Direct Mail – UtilitesDB

Show me the Money

Currently, looking for the money in social media marketing is like asking directions in a foreign land when you don’t speak the language and don’t know how the locals connect and communicate.

Social media is commonly defined as comprising “primarily Internet-based tools for sharing and discussing information among human beings.”

As an online marketer you want to hear about ad copy and conversions. Everyone – your audience, customers, and your employees – wants you to listen, connect, and collaborate. You want to control the conversation so people click. They want you to understand there is so much more – including profits.

Here are three models that are working and speak to business in terms it can understand – cost savings, marketing, advertising, customer service, and lead generation – as well as terms it may not yet understand like passion, heart, transparency, sharing, not controlling, and being there for your customers. These are business models that go beyond mere advertising.

Business Model 1 – Social Product Development

Why hire employees to develop new products when you can have the audience do it with you, and both of you get paid? Even better, what if you could involve all of your audience to share, participate, and spread the word, and get them paid as well?

This is the new world of virtual currency or creating value out of traditional points systems. T-shirt maker Threadless.com allows people to judge, promote, and even get their picture taken wearing a t-shirt, and rewards them with points each step of the way. Points can be redeemed for cash.

While MetaCafe and others have tried to incentivize content creators by paying them a fee based on ads, Threadless.com takes it to a new level where the creators and fans of their T-shirts can help spread the word and generate sales.

How They Do It

Designs are submitted to the community and printed by Threadless, who shares some of the revenue with the creator. Each action is tied to some form of currency; some of it is monetary, yet in social networks much of the social currency is how people view your reviews, your creativity, and support it.

By incentivizing certain actions and maintaining an active community, they unleash the genius of their audience and profi t.

Incentivize the product creators: they invite people to submit T-shirt designs. If it is selected, the person can win up to $2500, or maybe even $10,000 if it is selected one of the Best.
Pay the slogan creators: submit a slogan and win up to $200, so you don’t have to be able to draw to win.
Incentivize consumers to spread the word: Members of this social community can recommend t-shirts via email, or traditional affiliate links, and earn two credits (about $3) per sale. If they get their picture taken with their favorite T-shirt and submit it, they get one credit ($1.50). If the picture is used in the main site for promotion, they get 10 credits ($15.00). Considering t-shirts run $9-$30, that is a significant bounty for a small action.
Reward people for taking action: The key to Threadless is the fun community. Just paying people to promote and create is one thing; rewarding them for good behavior and excellence is the new way of product development.

Business Model 2 – Direct Response Media: Ads and Performance Marketing

This is the most common model in use, with businesses basically trying to fit the traditional marketing world onto social media with mixed results. When matched to the right audience, this can be very effective. Still, targeting will almost always decrease the overall size of the audience you are reaching, so numbers are not off the charts.

Direct media is the evolution of traditional direct response media (direct mail, DRTV, etc.) and Internet direct response like pay per click and affiliate programs into the social media space. The goal is to get a sale, and these folks have been posting ads, manipulating search engines, and building links.

How They Do It

Use personality to create buzz: Create buzz about product by using audio and video-driven business personalities, driving people from social media portals like Facebook and MySpace to their own sites, and even social networks, to create ongoing business.

Gary Vaynerchuk, WineLibrary.TV: Gary combines a video show about tasting wine with ongoing presence in many social networks. He drives people from these networks to his own Wine social network, Corkd.com (he bought it after being successful) and drives retail sales through WineLibrary.com, among other sites.

Gary’s personality plays against traditional wine snobbery and drives sales. Personality is essential, because in social media, how they remember you is the most important thing”and if they remember you. For retailers,this means driving repeat visits, which the video, social networking and marketing continually generate.

Develop new direct response ads: Allow people to interact, watch, and make selections within the advertising itself. Instead of an ad inciting people to click and leave the space they are at, these ads invite people to stay where they are, browse, and buy.

MyWeddingFavors.com has an affiliate program that uses video and a special video widget from Qoof.com. Affiliates place these ads in social media spaces, where videos can be played right on the page.

People can choose, watch, and explore while they are in the middle of their own social media experience. Basically the performance based marketing invites them to engage and interact with the ad, and pulls them away from what they are doing BEFORE sending them to the eventual site to buy the product.

Other tactics include:

Buying low cost advertising ($0.50 – $20 CPM) space on a variety of social media through ad networks. Ad buys are mostly based on straight ROI. Clickthroughs are very low. Branding ads are rarely successful.

Posting consistently to blogs, social bookmarking sites, video sites, and tag these posts with keywords in the title, tags, and description to drive search traffic.

Do performance marketing deals and pay others to promote and pay a bounty for a lead or sale. If the ad does not perform, no one gets paid. Lead generation is dominant here, especially to targeted audiences where it works best; because people are often more open to inquiring than to buying.

Business Model 3 – Customer Relationship Management and Employ Retention Management as Social Support Media

Many smart companies are using social media to better engage with their customers, and some to better engage with their employees. But social media canal so be used to manage customer relationships as well.The social media business model is very simple. Your content is your marketing tool. Sois your contact with people, either directly or watching over the discussions, questions, and interactions around your product, your brand or inside your company.

How They Do It

Zappos empowers its employees through an innovative training program which allows them to go out, via Twitter, and be available to answer questions from people and customers. A whole book could be written about Zappos customer service, and in fact it has, by the employees of Zappos (you can find it on their website). Giving employees technology will not solve your problems; inviting them to be passionate about your business does!

The key issue is trust; good employees find good customers if you teach them. Zappos sees employees as assets and ambassadors, not as a cost of doing business, and it shows. They are not afraid of how powerful their employees can become, and in fact, encourage it.

Many smart companies are improving communication and efficiency within their own company with social media, as a way to improve communication internally. Social media technologies like microblogging enable employees to follow each other for specific projects, and gives management an excellent tool to keep an eye on the growth of the business.

Best Buy claims it has drastically improved employee retention with social media. Technical firms like Cisco and Intel swear by their internal social media initiatives that foster ideas and feedback, while saving money and time. Financial firms like Wells Fargo are seeing better production by employing some social media within the company.

As you can see, there is money in terms of sales, yet also in terms of savings in social media. It is not just an advertising game, and it is one that can change business.

Be Unique

If you want to find the money you have to create your own business model. One that deals with your goals while building a relationship with your audience (and employees) that can reduce expenses and build sales year after year if you manage it right…or better yet, moderate it instead of manage it.

Social media demands a blend of heart and business savvy. You cannot have one without the other; if there’s no business, we should all ignore social media right now (like most of you, right?). If there’s no heart, if no one shows up as customers and employees get bored being employees,nothing really happens. Put the two together and you may find the magic, and profits, you are looking for… because it is the new game and it is happening right now.

Search Marketing Is Direct Marketing

When I say the word “marketing,” what do you think of? Probably some kind of advertising – maybe a TV commercial for Coke. That’s brand marketing, and it’s gotten the lion’s share of attention from marketers for decades.

Far fewer people are direct marketers – the folks behind the catalogs and mail solicitations that fill our mailboxes. If you know any direct marketers, you may want to hire them to run your search marketing campaigns. Let’s look at the basics of direct marketing to find out why.

The Name of the Game Is Response

Direct marketing is truly measurable marketing. Unlike most TV commercials, every direct marketing message is designed to evoke a response, such as “call this number now” or “mail your order form today.” The return on direct marketing investment is based on how many customers respond to those messages. A very successful direct marketing campaign might sport a 4 percent response rate; a failure, less than one-half of 1 percent. Direct marketers make their money by increasing response rates.

Think about it. It doesn’t cost any more to mail a catalog that drives 4 percent response as one that drives 2 percent. The creative costs, paper costs, printing costs and mailing costs are about the same for each mailing, so smart direct marketers focus on raising response to bring more return from the same investment. Direct marketers spend their time figuring out just what causes more people to respond. A different offer on the outside of the envelope might get more people to open it. A different picture and product description in a catalog might cause more people to order. A yellow sticky that says, “Before you pass on our offer, read this” might cause a few people to do just that.

But how do direct marketers know what worked? They measure the response. They measure changes in response to every small variant of their sales pitch. And they keep the changes that work and throw the rest away.

When credit card marketers send out a million pieces of mail to sign up new customers, they don’t just write a letter and mail it out. Instead they write 10 or 20 different letters and mail them to 1,000 people each. Then they mail the version of the letter that generated the best response to the rest of that million-person list.

Direct marketers constantly tweak their messages to become more persuasive. They continuously experiment with new ideas. It may seem picayune to focus on raising response rates from 2.2 percent to 2.6 percent, but just such increases mark breakthrough direct marketing campaigns.

Another way to increase return is to cull your mailing list. If you know that certain customers never seem to buy, you can eliminate those addresses from the list and add new ones that might prove more profitable. Your mailing costs are the same, but your responses will go up.

You can see that the basics of direct marketing revolve around experimenting with your messages and your mailing list to drive more and more sales for the same cost. You can apply those basics to Web marketing, too.

Web marketing, done well, is the biggest direct marketing opportunity ever, because the Web is infinitely more measurable than off-line direct marketing. Off-line direct marketers can measure only the final response – the mail order or the phone call, for example. They can’t tell the difference between those who threw the envelope away without opening it and those who read the entire message but still did not respond. If they could, they’d know whether to change the message on the outside of the envelope or change the letter itself.

The kind of measurement the Web offers is the stuff of direct marketers’ dreams.

Sweet Charity

If you think getting people to shop online is tough, consider the plight of nonprofit organizations. They ask people for their time and/or money, but instead of receiving goods, these donors simply get the satisfaction of doing good.

Although nonprofit organizations may have a different agenda from the for-profit online marketers, many of the goals (building relationships, income, brand awareness, etc.) are the same.

During the early part of the Internet era, many charitable organizations limited their Web activities to maintaining a website that accepted donations and member registrations, but over the past few years these groups have expanded to leverage many of the leading marketing tools.

Donations to nonprofit organizations are growing but remain only a small part of overall giving. Online donations in the U.S. doubled between 2003 and 2005 to $4.5 billion, but that is just 1.7 percent of the $260 billion in total donations, according to the GivingUSA Foundation.

Most people prefer to give off-line, so organizations establish different objectives for online activities and combine their direct marketing initiatives. In addition to getting people to donate, nonprofit online marketing goals also include increasing membership, encouraging activism, making resources available to those in need, issue awareness, building community and promoting word of mouth marketing. However, nonprofits typically operate under tight budgets where success is measured in lives affected and their experiences can offer useful lessons to all marketers.

Tools of the Trade

Employing search engine marketing and banner ads may be critical for many businesses, but nonprofits are selective if they choose to participate at all. Todd Whitley, vice president of e-marketing for the Leukemia & Lymphoma Society, is a proponent of SEM and display ads if the right audience segment is targeted. Whitley focuses his group’s search marketing plans on reaching caregivers who might need the organization’s services and “to find people who have relevancy to your mission.” Purchased keywords should be as specific to the target audience (such as “treatment”) as possible, Whitley says.

Joel Bartlett, marketing manager for People for the Ethical Treatment of Animals, bought banner ads on social networking sites such as MySpace but wasn’t satisfied with the traffic generated. However, when the group made its display available for posting on individuals’ personal pages and encouraged members to share them with their friends, traffic greatly increased. “The value of word of mouth goes further than any banner ad we could afford,” Bartlett says. As with commercial enterprises, customers (in this case organization members) are the best salespeople, and giving them the tools to increase brand awareness online can be very successful.

PETA is selective in its search marketing spending, limiting the scope to the related terms that have proven to be cost-effective. The PETA website has high natural search rankings for many of the terms related to protecting animals because of the abundance of links to the site, so Bartlett doesn’t see a need to participate in SEM for obvious keywords. “We’re already the No. 1 search term [for animal rights] so we don’t need to buy ads.”

Bartlett says that instead of using contextual or display ads on general interest sites, PETA advertises with advertising service Blogads.com to reach influential Web participants. Blogads works with bloggers who have loyal readership and are more likely to get involved and to spread the message to others, enabling PETA to reach a smaller but more receptive audience than mass media sites.

While search is not a major component of many nonprofits’ online marketing strategy, another performance marketing staple has proven successful – email marketing. Through newsletters and issue-specific alerts, PETA encourages people to forward the information from its website (including images of animal abuse) to their friends that will prompt action.

When it’s an email from a trusted friend, “people get outraged” about how animals are treated, Bartlett says. During PETA’s offline events, the organization collects email addresses to expand the audience of its newsletter and outreach activities.

Habitat for Humanity purchased Google AdWords for a time but cut back on online advertising recently, according to Senior Director of Direct Marketing Timothy Daugherty. The best-performing words were derivations of the organization’s name, and since the website could be found with natural search, search marketing was deemed unnecessary.

The group, which builds affordable housing for lower-income families, now focuses on increasing communications with people who have previously donated to maximize their marketing dollars, Daugherty says. Habitat for Humanity received about 10 percent ($8 million of the $80 million) of its total 2006 donations online, according to Daugherty.

The group has been successful in increasing awareness by getting list appends (email addresses for previous donors) for their direct marketing databases to reduce costs and open another line of communications, says Daugherty. Contacting donors via email is also effective in stimulating activism online and off-line, and is part of the organization’s effort to integrate marketing efforts, he notes. For issue-oriented campaigns, email works well in getting people to write letters and emails to public officials, he adds.

The National Council of Churches has collected more than 100,000 email addresses by getting members to forward information to friends and by requesting addresses on donation forms. “We ask people to share our email blasts with their friends,” and those who respond to forwarded emails are automatically added to the distribution list, says Daniel Webster, the organization’s director of media relations. The frequent communications about issues in the news help to build a virtual community and enable two-way communication, according to Webster.

In addition to most donations being made off-line, most word of mouth marketing occurs off-line as well, but email can be effective in spurring people to talk off-line with friends about an organization or contributions. Nearly 90 percent of people who have donated to a charity say they have urged others to give in person, but just 19 percent had done so by email, according to a 2005 Donor Trends survey by Craver, Mathews, Smith & Company and The Prime Group. Email has proven successful in promoting off-line activism that inspires people to attend and volunteer at events that are an important component of nonprofit activities.

Creativity Key for Tight Budgets

Operating within tight marketing budgets forces many nonprofits to be creative in their programs and partnerships, according to the Leukemia & Lymphoma Society’s Whitley.

While working for the American Lung Association, his group created a significant revenue stream by connecting for-profits to its members who voluntarily participate, according to Whitley. The organization created a campaign that asked members with asthma to provide input about how they managed their illness. Glaxo-Smith-Kline offered information about its related pharmaceutical products and gained valuable information by collecting data from the campaign, Whitley says. “[For-profit companies] don’t have access to live communities, so we provided a benefit to them.”

Whitley says nonprofits can also maximize their resources by collaborating with peer organizations with related goals. The American Lung Association joined with the Centers for Disease Control on an online campaign to publicize public flu clinics. By sharing the costs and their collective memberships, the two groups were able to reach a wider audience more quickly than acting individually. Companies with complementary products or services can likewise team up for their mutual benefit in marketing efforts.

The American Red Cross is using online communications tools and commerce to help replace its aging membership with a younger demographic, according to Darren Irby, the group’s vice president of communications. Irby says the base of its donors is over 65 and since “those people are dying off” and are less likely to be online, the Red Cross is targeting a younger generation with its online marketing efforts.

Since the under-40 crowd spends ample time chatting online, the group is generating revenue by piggybacking on advertising delivered via instant messaging (IM) software. The Red Cross teamed up with Microsoft’s Windows Live Messenger advertising program. To encourage people to use the IM software, Microsoft is donating part of the revenue from the ads that appear during an IM conversation to the charity of the participants’ choice. Red Cross members feel good about encouraging others to use the software, and the organization gets exposure and extra income.

The Red Cross is increasing brand awareness by going retro with the branded merchandise on sale at its online store. To celebrate the 125th anniversary of the group last year, the Red Cross began selling T-shirts, coffee mugs and hats emblazoned with a vintage World War II logo. The garb, which has sold well beyond expectations, “is a way to link the older and younger generations,” Irby says.

Instead of buying banners on social networking sites, the Red Cross makes tools available so that members can provide free exposure by promoting the organization on their personal pages. The Red Cross has set up groups on MySpace and LinkedIn, and has created banners, logos and promotional widgets to spread the word.

Irby recognizes that younger people like the immediacy of being able to support the Red Cross’ response efforts to a national disaster, but so far the group has not produced any viral videos for sites such as YouTube. He says workers in the field are too busy helping to film their activities, and he doesn’t encourage people to film relief efforts for fear of “losing control of the messaging,” he says. Instead, the Red Cross has created videos and posted them on an FTP site that is accessible by the media.

The Red Cross is also reaching out to bloggers to make the blood donation process less intimidating. The organization is requesting that bloggers write about the music that they listen to while giving blood. “Charities need to engage in two-way communication” if they want to develop a meaningful relationship with members and volunteers, says Irby.

Most nonprofits do not utilize formal affiliate programs, but PETA provides merchandise as incentives for people to promote its organization online and off-line, according to Bartlett. Through the “PETA2 Street Team” initiative, the group gives volunteers missions to accomplish, such as contacting people via email, adding links to PETA on their websites, or off-line activities, and volunteers earn points that can be redeemed for merchandise from the group’s online store. By offering “posters, CDs and autographed stuff from a band,” PETA is connecting with the young volunteers’ interests through relevant rewards, Bartlett says.

PETA also employs viral marketing to increase awareness online. The group has set up a website protesting Kentucky Fried Chicken’s animal handling and created an automatic sign generator that enables people to create virtual billboards about the restaurant chain and post them on personal websites. The group created an area on the photo-sharing website Flickr for volunteers to post images. Creating tools for people to generate their own content around the group’s messaging is “part of the strategy of empowering users and encouraging word of mouth” that is highly effective marketing, says Bartlett.

Coordinating the online activities of the groups within a national organization can maximize resources and create a more cohesive strategy, according to the Leukemia & Lymphoma Society’s Whitley. Nonprofit departments (like their commercial counterparts) can be territorial at times, but sharing the online successes and collaborating on projects will unify the organization. Whitley says the Web group can break down barriers and it “is critical [for the online group] to become a leader for interfacing cross-divisionally within an organization.” Similarly, online marketing initiatives can unify the divisions within a company by sharing their experiences and using the collective intelligence to optimize campaigns.

John Gartner is a Portland, Ore.-based freelance writer who contributes to Wired News, Inc., MarketingShift and is the Editor of Matter-mag.com.

It’s Just Direct Marketing

As I go around the country teaching workshops on pay per click (PPC) I get asked many varied questions on search engine marketing (SEM), depending on which city I happen to be in. Larger marketers seem to have more sophisticated questions; smaller marketers tend to focus on subsistence tactics. However, one theme seems to reoccur frequently: the myth that SEM is some kind of rocket science.

Smaller businesses and many members of marketing departments at large and even Fortune 1000 companies have bought into the idea that SEM is something that can only be properly utilized by those who know the correct “voodoo” to make it work.

But really, SEM is just another form of direct response marketing and many of the same principles apply. Why else do you think those nasty 24-page sales letters work so well at driving conversions from search engine traffic? Personally, I hate those letters, but I am not their targeted audience.

The marketers who write long sales letters typically have years of experience in direct response marketing and have figured out how to use search to reach the same customers that they would target with any other marketing vehicle. They are successful because their message resonates with their intended customers (mostly Internet newbies) and they apply the same controls to their search marketing campaign as they do to any other campaign.

So how can you apply the same tactics? Don’t get me wrong; I’m not advocating the use of long-winded sales letters with 15 calls to action set in strategically placed buttons. They may or may not work for your product – depending on your offer – whether your consumer is educated in your marketplace and your price point. What I am saying is that you too can adapt their techniques to reach your intended goal.

Here are some direct response marketing principles that should also apply to your SEM campaigns:

It takes work. In order to truly be successful at search engine marketing you have to constantly test your response rates. Those who throw up a campaign and expect to just sit and watch the dollars roll in without any labor investment are just wasting their time. Successful marketers test copy, keywords, placement, pricing, messages, landing pages, etc.
You have to test. In direct response marketing, testing rules is never-ending. Just like testing in direct mail, the cost of the campaign can be justified if the lift in the conversion rate is enough to offset the expense. To measure the effect, you have to A/B split-test your traffic, testing new landing pages against the old. For retail sites with thousands of products, you can minimize the expense by testing just the product pages driving the most sales. If the lift in conversion offsets the cost of optimizing the pages, keep testing and roll out new ones.
You have to track results. Just as savvy offline marketers can tell which piece of mail and from which specific message a customer converted, you have to be able to tell which keyword, message and referrer drove your sale. Tracking is easy to do on PPC, harder on search engine optimization, but critical on both.
Creative is key. Google rewards those with high click-through rates (CTR) on PPC by better placement, and the way to get high CTRs is to write great copy that resonates with your audience. A good copywriter can make the difference between a successful PPC campaign and one that bleeds cash. Similar to an offline campaign, online creative (i.e., your search listings) should be tested frequently because even a small lift in conversion can affect profitability.
It’s all about the benefit. Successful marketers remember that the customers’ needs are paramount at all times. They sell on benefits, not features, and look for the messages that play on their customers’ emotional responses to their product or service. Include in your creative the things that work best such as your unique sales proposition, calls to action, list of benefits, money-back guarantees, etc. Never test more than one element at a time, or you won’t know which one contributed to the lift or falloff. Over time, you will discover offers that work only online, but like offline marketing, it comes through the same test-and-learn discipline.
The “Lead to Sale” conversion rate is important. Just as in the offline world the key to conversions from search is providing the right hook in your listing at the right phase of the buying cycle, and then converting that lead into a paying customer with the right offer on your landing page.
Analysis is your friend. Like any good offline campaign, you learn a great deal from analyzing your testing and conversions. Sometimes, new search engine marketers make the mistake of analyzing all their online test campaigns as one big program. This can really skew your testing as the set of results from one search engine campaign can vary dramatically from another. Likewise one set of keywords can perform significantly better than the rest; but because even changing a keyword from singular to plural can have dramatically different results, you have to test and analyze each variable separately.
It’s all about CPA or CPL. All search engine marketing campaigns need to be analyzed in just the way you would analyze your efforts in the offline world. Cost per acquisition (CPA) or cost per lead (CPL) is your common denominator and the only number that really counts in the long term.
Create customer loyalty.Search engines are looking more and more at how many websites link to yours. But a bunch of links from high-traffic sites are worthless unless those links drive sales. Link campaigns are too time-consuming to do them just for the sake of getting higher search engine ranking. You need customer evangelists driving more sales, and links can provide that.

Not all traffic is created equal. Just as in the offline direct response world, the 80/20 rule applies. In that world we know that 80 percent of your profits come from 20 percent of your sales. The same thing applies in SEM: 20 percent of your keywords will drive 80 percent of your sales. Obviously those are the keywords you will focus 80 percent of your attention on but you can’t discover those drivers unless you test constantly. Some keywords will bring you more traffic, but fewer conversions on the back end. Other keywords may bring you no sales, but be effective in driving branding or eliminating a stumbling block in the buying cycle.

Direct response marketing skills and experience are some of the key drivers in SEM campaigns. There are some nuances of SEM that you can only learn by experience, but if you go into it with the mindset that these rules apply you will demystify the whole experience. Regardless of the source or channel this mindset is what makes the difference between success and failure.

MARY O’BRIEN is a partner at Telic Media. She was formerly senior director of sales at Yahoo Search Marketing and is currently presenting their advertiser workshops around the country.