Lairig Marketing

Insider’s View: Lining Google’s Pockets

Piling on to yesterday’s rant about Google search, here’s a personal look at where Google makes 97% of its money – paid search – the majority of it from the shallow coffers of small businesses and organizations.

For roughly four years now, I’ve been the Google “AdWords guy” for a nonprofit. There never seems to be enough time to launch a proper Facebook or Twitter campaign to let people know of our periodic events, so, like many small businesses, we rely on AdWords to drive people to our tiny website.

So, here we are on Rosh Hashanah eve, with an offer of a free dinner and service. In Manhattan. We started our paid search campaign less than a week ago. Since the expense comes from my shrinking bank balance, I minimize bids and daily totals. Expectations couldn’t be lower.

Yet, within a day, our little scoreboard shows that we are showing up! Hundreds of impressions! And even though Google “suggests” keyword prices double what we are bidding, we rank in the top four.

Then the “clicks” come through. Amazingly, they are always 2%. We get 2% click-thru on “Rosh Hashanah,” where our ad has served up 38,806 times. We also get 2% for the alternate spelling (“Hashana”), for which only 2948 impressions have been delivered.

Almost all of our dozen well-performing keywords come in at 2%. Strange coincidence.

But what really counts are what your site visitors do when they click through to your site. We have 849 supposed visitors via AdWords. My credit card is looking at a hit of $269.51. Number of dinner reservations called in so far? Zero.

[Speaking of the High Holy Days, we’ll not post again until next Monday. This will give Google a chance to catch up on its indexing.]

Our silly little website provider’s silly little analytics package doesn’t confirm anywhere near that much site activity. A rational person would halt the campaign. But this is the big day, when thousands of people who have waited this long to finalize plans will search Google for some Rosh Hashanah event advice.

We have no choice.

I expect we will “get” 400 “clicks” today alone. Google has now doubled its suggested price for “Rosh Hashanah” to $1.75, four times our current bid. We will be $500+ in, with most likely zero ROI.

Not that every outcome for all AdWords users is this bad, nor that our website is any good, etc. etc., but it seems easy to figure out how Google can amass $30 billion. Just take 5 million small businesses who are able to say, “what the hell, it’s only $500, what have we got to lose?” and you’ve tallied $2.5 billion.

Paid search is like gambling. You know you should be doing something else with your time, that the whole experience makes you feel a little dirty, that the house is stacked against you, and that you’re not going to win. But you place your bet anyway.

Another form of digital addiction.

A Challenge To SEO Experts Everywhere

Another sign of our strange world – there is MORE THAN ONE major online publication for the search industry. Thousands of people visit sites like Search Engine Land, Search Engine Watch, and Batelle Media EVERY SINGLE DAY for reasons that are unclear to me.

Here’s all you need to know about search engines:

• Start and end with Google.
• Google sees what everyone has recorded online.
• Google ranks all that content by keywords.

That is all we really know.

Yet every day, nearly 15 years after Google launched, you will find approximately 2,471 online articles from the three sites noted above plus a bunch more, claiming to tell you how to beat everyone else at Google’s game.

Yes, you alone can rise to the top of page one’s search results for ANY KEYWORD YOU WANT as long as you follow these “EIGHT TIPS TO GREAT SEO.”

The same article, over and over and over, dying to be awarded top spot for a search on “best SEO tips.”

Not a single one of these so-called search experts has any idea what to say, though, when Google doesn’t quite work the way it is supposed to. I shall attempt to prove this by putting out an open call to “SEO experts” everywhere: Solve my Google search problem.

After the recent Panda transition, a debacle during which Lairig Marketing was not indexed for a full month, this blog was indexed daily, both on Google’s Web and Blog search tabs. Then, mysteriously – which is really a redundant word when referring to anything Google – about a month ago, this blog was indexed only once a week on Blog search.

Yet it was indexed DAILY on Google’s Web search. Whaaaaa?

Until this week. Now, Lairig Marketing is indexed “whenever” Google feels like it, in both Web and Blog search results. Maybe every four days, maybe every five. Who knows? Who cares?

There isn’t an SEO “expert” alive who (a) knows these types of incidents even exist, and (b) would have the first f&cking HELPFUL idea on how to solve for it.

My challenge is a rhetorical one, of course. Since this post won’t be indexed, it can’t be found.

But you can bet your bottom keyword that as we speak, thousands of eager search engine beavers are lapping up another “What You Didn’t Know About SEO” post.

A Smartphone Debate That’s Not Too Smart

Nothing will fill up the comments section of an article or blog post faster than a comparison of smartphone operating systems. At least 75% of typical Americans would have no idea what that first sentence means.

Yet a smartphone’s operating system has become a battleground of words. Apple iOS fanboys against Windows Phone 7 defenders versus Android geeks. If you were to read their arguments, you’d be convinced that your garden variety smartphone buyer bases his or her ultimate selection on the software dimension only.

What world is that?

The well-known research firm NPD triggered another such outburst last week. The excellent media site Paid Content highlighted NPD’s study of consumer sentiment toward smartphones:

“Android also scores as the most ‘preferred operating system’ among current smartphone owners and those who intend to buy a smartphone…[W]hen all mobile users who either owned a smartphone or intended to purchase one were asked about what kinds of devices they want to buy next, 44%...said that they were considering Windows Phone 7 devices..”

We can only assume this was multiple choice. If the question was open-ended, more than 44% of consumers would have had to leave it blank.

The smartphone decision process goes like this, in this order:

• Do I want an iPhone?
• If not, which type of handset do I want? (Samsung, HTC, etc.)
• Which carrier has the most attractive data plan pricing? (AT&T, Verizon, etc.)
• Which one has the coolest apps?
• Buy phone

Did you see “I will make my decision based on the operating software of the phone” in that list?

We don’t know, and we don’t care. Go ask five iPhone users right now – RIGHT NOW – the name of the operating system their phone is using. I bet at least three of them say “Apple.”

The media, trade industry and “coastal” know-it-alls are distracting us with a side argument – can Google beat Apple, and can Microsoft make a valiant comeback?

Ironic, isn’t it, that consumers will decide this debate without having any idea what these tools are fighting about.

Friday Fast Four: Public Hangings…And More

Senior Executive Brand Value Falling Faster Than The Dow
There are so many business titans being slayed these past few weeks, we can’t keep up. But you’ll get to the top of our editorial calendar if you publicly throw a senior suit under the bus, hit reverse, and drive over him again.

The Sara Lee board recently convinced a chap named CJ Fraleigh to “resign” rather than be “fired.” No big deal there. But how’s this for public humiliation:

"…the company needs a more accelerated, more focused approach on bringing innovation to the marketplace in a very fast manner…''

Slow and woolly. Yet, he’ll still get a job somewhere else, while millions of others stand idle.

More Self-Checkout Checking Out
We told you many months ago that this grocery “self-checkout” phenomenon wasn’t going to make it to The Tipping Point.

Our friends at Big Y, who we highlighted here for a novel approach to loyalty, just ended its trial.

"After extensive research, Big Y has concluded that these self-checkout lanes not only DO NOT save customers time, but usually take them even MORE TIME…”

Face it – the cashier can tell if that head of lettuce in your cart is red leaf or romaine long before you can.

The Gilt Trip Continues
As the “daily deals” phenomenon continues to twist in hurricane force winds, the one we told you about for upscale cheapskates keeps piling on business extensions in hopes of someday seeing revenue outpace expenses.

The Gilt Groupe’s (add the last “e” for “eeeek”) just launched a Kids & Family deals subbrand. I have no idea what Baby Body Boot Camp or Instituto Cervantes are, but they sound great when you put “25% off admission” in front of them.

Just like any product does.

The Return of…From The Larry King Files: Is It Me Or…?
How is it that Kantar Media can update its 2011 forecast of advertising spending every two months, and the trade press doesn’t ask: “How is this still a ‘forecast’?”

Rest assured, Kantar will have its 2011 forecast looking tight by the time it releases its December update.

Mayor Koch Moment #5 – How’m I Doin’?

Way behind on scoring our December 2010 predictions for 2011. If you’re keeping score at home, here’s how Lairig Marketing has done so far:

January: Double-digit gains in holiday ecommerce = YES
February: Resurgence of TV advertising = YES
March: The rise of small-bank marketing = NO
April: Increased increases in mobile ad forecasts = NO

Unfortunately, we keep our losing streak going for the May 2011 prediction. Here’s what we said back in December:

“…an upwardly revised forecast comes out for media spending, this time for digital out of home. However, unlike for mobile advertising, no one notices because DOOH is still seen by most of the marketing world as the drunk, gay uncle at Thanksgiving.”

The only upwardly revised forecast this year has been for something else digital, the only digital any trade journal or blog wants to talk about – online advertising. How strange, when the growth rate for DOOH – the “D” STANDS FOR” DIGITAL,” folks – is just as high as that for online advertising.

So we are going to take half a point for this one. Because no one noticed. DOOH is still your gay uncle.

Here are some key story extracts from this year that NO ONE is reading:

Global digital-out-of-home advertising revenue, which climbed 16.3% from $5.56 billion in 2009 to $6.47 billion in 2010, is expected to climb another 16.9% to $7.56 billion in 2011.

Fox Sports South started incorporating live-streaming data on 10 digital billboards in Atlanta…sports scores will run on 40-foot billboards…CBS, Clear Channel, Lamar Advertising and Olympus Media are participating.

U.S.-headquartered Planar…saw sales of digital-signage products rise 68% year-on-year in the second quarter of 2011.

Preventable, a Canadian non-profit, together with the BCAA Road Safety Foundation, is setting up mobile digital billboards near schools that photograph speeding cars and post their photos on the billboard with the message "Before you rush through here, have a word with yourself." It is the first such road safety digital billboard of its kind in North America.

Digital location-based video ad exposures are seeing marked growth, according to The Nielsen Company’s Fourth Screen Network Audience Report. In the last quarter of 2010, the “average minute audience” for adults 18+ across 12 participating location-based networks was up nearly 250 percent. For Q4 2010, that translates to more than 500 million gross minute exposures per month.

A survey of 1,000 strategic media planners released Tuesday by the Digital Place-based Advertising Association found that 86.3% of the respondents plan to include digital place-based media in their 2012 plans, up from 65.3% in 2010.

At least someone in marketing is paying attention.

Netflix: Two Brands Are Lesser Than One

We didn’t plan on writing about Netflix again, after our post three days ago. But loyal Lairig Marketing reader Denis wrote, curious about the naming decision Netflix made. “Why not just call them Netflix Streaming and Netflix DVD?” Denis asked.

Excellent question. And not one you will see addressed anywhere else. The articles are already stacking up about the “PR debacle,” criticizing CEO Reed Hastings’s public apology. A much bigger issue is what the new brand-naming convention means to Netflix’s future. So, bravo to Denis for asking.

Netflix would have done what Denis suggested if it had wanted to create a strong “branded house,” like our friends at Virgin. But Hastings’s letter is clear, almost strident, in stating the company sees no synergies at all between a DVD business and a streaming one: “that need to be marketed differently, and we need to let each grow and operate independently.”

The die was already cast, then, for an act of brand suicide. The business (not brand) names doled out were just additional blocks of concrete tied around the legs, to ensure drowning.

The logic to call streaming “Netflix” makes sense from a business perspective. But not from a marketing one. Now, 20-million-plus subscribers need to be re-educated about TWO brands, versus one. Hundreds of thousands of customer service hours squandered, needlessly. So much for being worried about “cost structure.”

But there can only be one reason to take “Netflix” away from the DVD business and give it a name that three monkeys and one typewriter could have outdone, a name illogical since streaming is “Qwikster” than the post office: the DVD business is going to be spun off or sold off.

Hastings and team were able to cut the Netflix stock price in half. With this branding decision, they’ve outdone themselves, cutting the business to ribbons.

Hulu, Amazon, Blockbuster, et al. must all be in a state of shock, in disbelief that Netflix handed them this gift. Which one of them will be “Qwikest” to pounce?

Target: Hit Or Miss-oni? (Part 2 Of 2)

In Part 1 of our look at Target’s Missoni “Mess-oni,” we entertained the thought that perhaps the merchandise group underestimated demand. An honest mistake.

Today, we consider a sinister and manipulative motive – namely, that Target intended for things to go exactly as they did. That the aim was to generate a ton of free publicity, as well as positive word-of-mouth from women who were able to zig before the inventory zagged.

Buying into this second theory would imply that we believe Target is just as dumb as theory #1’s dumb forecaster. Here are a few reasons why:

Too Much Investment
Target spent well north of seven figures to gin up the bloggers and fashionistas. It certainly dropped a pretty penny on its Fashion Week pop-up store. Why throw it away in one day?

Too Much Downtime
Anyone trying to use target.com on that fateful day, whether for Missoni goods or not, was shut out. That is about as logical as cutting off one leg to lose weight so that you could outrun a bear. Oops.

Too Much New-Customer Dissonance
If part of the strategy was to attract new customers, then giving them a shopping experience completely at odds with Target’s mission statement makes no sense at all.

Too Much Existing-Customer Frustration
Imagine how loyal Target customers must have felt watching the riff raff piling their carts to the ceiling hours before putting the bounty up for sale on eBay.

On paper, then, it doesn’t seem realistic to think this is exactly what Target wanted. But the stiff, corporate-sounding non-apology leads us to believe running out of inventory early was definitely a goal, although perhaps for day 20 of 40, not day 1 of 40. So, there was indeed a forecasting error made, after all.

It appears, however, that little damage was done. Check the “Top 5 Mommy Blogs” and you won’t find a single mention of Target. This time, anyway.

Target just got away with murder. Did it learn any lessons? Or will it turn into a serial killer?

Target: Hit Or Miss-oni? (Part 1 Of 2)

Today’s trivia: Kmart, Target, and Walmart were all launched in 1962. Of the three, Target has been the most successful in becoming more than simply a discount store. One of many ways it has differentiated itself is through design.

Part of that has to do with how Target lays out its stores and shopping experience (making the inside of a Walmart look like a third-world country). The other is its singularly successful approach to co-opting name-brand product designers.

With excellent execution (and marketing, I might add), Target’s target, if you will, has become a slightly more upscale, more affluent woman. The continual introduction of top designers across just about every product category entices women on their way to Macy’s to at least poke their head into a Target store.

So what was last week’s “Missoni thing” all about?

Rather than a single-category endeavor, the Missoni partnership put its so-called “zigzag pattern” across nearly every product imaginable. Price points were extremely low – two digits versus Missoni’s usual neighborhood of four.

As you know, the stores were overrun by Missoni collectors. Target’s website crashed. And a complementary Target/Missoni pop-up store at Fashion Week in New York was cleaned out in hours.

Let the debate begin: Did Target make an honest forecasting mistake, or was this intentional, to make current and future customers forget they ever heard of Groupon?

In Part 1 today, let’s consider the argument that this was a serious forecasting mistake (like the kind our friends at Netflix made last week).

It is inconceivable that, over all these many years since 1962, Target hasn’t perfected the art of forecasting demand for new products. Since Missoni products are readily available elsewhere, a data wonk should have been able to run some neat price elasticity curves.

If he did, someone made an egregious error in overruling him. The Missoni prices were too low. In one horrible decision, Target has become the underground railroad to eBay for Missoni and all future design partnerships like it.

In Part 2 tomorrow, we examine why Target would intentionally create a stampede.

Zigzag, indeed.

Netflix Revised Subscriber Guidance: Netflinch

News so important it interrupts our normally scheduled Friday Fast Four. So important that we’ve upped our word count by 100.

First, we shall break our arm patting our back. Our prediction for this year’s July back in December 2010:

“The financial press is awash in headlines like ‘Netflix: The Best Short Ever?’…”

On July 13th (!!!) Netflix hit its all-time high, just short of $300. Since then it has slid, tripped and finally tumbled to $170. For those that shorted Netflix on the right day, you just made a return of 43%. You can thank us later.

Now to a bit of analysis about Netflix that you will not read anywhere else.

The blogo-rhea is flooded with knee-jerk “examination” of yesterday’s terse but honest guidance from Netflix management. Even Wall Street followed suit (!!!), cutting the share price by nearly 20%. All of this driven by a 2.7% reduction in forecasted subscriber count (and not an “actual” loss as some dopes are reporting).

Because almost all of Netflix’s reduced guidance is from DVD-only subs, here is the typical reaction by bloggers, many who should know better: “Netflix raised its prices too much.”

Oh dear.

Here is what you should really think about. Someone in the corporate strategy department at Netflix fuxed up the forecast. Here are two inputs he or she messed up, and you can also take these as learnings based on the revised guidance.

1) The 800,000 subscriber overestimate in DVD-only means this (and sorry for the caps, but we don’t want skimmers to miss it):

NOT AS MANY HOUSEHOLDS ARE PREPARED TO GO OVER-THE-TOP AS EVERY PUNDIT WITH SIX “CONNECTED” DEVICES BELIEVES.

There are simply too many households without the wherewithal – money, equipment, or knowledge – to watch “TV” on a laptop and/or hook a laptop to the crappy old TV set they own.

Now, as a set-up to the Netflix forecasting mistake/learning #2. Where did those 800,000 go? Notice the Netflix streaming number was also reduced, by 200,000. WHERE DID THE 800,000 GO?

2) The drop in Netflix’s streaming-subscriber guidance means this:

NETFLIX IS MAINLY A SUPPLEMENT TO PAY TV. NOT A REPLACEMENT.

The 800,000 will simply rely on their CURRENT cable or satellite provider for video entertainment. The new, much higher price from Netflix adds 20% or more to the monthly household “TV” outlay.

These households just don’t have the funds for it. Now, and for a long time (see long-term unemployed; and U.S. poverty rate).

Only loyal Lairig Marketing readers will see this Netflix analysis of course. The same ones who could have told their neighbors to get out of NFLX stock in late June or early July.

Meantime, let’s make another prediction: Deep in the basement at Netflix headquarters, a corporate strategist is about to get “streamed.”

In Auto Sales, Timing Is Everything

Ah, the days when the U.S. auto industry used to pound out 16 million units in sales per year. That, of course, changed in 2008. The Great Recession lowered the boom, dropping the sales pace under 10 million.

Since then, with federal intervention, management changes, a few corporate overhauls (see Chrysler), and even some interesting Super Bowl advertising, the industry has come crawling back. The traditional “Big 3” have even reclaimed some share from Toyota and Honda (see earthquake and sticky mats).

Because the economy is as sticky as those Toyota floor mats, however, the annual sales rate is a bit stuck around 12 million. Bad news for the industry, right? Yes, if you only look at new-car sales.

There is another segment of the auto industry that gets little press. Used cars. Which sell at a rate of 40-million-plus per year. And the used-car sector is looking at even better news, according to Kelly Blue Book research.

Used-car prices are at historic highs, and Kelly expects them to stay high for two or three more years (which means, of course, they won’t, but I digress). Since the bottom of 2008, average resale values have come back up by nearly 50%. I don’t believe new cars have been as fortunate in that statistic.

So, this is partly a story of being in the right subsector of an industry at the right time. If timing were the only part, then we would act like the Wall Street analysts who are currently downgrading the stock of CarMax, the biggest U.S. used-car dealer and who did exactly as we predicted in our Super Bowl advertising preview earlier this year, by the way.

CarMax reports quarterly earnings next week. It will be interesting to see how Wall Street reacts to another excellent quarter. As marketers, though, it will be more interesting to divine what management says about the future, and if marketing will play a role.

Can CarMax and its brethren such as AutoZone, body shops, tire replacers and oil changers use marketing to break the “timing” cycle? Can they be in the right place, all the time?