Rajesh Jain has a comprehensive review of the recent ad:tech conference. One part of his summary points out the high ROI for online advertising versus traditional advertising:

In the US, there is a big mismatch between time spent online and ad dollars. US Consumers are now estimated to be spending over 20% of their time online, while online ad spend ($20 billion in 2007) is only 7% of the overall ad budgets. This is seen as the big opportunity to dramatically grow the size of the online ad pie. As the US economy slows, there is a feeling that advertisers will move more money to where it can give better RoI. Print and TV are the two media which will feel the impact and pain of this shift.

His post has several strategic concepts, so bookmark it so you can refer to it during strategic planning.

Posted by Cliff Allen at 07:05 AM | Permalink | Comments (0) | TrackBacks (0)

Great marketing from corporations comes from productive marketing teams that have the tools to work together no matter where they are geographically.

This means that marketing teams need the best collaboration technologies available to speed interaction.

One of the best productivity tools, Microsoft OneNote, is also one of the best collaboration tools.

I use OneNote all day on a Motion Computing Tablet PC. The slate tablet is great for marketers because we like to scribble notes, draw 2x2 matrix diagrams, and tap into mounds of marketing data during the same meeting.

I'm not anti-keyboards -- I use two keyboards with my slate -- and I use OneNote on my desktop computer, too, so OneNote isn't just for tablet users.

But I was reminded of OneNote's collaboration features by Chris Pratley's post about how it's used by teams inside Microsoft.

Take a look at the videos he links to and you'll get several ideas on how to use OneNote to make your marketing team to be more productive.

Posted by Cliff Allen at 02:43 PM | Permalink | Comments (0) | TrackBacks (0)

We all know that marketing is a process -- a never ending process of generating awareness, interest, leads and, of course, sales. Periodically we need to step back and review our online marketing strategy to make sure that our day-to-day tactics are the best uses of our resources.

Michael Ortner at Capterra has written a short, but very valuable free e-book for online marketers about the best ways to generate traffic, leads, and customers.

In short, it outlines the keys to success for any of your online marketing campaigns. Topics include: 1) Design and content tips to improve your ability to convert web visitors into leads. 2) How to accurately measure your online campaigns. 3) The importance of sales lead cultivation.

...all with a special emphasis on the business software industry.

Michael has packed a lot into 12 pages, but if your B-to-B marketing and sales operation isn't meeting it's goals take a look at page 9 for the likely solution. While his company works mainly with software companies, the situation he describes there happens at many B-to-B companies.

Posted by Cliff Allen at 01:22 PM | Permalink | Comments (0) | TrackBacks (0)

Market segmentation is a key technique in targeting marketing messages - and maximizing ROI.

And, the use of Web analytics tools, such as Google Analytics, is making segmentation more specific and more valuable.

I've written a feature article that covers the use as Web analytics tools in combination with traditional market segmentation techniques. Take a look at Segmenting Your Market with Web Analytics.

Posted by Cliff Allen at 10:24 PM | Permalink | Comments (0) | TrackBacks (0)

Many people think that marketing is marketing -- that there is one approach to marketing for whichever industry or sector you sell into.

They make the mistake of thinking that the consumer marketing done by large companies like P&G or Coke will work for entrepreneurial consumer companies.

Or, they think that the business-to-business marketing done by large companies like IBM or Johnson Controls will work for entrepreneurial B-to-B companies.

Not so. Successful entrepreneurial marketing, especially for a high-tech startup, is very different from what's done by large companies with well-recognized brands. In addition, the marketing metrics are different for high-tech startups.

I'll be speaking on marketing at Startup LA, a two-day conference on Friday, October 26th from 1pm-6:30pm and Saturday, October 27th from 9am- 4pm at UCLA Anderson School of Management. The conference is designed to help high-tech entrepreneurs with issues from business planning and raising startup capital, to marketing and operations.

An overview of the conference is on the SureToMeet local events calendar in both the Business and the Technology categories.

Posted by Cliff Allen at 09:53 AM | Permalink | Comments (0) | TrackBacks (0)

The process of converting interested Web visitors into a paying customers is a path of several steps, and it's up to us to guide prospective customers along that path.

Web analytics consultants frequently talk about using the conversion funnel to measure the last few steps of going through the shopping cart payment process. However, there are additional steps in the purchase process where the conversion funnel tool can be used.

For many years marketers have used various models to describe the changes that occur as a prospect becomes more likely to buy a product. One model is AIDA:

• Attention - Recognition of a problem or need
• Interest - Curiosity about a product's features and benefits that can meet the need
• Desire - Emotional belief that buying the product will improve life
• Action - Making the purchase (calling the 800 number, clicking the Add to Cart button, etc),

Each of these states requires the prospect to accept additional information and update their attitude toward your product. These changes represent a "conversion" to a new purchase belief.

You can increase overall performance by monitoring and improving how well these individual conversion points affect sales.

First, identify the pages where you want visitors to change their attitude from skeptical visitor to interested prospect. Then, use conversion tracking to measure the effect they have on close rates, order size, and other key performance indicators.

If these pages help increase sales, guide more visitors through them. If they don't help, have your best direct marketing copywriter update them until they do increase your site's performance.

When customers are making the decision to purchase, make sure you have whetted their interest and peaked their desire so they're ready for action.

Posted by Cliff Allen at 04:21 PM | Permalink | Comments (0) | TrackBacks (0)

I received an announcement about a Webcast that looks interesting on how marketers can work with their CFO.

The title of the presentation caught my eye:
Is Your Marketing an Expense...or an Investment - 10 Strategies for Winning Over Your CFO and other Marketing Skeptics

I'm hearing more stories about CFOs telling marketing to justify their expenses with an ROI analysis, so this Webcast looks to be exactly on target for the current economy.

The presenter is Pat LaPointe, Managing Partner at MarketingNPV. They have great articles on their site, so I expect the Webcast will be good, too.

By the way, the Webcast is sponsored by Aquent, which supplies permanent and freelance talent to marketing firms and departments, so they have an interest in marketing departments showing a high ROI.

To register for the Webcast on August 21, 2007, go to http://www.marketingpower.com/webcast391.php

Posted by Cliff Allen at 03:13 PM | Permalink | Comments (0) | TrackBacks (0)

Seth Godin talks about how difficult it is to sell advertising -- especially advertising in media that are not trackable and cannot demonstrate an ROI.

My first career was in radio and TV -- two of the most un-trackable media there are. I did what I could to fix this problem with our reach-and-frequency software, but their problem is too big for most advertisers to deal with.

Fortunately, advertisers are moving to online advertising, which is a direct marketer's dream. For example, it has become possible to connect Google AdWords placements to shopping cart sales results -- with the ROI for each ad tabulated in Google Analytics (or another Web analytics system).

When advertisers know what's working -- and what's not working -- they are more likely to buy more of what works. This means publications can spend less time trying to sell overpriced (or under-tracked) ads -- and more time creating compelling content.

It's a win for advertisers, readers, and publications.

Posted by Cliff Allen at 10:02 AM | Permalink | Comments (0) | TrackBacks (0)

Microsoft has announced their largest acquisition ever -- buying the digital advertising systems of aQuantive for $6 billion.

Most reporters were asking how this acquisition fits into Microsoft's strategy. However, a stock trader on CNBC asked Brian McAndrews, aQuantive CEO, what I thought was a more interesting question: When will all content go digital so that everyone will be a measurable viewer or reader?

McAndrews very confidently said it'll be 5-10 years.

As someone who has been in direct marketing for a long time, I only have only one thing to say: finally!

Posted by Cliff Allen at 04:38 PM | Permalink | Comments (0) | TrackBacks (0)

The goal of marketers is usually to increase revenue, so we create metrics that help us do that.

Metrics are those numbers that "per" -- like "cost per lead" and "page views per day."

Marketing Metrics Are Everywhere

There are metrics everywhere in the marketing/sales process from awareness to closing an order and servicing the customer.

We strive for increasing our clickthrough rate on e-mails, newsletters, banner ads, paid search ads, and wherever we can measure clicks.

We look for ways to increase the "open rate" for everything from e-mails and envelopes to prospects' minds.

Why? Because these metrics are highly correlated to revenue, which is what we've all been taught is our goal.

Keeping Marketing Metrics Profitable

However, there are times when increased sales causes decreased profits.

This can happen when marketers are successful in getting customers to buy a "loss-leader" product. This type of product is sometimes added to the product line for a strategic reason, such as to show the market that the company is a one-stop place to buy that category of products.

Another type of problem product is one that is profitable but not as profitable as similar products sold by the company. These sometimes start out as custom products made for a special customer, then they're added to the catalog because someone says, "We've already got the molds and jigs."

No matter how these products found their way into the product line, they can cause profit problems when marketing (and sales) succeeds at increasing revenue to improve their metrics.

While increasing revenue is good, increasing profits is better because that increases shareholder value. So, be sure the products you're promoting are profitable or support a non-financial marketing strategy.

Posted by Cliff Allen at 01:39 PM | Permalink | Comments (0) | TrackBacks (0)

The key to determining the ROI of individual marketing campaigns is tracking customer behavior in response to those marketing activities.

Ideally, you want to track every customer at every touchpoint so you can determine the response to each marketing activity -- ads, mailings, etc. Companies that sell directly to customers have the best opportunity to track their customers' behavior. When you are in direct contact with a customer it's possible to know when and how every contact occurred.

But most companies sell through their distribution channel, which makes it very hard to know how each buyer was influenced by marketing and sales activities. Also, companies that use offline advertising and public relations to promote products have a hard time knowing the impact of their ads and stories on each customer.

Traditional offline media has always presented a challenge for marketers wanting to measure the value of their marketing, but direct marketing techniques can be used to track many customers. For example, people who respond to an ad immediately can be tracked using unique toll-free telephone numbers or URLs .

But we know that exposure to a company's prior ads helped a prospective customer move toward taking action. So how do we measure those exposures?

Sometimes you can determine if a customer was in the audience that was exposed to your earlier ads.

But when you can't get media exposure data for individual customers, you can apply reach and frequency math to the demographic segment the customer is in to estimate ad exposure.

This technique isn't just for consumer companies. Reach and frequency techniques can work for B-to-B marketers, too.

Many trade publications can tell you how much overlap they have with other publications in their market. Once you know the total subscriber base in your market segment you can calculate an estimate of how many of your ads were seen by each customer in that segment.

All customer tracking techniques take work to capture data, consolidate it into customer profiles, and apply sound analytical techniques. However, when marketing resources are tight this is the best way to have the highest ROI possible.

Posted by Cliff Allen at 06:45 PM | Permalink | Comments (0) | TrackBacks (0)

My previous post on cash flow from marketing activities didn't explain which flows of cash it referred to.

Some people who talk about increasing marketing ROI are referring to increasing sales revenue. So, they're happy when they generate $2 in sales for every $1 in marketing expense. But is this a high marketing ROI when compared with a company's other investments, or is it low, or just average?

Marketing typically generates $1-$4 of sales revenue for every marketing dollar spent, so a $2 return is typical, but that still doesn't answer the question of how marketing compares with the rest of the company.

The cash flow I was referring to is the cash that's left over after paying all costs of making the product, serving the customer, and each customer's portion of the operating expenses.

In other words, an increase in net cash flow means an increase in profit - not sales revenue.

So, let's take a look at how that 2-to-1 return of sales revenue to marketing expense can compare with a company's other Investments

Here's how sales revenue is allocated at companies like IBM and P&G:

Based on marketing generating $2 of revenue per marketing dollar spent, the company will receive $0.20 - which is a return of 20%.

So, the next time your CFO questions the return on marketing, have your marketing ROI ready. It's very likely that your ROI is higher than the investments in the rest of the company!

Posted by Cliff Allen at 09:48 AM | Permalink | Comments (0) | TrackBacks (0)

A lot has been written about increasing the ROI of various marketing activities. But, one thing is usually missing from those articles and sales pitches -- explaining just how to calculate that higher marketing ROI that they talk about.

The reason they don't want to talk about how to measure marketing ROI is that it's very hard to do. But being hard is no reason to skip the rigor of actually measuring the bottom line benefit of marketing.

The reason that it's hard to measure the ROI of marketing is that unlike many financial transactions, marketing is made up of a series of non-financial "transactions" that end in a financial transaction. Yet, the purchase wouldn't have been made without all the marketing activities that occurred over the prior weeks or months.

A typical financial transaction would be to buy something today, earn the extra cash flow that it generates, then sell it in a few years.

This chart illustrates the initial outflow and the inflows over the next four years from this transaction.

Microsoft Excel calculates the return on this investment as 5% per year. If the cost of capital is anything under 5% this is a good investment.

But marketing investments are not this clear in how they contribute to cash flow. And, marketing investments usually don't result in an asset that you can count on selling in the future.


Here is what that same investment -- and same 5% annual return -- looks like when the only benefit is increased cash flow.

Since there is no asset to sell (like a building or equipment) the cash flows each year need to be much higher to pay back the investment -- plus generate an extra 5% per year of additional cash.

This means that marketing activities need to perform much better than tangible assets just to generate the same net cash to the business.

The key to using ROI to improve marketing decisions is to have accurate data on the cost to obtain each customer and how much each customer contributes to the company's bottom line.

My objective here is two-fold. First is to provide the tools and techniques needed to quantify both of these. The second is to share analytical methods that can improve the effectiveness of our marketing decisions.

Posted by Cliff Allen at 04:08 PM | Permalink | Comments (0) | TrackBacks (0)