hybrid sites didn’t even require you to scroll down to take in the entire home page.

A business that regards its e-commerce site as nothing more than efficient catalog would argue that the hybrid site approach is misguided, since it is not focusing enough on specific offers. But do the numbers bear this out?

The conclusion from this study says no, although it does find weakness in a pure branding approach to the home page:

It appears likely that a hybrid strategy is most likely to maximize the net sales of each visitor to the website. Selling sites may overwhelm visitors, while branding sites may not present enough merchandise to entice consumers.

Many have preached this hybrid approach, but it’s nice to see this validation. It only stands to reason that consumers need to know two things before they buy:

  1. What are you selling?
  2. Are you to be trusted?

Raising levels of trust, through your site’s branding, is the best way to maximize sales in an environment where competitors are only a mouse click away.