SEM Tutorial Part 4 ( KPIs )

<div style="text-align: center;"> <span style="font-size: x-large;"><b><u>KPIs</u></b></span></div> <div style="text-align: center;"> <br /></div> <div class="" style="clear: both;"> Key performance indicators (KPIs) are the metrics that guide and measure your progress toward your business goals. KPIs support both the strategy and tactics for your business decisions. By knowing your KPIs, you’ll know how to manage your marketing campaigns for maximum profitability.</div> <div class="" style="clear: both;"> <br /></div> <div class="" style="clear: both;"> <a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiFtqIUiw00Nij35mPqmyGo0rnpqW0ws_xChS-FC0MCOCniT_tiFlYbI_XFdPcZh6_H2s99dHO0rYb8XkOIcHfJYRBm0NA8sOy8SBTDFNcW7SH6D7O7ho67ETSjs14BNt_kAteGznz2WYS8/s1600/searchenginemarketing.jpeg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="231" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiFtqIUiw00Nij35mPqmyGo0rnpqW0ws_xChS-FC0MCOCniT_tiFlYbI_XFdPcZh6_H2s99dHO0rYb8XkOIcHfJYRBm0NA8sOy8SBTDFNcW7SH6D7O7ho67ETSjs14BNt_kAteGznz2WYS8/s320/searchenginemarketing.jpeg" width="320" /></a>The most important KPIs for your business are average order value (AOV), customer lifetime value (CLV), project rate of return (PRR), costper- action (CPA), cost-per-lead (CPL), and close rate (CR). These numbers quantify your goals and provide guidelines for your marketing efforts. Business is also a social activity. For your projects to be successful, you need cooperation and collaboration with your team. To win support for your project, you need to be able to show the value of marketing in a simple and powerful way. Communicating information is just as important as gathering and analyzing data. By clearly stating the KPIs, you can tell the story you need to grow your business as well as your career.</div> <div class="separator" style="clear: both;"> <br /></div> <div class="separator" style="clear: both;"> There is often a conflict between the finance and marketing departments. The two camps don’t speak each other’s language. Marketing sees the accountants as bean counters who don’t understand that it takes money</div> <div class="separator" style="clear: both;"> to make money, and finance thinks marketing is a black hole with no connection to the bottom line. With a set of simple metrics, both sides can understand each other. You don’t need more than third-grade math to</div> <div class="separator" style="clear: both;"> calculate these numbers.</div> <div class="separator" style="clear: both;"> <br /></div> <div class="separator" style="clear: both; text-align: center;"> <span style="font-size: x-large;"><b>A KPI-Driven Business Process</b></span></div> <div class="separator" style="clear: both; text-align: center;"> <br /></div> <div class="separator" style="clear: both;"> KPIs inform and guide the business process. They give you a rational method, based on objective data and results, for making business decisions. You first set your goals and then you establish how to measure the progress toward those goals. Thus, you will be able to answer the questions What is working? and What needs to be changed? The following process will help you make the most of KPIs:</div> <div class="separator" style="clear: both;"> <br /></div> <div class="separator" style="clear: both;"> 1. Define your tactical goals. This comes down to a simple goal: You want to get more ________. This may be leads, sales, subscriptions, downloads, views of a video, and so on.</div> <div class="separator" style="clear: both;"> <br /></div> <div class="separator" style="clear: both;"> 2. Establish the target KPIs. By knowing the KPIs, you’ll know how much you can spend and still make a profit.</div> <div class="separator" style="clear: both;"> <br /></div> <div class="separator" style="clear: both;"> 3. Launch your marketing campaigns in SEO, PPC, radio, TV, print, and so on. Use the target KPIs to set the budgets.</div> <div class="separator" style="clear: both;"> <br /></div> <div class="separator" style="clear: both;"> 4. Measure the actual KPIs. Collect the results and see the actual KPIs for each campaign.</div> <div class="separator" style="clear: both;"> <br /></div> <div class="separator" style="clear: both;"> 5. Optimize your marketing channels. Improve the successful campaigns and reduce or close the unsuccessful campaigns.</div> <div class="separator" style="clear: both;"> <br /></div> <div class="separator" style="clear: both;"> 6. Communicate the results to your team, including coworkers and upper management.</div> <div class="separator" style="clear: both;"> <br /></div> <div class="separator" style="clear: both;"> Let’s look at each of these in greater detail.</div> <div class="separator" style="clear: both;"> <br /></div> <div class="separator" style="clear: both;"> <span style="font-size: x-large;"><b>Define Your Goals</b></span></div> <div class="separator" style="clear: both; text-align: center;"> <br /></div> <div class="separator" style="clear: both;"> The tactical goals for your project generally come down to a simple goal: You want more ________. This may be leads for services, product sales, newsletter subscriptions, PDF downloads, views of a video, and so on.</div> <div class="separator" style="clear: both;"> <br /></div> <div class="separator" style="clear: both;"> <span style="font-size: x-large;"><b>Calculate Your KPIs</b></span></div> <div class="separator" style="clear: both;"> <br /></div> <div class="separator" style="clear: both;"> You need to establish the maximum amount you can pay for a customer and still be profitable. We’ll describe this in general terms, explain each of the KPIs along with their formulas, give you a worksheet with the formulas, and then demonstrate this with an example. First, an overview of the KPIs:</div> <div class="separator" style="clear: both;"> <br /></div> <div class="separator" style="clear: both;"> </div> <ul> <li>Find the average order value (AOV). Divide the total revenue for the period by the number of orders to get the average value for an order. Some customers may buy a single item; other customers buy several items at different prices. Use these to find the average value of an order.</li> </ul> <ul> <li>Find the customer lifetime value (CLV). Multiply the AOV by the average customer’s number of annual purchases and length of customer lifetime (usually, several years) to get the CLV. This is how much the customer is worth to you in revenue.</li> </ul> <ul> <li>The question is then how much you’re willing to spend to acquire that customer (in other words, how much you invest to get a certain amount of revenue). In many companies, your finance team tells you that you must achieve a certain return in order to get the funding for your project. For example, for every dollar you spend, you should get four dollars in revenue. Use the PRR to calculate this.</li> </ul> <ul> <li>Find your close rate (CR), which is the number of leads you need to get customers. If you need 100 leads to get 20 customers, that is a 20% CR.</li> </ul> <ul> <li>Multiply the CPA by the CR to get the target CPL. This tells you how much you can spend to get a lead.</li> </ul> Let’s look at each of these KPIs in detail.<br /> <br /> <div class="separator" style="clear: both;"> <br /></div> <div class="separator" style="clear: both;"> <span style="font-size: large;"><b>Average Order Value</b></span></div> <div class="separator" style="clear: both;"> <br /></div> <div class="separator" style="clear: both;"> Average order value (AOV) is the average value (in dollars, Euros, and so on) of your orders. This is the total value of an order, not the price of each item in the order.</div> <div class="separator" style="clear: both;"> <br /></div> <div class="separator" style="clear: both;"> This assumes the items in a sale are generally in the same price range. It can produce misleading numbers if the order basket has items that differ by several orders of magnitude. If a sale includes a $500,000 house and a bird bath, the average value isn’t $250,000. If your orders include items with a wide range in price, you may need to develop KPIs for different amounts of sales.</div> <div class="separator" style="clear: both;"> <br /></div> <div class="separator" style="clear: both;"> To find the AOV, divide your revenues by the number of orders. Pick a time frame (such as last month, last 60 days, last quarter) that is representative, and look in your records for the amount of revenue and the number of orders.</div> <div class="separator" style="clear: both;"> <br /></div> <div class="separator" style="clear: both;"> $______ Total Revenue / ______ Number of Orders = $______ Average Order Value (AOV)</div> <div class="separator" style="clear: both;"> <br /></div> <div class="separator" style="clear: both;"> We use revenues, not profits, to calculate AOV. In very simple cases (such as Koi-Planet), we can calculate costs and profits, but for mid-size companies with dozens of products and revenue lines in the tens or</div> <div class="separator" style="clear: both;"> hundreds of millions of dollars, it can be a daunting task to determine profit and costs. Profit margins constantly shift as the company develops better processes, switches to other suppliers, launches new sales campaigns, and so on. Furthermore, accounting rules and regulatory issues can make it difficult to state profitability, so we use revenues, not profits.</div> <div class="separator" style="clear: both;"> <br /></div> <div class="separator" style="clear: both;"> <span style="font-size: large;"><b>Customer Lifetime Value</b></span></div> <div class="separator" style="clear: both;"> <br /></div> <div class="separator" style="clear: both;"> Customer lifetime value (CLV), which is also called lifetime customer value (LCV) or simply lifetime value (LTV), is the value of the revenue from the average customer over the lifetime of that customer. This means how much revenue you will earn from a customer over the years that the customer buys from you.</div> <div class="separator" style="clear: both;"> <br /></div> <div class="separator" style="clear: both;"> To find the CLV, multiply the AOV by the average number of orders by customers and the average lifetime of a customer.</div> <div class="separator" style="clear: both;"> <br /></div> <div class="separator" style="clear: both;"> $______ Average Order Value × ______ Number of Orders by a Customer per Year × ______ Number of Years for Customer = $______ Customer Lifetime Value (CLV)</div> <div class="separator" style="clear: both;"> <br /></div> <div class="separator" style="clear: both;"> CLV is a relatively new concept in marketing. Customer-centric marketing considers the customer as a person with needs and behaviors. The company can then provide ongoing products and services to the customer, which produces additional revenues. This leads the company into cross-selling (if the customer buys a digital camera, offer them a camera bag or a tripod), up-selling (offer advanced cameras), extended warranties, maintenance contracts, and so on. Software companies often use a lock-in strategy. They</div> <div class="separator" style="clear: both;"> make it difficult for customers to switch to other tools. The company also plans for the product version to become obsolete, so the customer is forced to buy upgrades. This generates additional revenues from a customer.</div> <div class="separator" style="clear: both;"> <br /></div> <div class="separator" style="clear: both;"> Unica recommends its clients think of marketing as a service. Because the Web enables customers to shop anonymously and makes it easy for them to find another vendor, the buyer has more control over the transaction. However, you as the seller can differentiate yourself with better service, ensuring that the customer will stay with you. Consider the customer’s point of view so you can offer additional appropriate products and services. With web analytics tools (such as Unica) and CRM tools (such as Salesforce</div> <div class="separator" style="clear: both;"> and Sugar CRM), companies are able to manage customers on an ongoing basis.</div> <div class="separator" style="clear: both;"> <br /></div> <div class="separator" style="clear: both;"> <span style="font-size: large;"><b>Project Rate of Return</b></span></div> <div class="separator" style="clear: both;"> <br /></div> <div class="separator" style="clear: both;"> The next step is to apply the requirement for the project’s rate of return. A marketing project can use a project rate of return (PRR) value, such as 25%. This is how much your company must earn on its marketing to be profitable. Your CFO may set a revenue threshold you have to meet in order to justify the investment.</div> <div class="separator" style="clear: both;"> <br /></div> <div class="separator" style="clear: both;"> We use PRR for our KPI calculations. Some companies may use internal rate of return (IRR), contribution margin (CM), or a combination of other metrics to determine profitability. In general, these numbers tell the marketing department how much they are expected to produce in revenues from their marketing investment.</div> <div class="separator" style="clear: both;"> <br /></div> <div class="separator" style="clear: both;"> The PRR is generally around 25%. This means the revenue will be four times the investment. In other words, if you invest $1 in marketing, you should expect $4 in revenues. The PRR can vary according to the type of</div> <div class="separator" style="clear: both;"> company. If the company is 50 years old and established in their market, they can spend less and get more results. Their PRR can be 10%. If the company is new and wants to grow aggressively, they will spend more to acquire customers. The PRR can be 50%, 75% or higher.</div> <div class="separator" style="clear: both;"> <br /></div> <div class="separator" style="clear: both;"> We don’t use ROI (return on investment). ROI is profits divided by costs multiplied by 100. To use ROI, you need to know the cost, but it is very difficult to determine costs in a mid-size or large business because it becomes a matter of definitions. Do you include fixed costs (such as the cost of the building, salaries, and interest)? Do you include variable costs (such as materials and outside services)? How do you allocate these costs across several hundred products, which may range in price from low to high? Costs may also vary according to the size of an order because of volume discounts. The company’s accounting method (cash vs. accrual) also affects your calculations. To add more complexity, costs are constantly shifting. You find better materials, you find a cheaper supplier, your supplier runs out of a material and temporarily substitutes another, you upgrade the production machines, and so on. We have not even opened the discussion of</div> <div class="separator" style="clear: both;"> corporate finance, merger and acquisitions, the effect of taxes and regulation, and so on. You can appreciate the difficulty of calculating costs in a global enterprise such as Toyota, SAP, or the Tata Group.</div> <div class="separator" style="clear: both;"> <br /></div> <div class="separator" style="clear: both;"> This is why we use revenues instead of profits or costs to calculate the CPL and cost-per-action. You only need to know the CLV and the PRR. You focus on getting leads and converting them into sales. These are the numbers that guide you to making profitable business decisions. We’ve found this works for our clients, even those with hundreds of millions of dollars in revenue.</div> <div class="separator" style="clear: both;"> <br /></div> <div class="separator" style="clear: both;"> <span style="font-size: large;"><b>Cost-per-Action</b></span></div> <div class="separator" style="clear: both;"> <br /></div> <div class="separator" style="clear: both;"> The next step is to calculate the cost-per-action (CPA). An action is the successful completion of a goal. You first define the goal (more leads, more sales, more registrations, views of a video, and so on) and then count the completions of that goal.</div> <div class="separator" style="clear: both;"> <br /></div> <div class="separator" style="clear: both;"> To find the CPA, multiply the CLV by the PRR.</div> <div class="separator" style="clear: both;"> <br /></div> <div class="separator" style="clear: both;"> $_____ CLV × 25% PRR = $_____ Cost-per-Action (CPA)</div> <div class="separator" style="clear: both;"> <br /></div> <div class="separator" style="clear: both;"> We assume the PRR is 25%. Your PRR may be different. For many salespeople, CPA is cost-per-acquisition, which generally means they acquire a customer. If your goal is to get visitors to download</div> <div class="separator" style="clear: both;"> a PDF document or watch a video, that isn’t really an acquisition. That’s a desired action (the visitor did what you wanted), so it’s better to use the general term cost-per-action. It basically means the same thing.</div> <div class="separator" style="clear: both;"> <br /></div> <div class="separator" style="clear: both;"> <span style="font-size: large;"><b>Close Rate</b></span></div> <div class="separator" style="clear: both;"> <br /></div> <div class="separator" style="clear: both;"> The close rate (CR) is the ratio of how many leads turn into customers. If you get 40 conversions from 100 leads, that is a 40% CR.</div> <div class="separator" style="clear: both;"> To find the CR, divide the number of customers by the number of loads.</div> <div class="separator" style="clear: both;"> _____ Customers / Leads = _____ × 100 = _____ % Close Rate (CR)</div> <div class="separator" style="clear: both;"> Close rates can vary by industry and company. They can range from 2% to 50% or higher.</div> <div class="separator" style="clear: both;"> <br /></div> <div class="separator" style="clear: both;"> <span style="font-size: large;"><b>Cost-per-Lead</b></span></div> <div class="separator" style="clear: both;"> <br /></div> <div class="separator" style="clear: both;"> Finally, we calculate the cost-per-lead (CPL). This is how much a lead may cost. A lead is a prospect or a contact that you then convert into a customer. If a CPA costs $10 and you need ten leads to get one conversion, then those leads cost $1 each.</div> <div class="separator" style="clear: both;"> <br /></div> <div class="separator" style="clear: both;"> To find the CPL, multiply the CPA by the close rate (CR)</div> <div class="separator" style="clear: both;"> $_____ CPA × _____% Close Rate = $_____ CPL</div> <div class="separator" style="clear: both;"> <br /></div> <div class="separator" style="clear: both;"> <span style="font-size: large;"><b>Assumptions</b></span></div> <div class="separator" style="clear: both;"> <br /></div> <div class="separator" style="clear: both;"> Our KPI model has several assumptions and limitations. We assume a discount rate of zero, meaning that revenues earned in the future are worth the same as they are today. Most marketing projects have a short time horizon, so the discount rate generally doesn’t matter.</div> <div class="separator" style="clear: both;"> <br /></div> <div class="separator" style="clear: both;"> You may need to adjust the KPIs several times over the course of a campaign. When you begin to optimize the campaign, the numbers will affect each other. You improve the CR, which increases the CPL, which produces more leads.</div> <div class="separator" style="clear: both;"> <br /></div> <div class="separator" style="clear: both;"> An advanced formula for CLV and AOV may distinguish between high-value and low-value customers and products. Work with your accounting team to develop appropriate models.</div> <div class="separator" style="clear: both;"> <br /></div> <div class="separator" style="clear: both;"> The KPIs will differ, depending on the type of site. There are several basic websites:</div> <div class="separator" style="clear: both;"> <br /></div> <div class="separator" style="clear: both;"> </div> <ul> <li>Lead generation websites These sites get leads, registrations, or contact requests. Many of these sites produce leads that are closed by other teams, so the KPIs consider the CPL, not the cost-per-action.</li> </ul> <ul> <li>Sales sites These sites sell products or services. Our KPI model is best suited for sites that sell products, such as Koi-Planet.</li> </ul> <ul> <li>Support sites These sites offer support, FAQs, and information for products or services. Companies use them to reduce the cost of telephone support. If a support site does its job well, fewer visitors will contact the company (they got the solution at the website). Forthese sites, KPIs may consider the volume usage of the internal search tool, the reduction in support calls, and similar.</li> </ul> <ul> <li>Informational websites These sites offer content, such as information, videos, music, and so on. For example, there is Facebook, Education.com, and MySpace. These sites use advertising to generate revenue. They use other KPIs such as eRPM (revenue per million page views), eCPM (cost per million page views), time-on-site, and so on.</li> </ul> <div> You can use our model to develop a KPI model that is suited to your industry, products, and website.</div> <div> <br /></div> <div> <br /></div> <div style="text-align: center;"> <span style="font-size: x-large;"><b>KPI Worksheet</b></span></div> <div style="text-align: center;"> Here is the KPI formula as a worksheet:</div> <div style="text-align: center;"> <br /></div> <div class="separator" style="clear: both; text-align: center;"> </div> <div class="separator" style="clear: both; text-align: center;"> <img border="0" height="312" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhsX_CP3L8Br5YvJLbmXMchpKrCOpyiZvl5yFBZq1acb2ZgvfJ58cii2lyyzAUYHIjZ98_ZXVbMulvKEhKZBSicMJt-sOiL_PvGvQW7KdTDOnyU73qVmltH522yAMiMDAZ1jcBo8yDXgbYC/s640/Untitled-1+copy.png" width="640" /></div> <div> <div> <br /></div> <div> Work with your finance team to build a worksheet that matches your projects. You can download our worksheet from the book’s website at Insider-SEM.com.</div> </div> <div> <br /></div> <div style="text-align: center;"> <span style="font-size: large;">An Example: Selling Bags of Koi Food</span></div> <div style="text-align: center;"> <div> Let’s try out the KPI worksheet with an example. Let’s assume Koi-Planet is selling bags of koi feed.</div> <div style="text-align: left;"> <br /></div> <div class="separator" style="clear: both;"> <img border="0" height="194" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjxkGj2CtKI5e2yf_gesAuF5AOQQVM0zVbq-paHM_o791jWo3dEOUldJQbR9Axzipa1I2dMxqj1-ofqYEW9cBo9HBjUHceEM1m_R5a6P3Hb0C_VNR0IlkwIosVFm6H9eibdXEDWTMoVOzBj/s640/Untitled-1+copy.png" width="640" /></div> <div style="text-align: left;"> <br /></div> <div style="text-align: left;"> <div> In this example, Koi-Planet can spend up to $60 for each lead and be profitable. The close rate (CR) is fairly low at 20%; if we improve that, the CPL will increase, which allows us to spend more on leads and be profitable.</div> <div> <span style="font-size: large;"><br /></span></div> <div> <span style="font-size: large;"><b>Estimated KPIs or Actual KPIs?</b></span></div> <div> <br /></div> <div> The point of these calculations is to estimate the upper limits of your marketing expenditures that allow your project to remain profitable. If you know how much you can spend and stay profitable, then you can spend up to the limit. This sets a ceiling for your marketing spend.</div> <div> <br /></div> <div> Many books and articles about KPIs calculate these numbers the other way around: They start with how much you actually spent, look at how many leads you got, and then state that your leads had a cost of $10. That’s a factual statement that doesn’t give you any guidelines. What does it mean if you find that the CPL was $10? Was it profitable? Did you lose money? Could you spend $15 and still be profitable? Without including the PRR (or a similar number), the revenue value, and the CR, a factual CPL isn’t useful.</div> <div> <br /></div> <div> <div> Our KPI model combines several formulas into one larger formula to give you a way to calculate how much you can spend in marketing to produce the revenue you want. It also tells you how much you can spend</div> <div> per lead or action and remain profitable.</div> </div> <div> <br /></div> <div> <span style="font-size: large;"><b>Why This Works</b></span></div> <div> <br /></div> <div> Books are available with hundreds of KPIs, but you only need a few to get control over your project:</div> <div> <br /></div> <div> <ul> <li>The CLV tells you how much a customer is worth in revenue. This is based on the AOV and the number of orders a customer makes during their life cycle.</li> </ul> <ul> <li>Multiply the CLV by the PRR to get the cost-per-action (CPA). The CLV is the value of the customer. The PRR tells you how much revenue you must produce to be profitable. By multiplying these, you’ll know how much you can spend to get that revenue value. If you want $100,000 in revenues and the PRR is 25%, you can spend up to $25,000 for marketing. For every dollar you spend, you get four dollars back.</li> </ul> <ul> <li>Multiply the CPA by the CR to get the target CPL. The CR measures your ability to convert leads into sales. If you know half of your leads turn into sales, you need two leads to get a sale. If you can afford $10 for a CPA, you can spend up to $5 to get each lead. The CPL tells you how much you can spend to buy a lead.</li> </ul> <div> All you have to find out is your CLV, your PRR, and your CR. With these, you can calculate the CPA and CPL, which tell you how to be profitable. You have a great deal of control over the close rate. If your conversion is done on a web page, you can use multivariate tools to improve the close rate. If your conversions are done by a sales team on telephones or in person, use training and bonuses to motivate the sales team to improve the close rate.</div> </div> <div> <br /></div> <div> The success of this formula depends on reliable data. Most companies have several years of sales data from the business intelligence (BI) tools and can quickly calculate these numbers. If you’re starting a new project (or a new company), you can estimate/guess these numbers and then adjust them as you collect data. We will show you how to do this later in the chapter.</div> <div> <br /></div> <div> This formula works for both online projects (lead generation, e-commerce sales, registrations for social networking sites, and information distribution sites) and offline marketing projects.</div> <div> <br /></div> <div> <span style="font-size: large;"><b>Use CPLs to Manage Your Campaigns</b></span></div> <div> <br /></div> <div> The target CPL is the maximum amount you can spend for a lead. If you keep the actual CPL at or less than the target CPL, your campaign will be profitable. In other words, the CPL is how much you can pay to buy a prospective customer. If you know your target CPL, you can buy the number of sales that you need for your business. This is why CPL is your most important KPI.</div> <div> <br /></div> <div> A high target CPL doesn’t mean you must spend that much. It means you can spend up to that limit and still be profitable. It also doesn’t mean you should spend as little as possible for a lead. Many marketers see advertising as a cost, not an investment, and they try to limit their costs. They generally underspend. If the KPI model shows they can spend $15 for a lead but they spend only $2 per lead, they will get few leads. If they are willing to pay up to $15 per lead, they will buy many more leads. As long as you are within your target CPL, you will be profitable. Spend up to the target CPL for the channel and buy as many leads as your sales team can handle.</div> <div> <br /></div> <div> If your competitors haven’t calculated their CPLs, they will get nervous when CPLs go as high as $5. They refuse to pay $5, which means they lose the opportunity to buy customers. If your calculations are based on reliable data and you know $15 CPLs are profitable, you can spend $15 to buy more leads than your competitors.</div> <div> <br /></div> <div> Don’t look at marketing as a cost. The goal of marketing isn’t to reduce your costs. Your goal is to acquire customers to maximize your revenues.</div> <div> <br /></div> <div> <div> CPL lets you manage your campaigns. You can use multiple channels such as Google, Yahoo!, and Microsoft PPC, along with Facebook, radio, TV, print, bulk e-mail, SEO, link building, direct mail, billboards, catalogs, coupons, and so on. The close rate will be different for each channel. This depends on many factors: the quality of your ads, the quality of your competitors, your unique selling point (USP), your sales team’s close rate, and so on. Try the channels that are appropriate to your target audience.</div> <div> Measure the resulting KPIs and see where you can make profits. Track the KPIs in each campaign and compare the campaigns in terms of revenues against each other. If you keep the actual CPLs lower than your target CPL, the channel is profitable for you. This means you can increase the ad spend to get more leads and more sales. Turn up the volume!</div> </div> <div> <br /></div> <div> You can assign the campaign to a staffer and give them the target CPL as their guideline. They can then manage the campaign, adjust bids and fees, and try out keywords and ads so long as they keep the average CPL at or under your target CPL. You can also give the target CPL to a marketing company or PPC agency and tell them to produce as many leads as possible within that CPL.</div> <div> <br /></div> <div> In some cases, CPL and CPA are the same. At an e-commerce website with a shopping cart, if the visitor buys, they become a customer. There isn’t an intermediate stage of leads in the cycle.</div> <div> <br /></div> <div> In PPC (pay-per-click), you set bids by the keyword. But don’t worry about the bids or costs for each keyword. Look at the average CPL for the entire ad group. As long as the ad group delivers leads within the target CPL, the ad group is profitable. This means it can be okay in an ad group if the CPL for some of the keywords is higher than the target CPL, as long as the average CPL for the ad group is within your target CPL. This allows you to use a kind of portfolio management for your pay-per-click campaigns. Some keywords may be high, but they are making conversions, and the more conversions you get, the sooner you reach the breakeven point.</div> <div> <br /></div> <div> We often meet people who say, “We’ve been doing great in SEO for the last three years, so we’re not paying for PPC!” They think they’re really clever. They are managing marketing as a cost, not an investment. When we sketch out this financial model and they realize how much they’ve lost in potential sales for the last three years, they move fast to set up campaigns in every channel.</div> <div> <br /></div> <div> <span style="font-size: large;"><b>Go After Your Competitors’ Customers</b></span></div> <div> <br /></div> <div> You can also use these KPIs for competitive marketing. Once you’ve established your KPIs and you have a working model (optimized campaigns, actual KPIs, and so on), you can afford aggressive bidding campaigns to target your competitors’ customers. You’re helping their customers to get better products—namely, yours!</div> <div> <br /></div> <div> <span style="font-size: large;"><b>Set Your Baseline</b></span></div> <div> <br /></div> <div> <div> When you start your project, set your baseline. Knowing your baseline, you’ll be able to see if you are making progress. Use a time period for your project, such as sales the last month, the previous quarter, or the preceding year. The time period should be large enough that you have at least 1000 orders. If you</div> <div> have no data at all, start at zero.</div> </div> <div> <br /></div> <div> <span style="font-size: large;"><b>How Much Data Do You Need?</b></span></div> <div> <br /></div> <div> You should use around 1000 data points as your basic set. Why 1000? Statisticians have shown that 1067 events are sufficient to draw conclusions with a 3% margin of error.</div> <div> <br /></div> <div> For example, if you have 1067 leads and you got 181 sales, that’s a 17% conversion rate. You can expect the future conversion rate to be 17%, with a ±3% margin of error, which is 14% to 20% (3% below 17%, and 3% above 17%).</div> <div> <br /></div> <div> Of course, the more data you have, the better you can project the future. If you use fewer events, the margin of error will be greater. You can use more events to make predictions, but it improves the margin of error only slightly. With 2401 events, the margin of error is 2%. With 10,000 events, the margin of error drops to 1%.</div> <div> <br /></div> <div> We find that 1000 events with a 3% margin of error is sufficient to make decisions with a good level of confidence. For more, see “margin of error” in Wikipedia.</div> <div> <br /></div> <div> In Chapter 5, SEO, and Chapter 6, PPC, we state that you should have about 1000 impressions or clicks before you can decide whether to delete a keyword or ad. This is for the same reason. You need 1000 events to make reliable conclusions. Adjust the time span (yesterday, seven days, one month, and so on) until you get 1000 events so you can make decisions.</div> <div> <br /></div> <div> <span style="font-size: large;"><b>What about Impressions and Clicks?</b></span></div> <div> As you can see, many of the numbers commonly used in PPC and analytics don’t matter. Although it may be nice to know that traffic is up on your site, you should focus on conversions, sales, and profits. The following are not KPIs:</div> <div> <ul> <li>Traffic increased by 24%.</li> <li>Clicks dropped by 10%.</li> <li> Page views are up by 7%.</li> </ul> <div> Don’t confuse KPIs with activity on your website. Those numbers come from the traditional IT’s concern with data tracking. They have little to do with your business.</div> </div> <div> <br /></div> <div> <span style="font-size: large;"><b>What about KPIs for Media Companies?</b></span></div> <div> <br /></div> <div> Up to now, we’ve looked at KPIs for companies that generate revenue through transactions, such as selling products or services. Let’s briefly look at media companies. These generate revenue primarily through advertising. For media companies, the KPIs have different factors. The goal isn’t an event or transaction. Instead, the media company generates revenue during the time the customer is on the website. For example, a media company may generate value through three primary methods: advertising impressions, clicks on advertisements, and actions taken by their customers for CPA advertisements. Using this as a baseline, we can calculate each of the KPIs as follows:</div> <div> <br /></div> <div> <ul> <li>AOV If an average customer looks at ten ads per session, and one out of every ten customers clicks on a CPC advertisement, and one out of every 100 customers registers for a product demonstration offered by a CPA advertisement, the AOV is the sum of the value generated by each of those actions by an average customer. If we assume each ad impression is worth $.01, a click on a CPC ad generates $.30, and the registration for the product demonstration is worth $5.00, then the AOV would equal ($.01 × 10) + ($.30 × 1/10) + ($5.00 × 1/100), or $.18.</li> </ul> <ul> <li>CLV The CLV is the AOV multiplied by the number of times the average customer returns to a company’s website without that customer having to be repurchased. If that customer returns four times without having to be prompted by another marketing campaign, then the CLV in our example is 4 × $.18, or $.72.</li> </ul> <ul> <li>CPA In the same way that a transaction-based company uses PRR to calculate this metric, a media company must also calculate their target return to determine their target CPA. For media companies, the variable cost of delivering additional ad impressions tends to be very low. This allows the company greater flexibility to spend up to as much as the CLV to drive new visitors to the site and still generate incremental value for the business. This is because the contribution margin (CM) is positive up to the point where the cost of driving the last visitor equals the CLV. (See Wikipedia for more details on contribution margin.)</li> </ul> <ul> <li>CR The conversion rate of a media company can be segmented based on the different advertising models or based on the channel the company is using to market to prospective customers. For example, a company may use a display advertising campaign as part of its portfolio approach to driving traffic, where the average impressions conversion from advertisement to visitors is 0.1%. For those campaigns, the conversion rate would be equal to the click-through rate on the advertisements, which is 0.1%. In the case of PPC campaigns, the calculation is different. The action the company is looking for in calculating its CPA may be to drive more visitors to its site. For a PPC advertising model, every click becomes a visitor, so the conversion rate is 100%. These differences in channels are important for media companies.</li> </ul> <ul> <li>CPL A media company may define a lead and a visit as the same, in which case the CPA and CPL are identical. If the company is using display advertising, its CR is the percentage of advertising impressions that converts to a visitor. In this case, the ad impression is the lead, so CPA and CPL are calculated with the CR.</li> </ul> </div> </div> </div>

SEM Tutorial Part 4 ( KPIs )

KPIs Key performance indicators (KPIs) are the metrics that guide and measure your progress toward your business goals. KPIs support bo...

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SEM Tutorial Part 3 ( Integrated Marketing )

<div class="separator" style="clear: both; text-align: center;"> <span style="font-size: x-large;"><b>Integrated Marketing: The New Approach</b></span></div> <div class="separator" style="clear: both; text-align: center;"> <br /></div> <div class="separator" style="clear: both;"> Integrated marketing is the use of two or more marketing channels to sell a product or service. The same message is sent via multiple marketing channels, such as web, radio, TV, and postal mail. By using several channels, you widen the exposure of a company’s brand or product.</div> <div class="separator" style="clear: both;"> <br /></div> <a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjh6OkJnKLIrniq11hHnihEw_0Ut1_30yldBLRMzn1ZrseZtLkkZi-_zOmE5ygj3H5cssz1zT1B5lrHeNp2I83Ad5cVX8crgXpuXNBO7mVBpL_wMttlCCdE8_cb_UU4RWweHXGN9PHdQ1tl/s1600/searchenginemarketing.jpeg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="231" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjh6OkJnKLIrniq11hHnihEw_0Ut1_30yldBLRMzn1ZrseZtLkkZi-_zOmE5ygj3H5cssz1zT1B5lrHeNp2I83Ad5cVX8crgXpuXNBO7mVBpL_wMttlCCdE8_cb_UU4RWweHXGN9PHdQ1tl/s320/searchenginemarketing.jpeg" width="320" /></a>With integrated marketing, you create a product message that is both consistent with and relevant to the target customer. You can produce campaigns with unified messaging for TV, radio, Web, and newspaper print ads. The keywords, the unique selling proposition (USP), the messaging, the look, the sound, and the customer can all be unified into a broad ad campaign that works in multiple channels.<br /> <br /> Today, a marketing team can use software from Unica or Omniture to launch and manage literally thousands of campaigns. By switching to digital technology, we can begin to track data. Thus the field of analytics came into play. At first, there were simple web stats packages that allowed the IT team to manage websites by raw aggregate numbers. They tracked visits, page views, and similar, to see if they had to add more capacity. Marketing and sales took over the websites, and they needed tools to track sales. As<br /> <span class="GINGER_SOFATWARE_correct" ginger_sofatware_markguid="32452560-3d4d-4b27-90c2-8f1904b934b0" ginger_sofatware_uiphraseguid="0cc1dc0a-d9a8-46b4-9512-56c1a9eb1dac" grcontextid="a:0">a</span> result, the first business analytics tools <span class="GINGER_SOFATWARE_correct" ginger_sofatware_markguid="3c15e939-634e-48c6-b8b3-c0c043891369" ginger_sofatware_uiphraseguid="0cc1dc0a-d9a8-46b4-9512-56c1a9eb1dac" grcontextid="were created:1">were created</span>. In the last year, analytics <span class="GINGER_SOFATWARE_correct" ginger_sofatware_markguid="fb05e0e6-8381-452c-8e02-a4b62b73613a" ginger_sofatware_uiphraseguid="0c4ccbd6-0ef2-4069-962d-d499a8d0fd4a" grcontextid="has undergone:0">has undergone</span> rapid evolution. The ability to track websites and PPC can be expanded into other digital campaigns.<br /> <br /> <br /> The ability of analytics to track results is being extended into these media. With unique URLs, PURLs, and tracking URLs, you can now track sales, cost-per-action (CPA), and return on investment (ROI) in radio, TV, and print just as in PPC. Soon, the consumption of nearly all media will be IP-based. This allows tracking of distribution and consumption. This also allows campaign results to be compared against each other.<br /> <br /> The goal for marketers is to optimize the customer’s experience. This means giving your customer what they want, when they want it, in the media form they want it in. This is the way for businesses to open the pocketbooks of their customers.<br /> <br /> Digital marketing strategies may include the following tools:<br /> <br /> <br /> <ul> <li>Analytics Software to track and analyze the results of marketing campaigns. It allows segmentation and profiling of customers. Companies include Omniture, Unica, Coremetrics, and Google Analytics.</li> </ul> <ul> <li>PPC (pay-per-click or paid search) Ad services by the major search engines that let you place ads on the search results pages.</li> </ul> <ul> <li>Multivariate testing (MTV) Software that allows you to create and test permutations of your web pages to find the version that performs best. MVT is offered by companies such as Offermatica and Optimost.</li> </ul> <ul> <li>Targeted messaging Using databases, analytics, behavioral targeting, and customer profiles to send targeted messages.</li> </ul> <ul> <li>Business intelligence (BI) Software that collects and presents the company’s sales and financial activity.</li> </ul> <ul> <li>CRM Software to track customers, such as Salesforce and Sugar CRM</li> </ul> <div> Marketing can be digitized. This means it can be quantified and rationalized. New advertising, enabled by digitization and digital tools (analytics, multivariate testing, and so on), allows integrated marketing</div> <div> across multiple channels.</div> <div> <br /></div> <div> <div> Previously a small marketing team could only carry out and manage several dozen ad campaigns. Now they can execute and manage several hundred campaigns simultaneously. The tools can collect and analyze</div> <div> <span class="GINGER_SOFATWARE_correct" ginger_sofatware_markguid="de1f4f22-f0b5-4d7f-80a4-5297c4bc9ffb" ginger_sofatware_uiphraseguid="6ec062d6-b1d5-42ea-8f0d-c25fdb19bbae" grcontextid="massive:0">massive</span> amounts of data in multiple dimensions. You use analytics to study the data. You use KPIs to guide your efforts. Digitized marketing can be tracked, so marketing is evolving into sales. Marketing channels are now turning into sales channels. With the ability to compare the various channels and by knowing the KPIs, a company can test channels to find the ones that produce profits. Once they know which ones work, they can turn up the volume by focusing more of their budget on the top-performing channels.</div> </div> <div> <br /></div> <div> <div> In online marketing, due to advancements in web analytics and BI technologies, we know about our visitors. We know where they come from (approximate or specific location as well as any referring sites or search</div> <div> <span class="GINGER_SOFATWARE_correct" ginger_sofatware_markguid="9ee79986-1166-402b-9b73-dedc6e61b702" ginger_sofatware_uiphraseguid="31964cb4-a6e0-4096-820b-14155cbfb326" grcontextid="engines:0">engines</span> such as Google), what they are looking for by the keywords they type in, what they show interest in, and so on. We can add to a Claritas demographic profile which tells us about our market’s lifestyle and behaviors.</div> </div> <div> <br /></div> <div> <div> Because digital technology allows tracking, Directors, VPs, SVPs, and CMOs are expected to show and describe the results of their marketing efforts. They have to boil down many scenarios with many outcomes into clear wins and present this to upper management. Sales-marketing is about generating as well as increasing revenue for your company. Think about how to tell those stories around your big wins as well as incremental wins.</div> </div> <div> <br /></div> <div> <div> There are a couple of ways to increase revenue. You can market to your target audience or you can find new market opportunities. A number of tools enable this.</div> </div> <div> <br /></div> <div> <div> To reach customers in a highly fragmented world, marketers must learn how to deliver their messages across many channels. For example, a company selling <span class="GINGER_SOFATWARE_correct" ginger_sofatware_markguid="22a7d06a-7335-4d06-a0a5-4963fe346d85" ginger_sofatware_uiphraseguid="37c27d7c-e4aa-4966-939e-103385d164ad" grcontextid="koi:0">koi</span> fish can advertise through e-mail lists, radio, web</div> <div> <span class="GINGER_SOFATWARE_correct" ginger_sofatware_markguid="00dc5220-9d19-4ff2-8f93-a438d8407bee" ginger_sofatware_uiphraseguid="3ef7d9ae-db2b-4f5f-a87c-5ca467abda4b" grcontextid="banners:0">banners</span>, SEO, and paid search (PPC). This will generate the traffic to your business.</div> </div> <div> <br /></div> <div> <div> Applying an end-to-end strategic approach, coupled with business processing rules, to your prospects focuses your traffic to deliver meaningful and well-qualified prospects, leads, and customers. This method is also referred to as strategic marketing. Through this, you deliver value to your prospects and customers.</div> </div> <div> <br /></div> <div> <div> Because the majority of a business’s prospects <span class="GINGER_SOFATWARE_correct" ginger_sofatware_markguid="bad79608-bfee-49df-8a47-bd4209105d07" ginger_sofatware_uiphraseguid="2e57e29d-6cfd-4806-9dc1-b9303d289949" grcontextid="prefer:0">prefer</span> to visit the business’s website first before engaging in any purchases, it is critical to apply web analytics to help them <span class="GINGER_SOFATWARE_correct" ginger_sofatware_markguid="bb6126f9-61e1-4e16-ba50-90da11b80acd" ginger_sofatware_uiphraseguid="2e57e29d-6cfd-4806-9dc1-b9303d289949" grcontextid="solve:1">solve</span> for their needs. Furthermore,</div> <div> analytics can be applied to your current customer database or CRM system to identify new market opportunities and to sell more products and services to customers based on what they may need.</div> </div> <div> <br /></div> <div> <div> As a business marketer, it is your responsibility to develop a data mining and segmentation strategy. This helps your teams divide up the customer base into smaller, understandable categories. From this, your teams should be launching new campaigns based on the method of listening to and processing the messages your customers are sending. This cycle repeats over and over in a continuous fashion to improve the sales marketing process.</div> </div> <div> <br /></div> <div> <div> The advertiser displays a message at the audience through multiple marketing channels. These channels can include search engines, radio, TV, and newspapers. Each of these channels <span class="GINGER_SOFATWARE_correct" ginger_sofatware_markguid="44f02b89-512f-4f22-ae43-656f4d449b75" ginger_sofatware_uiphraseguid="b565fdd3-7b48-4828-94bf-34d9a93cdf46" grcontextid="points:0">points</span> the viewer to a unique URL. The URLs have tracking code so the analytics can capture data on origin, location, keywords, and so on. Analytics tools can use rules to manage decisions. The rules can use visitor ID, such as IP address, cookies, e-mail login ID, or loyalty card ID. For example, if the visitor came via TV, a video can be offered.</div> <div> Visitors who use their cell phones to visit the unique URL can be shown content that is formatted for mobile devices.</div> </div> <div> <br /></div> <div class="separator" style="clear: both; text-align: center;"> <img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiOj7pz4x-uYC7sZxjj_q5vWn82FoV0li9E3Hh5Gz3cPeMVOLtUjiyba4YiXGyTqcwdpUgnYaEEKeiNsYPjDYJV6rczSzeQa_KOrrWOZF8asCjefXl_0AwD3W5NURid03E_HZ6eNVMYu6_t/s1600/Untitled-1+copy.png" /></div> <div class="separator" style="clear: both; text-align: center;"> <br /></div> <div class="separator" style="clear: both; text-align: center;"> <br /></div> <div class="separator" style="clear: both; text-align: center;"> <span style="font-size: x-large;">Manage Integrated Marketing with Enterprise Marketing Management (EMM)</span></div> <div class="separator" style="clear: both; text-align: center;"> <br /></div> <div class="separator" style="clear: both;"> Automated marketing is known as enterprise marketing management (EMM). This is also called marketing resource management (MRM) and marketing operations management (MOM). EMM uses various tools to manage marketing strategies and tactics. This can include analytics, campaign management, automated reports, dashboards, lead management, event-driven marketing, predictive modeling, and more.</div> <div class="separator" style="clear: both;"> <br /></div> <div class="separator" style="clear: both;"> EMM is used in marketing to reduce costs, increase productivity, and grow revenue. Companies can identify and act on customer activities. Marketers can collaborate across teams and with their external agencies to</div> <div class="separator" style="clear: both;"> <span class="GINGER_SOFATWARE_correct" ginger_sofatware_markguid="bf79359e-14a0-4551-ac81-fe9792bbc049" ginger_sofatware_uiphraseguid="a9712e24-bac7-4e16-99e7-a74e820305a6" grcontextid="launch:0">launch</span> and manage complex marketing campaigns. EMM includes:</div> <div style="text-align: left;"> <br /></div> <div style="text-align: left;"> <ul> <li>Analytics to understand and anticipate customer behavior</li> <li>Event-detection to track and respond to customers</li> <li></li> <li>Campaign management to carry out timely, consistent communications with customers</li> <li>Lead management to track leads</li> <li></li> <li>Marketing resource management (MRM) to manage budgets, creative production, marketing content, and other resources</li> </ul> <ul></ul> <div> Generally implemented as an integrated solution, EMM reduces time-to-market through automation, improves customer targeting through analytics, and proves the profit value of marketing through closed-loop</div> <div> measurement and reporting. Two vendors with integrated marketing solutions are <span class="GINGER_SOFATWARE_correct" ginger_sofatware_markguid="bd50b187-767f-47c7-962b-cfe6ab334686" ginger_sofatware_uiphraseguid="0db7af10-c9aa-4d19-a063-3d89ccd0201e" grcontextid="Unica:0">Unica</span> and Omniture.</div> <div> <br /></div> <div style="text-align: center;"> <span style="font-size: x-large;"><b><span class="GINGER_SOFATWARE_correct" ginger_sofatware_markguid="5f5f5d3e-cd76-446f-be3f-85388d838831" ginger_sofatware_uiphraseguid="f85326cd-a652-4fb5-834e-f533a6b14a34" grcontextid="Unica:0">Unica</span> and Omniture</b></span></div> <div style="text-align: center;"> <br /></div> <div style="text-align: left;"> <div> <span class="GINGER_SOFATWARE_correct" ginger_sofatware_markguid="bb2cc41d-5fdc-4c7a-9a81-30e721a409f5" ginger_sofatware_uiphraseguid="ba6dd231-5928-4fb1-9229-bac0abbb929d" grcontextid="Unica:0">Unica</span> and Omniture, both have analytics tools with automated <span class="GINGER_SOFATWARE_correct" ginger_sofatware_markguid="1dab86e2-9d03-4c51-a8eb-951fb2177e00" ginger_sofatware_uiphraseguid="ba6dd231-5928-4fb1-9229-bac0abbb929d" grcontextid="decisionmaking:1">decisionmaking</span>, but they approach the market from different directions and they offer different solutions:</div> <div> <br /></div> <div> <div> <ul> <li><span class="GINGER_SOFATWARE_noSuggestion GINGER_SOFATWARE_correct" ginger_sofatware_markguid="19a3574d-04b7-4035-8ad0-41fc773371fe" ginger_sofatware_uiphraseguid="eef6204c-fd50-4a69-b916-93dc48067727" grcontextid="Unica:0">Unica</span> starts from offline marketing, so their tools are based on the needs of multichannel marketing. <span class="GINGER_SOFATWARE_noSuggestion GINGER_SOFATWARE_correct" ginger_sofatware_markguid="7474d0d5-1262-451f-b17d-45380113d03f" ginger_sofatware_uiphraseguid="8123cece-d81a-466f-a797-b7a2c3eeca25" grcontextid="Unica:0">Unica</span> includes analytics, segmentation, propensity scoring, lifetime value prediction, predictive modeling, resource management, automated decision-making, dashboards, and tracking. <span class="GINGER_SOFATWARE_noSuggestion GINGER_SOFATWARE_correct" ginger_sofatware_markguid="8f036492-bdeb-4df9-a5dc-c0d79adefc1b" ginger_sofatware_uiphraseguid="f8c58355-c7a8-41e3-8e44-63d5b87d5bcb" grcontextid="Unica:0">Unica</span> has the most complete EMM solution on the market. Forrester Research ranks Unica as the clear market leader in EMM, both in terms of execution and completeness of vision. It also has the strongest offering and strategy of any EMM vendor. <span class="GINGER_SOFATWARE_noSuggestion GINGER_SOFATWARE_correct" ginger_sofatware_markguid="85a774fd-03e6-4c33-b7b5-a2e876a900eb" ginger_sofatware_uiphraseguid="4e4c2389-dd67-4e86-bcfa-850b85165150" grcontextid="Unica's:0">Unica's</span> platform is Affinium NetInsight.</li> </ul> <ul> <li>Omniture approaches the market from web marketing, so it <span class="GINGER_SOFATWARE_correct" ginger_sofatware_markguid="eacb9473-56d4-4e7b-929d-4489d5ba4426" ginger_sofatware_uiphraseguid="2cfd48cd-75df-43e9-b891-acaffa4f3e2b" grcontextid="is focused:0">is focused</span> on analytics tools. It includes tools to automatically manage PPC, multivariate testing, data warehousing, and behavioral targeting. Omniture is evolving from analytics to business optimization software. It can measure customer trends, enable appropriate analysis for the various levels of users in a company, automate processes, and optimize the customer experience. Omniture's analytics software is known as Omniture SiteCatalyst.</li> </ul> </div> </div> <div> <div> Both of these companies offer extensive support and service, including consulting services.</div> </div> <div> <br /></div> <div style="text-align: center;"> <span style="font-size: x-large;">Seven Tips from Unica</span></div> <div style="text-align: center;"> <br /></div> <div style="text-align: left;"> Here are seven tips for integrated marketing from Unica.</div> <div style="text-align: left;"> <div> Set up your online segmentation strategy based on visitor usage and activity. In this case, the audience is divided up into four segments: couch potatoes (they don’t participate in blogs or other user activities), readers, critics, and content creators. As shown next, you can compare these groups to find which one produces the most value by engagement, conversions, and revenue.</div> <div class="separator" style="clear: both; text-align: center;"> <img border="0" height="496" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgA0owFl7AG1U-o1uo19ADoTu9ddfqSVJ1T80nCPWnHm0IM_eor5awdCiHlnmto4PC4FhF2LmhWBOuw4Z6gBbImkR0e2FR-pwmZ7FaiuazPBIjzPpS3u_WHfPcoYgtb_vKjknAAOlEBdBPw/s1600/Untitled-1+copy.png" width="640" /></div> <div class="separator" style="clear: both; text-align: center;"> <br /></div> <div class="separator" style="clear: both; text-align: left;"> Using your sales database, you can identify new market opportunities across medium and high-value lifetime visitors. You can explore the results from keywords, referrers, locations, and content segmentation, as shown next.</div> <div class="separator" style="clear: both; text-align: left;"> <br /></div> <div class="separator" style="clear: both; text-align: left;"> <br /></div> <div class="separator" style="clear: both;"> Remember, customers are not defined by clicks alone. Look for groups of customers and try to find additional similar customers.</div> <div class="separator" style="clear: both; text-align: center;"> </div> <div class="separator" style="clear: both; text-align: center;"> <img border="0" height="442" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh55vx_gY_SypZ8_ChqwXUudbCidFWVTNcnnEHeNox3SJikcYFL8mUEcG8gB2rj_gnD2yNAyPvHOtjACCS63YkXE0zSNUngEe-v3Ny77uNKV_5j4zg4yCQOgJdZMjZeaeEUy8e4dezIXHfG/s640/Untitled-1+copy.png" width="640" /></div> <div class="separator" style="clear: both; text-align: center;"> <br /></div> <div class="separator" style="clear: both; text-align: left;"> <br /></div> <div> <div> Use event triggers to manage bids and campaigns. You can set up rules to trigger campaigns based on visitor actions, as shown next. If they abandon the shopping cart, send them a tailored offer. If they buy, send</div> <div> them an up-sell offer or additional services. Make offers that are relevant or valuable to your customer.<br /> <br /> <br /> Use cross-channel campaigns to reach customers, as shown next. For example, a visitor comes to your website and browses the pages for bicycles. Do you show them additional ads for bicycles? You find that they<br /> <div class="separator" style="clear: both; text-align: center;"> <img border="0" height="398" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEg64q8P_iMjpADMMKKNMO3N386uoEedQ1oAjtB5Rtj1-O-htd9vRTNg4YKlxnSpi_wUrGEqj5s8WpzwhIQ1hTIe2LgJXOZgGeOSUIMZbd9e4yZLZhvBwUWbPTdJDj-7v2vXMC6CAcks2qGd/s640/Untitled-1+copy.png" width="640" /></div> <div class="separator" style="clear: both; text-align: center;"> <br /></div> <div class="separator" style="clear: both; text-align: left;"> <br /></div> <span class="GINGER_SOFATWARE_correct" ginger_sofatware_markguid="78f9da4d-a650-48e8-b35e-9561afefccfb" ginger_sofatware_uiphraseguid="96b0a2d2-0b91-4948-a6b1-75d7c9a5db18" grcontextid="clipped:0">clipped</span> out a newspaper coupon and came to the store and bought a kayak. You use the data from one channel in another channel; you now show the visitor online ads for kayak accessories, including paddles, vests, and so on.<br /> <div class="separator" style="clear: both; text-align: center;"> <img border="0" height="400" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEh9qSnXOazNGBPoHf7uUSGrQUwiYv-cqM_wsb4x3Jv51PM0r0OSwWcx2uSfdNZHKceaT_tSRjTG3rLNdpBbvEtS3AMRkIt4ONrY9Cf2Rko6SBlSWcAaTrL6xPuHZ8gPOZB_yOlIww-3FzFM/s400/Untitl.png" width="371" /></div> <div class="separator" style="clear: both; text-align: center;"> <br /></div> <div class="separator" style="clear: both; text-align: left;"> <br /></div> <div class="separator" style="clear: both; text-align: left;"> <br /></div> <div class="separator" style="clear: both;"> Look at why your customers go away, as shown next. Often, site optimizers experiment with different layouts, colors, call-to-actions, messaging, and so on. But sometimes, you’ll find these site optimization</div> <div class="separator" style="clear: both;"> experiments won’t keep customers. Customers buy because they find something is useful and valuable. Offer them highly targeted and relevant retention offers. Turn your marketing campaigns into a service for your</div> <div class="separator" style="clear: both;"> customer by matching your offer to what your customer is interested in.</div> <div class="separator" style="clear: both;"> <br /></div> <div class="separator" style="clear: both; text-align: center;"> <img border="0" height="400" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhukvm2dsidkd8cMfyyeUOVsYFCDKMwmQJIxjCEHMQnSqDPv1iGhuU7M33oCosCipu2Zvgyh46BMOHO2weciKHdhY2jj2ZNzn1hhrfjCj3nudRYILFtuMsN2QOYAwcyOMnMU09IBnHGprH3/s400/Untitled-1+copy.wpng.png" width="307" /></div> <div class="separator" style="clear: both;"> <br /></div> <div class="separator" style="clear: both;"> Use site map overlays. These show you where the customers are clicking. As you can see next, Unica and Omniture’s site overlay shows you the profitability of the links so you can restructure your website to maximize profits.</div> <div class="separator" style="clear: both;"> <br /></div> <div class="separator" style="clear: both; text-align: center;"> <a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiCwINRd8ny9BHOih_tFo6IUU6KkqMrzaIghPiFcVgtR3rOCi14-3im83Yq9eYkdS7OtVwBgDecMJMGrWANDUO_OQ7ZyB49y1yNe3giXPYYXQS7LXauHi46ir9RUK1hA_1GNaOX56x4QWQ5/s1600/ww.png" imageanchor="1" style="margin-left: 1em; margin-right: 1em;"><img border="0" height="492" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiCwINRd8ny9BHOih_tFo6IUU6KkqMrzaIghPiFcVgtR3rOCi14-3im83Yq9eYkdS7OtVwBgDecMJMGrWANDUO_OQ7ZyB49y1yNe3giXPYYXQS7LXauHi46ir9RUK1hA_1GNaOX56x4QWQ5/s640/ww.png" width="640" /></a></div> <div class="separator" style="clear: both;"> <br /></div> <div class="separator" style="clear: both;"> Use the reporting tools to create questions about your data, as shown next. You can use predefined questions or create your own. Once your question is built, views and reports are created on the fly for analysis and decision-making.</div> <div class="separator" style="clear: both;"> <br /></div> <div class="separator" style="clear: both; text-align: center;"> <img border="0" height="468" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEiife52kUjT245cNpKWpNaKMS4T4_Ro3YjoWF5-dVbfMUfj_DSKM6F25Auj0Eps0j5a7ZzoHomx1An2f8lQ9_P3ETgT4B0MPi-FLTMoxr6EeTVBHwdx_hOm8yfIhH-GZVGvhCsFoW7FM1DB/s640/Untitled-1+ccopy.png" width="640" /></div> <div class="separator" style="clear: both;"> <br /></div> <div class="separator" style="clear: both;"> <br /></div> <div class="separator" style="clear: both; text-align: left;"> <span style="font-size: x-large;">Interview: Yuchun Lee, CEO of Unica</span></div> <div class="separator" style="clear: both;"> Yuchun Lee cofounded Unica in 1992. Over 600 companies use Unica for their EMM. Yuchun Lee holds degrees in electrical engineering and computer science from MIT and an MBA from Babson College. Mr. Lee is the CEO of Unica.</div> <div class="separator" style="clear: both;"> <br /></div> <div class="separator" style="clear: both;"> <b>Q: What is integrated marketing? How do you define it?</b></div> <div class="separator" style="clear: both;"> A: Integrated marketing is a process by which all communications and marketing programs delivered to a customer or prospect are relevant and consistent. This applies whether the communications are offline or online, inbound or outbound.</div> <div class="separator" style="clear: both;"> Online marketing channels include any e-marketing campaigns or programs, from search engine optimization (SEO), pay-per-click, affiliate, e-mail, banner, to the latest web-related channels for webinar, blog, RSS, podcast, and Internet TV. Offline marketing channels are traditional print (newspaper, magazine), mail order, public relations, industry analyst relations, billboard, radio, and television.</div> <div class="separator" style="clear: both;"> Unica’s enterprise marketing management (EMM) technology delivers a complete platform for integrated marketing. It is uniquely based on a system of record for marketing, which you can think of as institutional memory for the marketing organization. The system of record brings together marketing assets, such as creatives, reports, budgets, and business definitions (for example, customer segments and best practices) so that marketers can manage their creation and usage, rapidly assemble them to execute different programs, and measure performance. This free flow of accurate, up-to-date information speeds marketing execution, reduces mistakes, boosts productivity through automation and reuse, and enables faster, better decisions.</div> <div class="separator" style="clear: both;"> <br /></div> <div class="separator" style="clear: both;"> EMM helps companies manage their marketing campaigns, programs, and activities across time and across channels. In that respect, all those pieces work together to help marketers better address the needs of the customer through whatever channel the customer wants, ensuring sensitivity to customer preferences and consistency of message delivery. This is what integrated marketing and EMM are all about.</div> <div class="separator" style="clear: both;"> <br /></div> <div class="separator" style="clear: both;"> <b>Q: Can you give a few examples of EMM? How does the customer experience this? How does it work for the company?</b></div> <div class="separator" style="clear: both;"> A: Marketing is more complex than any other part of an enterprise in terms of the different kinds of processes it requires. If you have 1000 sales people in a company, they’re pretty much doing the same thing. If you have 50 marketers, they are doing 200 different things. The key thing to understand is that EMM enables the automation of dozens and dozens of different marketing processes, which taken holistically add up to what we call “enterprise marketing management.”</div> <div class="separator" style="clear: both;"> <br /></div> <div class="separator" style="clear: both;"> Let’s talk about some of the things EMM solves. From an analytics perspective, we have customers, such as Lands’ End, who use our technology to automate their direct mailings. Lands’ End has hundreds of versions of their catalogs. Depending on who you are, you get a special version that is designed to appeal to your interests. Our technology helps them manage the mailings of those catalogs and to assess the effectiveness of</div> <div class="separator" style="clear: both;"> their catalog versions and targeting strategies. An online example is Monster.com, who automates the execution of over 1,000,000 targeted e-mails per day based on job seeker preferences and behavior.</div> <div class="separator" style="clear: both;"> <br /></div> <div class="separator" style="clear: both;"> Another example is to look at the different marketing processes and tools that marketers manage: signage, local advertising, store openings, events, etc. All of these activities have multiple moving parts. Customers use our software to define and store information about these activities so that every time they open a new store, it’s the same process, including the same approval process and workflow. If you look at a company</div> <div class="separator" style="clear: both;"> like Lowe’s, which has regular Sunday newspaper inserts, they need to determine which products get promoted, their placement within the insert, the graphics and the approval for those graphics, the prices, and so on. This can involve several hundred people working in different countries. They use Unica software to help streamline and coordinate these complex processes. By and large, EMM helps companies solve their</div> <div class="separator" style="clear: both;"> mission-critical problems in marketing, and that’s what it’s all about.</div> <div class="separator" style="clear: both;"> <br /></div> <div class="separator" style="clear: both;"> <b>Q: What is integrated analytics? How do you define it?</b></div> <div class="separator" style="clear: both;"> A: Analytics are a key part of integrated marketing. If you look at the core marketing processes, they consist of analysis of customers and data, planning of marketing budgets and resources, production and design, including message development, execution of programs and campaigns, and measurement of results. So there are five steps: analysis, planning, production, execution and measurement. Analytics is a vital step in these marketing processes. Integrated analytics, in our view, spans time and channels. It allows marketers to analyze customers in a holistic fashion, synchronizing data about their lifestyle and their preferences, the permissions they’ve given, their purchase and interaction history. Truly integrated analytics enables companies to develop and deliver marketing messages that are so timely and relevant they feel like a</div> <div class="separator" style="clear: both;"> </div> <div class="separator" style="clear: both;"> valued service to their customers.</div> <div class="separator" style="clear: both;"> <br /></div> <div class="separator" style="clear: both;"> <b>Q: How does Unica deal with a company’s existing analytics tool? Is it a layer on top of the analytics?</b></div> <div class="separator" style="clear: both;"> A: It depends on the type of analytics tool and the company’s situation. Unica offers a wide range of capabilities , including reporting, web analytics, predictive modeling, event detection, and real-time analytics for delivering personalized offers during web and call center interactions. While many companies often have existing capabilities in some of these areas, they are often isolated, complex applications that are not fully integrated into their marketing operations. Unica can help in two ways. In some instances, we integrate</div> <div class="separator" style="clear: both;"> with existing capabilities. For example, we have many customers that use SAS to build predictive models. These models can be used within our overall marketing automation solution to help segment and optimize campaigns. In other situations, companies find that their legacy analytics capabilities are too complex and costly to maintain and integrate. As a result, we see companies adopting our analytics capabilities because of their ease of use, functional capabilities, and integration within our EMM suite.</div> <div class="separator" style="clear: both;"> <br /></div> <div class="separator" style="clear: both;"> <b>Q: Google Analytics is free. What’s the business case for graduating to a larger package? The CEO wants to know why she should spend good money for another tool.</b></div> <div class="separator" style="clear: both;"> A: Anytime you can get something for free, it’s probably worth considering. Google Analytics is a standalone application that provides basic reporting, but it lacks segmentation and integration capabilities. We believe that site analytics delivers significantly more business insights when you are able to integrate all your critical online and back office data. You are also able to act more effectively on these insights when your web analytics solution is part of an integrated marketing platform.</div> <div class="separator" style="clear: both;"> <br /></div> <div class="separator" style="clear: both;"> <b>Q: At what size can a company start to apply EMM? At how many customers or what level of revenue does it become appropriate?</b></div> <div class="separator" style="clear: both;"> A: We find that companies with at least $30 million in annual revenue have the business need and marketing budget to invest in EMM. We do see smaller web-centric companies investing in our site analytics solution because of the mission-critical nature of their sites. But in general our range of companies is from $30 million to the largest companies in the world. If you look around the U.S., there are about 25,000 companies in that range. Globally it’s about 50,000 companies to be very conservative. It’s a pretty big market.</div> <div class="separator" style="clear: both;"> <br /></div> <div class="separator" style="clear: both;"> <b>Q: What’s the ideal size of the team?</b></div> <div class="separator" style="clear: both;"> A: We often see teams of about 50 to 100 people in the marketing organization, but we have some customers effectively leveraging our EMM capabilities with teams as small as five or six people. Smaller teams tend to focus on our marketing automation capabilities while larger teams also gain significant benefit from our collaboration and workflow management capabilities.</div> <div class="separator" style="clear: both;"> <br /></div> <div class="separator" style="clear: both;"> <b>Q: What about Web 2.0? Analytics was based on the Web 1.0 model and tracking </b><b>of page-by-page click activity. But Web 2.0 sites are actually an application, not a </b><b>website. Is it a mistake to apply Web 1.0 analytics to Web 2.0? Do we need an entirely </b><b>new approach to Web 2.0 sites?</b></div> <div class="separator" style="clear: both;"> A: There’s a common tactical issue that companies must address in web analytics around page tagging vs. event tagging for Web 2.0 content. Event tagging is technically straightforward in most analytics tools, but marketers do need to determine what events should be captured for analysis. There is a tendency to “just capture everything,” but too many client-side analytics events can impact a user’s experience on your site, which negates one of the big reasons people are deploying Web 2.0 interface technologies.</div> <div class="separator" style="clear: both;"> <br /></div> <div class="separator" style="clear: both;"> The bigger issue we see with Web 2.0 is a change in paradigm around how consumers interact with a company. Media fragmentation has made it increasingly challenging for marketers to get their messages across. Then there is the networking effect that happens in the Web 2.0 world. It’s the social network that’s influencing people and their perception of companies and brands. Power has shifted to the consumer, and their individual experiences of your brand—both positive and negative—can easily echo across the Web. This viral effect is something that marketers also seek to leverage with compelling and innovative viral campaign strategies. These changing paradigms impact what you need to measure and place a premium on understanding your customer’s experience of your company both directly and indirectly.</div> <div class="separator" style="clear: both;"> <br /></div> <div class="separator" style="clear: both;"> <b>Q: One of the problems with Web 2.0 is the lack of a clear business model, which means a lack of clear KPIs. How would you address this?</b></div> <div class="separator" style="clear: both;"> A: Business models and appropriate metrics are still evolving around Web 2.0. But remember, any time you spend marketing money, you can establish performance objectives or you can treat it as more of a branding activity. A lot of marketers would tell you that marketing cannot be measured. I personally don’t believe that’s true. I think that you can often find proxies to assess your marketing efforts. We are seeing the world move more toward measurable marketing. I think Web 2.0 media and its linkage to web analytics as a technology is the perfect example of why people want to measure usage and apply metrics that range from engagement to more specific ROI models where appropriate. I can tell you that Web 2.0 media is much more measurable than television, but not nearly measurable enough when compared to other types of marketing campaigns, such as keyword search, paid search, and organic search. It depends on how your company defines measurement and how strongly the CFO wants exact numbers from the CMO.</div> <div class="separator" style="clear: both;"> Ten years from now—or sooner—CMOs are going to have to justify marketing spend across all channels and media types.</div> <div class="separator" style="clear: both;"> <br /></div> <div class="separator" style="clear: both;"> <b>Q: In the event of a recession, what would you recommend to Web 2.0 sites?</b></div> <div class="separator" style="clear: both;"> A: One strategy would be to do more with what you have. Another is to invest in technology that offers a strong measurable ROI. Let me give you an example. In the last recession there was a major retailer who had 26 projects. After the first year, only two projects got funded. Our project was one of them because it had measurable ROI. If you spend $1 you will get $5 back.</div> <div class="separator" style="clear: both;"> <br /></div> <div class="separator" style="clear: both;"> <b>Q: Where do you think cross-channel analytics vs. web analytics is going in the next </b><b>few years?</b></div> <div class="separator" style="clear: both;"> A: I believe that web analytics as a standalone market will eventually disappear. As a result, I think there are three trajectories for web analytics technologies going forward. One trajectory is for web analytics to be an integral part of an e-commerce platform where people are opening up online stores. The second is for web analytics to be absorbed into the more general category of business intelligence using analytics to interpret business data, not just for the website but for the business as a whole. The third trajectory is for web analytics to be part of a marketing suite because a website is a very integral part of the marketing organization in many industries. Our view is that web analytics as a technology needs to be an integral part of EMM. We think web analytics will be a key component of cross-channel analytics and we are seeing clear signs from marketing buyers who believe this, too.</div> <div class="separator" style="clear: both;"> <br /></div> <div class="separator" style="clear: both;"> <b>Q: Why is cross-channel marketing important today?</b></div> <div class="separator" style="clear: both;"> A: The Internet has affected the way a company communicates with the customer and has facilitated a shift of power to the customer. To be effective as a marketer, there are two things you have to do. You have to be relevant to the customer, and you have to be consistent across channels. If you don’t have an integrated cross-channel marketing framework, you can’t accomplish this.</div> <div class="separator" style="clear: both;"> <b><br /></b></div> <div class="separator" style="clear: both;"> <b>Q: The Web gave us online marketing, which has been a new form of marketing for the last ten years. EMM and cross-channel marketing merge online marketing and offline marketing. Will the Web become “just another media”?</b></div> <div class="separator" style="clear: both;"> A: Think of the Web as another channel. If you look at handheld devices or e-mail, they each have their own pluses and minuses. As an effective marketer, one has to figure out how to deliver messages to buyers effectively and consistently across these channels. It’s a mistake to view the Web as something so special that it should be a siloed part of a company or something that you don’t integrate with the rest of your interaction channels. Shopping, purchase, fulfillment, and service activity occur across a mix of channels and in different patterns depending on the customer. Effective marketing must operate holistically across channels to fulfill its promise of delivering timely and relevant messages and experiences.</div> <div class="separator" style="clear: both;"> <br /></div> <div class="separator" style="clear: both;"> <b>Q: Asia and Europe are far ahead of the U.S. in cell phone use. They’ve moved </b><b>from desktop computers to cell phones. They shop on their cell phones; they pay for </b><b>services with their cell phones; they read books on their cell phones. With Apple’s </b><b>iPhone and the Google phone, we may finally get advanced cell phone services </b><b>in the U.S. This allows geo-based marketing, plus in-store offers. Where are the </b><b>opportunities for analytics on mobile devices?</b></div> <div class="separator" style="clear: both;"> A: I think there is a tremendous potential there. I think overall in Asia and Europe we are barely scratching the surface when it comes to providing a robust channel for communications between the company and the consumer. The Internet and mobile phone infrastructures are on a five- to ten-year convergence course. These two infrastructures will converge, and one will carry the other’s traffic so there will be no difference between them.</div> <div class="separator" style="clear: both;"> Once that happens, the phone becomes a very interesting channel for marketers and individuals. Not only can it enable instant messaging and e-mail, it also offers an Internet browser. Plus, it’s also a geographically enabled device. But, unlike a computer, which can be shared, is not always on, and is often stationary, a mobile phone is personal. It’s almost always carried by someone and is often active 24/7.</div> <div class="separator" style="clear: both;"> It’s a very special channel that marketers can take advantage of, but because it’s so personal, it makes the right type of marketing even more challenging. You can’t just spam everybody who has a phone. We advise companies to think of marketing as a service. With accurate targeting, you can deliver timely and relevant messages to your customers. This turns marketing into a valued service.</div> <div class="separator" style="clear: both;"> <br /></div> <div class="separator" style="clear: both;"> <b>Q: What top three tips and tricks do you recommend for companies looking to deploy this?</b></div> <div class="separator" style="clear: both;"> A: First, I wouldn’t try to buy the whole thing at once. This is a very complex set of technologies that requires thought on which areas to apply first. I would advise working with a vendor like Unica who has lots of experience helping customers formulate a roadmap to adopt this technology. That’s number one. Second, pick a vendor that has the holistic view of marketing. Too often we see companies trying to apply very short-term solutions to complex, long-term problems. That will only add more complexity down the road. Think holistically about marketing.</div> <div class="separator" style="clear: both;"> Third, check references. Talk to companies who are doing this successfully and get the inside scoop. There are few vendors who are delivering the goods.</div> <div class="separator" style="clear: both;"> <br /></div> <div class="separator" style="clear: both; text-align: center;"> <span style="font-size: x-large;"><b>Conclusion</b></span></div> <div class="separator" style="clear: both; text-align: center;"> <br /></div> <div class="separator" style="clear: both;"> Both Google AdWords and the various analytics tools show marketing can be managed as a trackable activity. With the broad acceptance of the Web by consumers and unique URLs, the power of online marketing’s digital tracking can be used with traditional marketing.</div> <div class="separator" style="clear: both;"> <br /></div> <div class="separator" style="clear: both;"> Digitized marketing creates new abilities: tracking the customers, offering the customers what they really want, better reports for marketers, tools for automated distribution of campaigns across multiple channels, and tools for event-triggered campaigns.</div> <div class="separator" style="clear: both;"> <br /></div> <div class="separator" style="clear: both;"> Traditional marketing and online marketing are merging into one. Several years ago, it appeared online marketing would remain a small segment of marketing. That has changed. Online marketing will become part of general marketing. Marketing is a trillion-dollar industry in the U.S. and makes up the largest discretionary budget within companies. The combination of both online and offline marketing opens the door to many new tools and services in marketing.</div> <div class="separator" style="clear: both;"> <br /></div> <div class="separator" style="clear: both;"> In writing this book, we talked with senior people at Cisco, Omniture, Unica, Google, Yahoo!, Microsoft, Education.com, Aveda, 24-Hour Fitness, and many other companies. All of them felt these new tools will evolve rapidly in the next few years. This industry has only just begun. In this book, we will cover:</div> <div class="separator" style="clear: both;"> <br /></div> <div class="separator" style="clear: both;"> </div> <ul> <li>KPIs Digitized marketing allows you to manage your campaigns. You use key performance indicators (KPIs), which are the key numbers. We will show you how to define your KPIs for maximum profitability and use KPIs to manage your campaigns and channels.</li> </ul> <ul> <li>Analytics An overview of analytics, along with a hands-on guide to using Google Analytics.</li> </ul> <ul> <li>SEO Search engine optimization (SEO) helps you to make sure your website is findable by your audience when they are searching for you in search engines. We will show you how to use analytics and KPIs to manage your SEO.</li> </ul> <ul> <li>PPC Use pay-per-click (PPC) to place advertising in search engines, radio, TV, and newspapers. We will also show you how to use analytics and KPIs to manage your PPC campaigns.</li> </ul> </div> </div> </div> </div> </div>

SEM Tutorial Part 3 ( Integrated Marketing )

Integrated Marketing: The New Approach Integrated marketing is the use of two or more marketing channels to sell a product or service. ...

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SEM Tutorial Part 2 ( Integrated Marketing )

<div style="text-align: center;"> <span style="font-size: x-large;"><b>The Buying Cycle and the Moment of Purchase</b></span></div> <div style="text-align: center;"> <br /></div> The goal of marketing is to focus advertising on the active target audience to reach them at the moment they decide to buy. This reduces the cost of advertising and increases the likelihood of success. Digital marketing allows the advertiser to reach the consumer at the moment the consumer decides to buy.<br /> <br /> <div class="separator" style="clear: both; text-align: center;"> <a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjh6OkJnKLIrniq11hHnihEw_0Ut1_30yldBLRMzn1ZrseZtLkkZi-_zOmE5ygj3H5cssz1zT1B5lrHeNp2I83Ad5cVX8crgXpuXNBO7mVBpL_wMttlCCdE8_cb_UU4RWweHXGN9PHdQ1tl/s1600/searchenginemarketing.jpeg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="231" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEjh6OkJnKLIrniq11hHnihEw_0Ut1_30yldBLRMzn1ZrseZtLkkZi-_zOmE5ygj3H5cssz1zT1B5lrHeNp2I83Ad5cVX8crgXpuXNBO7mVBpL_wMttlCCdE8_cb_UU4RWweHXGN9PHdQ1tl/s320/searchenginemarketing.jpeg" width="320" /></a></div> Let’s look at the steps involved in buying. When someone buys a product, they go through a process known as the buying cycle, which has four phases: awareness, research, compare, and purchase. In general, Consumers first become aware of a need or desire. They then research the market and compare the products. They finally select what they want and purchase the product. (Depending on the researcher and market, this is also called the marketing cycle, purchase cycle, sales cycle, purchase path, buying funnel, and similar concepts, and these have three to seven phases.)<br /> <br /> For example, Laura is looking at her yard, and she would like a pond with fish. She thinks off and on about this for a few days. This is the awareness-of-need phase. Laura begins to ask friends and family about fish<br /> Ponds. She slowly realizes that she needs a fish pond with a filter and pump. She learns about fish and finds that large Japanese fish called Koi would be best. She talks with coworkers and neighbors. She begins to use the Web and search engines. She is in the research phase. Finally, after several weeks, she has narrowed it down to the general type of pump and the breed of Koi. Immersible or external pump? Asagi or Koromo Koi? She compares the products. Finally, she knows what she wants (it fits her yard, her needs, her budget, and her tastes) and Laura turns to the Web to find a vendor who can deliver what she wants. This is the purchase phase.<br /> <br /> In the awareness, research, and comparison phases, Laura aren’t ready to buy. She is learning about the products. She is looking for information. She will ignore ads and “buy now” pages. In the purchase phase, Laura has decided what she wants. She knows the make, model, and features. She also knows the price. She won’t pay attention to other products. She is looking for a vendor who can reliably deliver her selection.<br /> <br /> The length of the buying cycle depends on the product or service. For low-cost consumer products, this may be a few days. For large purchases, this can take a month or so. For industrial equipment, this can take six<br /> Months or more. For real estate, this can take six years or more.<br /> <br /> <br /> <span style="font-size: large;"><b>Interview: Bob Platkin, Director of Marketing</b></span><br /> <br /> Bob Platkin is perhaps best known to the American public for having repositioned two Major brands in the 1980s. He turned A.1. Steak Sauce into a condiment for hamburgers. He also developed the marketing strategy for the famous Gray Poupon mustard TV Commercials, where two wealthy men in a Rolls-Royce “pass the Gray Poupon.” Bob has held senior marketing positions at Nabisco/Heublein (A.1. Steak Sauce, Gray Poupon Mustard, Smirnoff), Stanley Works, Colt Firearms, the American Can Co. (Northern Tissue),<br /> And Ted Bates Advertising (Colgate-Palmolive). Bob founded Urbina Design, an electric appliance company, and continues to consult with companies on marketing strategies.<br /> <br /> Q: What was the story behind Gray Poupon? Why did you take that approach? A: Gray Poupon mustard was a sleepy niche item on the gourmet shelves at supermarkets. They advertised in the three leading high-end gourmet magazines. It was sold as an ingredient for gourmet recipes. The product had a nice 5%–10% growth every year. We found we had 90% distribution in supermarkets but only reached 30% of households. My strategy was to sell Gray Poupon mustard for sandwiches and hot dogs. This was very<br /> Bold. They had an extremely profitable product, but I was telling them to mass-market it. We relaunched the product as a condiment. Don’t talk about white wine. Don’t show French recipes. We made it into an everyday spread for sandwiches. We even did ads with “hot dogs.” To get the public familiar with it, we put it in airline in-flight meals. Gray Poupon took off at about 20% annual growth and didn’t stop growing for a decade.<br /> <br /> Q: How did you grow A.1. Steak Sauce? A: We forced distribution through advertising to create a demand for A.1. Steak Sauce. Normally, you don’t force distribution through advertising. A company would first get<br /> Their product distributed and then do advertising to sell the product, not the other way around.<br /> <br /> We put coupons in the Sunday papers. By creating demand, supermarkets had to stock it. By tracking each coupon’s unique ID, we could calculate the marketing costs. We used the data to tune the numbers to reflect reality. We didn’t have computers. We didn’t even have spreadsheets. This was all done by hand with pocket calculators.<br /> <br /> To keep things manageable, we started in one city. After two months, we had revenue. We used the profits to expand in the next city. We also used our data to calculate customer lifetime value. We compared customers who bought a second time to those who only bought it once. By knowing the volume of repeat business, we could sell the product to stores in the next city. We used data to continuously improve our process and grow big in a very short time.<br /> <br /> A.1. Steak Sauce had been known as a steak sauce, so we repositioned it for hamburgers. People put it on hamburgers and felt like, “Hey, I’m eating steak!” Another company was Stanley Tools. Stanley tools were sold in Wal-Mart. Every Monday morning, Wal-Mart gave large spreadsheets to the executives, including myself. I would analyze why a product didn’t do well in a region. On the converse, products that did sell well were quickly replenished. We looked at the variables, isolated the leading causes, and tried to solve those. We used Wal-Mart Retail Link, which was their analytics and sales performance tool. It used SKU numbers and checkout scanner data.<br /> <br /> Q: What is the difference between marketing then and now? A: Back then, if you had the money, you were king. By creating TV road blocks (i.e., buying up all of the ads on prime time, which forced everyone to see your ad and also kept your competitors out of the picture), the retailers had to stalk you!<br /> <br /> Google is like the TV road blocks of the 1980s. By being at the top of just three search engines (Google, Yahoo!, and Microsoft), you get access to over 98% of your market. Back in the 80s, supermarkets and retailers were formidable barriers to entry. To sell your product, you had to get into the supermarkets. Google obliterated them. Anyone can set up a website, run an online campaign in Google, and be in business. What’s even better is when you show up in the unpaid results. When people are looking for information and they find you in the unpaid listings, they will consider your site to be authoritative.<br /> <br /> You can also buy keywords, banner ads, video, and so on to create repetition. If you dominate the paid advertising space in your market or industry, you can spend the majority of your budget to get a good market that is ready to purchase. This expands your customer base, making you yet bigger.<br /> <br /> Q: Can you give us some tips about marketing? A: The share of advertising matched the share of the market. If you had enough money, you could buy your market share. If your ad budget was 40% of the overall market’s ad budget, you’d end up with 40% of the market. Madison Avenue gave you money to blow, and it worked! Great advertisers could take an everyday product and quickly turn it in a million-dollar success. Most of your advertising went to positioning.<br /> <br /> We figured out the unique selling point (USP). The USP is the features and benefits that distinguish a company. For example, your research found that the three most important factors for your product were flavor, texture, and price. Now if your competitor was advertising on flavor, you couldn’t advertise on flavor because your money would end up supporting your competitor. It would be better for you to advertise on texture.<br /> <br /> Another thing: If you advertise on flavor, then your product must support the advertising. If you say your product is crispier than the others, then it must be crispier and appear crispier. If it’s not, the public will reject your campaign.<br /> <br /> A company can have a single message for a product. Advertisers can create the image for the product. For example, Volvo created the concept of safety. With a huge propaganda campaign and countless repetition, they make safety seem like a real issue. People buy Volvo because the car is “safe.” Volvo owns this market now.<br /> <br /> Repetition is important. After three or four times, a person remembers an ad. This is why the marketers threw large budgets at the product’s positioning.<br /> <br /> Don’t spread yourself too thin. Control the message at a micro level to dominate niches until you are a share leader in one market channel and use the profits to dominate the next marketing channel. Bootstrap until you have substantial profits, then go for mass market.

SEM Tutorial Part 2 ( Integrated Marketing )

The Buying Cycle and the Moment of Purchase The goal of marketing is to focus advertising on the active target audience to reach them at...

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SEM Tutorial Part 1 ( Integrated Marketing )

<div class="separator" style="clear: both; text-align: center;"> <span style="font-size: x-large;"><b> Integrated Marketing</b></span></div> <div class="separator" style="clear: both; text-align: left;"> <br /></div> In this book, we will show that offline and online media are converging into digitized media. The ability of analytics to track and manage digitized marketing is turning traditional and online marketing into sales-performance marketing.<br /> <br /> <a href="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgGWNweV3MIOMl4NlgkNl38yX0l68LwPVdqqlRaTiiQofqevo06ROgXpanDFpvxrdnYaxFIpU2RwPwLqgZGs-GSAgRnKR0ZR5D4uy6gVu9sZzy7LlFx34N_xnryzcAy-1RRTltzZGgeqoYu/s1600/searchenginemarketing.jpeg" imageanchor="1" style="clear: left; float: left; margin-bottom: 1em; margin-right: 1em;"><img border="0" height="231" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEgGWNweV3MIOMl4NlgkNl38yX0l68LwPVdqqlRaTiiQofqevo06ROgXpanDFpvxrdnYaxFIpU2RwPwLqgZGs-GSAgRnKR0ZR5D4uy6gVu9sZzy7LlFx34N_xnryzcAy-1RRTltzZGgeqoYu/s320/searchenginemarketing.jpeg" width="320" /></a>Just as you can track the results in paid search (pay-per-click or PPC), you can use analytics to track search engine optimization (SEO), PPC, link building, and bulk e-mail. And just like you can track PPC, you can<br /> Use analytics to track marketing campaigns in other media, such as radio, TV, newspaper ads, printed coupons, direct mail, and so on. The customer response to all these forms of marketing can be captured by digital tools, which allow you to compare and manage those media.<br /> <br /> We will also show you how to manage those campaigns by using key performance indicators (KPIs). With a few simple numbers, you can compare campaigns against each other; you can drop the unprofitable campaigns, and you can increase the ones that produce profits.<br /> <br /> Digitized media give the consumer a high degree of choice, which creates thousands of channels. Digital tools also allow the marketer to create and manage thousands of campaigns, each tailored and personalized to those channels.<br /> <br /> Digitization of marketing presents opportunities for marketers. With analytics for better decision-making, marketers can grow a company’s sales. They can also use analytics to prove their work. This moves the emphasis from branding-based marketing to performance-based marketing—namely, sales-based marketing. This means marketers can demand additional compensation such as bonus and commissions, similar to sales people.<br /> <br /> <div style="text-align: center;"> <span style="font-size: x-large;">What We Can Learn from Offline Marketing</span></div> <div style="text-align: center;"> <br /></div> Many of the basic ideas in marketing were developed by offline marketers. Marketing started in newspapers in the 1800s. In the twentieth-century, radio and TV were added. Marketers used direct marketing, database marketing, profiling, clustering, and segmentation. They qualified prospects and leads to make sales. For example, supermarkets developed inventory and sales tracking systems. At first, coupons were recorded by hand. As supermarkets computerized in the 70s and 80s, information was gathered at the point of purchase by an electronic device that read a coded ticket on the product. This recorded the product SKU, price, and amount. If customers used a loyalty card or credit card, the supermarket assigned a unique identifier to each customer. They learned customer preferences and built a large pool of data to extrapolate buying patterns. Supermarkets also used this data to print store receipts with coupon offers to sell related products, to repeat sales, or to sell new items. The data were also used for marketing decisions in advertising<br /> Dollars, advertisement placement, inventory count, amount of shelf space, pricing, order placement, and product delivery. By combining scanner data with consumer interviews, supermarkets could calculate customer lifetime value (LTV).<br /> <br /> In contrast, web marketing, which started with the dot-comes in the mid-90s, was often done by young computer people without experience in traditional Marketing. In furious (and often destructive) evolution, web designers and web marketers tried many new things, such as banner ads, bulk e-mail, portals, advertising in search engines, and so on. Phases and fads were often measured in months. At the time, traditional marketing and web marketing didn’t seem related because the underlying technologies were so different.<br /> <br /> In the last few years, offline and online marketing have begun to converge. Tools for online marketing are being applied to offline marketing. Ideas and processes from offline marketing are being added to the online market. With analytics, we can now track marketing down to the individual customer and sale, which means marketing is turning into sales. Digitized marketing is changing the nature of marketing.<br /> <br /> In the 1960s, a U.S. An advertiser could show four TV ads on two nights to reach 90% of the U.S. Audience. Advertisers quickly learned they could show a TV commercial simultaneously on the three networks, so no matter where the viewer turned, they had to see the commercial. Every consumer had to pass through this TV road block.<br /> <br /> To get the same 90% reach of the 1960s, it now takes 85 TV ads. There are now thousands of cable TV channels, newspapers, radio stations, billboards, and other ad formats, plus some ten billion pages on the Web.<br /> Digitization changes both sides of a medium:<br /> <br /> <br /> <ul> <li>Digital technology offers consumers countless choices, so they consume media in literally thousands of forms. For example, when music is digitized, it can be heard on MP3 or iPod players. They can create their personal radio stations at Pandora.com. By digitizing news and using an RSS reader, they can easily scan dozens of newspapers each day. The Web allows them to visit companies anonymously, which puts them in charge of the media. Because there are thousands of free alternatives, media channels can’t charge the customers (they can always find it free elsewhere). So the only way to monetize media is through advertising.</li> </ul> <ul> <li>On the other side of the coin, marketers can use digital tools to manage ad campaigns into those myriad channels. Digital tools allow segmentation, so the markets can target specific audiences. Campaign management tools let the marketer create ads and manage dozens of placements. These tools also contain rules that trigger on certain conditions, which means marketing goes from a few campaigns per year to literally thousands of campaigns simultaneously.</li> </ul> <div> <div> The biggest benefit of digital media delivery is in advertising. Most media earn their money by displaying advertising. The bulk of newspaper and magazine revenues is based on advertising, not subscriptions. TV and radio are based entirely on advertising. By improving the ability to display advertising, the media channels can either earn more money or simply stay in business.</div> </div> <div> <br /></div> <div> <div> Web marketing itself is evolving. Several years ago, SEO and PPC were the main issues in search marketing. Tracking was done with web stats packages that simply read the server log files to report the total number</div> <div> <span class="GINGER_SOFATWARE_correct" ginger_sofatware_markguid="c0b4ff66-764a-4f0f-88fa-f90260e9300b" ginger_sofatware_uiphraseguid="892de0db-97af-4de3-b914-3b5456895466" grcontextid="of:0">of</span> visitors, number of viewed pages, time-on-page, and other basic data. PPC was trackable because Google included simple reporting tools. SEO for the most part was untraceable, and many assumed it was a form of public relations (PR).</div> </div> <div> <br /></div> <div> <div> Today, this model has flipped around. Analytics is now the main issue. Digital media send data to the analytics. This includes PPC (Yahoo!, Google, Microsoft), SEO, banner ads, bulk e-mail, and so on. The traditional media (radio, TV, and print) have been digitized and added into the data stream. All of these marketing channel feed data into analytics.</div> </div> <div> <br /></div> <div> <div> Analytics are used to study and manage these channels. The various digital campaigns feed data into the analytics tool. Analytics can show and compare the results of a campaign: where the converting traffic came from, how much it cost per lead, how much it cost per sale, the value per visitor, and so on. Because analytics can compare campaigns, analytics are turning into a business tool to manage channels on the basis of your business goals and results. We use analytics to answer two questions: What is going on? What can we do about it? You decrease (or shut down) the campaigns that don’t perform. You increase the campaigns that produce profits.</div> </div> <div class="separator" style="clear: both; text-align: center;"> </div> <div class="separator" style="clear: both; text-align: center;"> <img border="0" src="https://blogger.googleusercontent.com/img/b/R29vZ2xl/AVvXsEhKr_7N7R7ywirBfcwINpAxRj-vvKCWZuDWV6wHuf-V_6cYVceWOqGKjWARp_pVika8JDsV0mYLxbqnPaYzfbYA7Fd8hs7NfVXWQ1nFyFJupmZm4Sr2NFDQx3nDUcOsEtVh77GKi2hzVjfI/s1600/Untitled-1+copy.png" /></div> <div> <br /></div> <div class="separator" style="clear: both; text-align: center;"> <br /></div> <div class="separator" style="clear: both; text-align: left;"> <br /></div> <div style="text-align: center;"> <span style="font-size: large;"><b>Google’s Role in the Digitization of Analog Media</b></span></div> <div style="text-align: center;"> <br /></div> <div style="text-align: left;"> <div> The most significant driver of this revolution in digital marketing has been Google. Although other companies invented PPC and analytics, Google popularized these tools. Google AdWords was easy to use and it worked better than the other services, so hundreds of thousands of advertisers used it for their campaigns. The tool allowed advertisers to pay only if someone clicked on the ad, and the tool reported the cost-per-click down to the penny. As a result, advertisers learned to manage campaigns by the numbers. They learned marketing could be trackable.</div> <div> <br /></div> <div> <div> By 2007, Google reached the limits of PPC. With close to 90% market share, there isn’t much more growth for Google in online marketing. So Google began to expand into other media markets. They developed tools</div> <div> similar to AdWords that let you place advertising in AM/FM radio. You select a radio station in a city, you upload a sound clip, you place a bid, and your ad plays on AM radio. With Google’s bulk purchase of radio ad minutes, you can place ads on the radio for as little as $2.14 per ad play.</div> </div> <div> <br /></div> <div> <div> Through Google, you can also place ads in TV. This includes hundreds of video channels, such as CNN, MSNBC, and Animal Planet. You upload a video clip, select the markets, place the bids, and your ad campaign is on TV. Google is also going after the newspaper market. Through Google’s tools, you can place ads in hundreds of newspapers, including The New York Times and newspapers in smaller cities. Google is also rolling out tools for advertising on mobile devices, such as cell phones and PDAs. These new tools will change the old media.</div> </div> <div> <br /></div> <div> <div> Google has also added an analytics package to help advertisers study and manage the results. Marketing now wants more tools. They want to go further into the data. This includes enterprise-level analytics, automated marketing rules, business intelligence, data mining, predictive modeling, and so on. Other companies offer these advanced tools.</div> </div> <div> <br /></div> <div> <div> <span style="font-size: large;">The Limits of Traditional Media in a Fragmented Marketing World</span></div> </div> <div> <span style="font-size: large;"><br /></span></div> <div> <div> Analog media were unable to track sales with certainty. Radio, TV, and newspapers used polls, such as Nielsen rating services, to establish statistical models about their audience. By calling people or using viewer diaries, they could establish that on Monday afternoon, Channel 4 had 10,000 viewers. But this produced only aggregate numbers. The connection of views to sales couldn’t be tracked. Traditional medias had to guess at the viewer’s intent.</div> </div> <div> <br /></div> <div> <div> TV stations didn’t know if the show was being watched. They had no idea if the TVs were turned on or if people were sitting in front of them. Radio could broadcast music, but they didn’t know if people were listening at all. Newspapers could only track the sales and subscriptions. They knew they printed 100,000 copies and they knew 80,000 were delivered to homes and another 20,000 were sold at newsstands. But they had no idea if anyone actually read these. The same problem existed for magazines, mail order,</div> <div> and billboards.</div> </div> <div> <br /></div> <div> <div> The best they could do was track sales by using coupons. An advertiser places a coupon in a newspaper and by Tuesday, they know 5000 coupons were redeemed. That’s about all they can know. Another 10,000 people could have clipped out the coupon, but never came to the store. Another 20,000 people could be interested, but also didn’t come to the store. The advertiser can only track coupons that are redeemed. They can’t track other information that could improve the campaign.</div> </div> <div> <br /></div> <div style="text-align: center;"> <span style="font-size: x-large;"><b>Using Unique URLs and Tracking Codes</b></span></div> <div style="text-align: center;"> <br /></div> <div style="text-align: left;"> <div> To track traditional media such as radio or TV with digital tools, you send the visitor to a web page. In your radio or TV ad, you include a unique URL that is easy to remember and relevant to the campaign. Visitors go to their laptops or PDAs and use web browsers to reach the URL. At that web page, analytics and other tracking tools can record the visits, actions, conversions, and so on.</div> <div> <br /></div> <div> <div> If your URL is difficult to spell or remember, you can register several URLs that are easier to spell. Use the names of seasons or months (such as KoiSummer.com or KoiJuly.com) or cities and states (KoiAtlanta.com). You can use these for various campaigns. You can also use unique URLs for each media. To track the results from TV and radio, send the TV views to KoiSummer.com and the radio listeners to KoiJuly.com.</div> </div> <div> <br /></div> <div> <div> You can use unique URLs with newspaper classified ads, TV commercials, radio commercials, billboards, direct mail, magazine coupons, bumper stickers, and so on. Any form of advertising can display a URL.</div> <div> You can even use unique URLs on the Goodyear blimp and track the visits and sales at the website.</div> </div> <div> <br /></div> <div> <div> An additional step is to use 301-redirects, which redirect the visitor from a URL to another website. If you don’t want to build several websites, you can set up the unique URLs and use 301-redirects (a few lines of code at the server) to send the visitors to your main website.</div> </div> </div> </div>

SEM Tutorial Part 1 ( Integrated Marketing )

 Integrated Marketing In this book, we will show that offline and online media are converging into digitized media. The ability of analy...

Read more »