So I was standing next to this friend of mine the other night when he casually mentioned that he might be joining the board of Barnes & Noble. My first reaction. Dude, the Nook has no chance. No one talks about the Nook. No one uses the Nook. I sit in a Barnes & Noble Starbucks quite a few days a week and I have never ever seen anyone even pause to look at the huge Nook display at the front of the store. You have to give that thing away to get anyone to use it. It's the only hope. Quite possibly Barnes & Nobles only hope not just in the eReader market but for their survival. In ten years there are not going to be any bookstores to walk into.
Well I get up the next day find out that Barnes has broken off talks with a gentleman named Ron Burkle to expand the B&N board by three seats, and that a judge had ruled against Burkle in his attempt to increase his ownership position at B&N. Ron Burkle is seriously rich. He is in the Forbes 100. He owns an investment company called Yucaipa.
So quicker than you can say kindle Yucaipa started a proxy fight. Mike McQuary, whom I worked with for a number of years, is on Yucaipa's slate of nominees for Barnes & Noble's board of directors.
If you are ever going to read SEC filings proxy statements are the best. Proxy statements filed by a party other than the registrant are the very best. They are full of intrigue. Buried with the proxy statement is this little gem:
In Yucaipa’s view, the B&N College acquisition (Barnes and Noble purchased B&N College for $514 million. B&N College just happened to be owned by the Barnes & Noble CEO and his wife) benefitted the Riggio family but does not make strategic sense for the Company. It gave Barnes & Noble over 600 retail textbook locations and essentially doubled the Company’s exposure to a “brick and mortar” market segment most at risk to technological changes, including increasing online textbook sales and digital textbook downloads. Yucaipa believes this capital could have been better and more timely utilized to support the Company’s digital media and e-books strategy.
Yucaipa understands the need to aggressively go after the e-books market. And my bet is that McQuary is thinking the same way I am about what to do. Amazon wants to view Kindle as a business that will stand on its own. Apple is proud of the iPad.
Barnes & Noble has got to get price/promotionally aggressive on the Nook. Is anybody asking for a Nook this Christmas? No. Change that by giving the things away on Black Friday with the purchase of x number of books. Treat the Nook cost as a marketing customer acquisition expense. With a small and shrinking market share a razor and blades strategy is B&N's only chance in the digital media and e-book world.
If they don't use it Barnes and Noble becomes Tower Records.
ATDC is seeking an online marketing summer intern. The candidate should be willing to demonstrate a high level of resourcefulness and a willingness to learn online marketing skills.
This 12-week position is designed to offer an individual a range of practical experience in online marketing including social media. ATDC is aggressive in its use of social media and is looking for a young talent who can work within our culture as an integral part of our organization. The candidate should feel comfortable working in an open and unstructured environment.
ATDC was recently recognized by Forbes as one of the top technology incubators changing the world. It is located at Technology Square in Midtown, the heart of the Atlanta startup community. This position includes a $500 monthly stipend. You will be expected to work in the office from 8am-12pm Monday through Friday with some flexibility.
Interested candidates should contact me directly. Doing so in an appropriate and creative way will result in a conversation.
So Dave Williams of BLiNQ went out to the f8 show in San Francisco and realized that Atlanta needs a group to share best practices related to anything Facebook. So, he pinged me about ATDC sponsoring such a group and low and behold it is so. Should be a great group for developers working on the Facebook platform and companies looking toward Facebook for marketing purposes. Meetings will be held held the 1st Tuesday of every month at 6:30pm. Free pizza and beverages, will be served compliments of BLiNQ. You can join the meetup group here.
This is a guest post by Charles Lumpkin, the principal of Charles Lumpkin + Partners. Charles and his firm have been entrusted with million dollar budgets by
companies who demand disciplined and measurable Internet
marketing. He and his team provide Internet marketing strategy and
services, usually on a pay-for-performance basis to companies of all
sizes. Charles is a sponsor of FoG.
Let me offer some advice. If you want your business to survive – know these two things; how much a customer is worth to you and how much you can afford to get one. As you go about your marketing efforts, measurement is key.
Find out your CPA (Cost Per Acquisition)
Without a doubt the most important questions that you must answer are the rate and cost of customer acquisition for your business. You get this wrong, and you are toast. I know of no more efficient way to fold up shop. As a startup you’ve got to figure out (and quickly) how much it will cost you to bring on new customers.
So, fearless leader, you’ve got to put your marketing plan to a test as soon as you possibly can; driving toward measuring and reducing that all important CPA. If you need help with this calculation contact me and we can walk through it for your company. Regardless, take the time to determine your CPA as soon as you can.
Start ratcheting that thing down
Now that you know the number your job is to apply some good ole marketing elbow grease, how does one do this? Let me introduce you to Scientific Advertising. This book is 87 years old and its messages are as important today as they were when it was written. Scientific Advertising, by Claude Hopkins, a relentless ad man from early last century, is considered a classic and a must read by advertising leaders. David Ogilvy, often called the “father of advertising”, said about Claude’s little book: "Nobody, at any level, should be allowed to have anything to do with advertising until he has read this book seven times. It changed the course of my life"
So science, really? No, seriously, every time you run an ad you should be running a controlled experiment. Take your best effort to date and create at least one variation of it. Test them head to head, and then retest them. The winner becomes your new “Control”. And you never stop. That’s right, as long as you are running your business; there is no rest for the weary. Innovate or perish!
Different Media – Same Methods
The wisdom put forth in this old tome, is applied to the media that were popular in the day, primarily print. Believe it or not, these are the same principals the best and the brightest follow to this day in online marketing. Follow Claude’s advice and you will find that your will soon be getting way more bang for your online advertising buck.
There’s no school like old school
In the old days they tracked advertising with printed source codes on coupons, in mailers and catalogs. When you ordered your item, advertisers knew which ad drove the sale. Pretty neat stuff right? Now this is akin to running a Google ad and watching what conversion activity happens in your analytics package. You might vary the copy and determine which ad pulls more and you are running an experiment.
The Split Test
The simplest form of a scientific test is the split test. Split your audience using a random or controlled sampling method, serve up variations of your ad to the samples and compare your results.
From Scientific Advertising:
One ad is compared with another, one method with another. Headlines, settings, sizes, arguments and pictures are compared. To reduce the cost of results even one percent means much ….. So no guesswork is permitted. One must know what is best. Thus mail order advertising first established many of our basic laws.
Here’s a sample of variations of two versions of landing page split test:
Which wins? Test it and find out!
The More Things Change the More they Stay the Same
The media may change, measurement tools may change, but the benefit of applying solid methodology and disciple to testing, recording and sharing results is a concept that can’t be emphasized enough. Although Hopkins suggests that his contemporaries had started to get it right. I can’t help but see ourselves in these words:
The lack of those fundamentals has been the main trouble with advertising of the past. Each worker was a law to himself. All previous knowledge, all progress in the line, was a closed book to him. It was like a man trying to build a modern locomotive without first ascertaining what others had done. It was like a Columbus starting out to find an undiscovered land.
Does this sound a little like some forays into banner advertising and social media? As we rush to keep up with the technology and be everywhere at once, how well are we measuring the impact of our efforts?
A/B testing, hold-out panels, test markets are not new ideas, they are simply under utilized. A good refresher course can be found in this 87 year old book. Apply the concepts to new media, drive your CPA down and watch your profits grow.
Wrap Up
Yes we spend time updating dashboards and reviewing reports, but are we really analyzing their implications and re-crafting our communications based on them? Are we testing one ad against another? From my exposure to many companies we are not. The simple truth is that as we work to build our businesses, whether well established or still on the drawing board, the principles espoused in this book can help us minimize risk, read and leverage successes and build business plans that have a high likelihood of becoming reality.
We don’t need to set a marketing budget and guess at results. Small tests can provide the data to predict the out-come off strategies that can then be rolled out. So why not adopt the methods that will help you sleep better at night, methods that mean your business investments will carry “so little risk”. Per Claude:
Advertising, once a gamble, has thus become, under able direction, one of the safest business ventures. Certainly no other enterprise with comparable possibilities need involve so little risk.
So get crackin’. Find out your CPA and start hammering it down. Apply the principals you learn in Scientific Advertising and go kick some ass.
You can read and download Scientific Advertising in its entirety below.
David Skok, a five time startup entrepreneur turned venture capitalist at Matrix Partners recently blew into Atlanta for the DLA Venture Pipeline meeting and he blew away the crowd with his talk on "Customer Acquisition & Monetization." The presentation which is embedded below summarizes several key themes on David's blog, "for Entrepreneurs."
I have written briefly about customer acquisitions costs here before. What I have not fully explained, and what David does such a wonderful job of demystifying, is the analytical analysis and math that is a part of building a successful Internet business. Capital light not only applies to product development, it applies to marketing. Entrepreneurs must focus on making it easy for their product to function as a sales force and for customers to sell themselves.
In his presentation and on his blog David has provided a roadmap for not only reducing customer acquisition costs but for building a marketing machine. Entrepreneurs would be wise to follow the path.
I am killing the ATDC marketing circle and Internet circle. These were small monthly gatherings of startup types that were interested in either topic. I will continue to support Brandy Nagel who spearheaded the marketing circle effort.
If anyone wants to engage with me about either subject hit the BookNow button in the right side bar and make yourself an appointment.
Update: The marketing circle lives on. Brandy has moved the event to Friday mornings from 8:30 - 10:30. You can register here.
I have this theory. It's most likely not going to be real popular. But I have this theory. It's a theory about how social media marketing is going to evolve. The theory goes a little bit like this.
Social media is small part of the interactive marketing pie. It's growing fast. But right now it is small. In it's infancy even. A mere $700 million sliver of a $25 billion dollar pie. If you go back and look at Internet ad spending history the entire category was $600 million in 1997. In terms of social media spend it is 1997.
Think about 1997 and interactive marketing. DoubleClick was hot. Yahoo! was hot. Pointcast was hot. So hot that News Corp offered $450 million to buy them.
Google was just a sparkle in Larry's and Sergey's eyes. That $600 in
revenue was nearly all being spent on interactive display advertising. Advertising that was chasing online eyeballs. Social media marketing is a lot like interactive marketing in 1997 from a market development point of view as well. Conversations, engagement, followers, and fans are the eyeballs of yesteryear.
Take a gander at Forrester's interactive advertising spend projections below. Notice anything interesting about it?
I do.
Look at the more mature categories of email marketing, display advertising, and search marketing. It's obvious that search marketing dominates. It dominates because of its direct response nature. What might not be quite so obvious, because you need to dig a little deeper into the underlying numbers, is that a steady state of 70% of interactive marketing spending is being used for direct marketing activities.
My theory on social media marketing is that it is going to mature to a state very similar to other online marketing categories. Most of the growth projected for the social media category is going to be spent on direct response marketing activities. The entire reason interactive marketing has grown is it is more measurable, less expensive, and more revenue focused than traditional media. If CMOs are going to shift their budgets into social they are going to demand the same type of performance.
It's really no surprise that marketers want to invest in activities that are both efficient and measurable. But there is another side of the coin, the side of the social media user. The common wisdom is that social media users don't want to be sold, they want deeper engagement. But no one wants to "be sold" in any medium from mass market advertising to one on one sales. People want to buy.
Regardless, eMarketer recently highlighted a study by Marketing Sherpa that addressed this issue.
Why many users are indeed interested in deeper engagement, the number one motivation why users followed/friended companies was to learn about specials and sales. This supported an earlier study by Razorfish.
Social media users want deals. If marketers are going to be successful they are going to have to give them deals.
Based on their behavior interactive marketers want efficient measurable revenue focused opportunities. Social media users want deals. But them together and you have social media looking a lot like other more mature interactive marketing mediums. Or so my theory goes. But is it just a theory.
Very interested in what the smart marketers and social media users that comprise the readership of FoG have to say about the matter.
So I was having lunch with an entrepreneur that I respect recently. We started talking about email marketing. The conversation went something like this.
Entrepreneur: How do you feel about email marketing.
Lance: What do you mean?
E: Sending out emails.
L: Did they opt in to receive emails specifically from your company?
E: No.
L: Did they indicate in some way that they would be interested in receiving emails from your company?
E: No.
L: How did you get their names?
E: Purchased well targeted lists that have shown an interest in our category.
L: That is unsolicited email. It's spam.
E: Some marketing guy told me it was ok if it was well targeted.
L: It's spam. Don't do it.
Now I am surely not pure but if someone has not given you permission to send them an email, like double opt-in permission, don't do it. It is unsolicited email. It's spam.
My background working for an ISP and an email security may bias me quite a bit.
Today at the sold out SoCon10 I am giving the presentation you see below entitled "Measuring Social Media ROI: An ATDC Case Study."
The genesis of the presentation is twofold. First and foremost in the summer of 2009 there was a lot of talk about how you could not or should not measure the return of your social media efforts. I do not believe either to be the case. Second, Stephen Fleming become the acting director of ATDC and decided we were going to change strategic direction. He announced this at a Monday staff meeting and wanted it implemented in seven days. That time frame pretty much limited our marketing efforts to online and we exclusively relaunched via social media This provided a great opportunity to demonstrate that social media ROI could be calculated and how to go about doing it.
The opinions expressed here are mine and mine alone (with the exception of comments by others of course). They do not represent the opinion or position of any other person on entity. All postings adhere to my personal values.
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