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In his post about Foursquare last October, David Lewis said Foursquare had “some serious weaknesses,” but he admitted, “It’s worth keeping an eye on it.”

Well suddenly, Foursquare seems to be breaking out of its status as a cutesy, fun mobile-enabled game. It has just been discovered by the likes of Bravo TV, HBO, the History Channel, Warner Brothers, and Zagat, according to Advertising Age. The magazine says “These new deals represent an entertainment trifecta for Foursquare – network TV, cable TV and movie studios.”

It’s true that when big advertisers discover a new media channel, it tends to legitimize the channel for other advertisers. My last post about Pepsi snubbing Super Bowl ads in favor of Facebook speaks to that. So is this the beginning of Foursquare’s coming out party?

Obviously, Foursquare co-founder Dennis Crowley would like to think so. He sees entertainment brands as having significant potential for the company because of changes in viewer behavior. He believes consumers now watch shows on television “with computers on their laps or phones in their hands – multitasking while they watch, communicating about the content, or just killing time during commercials.”

This kind of behavior plays nicely to Foursquare’s shtick: users and friends checking in with each other from specific locations, making lists of favorites and sharing them, winning points for checking in, and winning badges for participating in new experiences. It all may sound a little juvenile, but think of it as a GPS-enabled Twitter combined with enticing rewards. Obviously, some very big advertisers are testing Foursquare to see if it will work for them. Exactly how these advertisers will use Foursquare, or benefit from it, is part of the test.

There are already some advertisers who are proving that Foursquare can pay off. Zagat, a guidebook that rates restaurants, is probably one of the better examples because what Zagat does fits so well with the concept of Foursquare. According to Advertising Age, “[Zagat] has populated five cities with tips that share their expertise – things like drink deals, the best times to dine, and what entrees to order. By checking in at Zagat-rated locations, users can unlock a new ‘foodie badge’ and those that frequent a place most often might be featured on Zagat.com…”

Zagat has an iPhone application that allows users to access content about and ratings of restaurants. It also offers the ability to make OpenTable reservations for those restaurants that accept them directly from the app. But Zagat’s Ryan Charles told Advertising Age that iPhone and other smartphone applications are just the beginning. Foursquare is “a natural progression. There is an obvious synergy between Zagat’s expertise in helping people make quick, informed decisions and Foursquare’s location-based platform.”

Will this latest buzz get Foursquare over the hurdle of being an intriguing if inconsequential technology? And will the current interest from big advertisers help transform Foursquare into a major player capable of displacing Twitter? It’s too soon to tell – but one way or the other, chances are Foursquare will become a player that online marketers will be have to take seriously.


More:
Foursquare, Seriously

Recently The Virginia Senate has proposed Bill no. 660. Effectively, the same Advertising Tax that was passed and done significant damage to the small entrepreneurial internet marketing businesses in those states and cost small business jobs in the process.

States have started looking at these bills as a way to make money for their states in times of economic and budgetary turmoil. In California, arguably the State with the most financial troubles, Governor Schwarzenegger understood the effect that this bill would have on the entrepreneurs and jobs in his state and vetoed the bill.

Last night Governor Bob McDonnell delivered the GOP response to President Barack Obama’s State of the Union Address. The full video of his response is below, but I wanted to call attention to some of his words in that response that clearly shows that he must follow Governor Schwarzenegger’s example and veto Bill 660, if it make it to his desk. He said the following:

“Here in Virginia we face our highest unemployment rate in 25 years, and bringing new jobs and more opportunities to our citizens is the top priority of my administration. Good Government policies should spur economic growth and strengthen the private sectors ability to create new jobs.”

And then Governor McDonnell followed that with the following at 1:49 in the video below and aired throughout most of the morning news broadcasts this morning:

“We must enact policies that promote entrepreneurship and innovation so America can better compete with the world. What government should not do is pile on more taxation, regulation, and litigation that kills jobs and hurt the middle class.”

Virginia Senate Bill 660 is a policy that will discourage entrepreneurship in Virginia. If enacted, the innovative entrepreneurs in the state will be dropped by the same merchants that the state hopes to obtain taxes from and the potential tax gains will be more than offset by the loss of revenue from these entrepreneural businesses and the employees they are forced to fire.

There are many Internet marketing and advertising companies in Virgina that earn their living through Internet advertising. They do not sell merchant products, nor do they even know who their customers are. These businesses earn revenue through advertising for out-of-state merchants. Upwards of 90% or more of their revenue comes from out-of-state merchants. Large advertisers like Overstock and Amazon have already put Virginia affiliates on notice, that if this bill progresses they will stop working with these entrepreneurial companies in Virginia, like they have in EVERY state that this Internet Advertising tax has been proposed. Those large advertisers are just the tip of the iceberg, many merchants will stop working with these entrepreneurial companies in Virginia, because we have seen it happen in New York and every other state where this Advertising Tax has been passed.

Please Governor McDonnell, we hope that you will help us insure that this bill never reaches your desk, but if it does, please Veto it. Don’t allow Virginia to enact a policy that squashes entrepreneurship and innovation in your state by piling on more taxation that will kill jobs and hurt the middle class of Virginia.

Respectfully yours,

Adam Viener
Chariman & Founder
Imwave, Inc.
Reston, VA


Governor McDonnell’s GOP Response to Barack Obama’s State of the Union Address Jan 27th, 2010:

Click here to view the embedded video.


More here:

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Apparently, the newspaper industry has finally had enough – or at least the New York Times has. Word came out on Wednesday that the New York Times would start charging for its online content.
The Times has tweaked its model from all-everything or all-free with a model that will only charge its most avid users. But that’s significant, given the fact that the media as a whole tends to follow the lead of the Times in how business is done.
For the past few years, the newspaper business has tried to stop its collective bleeding. Blaming everyone from unpaid bloggers to Google, much of the consternation stemmed from regret over not charging for access from the early days of the Web.
With the Times moving ahead and pulling the trigger, look for many other newspapers to follow suit. The media has argued that it wants to benefit financially from the giant traffic stream that Google brings to its sites, but that argument may be flawed.
While it’s true that readers are going to search engines as their first place for news, they might not be biting on the hook that newspaper web sites are offering. According to a new study, 44 percent of people who scan headlines on Google don’t click through to newspaper Web sites.
When the paywall slams down around the Web there’s going to be a much tighter atmosphere for the information that fuels aggregating sites and search engines. If The Huffington Post can’t excerpt the Times as often, how does that impact the value of HuffPost?
The year of the paywall will cause ripples across the Web and force users to answer the question of whether they are willing to pay for information just like they pay for apps and music.


Originally posted here:
2010: The Year The Paywall Comes Down

There’s been alot of hype and debate around the concepts of virtual goods and offers due to a few high flying companies which have been media darlings. The highest profile company in question is Zynga, athough other social gaming sites and social networks have employed similar tactics. All have enormous user bases and are pulling in hundreds of millions in revenue, but the debate centers around how they make earn money. There’s too much to cover in one post, so this discussion will be split into two posts, with this one providing the basis for the controversy.

By some estimates, these companies may earn 1/3 of their revenues from something called “offers”. What is an offer you say? An offer, for the purposes of this article, is an exchange of information and/or actions to earn credit spendable on a web site, virtual world, or online game. The concept is simple and particularly lucrative.

Web site visitors or game players can get in game points or currency that they can spend on upgrades, weapons, tools, or other power ups that give them an advantage. The points, often called cash, coins, or gold, can be purchased directly using several payment instruments; but for the cash strapped, unbanked, cheap, or income challenged, a more attractive mechanism is to use offers to gain these credits. Offers, up until a month ago when negative media attention from sites like Techcrunch and backlash caused Facebook to clean house, included surveys, quizzes, trials for magazines, game rentals, DVD rentals, credit cards, and more, many of which touted free trial or no cash or credit card required.

List of example offers The partial list of offers (left) entices the user to enter trials, sign-up for services, or take quizzes and surveys.

What makes offers so attractive? How does “Fill out a survey and earn 19 points” sound to you? Especially when 19 points gets you a 10% boost in game income, increased character speed or other abilities? So for just a few minutes of time, you can earn the points that other gamers may spend their hard earned cash on.

For example in the popular game Mobsters, by Playdom, it would cost you $4.99 to purchase 21 points; thus taking these surveys sounds attractive since the math would suggest that if I completed a survey every 10 minutes, in an hour I would have done 6 surveys, earned 126 points, and saved nearly $50. But think about what just happened – the discussion turned from 1 survey and 19 points to a subtle assignment of a working wage for the game player, where he/she could earn the equivalent of $50/hour. Other offers include Blockbuster video trials, Netflix trials, Credit Cards sign-ups, mobile phone content trials, and more. Great deal for the end user, on the surface.

Before going forward, I need to add that many of the scammy offers have already been removed from by many of the providers due to the media attention, however, even the remaining offers by reputable companies still have issues. The risks of these offers fall on the user signing up for the offer and the merchant sponsoring the offer.

  • Does the users know what he or she is signing up for?
  • What quality of lead is the merchant receiving?
Entertainment book offer Problems arrise due to confusion over how to complete the offer. The Entertainment book offer button takes the user to a page with no actual mention of the offer. Are users supposed to sign-up? If so, how do they get credit?
Direct TV offer The same problem appears for the Direct TV offer. How does the user know what to do? How does he/she earn credit?

By now you may be wondering where the deal really is. If users have to pay for subscriptions, why don’t they buy points directly? Do users always have to spend money to get their points? You’ve now hit the tip of the iceberg and are wondering if this amounts to a system for scams.

As a starter for the next post, consider the two images below.

free walmart gift card qualify for free

The offer is not from Wal-Mart, but from a rewards program company, and it looks pretty good, right? Well, if you read the fine print you’ll see that to get your ‘free’ $1,000 gift card you must complete 13 offers. But click through and look at the second image: you’ll see it says you have to complete two offers to get your ‘free’ gift. How does this make sense? The user was lead to believe they had to complete one offer to get their free 21 points. This is starting to smell like the BlueHippo investigation by the FTC, where offers were supposed to get you a free PC. Yet they only shipped one. Yes one.

In my next post I’ll discuss my experience trying a few of these offers, some additional math around the business, and discussion on the even larger problem that this is revealing.


Excerpt from:
Virtual Goods, Offers, and Scams: Part 1

The 2009 Cone Consumer New Media Study, results of which were released on October 20, shows the continuing growth of consumer empowerment.

Cone, a strategy and communications agency that specializes in cause branding, looked only at users of “new media,” defined as “dialogue among individuals or groups by way of technology-facilitated channels” – social networks, blogs, games, message boards, and the like. Over one-third of the respondents use new media two or more times a week.

Highlights of the study include the following:

1.    Consumers are increasing their interaction with companies and brands online. Almost 80 percent of new media users interact with companies or brands via new media sites and tools. This is an increase of 32 percent from the 2008 study. More than one-third of users (37 percent) interact via new media at least once per week, up from about 25 percent last year. New media users “overwhelmingly believe companies or brands should not only have a presence in new media, but also interact with their consumers in this space,” says Cone. In addition, consumers “think more highly of companies or brands when they or their friends can interact with them in a new media environment.”

2.    Consumers believe they can influence businesses by voicing opinions online. Sixty-two percent of respondents believe they can influence business decisions by voicing opinions via new media channels. About one-quarter have offered their opinion on an issue or contacted a company directly. Consumers are also interested in and influenced by information they get online. A large majority of respondents (85 percent) want companies to tell them what is in products and how they are made. Three-quarters of new media users say new media channels are an effective way to learn about Corporate Responsibility efforts.

3.    Supporting causes is important to new media users. Seventy-nine percent of respondents believe companies and nonprofit organizations should use new media channels to raise money and awareness for causes. Eighty-five percent of respondents say new media provides them with an opportunity to learn about new issues. Eighty percent say new media provides another way to support their favorite causes. Sixty percent have used some form of online or new media to support a cause. However, only 18 percent of users have made a cash donation through new media. Why? Nearly 39 percent said they didn’t trust that their efforts would actually help the cause, and 31 percent said they’d rather support causes offline. While no single cause had a majority of attention, leading causes supported via new media include animal welfare (29 percent), health and disease (28 percent), education (23 percent), the environment (22 percent) and human rights/equal rights (21 percent).

New media users appear to be active, interested and engaged. They are influenced by information they get online – and they believe they can influence businesses by communicating with them online.

It is clear that Internet-savvy consumers have high expectations. They want businesses to use new media. This is good news for online marketers, but there is this cautionary note as well: Businesses need to be ever-vigilant about using new media appropriately, and they must be responsive to consumer inquiries and comments.


Read the rest here:
New Media Study Shows Increasing Consumer Empowerment

The Federal Trade Commission (FTC) is regulating the use of blogs and other consumer-generated new media content in marketing. Revised advertising rules issued by the agency broadly extend the concept of endorsements and testimonials to include as sponsored advertising all sorts of loose new media relationships that are increasingly used in place of traditional radio and television advertising and paid endorsements.  These rules fundamentally change the legal and regulatory landscape for Web 2.0 marketing and should be studied carefully by bloggers, marketers and online advertising agencies, all of whom will now have to contend with new compliance obligations.

On October 5, the FTC issued its final revised Guides Concerning the Use of Endorsements and Testimonials in Advertising, the first rewrite of the Guides since 1980.  Under the revised rules, which go into effect on December 1, companies that make payments or give free products to bloggers and other online commentators in order to generate positive buzz or favorable reviews for their products will now have to monitor closely the statements and claims made about the products and ensure that these relationships, if material, are clearly and conspicuously disclosed.  Otherwise, they will face liability for unfair or deceptive advertising practices under Section 5 of the FTC Act, even if they do not control what the bloggers say (or, indeed, whether they say anything).  The bloggers themselves will face similar liability for false or misleading statements and non-disclosure of material connections.  Marketers are also responsible for advising bloggers of their responsibilities.

While not actually binding law, the Guides serve as administrative interpretations of the law, issued to provide guidance on what the FTC considers to be deceptive behavior.  However, this does not mean compliance is optional.  Violations are punishable by civil penalties of up to $11,000 per violation. In addition to the regulation of Web 2.0 marketing which is the focus of this article, the Guides also include other significant changes, such as a new requirement that testimonials which do not describe typical consumer experiences must include clear and conspicuous disclosures of the results consumers can generally expect to achieve by using an advertised product.

By its very nature Web 2.0 marketing encompasses a variety of informal and fuzzy relationships which fall within the purview of the FTC’s new rules even though they are qualitatively different from traditional uses of endorsements in advertising.  For example, a marketer may provide unsolicited samples of its products to members of a blogger network who sign up for the network so that they can review the products on their sites.  Or a marketer may supply a product, such as a video game, to one particularly well-read blogger known as an expert or authority in his area in the hope of gaining a positive review.  Or the marketer may institute a word-of-mouth or viral marketing scheme where participants receive something of value (such as a payment or an entry in a sweepstakes) to e-mail their friends or send out tweets about the marketer’s product.  All of these relationships may now be characterized by the FTC as endorser-advertiser relationships, wherein both the “endorser” (i.e., the person generating the content about the product) and the “advertiser” (the marketer) must ensure the absence of false or misleading statements and the “clear and conspicuous” disclosure of connections that are not reasonably expected by the target audience and are likely to influence purchasers’ assessment of the credibility of the statements.

When is a Favorable Post an “Endorsement”?

The Guides define an “endorsement” as an advertising message that consumers will likely believe reflects the opinions, beliefs, findings or experience of a party other than the sponsoring advertiser, whether the endorser’s statements are the same as or different from the sponsoring advertiser’s.  Knowing the level of incentive that turns blogger commentary into a compensated “endorsement,” thereby rendering both the blogger and the advertiser potentially liable for failure to disclose material connections and for deceptive statements, is critical.  The FTC notes on page 10:

“[A] blogger could receive merchandise from a marketer with a request to review it, but with no compensation paid other than the value of the product itself. In this situation, whether or not any positive statement the blogger posts would be deemed an “endorsement” within the meaning of the Guides would depend on, among other things, the value of that product, and on whether the blogger routinely receives such requests. If that blogger frequently receives products from manufacturers because he or she is known to have wide readership within a particular demographic group that is the manufacturers’ target market, the blogger’s statements are likely to be deemed to be “endorsements,” as are postings by participants in network marketing programs. Similarly, consumers who join word of mouth marketing programs that periodically provide them products to review publicly (as opposed to simply giving feedback to the advertiser) will also likely be viewed as giving sponsored messages.”

The Guides cite as an example a consumer who purchases a new brand of dog food and reviews its favorably on her personal blog.  If she purchases the dog food with her own money or gets it for free because the store routinely tracks her purchases and generates a coupon for a free trial bag of the new dog food, there is no endorsement.  However, if the consumer gets the dog food as a result of joining a network marketing program under which she periodically receives various products about which she can write reviews if she wants to, her positive review will be considered an endorsement.  As another example, a college student who has earned a reputation as a video game expert receives (as he has in the past) a copy of a newly released video gaming system along with a request from the manufacturer to write about it on his blog.   He tests it out and gives it a favorable review.  This is also an endorsement, and the FTC comments that because the review is disseminated via a form of consumer-generated media in which his relationship to the advertiser is not inherently obvious, and given the value of the gaming system, the blogger should clearly and conspicuously disclose that he received it free of charge.  Furthermore, “[t]he manufacturer should advise him at the time it provides the gaming system that this connection should be disclosed, and it should have procedures in place to try to monitor his postings for compliance.”  (Here the blogger would also have to comply with the FTC’s rules on the use of expert statements in advertising.)

In one of the Guides’ most controversial examples, a skin care product manufacturer participates in a blog advertising service that matches up advertisers with reviewers.  The marketer requests that the blogger try out its new body lotion and write a review.  The blogger, totally on her own initiative and without any direction from the manufacturer, makes an unsubstantiated recommendation that the product cures eczema.  Both the manufacturer and the blogger will be liable for the unsubstantiated claim and any failure to disclose that the blogger is being paid.

The FTC has explained that the purpose of the new rules is to treat new media in the same manner as traditional journalistic and advertising outlets.  However, as a practical matter, many businesses treat these channels differently and will have to scramble to implement the necessary monitoring and enforcement mechanisms.  When a business buys a conference sponsorship, for example, in the hope of generating some positive online buzz, is anyone at the sponsor giving the conference organizer’s blog and Twitter emissions at compliance review?  Indeed, the whole point of marketing to bloggers and through social media is to support a spontaneous and unforced style of commentary that has greater authenticity for cynical, tech-savvy consumers.   Of course, in response to such comments the FTC has countered that its rules are designed precisely to protect consumers’ ability to rely on this quality of the blogosphere in making purchasing decisions.   Controlling what bloggers say is not relevant; what matters for liability purposes is whether “the advertiser initiated the process that led to [the] endorsements being made – e.g., by providing products to well-known bloggers or to endorsers enrolled in word of mouth marketing programs ….”

Playing the Compliance Game

Unfortunately, corporate legal departments will now have to extend the long arm of compliance over a whole host of Web 2.0 marketing activities that until now may have been loosely policed, if at all.   “In employing this means of marketing,” the FTC dryly observes, “the advertiser has assumed the risk that an endorser may fail to disclose a material connection or misrepresent a product, and the potential liability that accompanies that risk.”  However, it also states that in the exercise of prosecutorial discretion it will consider “the advertiser’s efforts to advise these endorsers of their responsibilities and to monitor their online behavior ….”

What this means for companies is that they will have to design a compliance and monitoring program.  What it means for online advertising agencies is that they can expect new restrictions and levels of review from clients over their Web 2.0 marketing activities and should also expect to assume a role in their clients’ compliance and monitoring programs.  Companies will want to get a handle on what their marketing departments are doing to curry favor with bloggers and create buzz through viral online marketing and will be especially anxious to herd advertising and PR agencies into the corral, since the companies are legally responsible for the actions of these third-party agents.

If compensation, free products or other valuable incentives (such as sponsorships) are being offered in the hope of stimulating positive reviews, then the company will need to institute and document a process of advising bloggers and other new media commenters about their duty to disclose material connections and the limits on the factual claims they can make about a products and its beneficial effects.   There should also be periodic monitoring of the resulting posts, with documented follow-up action if necessary, to make sure they comply with the FTC’s endorsement guidelines.
If blogger relationships are managed through an advertising or PR agency, then the agency will likely have to provide detailed information for each campaign about its contacts with bloggers and will have to share in the responsibility of conveying the advertiser’s guidelines to them and monitoring their compliance.   Companies should include a specific allocation of responsibilities with respect to these issues in written contracts with their agencies.  At the very least, a company should reserve the right to audit and pre-approve an agency’s solicitation of bloggers so that the company knows which bloggers the agency is dealing with and whether the relationships are of a type that could lead to advertiser-endorser liability and can monitor the bloggers’ posts about the company’s products.

If this compliance burden is too onerous for companies and their online advertising agencies, the alternative is to implement policies that prohibit the payment of compensation or giving away of valuable products in the hope of generating positive online buzz.   Favorable reviews are not “endorsements” within the meaning of the Guides unless they have been incentivized in some way.

Tips for Bloggers

As for bloggers and other online commenters, they should be sure to disclose any compensation or benefits they receive to comment on products and, if they do have such a connection to an advertiser, should be very careful to follow the guidelines furnished by the advertiser or its advertising agency (which the advertiser is required to provide) and not make general or sweeping factual claims about the product or any claim that can’t be easily substantiated.  If a blogger chafes at submitting to this degree of oversight and control, he always has the option of buying the product himself, for example, rather than receiving it as a freebie.  The FTC has indicated that advertisers and not bloggers will be its main enforcement target.  However, a blogger who runs a “substantial operation” that violates the rules and who receives a warning will still be at risk.  Moreover, the FTC can adopt a more aggressive enforcement stance at any time.

The FTC’s rulemaking will heavily influence the way marketers generate buzz on the Internet and warrants close scrutiny of participation in blogger and viral incentive programs by all parties involved.


Credit:
FTC Regulates Blogger, Viral Marketing Relationships

The Federal Trade Commission (FTC) is regulating the use of blogs and other consumer-generated new media content in marketing. Revised advertising rules issued by the agency broadly extend the concept of endorsements and testimonials to include as sponsored advertising all sorts of loose new media relationships that are increasingly used in place of traditional radio and television advertising and paid endorsements.  These rules fundamentally change the legal and regulatory landscape for Web 2.0 marketing and should be studied carefully by bloggers, marketers and online advertising agencies, all of whom will now have to contend with new compliance obligations.

On October 5, the FTC issued its final revised Guides Concerning the Use of Endorsements and Testimonials in Advertising, the first rewrite of the Guides since 1980.  Under the revised rules, which go into effect on December 1, companies that make payments or give free products to bloggers and other online commentators in order to generate positive buzz or favorable reviews for their products will now have to monitor closely the statements and claims made about the products and ensure that these relationships, if material, are clearly and conspicuously disclosed.  Otherwise, they will face liability for unfair or deceptive advertising practices under Section 5 of the FTC Act, even if they do not control what the bloggers say (or, indeed, whether they say anything).  The bloggers themselves will face similar liability for false or misleading statements and non-disclosure of material connections.  Marketers are also responsible for advising bloggers of their responsibilities.

While not actually binding law, the Guides serve as administrative interpretations of the law, issued to provide guidance on what the FTC considers to be deceptive behavior.  However, this does not mean compliance is optional.  Violations are punishable by civil penalties of up to $11,000 per violation. In addition to the regulation of Web 2.0 marketing which is the focus of this article, the Guides also include other significant changes, such as a new requirement that testimonials which do not describe typical consumer experiences must include clear and conspicuous disclosures of the results consumers can generally expect to achieve by using an advertised product.

By its very nature Web 2.0 marketing encompasses a variety of informal and fuzzy relationships which fall within the purview of the FTC’s new rules even though they are qualitatively different from traditional uses of endorsements in advertising.  For example, a marketer may provide unsolicited samples of its products to members of a blogger network who sign up for the network so that they can review the products on their sites.  Or a marketer may supply a product, such as a video game, to one particularly well-read blogger known as an expert or authority in his area in the hope of gaining a positive review.  Or the marketer may institute a word-of-mouth or viral marketing scheme where participants receive something of value (such as a payment or an entry in a sweepstakes) to e-mail their friends or send out tweets about the marketer’s product.  All of these relationships may now be characterized by the FTC as endorser-advertiser relationships, wherein both the “endorser” (i.e., the person generating the content about the product) and the “advertiser” (the marketer) must ensure the absence of false or misleading statements and the “clear and conspicuous” disclosure of connections that are not reasonably expected by the target audience and are likely to influence purchasers’ assessment of the credibility of the statements.

When is a Favorable Post an “Endorsement”?

The Guides define an “endorsement” as an advertising message that consumers will likely believe reflects the opinions, beliefs, findings or experience of a party other than the sponsoring advertiser, whether the endorser’s statements are the same as or different from the sponsoring advertiser’s.  Knowing the level of incentive that turns blogger commentary into a compensated “endorsement,” thereby rendering both the blogger and the advertiser potentially liable for failure to disclose material connections and for deceptive statements, is critical.  The FTC notes on page 10:

“[A] blogger could receive merchandise from a marketer with a request to review it, but with no compensation paid other than the value of the product itself. In this situation, whether or not any positive statement the blogger posts would be deemed an “endorsement” within the meaning of the Guides would depend on, among other things, the value of that product, and on whether the blogger routinely receives such requests. If that blogger frequently receives products from manufacturers because he or she is known to have wide readership within a particular demographic group that is the manufacturers’ target market, the blogger’s statements are likely to be deemed to be “endorsements,” as are postings by participants in network marketing programs. Similarly, consumers who join word of mouth marketing programs that periodically provide them products to review publicly (as opposed to simply giving feedback to the advertiser) will also likely be viewed as giving sponsored messages.”

The Guides cite as an example a consumer who purchases a new brand of dog food and reviews its favorably on her personal blog.  If she purchases the dog food with her own money or gets it for free because the store routinely tracks her purchases and generates a coupon for a free trial bag of the new dog food, there is no endorsement.  However, if the consumer gets the dog food as a result of joining a network marketing program under which she periodically receives various products about which she can write reviews if she wants to, her positive review will be considered an endorsement.  As another example, a college student who has earned a reputation as a video game expert receives (as he has in the past) a copy of a newly released video gaming system along with a request from the manufacturer to write about it on his blog.   He tests it out and gives it a favorable review.  This is also an endorsement, and the FTC comments that because the review is disseminated via a form of consumer-generated media in which his relationship to the advertiser is not inherently obvious, and given the value of the gaming system, the blogger should clearly and conspicuously disclose that he received it free of charge.  Furthermore, “[t]he manufacturer should advise him at the time it provides the gaming system that this connection should be disclosed, and it should have procedures in place to try to monitor his postings for compliance.”  (Here the blogger would also have to comply with the FTC’s rules on the use of expert statements in advertising.)

In one of the Guides’ most controversial examples, a skin care product manufacturer participates in a blog advertising service that matches up advertisers with reviewers.  The marketer requests that the blogger try out its new body lotion and write a review.  The blogger, totally on her own initiative and without any direction from the manufacturer, makes an unsubstantiated recommendation that the product cures eczema.  Both the manufacturer and the blogger will be liable for the unsubstantiated claim and any failure to disclose that the blogger is being paid.

The FTC has explained that the purpose of the new rules is to treat new media in the same manner as traditional journalistic and advertising outlets.  However, as a practical matter, many businesses treat these channels differently and will have to scramble to implement the necessary monitoring and enforcement mechanisms.  When a business buys a conference sponsorship, for example, in the hope of generating some positive online buzz, is anyone at the sponsor giving the conference organizer’s blog and Twitter emissions at compliance review?  Indeed, the whole point of marketing to bloggers and through social media is to support a spontaneous and unforced style of commentary that has greater authenticity for cynical, tech-savvy consumers.   Of course, in response to such comments the FTC has countered that its rules are designed precisely to protect consumers’ ability to rely on this quality of the blogosphere in making purchasing decisions.   Controlling what bloggers say is not relevant; what matters for liability purposes is whether “the advertiser initiated the process that led to [the] endorsements being made – e.g., by providing products to well-known bloggers or to endorsers enrolled in word of mouth marketing programs ….”

Playing the Compliance Game

Unfortunately, corporate legal departments will now have to extend the long arm of compliance over a whole host of Web 2.0 marketing activities that until now may have been loosely policed, if at all.   “In employing this means of marketing,” the FTC dryly observes, “the advertiser has assumed the risk that an endorser may fail to disclose a material connection or misrepresent a product, and the potential liability that accompanies that risk.”  However, it also states that in the exercise of prosecutorial discretion it will consider “the advertiser’s efforts to advise these endorsers of their responsibilities and to monitor their online behavior ….”

What this means for companies is that they will have to design a compliance and monitoring program.  What it means for online advertising agencies is that they can expect new restrictions and levels of review from clients over their Web 2.0 marketing activities and should also expect to assume a role in their clients’ compliance and monitoring programs.  Companies will want to get a handle on what their marketing departments are doing to curry favor with bloggers and create buzz through viral online marketing and will be especially anxious to herd advertising and PR agencies into the corral, since the companies are legally responsible for the actions of these third-party agents.

If compensation, free products or other valuable incentives (such as sponsorships) are being offered in the hope of stimulating positive reviews, then the company will need to institute and document a process of advising bloggers and other new media commenters about their duty to disclose material connections and the limits on the factual claims they can make about a products and its beneficial effects.   There should also be periodic monitoring of the resulting posts, with documented follow-up action if necessary, to make sure they comply with the FTC’s endorsement guidelines.
If blogger relationships are managed through an advertising or PR agency, then the agency will likely have to provide detailed information for each campaign about its contacts with bloggers and will have to share in the responsibility of conveying the advertiser’s guidelines to them and monitoring their compliance.   Companies should include a specific allocation of responsibilities with respect to these issues in written contracts with their agencies.  At the very least, a company should reserve the right to audit and pre-approve an agency’s solicitation of bloggers so that the company knows which bloggers the agency is dealing with and whether the relationships are of a type that could lead to advertiser-endorser liability and can monitor the bloggers’ posts about the company’s products.

If this compliance burden is too onerous for companies and their online advertising agencies, the alternative is to implement policies that prohibit the payment of compensation or giving away of valuable products in the hope of generating positive online buzz.   Favorable reviews are not “endorsements” within the meaning of the Guides unless they have been incentivized in some way.

Tips for Bloggers

As for bloggers and other online commenters, they should be sure to disclose any compensation or benefits they receive to comment on products and, if they do have such a connection to an advertiser, should be very careful to follow the guidelines furnished by the advertiser or its advertising agency (which the advertiser is required to provide) and not make general or sweeping factual claims about the product or any claim that can’t be easily substantiated.  If a blogger chafes at submitting to this degree of oversight and control, he always has the option of buying the product himself, for example, rather than receiving it as a freebie.  The FTC has indicated that advertisers and not bloggers will be its main enforcement target.  However, a blogger who runs a “substantial operation” that violates the rules and who receives a warning will still be at risk.  Moreover, the FTC can adopt a more aggressive enforcement stance at any time.

The FTC’s rulemaking will heavily influence the way marketers generate buzz on the Internet and warrants close scrutiny of participation in blogger and viral incentive programs by all parties involved.


Credit:
FTC Regulates Blogger, Viral Marketing Relationships: Analysis and compliance tips

You’d think by now business owners would have figured out that social media is the next tidal wave on the Internet, and that they’d better get on the surfboard or get wiped out. Well, think again. SmartBrief on Social Media,  an e-mail newsletter that goes out to some 30,000 business readers, reports that nearly 85 percent of readers surveyed “have experienced resistance to social media as a business strategy.”

When asked “Where have you encountered the greatest resistance to social media in your organization?” the two leading responses were (not surprisingly) the president/business owner (21 percent) and senior management (20 percent). Of those readers that “successfully overcame resistance to using social media” at their place of business, more than half of them said they “just did it, and served as the role model themselves.”

Chris Brogan, author of the new best-selling book Trust Agents, suggests
it may require more than “just doing it,” however. He thinks it takes good arguments about improving the company’s communications and bottom line, not simply espousing the coolness of social media. He recommends sharing relevant case studies to prove that other businesses are getting legitimate results from using social media. It wouldn’t hurt to get a member of senior management to be a cheerleader, either.

“It’s just a matter of finding the right opportunity to recommend that your company is ready to play in the game,” Brogan says. “It might mean finding your top competitor already using the tools, but hey, that’s won several social media enthusiasts the chance to get things going.”

In an interview with SmartBrief on Social Media, marketing expert Valeria Maltoni, who writes the ConversationAgent blog, reinforces Brogan’s points, saying it’s crucial to “speak the language of business when describing social media” and “focus on the opportunities that exist in the marketplace.” The three most common mistakes Maltoni sees in pitching social media to senior management are not tying the strategy into business goals, lack of insight into where social media can be integrated into the company’s business strategy, and poor execution capabilities.

Maltoni says that entrepreneurs tend to immediately understand the benefits of social media: “They get it, they know they can use the tools to amplify their off-line activities and scale their own presence and participation in customer communities.” Large organizations, on the other hand, may be more resistant because they are “more siloed and less organic.”

The bottom line seems to be that for business leaders to embrace social media, they’ll need to hear a compelling business argument that includes some justification for ROI.


See more here:
Businesses Still Wary of Social Media

Remember part 1 and part 2 of my interview with Gordon Magee of Drs. Foster Smith? It’s been a while and I’m back to wrap up sharing what I was able to learn from this pioneer of e-commerce video.  I probed Gordon for details on the strategic, long-term approach he’s using to drive multi-channel sales with video.  In all honesty I did NOT learn of the rigid, measured direct-response strategy that I had expected. What I did uncover was how important trust is to a company that is, yes, financially precise and metrics-driven.  Trust, as it turns out, appears to be the main driver in the company’s early, yet large, investment in video.

Uh oh, is this “branded entertainment”?

Now as many of you know I’m not a big fan of traditional, mass media “branding” advertising.   In fact, I view most of it as a poorly executed, glorified art form — not a science.   It thrives on waste.  How many times have you been in a meeting and fallen back on the comfortable excuse of, “well… it did help brand us.”  Unfortunately, many marketing failures are labeled “branding wins” when, in fact, the man or woman running the show (CEO, CMO, COO/CFO) knows better.

In many cases, a campaign’s tactics failed to produce a tangible, strategic business output.  It failed.  You can call it a win but they won’t when you leave the room.

I mention it because most use of video on the Web has been rather gratuitous.  They call it “branded entertainment.”  It has a tendency to be aimless eye-candy that marketers hope gets passed around and… and… and well… create attention/awareness, interest, desire and action (with the action piece being completely un-tracked and rather blindly assumed).

In this tough economy we need new, improved (ie. trackable, reliable, PROVEN) strategies not glorified tactics.  Some call it marketing science and it’s time has arrived.

Now I’m not suggesting Gordon was or is wasting his marketing budget.  What I AM suggesting is that the direct response metrics were left unclear to me and, perhaps, with good reason.  Maybe DrsFosterSmith.com is too early on to really use them or — heck — reveal them to the world.

Increased trust as a valid goal

Let’s assume “better trust” or “more trust” among customers (new and old) is a valid business output.  How tangible is it?  How measurable is it?  Heck, should it even be measured at all?  Now we’re getting into dangerous guru territory where some believe ROI to be a silly pipe dream.  But what if we could assign some tangible behaviors that customers demonstrate to “increased trust?”

Even more wild — what if we just assumed that part of a holistic marketing strategy was a foundation that must be built without expectation of measurement?

Gordon says…

“… we probably have more articles on pet care and more veterinary articles online than anybody in the country. So to go into video and do the same thing was just a natural outgrowth of what we have been doing for 25 years really.”

Why so much content?  Trust.  When it comes to pets and doctors (veterinarians) it’s not about price.  It’s not about color, flavor, speed, accuracy or anything that would be desirable (aspirational).  It’s about TRUSTING someone to help you take care of your pet’s health, well-being or a disease.  Trust matters — in this case perhaps more than anything else.

Measurement: The details

Says Gordon, the future is all about…

“… a blending of a branding relationship development type strategy along with an ROI measurement.  The ROI will be much more difficult to measure in some respects. Certainly we can use analytics tools to find out what people are clicking through on and if they have watched a video and what they did and so on. But frankly some of that gets so granular, you can have data overload, that you’re better off looking at the larger picture to determine what’s going on.”

Now typically these kinds of comments fly red flags with me… but I’m starting to wonder at this point.  Gordon continues as I push him for details on WHAT he measures, why and what it proves…

“Are our sales moving up? Are people spending more time on the site? What’s actually happening? If we then try to drill down to every little item — at some point it becomes impractical apart from what some speakers will tell you at the Internet Retailer or show.

The first thing I study when I want to find out how we are doing is… what did we sell yesterday? What were our overall sales? What products were selling?”

Now at this point I was really starting to wonder, I’ll admit.  This sounds like a BRANDING campaign and perhaps so… one aimed at creating or fostering trust.  Gordon continues…

“Yes, we will look at email returns. Did this email do well? etc. Are people clicking through? What’s our click through rate? Those high level metrics are important so you have got a clue. But at the end of the day, if you have got all kinds of clever little analytical measurements that are telling you what people are clicking through and where they are going… well if you’re not selling anything that doesn’t matter.”

So I think you work from the other end of the pyramid, the sharp point of the pyramid being, ‘Did we sell stuff?’ Then drill down as far as you need to, to find out how you got there. Then stop before you drive yourself crazy.”

Ok… Gordon seemed to come back to measurement as being a worthwhile strategy at the end but it left me scratching my head a bit — but in fairness to Gordon and the company that’s just fine.  It sets us up to ask more questions later )

User / customer generated video

And what about user generated content (UGC) — specifically video?  It would seem ripe for opportunity in the pet realm with all those cute cuddly little creatures of all sorts out there.  To my surprise Gordon said no.  His reasoning was remarkably sound and, not surprisingly, all about TRUST.

“Jeff, we will likely not get too much involved in that.. and part of the reason has to do with us being owned by veterinarians and people having that trust relationship with us regarding the information that they get.

We want to make sure that there are no misunderstandings about the veterinary pet care information that we provide. A misunderstanding could happen if we would have, let’s say, a customer quote something that isn’t the latest veterinary information from research and so on… have another customer read that and go, ‘Oh yeah, I should feed my dog X because customer Y said that’s the right thing to do,’ and maybe they didn’t read three entries later our analysis of, you know, ‘That’s actually not a good idea,’ kind of a thing.

I’ll give you just a quick example of something simple. We were on television here a few weeks ago. We brought pets down to Chicago’s In the Loop with iVillage. Had our veterinarians on, the question came up, ‘Is it OK to give milk to my cat?’  Of course, I’m from Iowa.  We grew up doing that. And one of the vets said, ‘Actually, you know, it’s really not a good idea because they can have digestive problems. It’s really not what you should be feeding them.’

So little things like that that seem to be so common knowledge but incorrect are the kinds of things that we would not want to have on the website.

So we probably won’t do that. Our goal is to brand us… and not the other customers. We may at some point have a forum… where people can interact with us, but the scale of that, at times, it becomes so huge that management becomes a challenge. We just started a photo contest this past week. Right now we’ve got 5000 photo entries already in one week, and we’ve got to manage those and determine the winners, and so on.  And I think ditto would happen with a forum.

Now, sounds like a really good marketing message to say, ‘Gordon, did you just hear yourself? If you can bring that many people to your site, wouldn’t you want to do that?’

Well, we do want to have them come but we want to have them be provided accurate information and not just have a cool Web 2.0 interaction with them . We want them to interact with information. At some point we might do the forum so they can interact with each other — I would say there’s some merit to that — but management’s part of the issue for us.

Candidly I think DrsFosterSmith.com’s approach is either a little from the hip or he is just holding back a bit.  In either case I hope Gordon might share more details with us in months ahead.  We marketers are living in historically difficult times where new tools are needed for marketing in the new economy.  As my loyal followers know, I have a decent nose for sniffing out marketing waste and I’ll continue to share my research moving forward.

Still not got your fill of Gordon?  Check out this short interview he was good enough to give me recently while in Chicago.


Excerpted from:
Using Video to Drive Sales in a Down Market

Trust toward business has reached a new lows:  10% of Americans now say they trust big business (Financial Trust Index). 77% say they refuse to buy from a company they distrust (2009 Edelman Trust Barometer). But the truth is that before the current economic crisis people had already lost faith in business.  Contrast this with the mid-1950s, when about 80% of U.S. adults said that big biz was a good thing for the country and believed that business required little or no change.

Remember part 1 and part 2 of my interview with Gordon Magee of Drs Foster Smith? It’s been a while and I’m back to wrap up sharing what I was able to learn from this pioneer of e-commerce video.  I probed Gordon for details on the strategic, long-term approach he’s using to drive multi-channel sales with video.  In all honesty I did not learn of the rigid, measured direct-response strategy that I had expected. What I did uncover was how important trust is to a company that is, yes, financially precise and metrics-driven.  Trust, as it turns out, appears to be the main driver in the company’s early, yet large, investment in video.

Uh oh, is this “branded entertainment”?

Now as many of you know I’m not a big fan of traditional, mass media “branding” advertising.   In fact, I view most of it as a poorly executed, glorified art form — not a science.   It thrives on waste.  How many times have you been in a meeting and fallen back on the comfortable excuse of, “well… it did help brand us.”  Unfortunately, many marketing failures are labeled “branding wins” when, in fact, the man or woman running the show (CEO, CMO, COO/CFO) knows better.

In many cases, a campaign’s tactics failed to produce a tangible, strategic business output.  It failed.  You can call it a win but they won’t when you leave the room.

I mention it because most use of video on the Web has been rather gratuitous.  They call it “branded entertainment.”  It has a tendency to be aimless eye-candy that marketers hope gets passed around and… and… and well… create attention/awareness, interest, desire and action (with the action piece being completely un-tracked and rather blindly assumed).

In this tough economy we need new, improved (ie. trackable, reliable, proven) strategies not glorified tactics.  Some call it marketing science and it’s time has arrived.

Now I’m not suggesting Gordon was or is wasting his marketing budget.  What I am suggesting is that the direct response metrics were left unclear to me and, perhaps, with good reason.  Maybe DrsFosterSmith.com is too early on to really use them or — heck — reveal them to the world.

Increased trust as a valid goal

Let’s assume “better trust” or “more trust” among customers (new and old) is a valid business output.  How tangible is it?  How measurable is it?  Heck, should it even be measured at all?  Now we’re getting into dangerous guru territory where some believe ROI to be a silly pipe dream.  But what if we could assign some tangible behaviors that customers demonstrate to “increased trust?”

Even more wild — what if we just assumed that part of a holistic marketing strategy was a foundation that must be built without expectation of measurement?

Gordon says…

“… we probably have more articles on pet care and more veterinary articles online than anybody in the country. So to go into video and do the same thing was just a natural outgrowth of what we have been doing for 25 years really.”

Why so much content?  Trust.  When it comes to pets and doctors (veterinarians) it’s not about price.  It’s not about color, flavor, speed, accuracy or anything that would be desirable (aspirational).  It’s about trusting someone to help you take care of your pet’s health, well-being or a disease.  Trust matters — in this case perhaps more than anything else.

Measurement: The details

Says Gordon, the future is all about…

“… a blending of a branding relationship development type strategy along with an ROI measurement.  The ROI will be much more difficult to measure in some respects. Certainly we can use analytics tools to find out what people are clicking through on and if they have watched a video and what they did and so on. But frankly some of that gets so granular, you can have data overload, that you’re better off looking at the larger picture to determine what’s going on.”

Now typically these kinds of comments fly red flags with me… but I’m starting to wonder at this point.  Gordon continues as I push him for details on what he measures, why and what it proves…

“Are our sales moving up? Are people spending more time on the site? What’s actually happening? If we then try to drill down to every little item — at some point it becomes impractical apart from what some speakers will tell you at the Internet Retailer or show.

The first thing I study when I want to find out how we are doing is… what did we sell yesterday? What were our overall sales? What products were selling?”

Now at this point I was really starting to wonder, I’ll admit.  This sounds like a branding campaign and perhaps so… one aimed at creating or fostering trust.  Gordon continues…

“Yes, we will look at email returns. Did this email do well? etc. Are people clicking through? What’s our click through rate? Those high level metrics are important so you have got a clue. But at the end of the day, if you have got all kinds of clever little analytical measurements that are telling you what people are clicking through and where they are going… well if you’re not selling anything that doesn’t matter.”

So I think you work from the other end of the pyramid, the sharp point of the pyramid being, ‘Did we sell stuff?’ Then drill down as far as you need to, to find out how you got there. Then stop before you drive yourself crazy.”

Ok… Gordon seemed to come back to measurement as being a worthwhile strategy at the end but it left me scratching my head a bit — but in fairness to Gordon and the company that’s just fine.  It sets us up to ask more questions later )

User / customer generated video

And what about user generated content (UGC) — specifically video?  It would seem ripe for opportunity in the pet realm with all those cute cuddly little creatures of all sorts out there.  To my surprise Gordon said no.  His reasoning was remarkably sound and, not surprisingly, all about trust.

“Jeff, we will likely not get too much involved in that.. and part of the reason has to do with us being owned by veterinarians and people having that trust relationship with us regarding the information that they get.

We want to make sure that there are no misunderstandings about the veterinary pet care information that we provide. A misunderstanding could happen if we would have, let’s say, a customer quote something that isn’t the latest veterinary information from research and so on… have another customer read that and go, ‘Oh yeah, I should feed my dog X because customer Y said that’s the right thing to do,’ and maybe they didn’t read three entries later our analysis of, you know, ‘That’s actually not a good idea,’ kind of a thing.

I’ll give you just a quick example of something simple. We were on television here a few weeks ago. We brought pets down to Chicago’s In the Loop with iVillage. Had our veterinarians on, the question came up, ‘Is it OK to give milk to my cat?’  Of course, I’m from Iowa.  We grew up doing that. And one of the vets said, ‘Actually, you know, it’s really not a good idea because they can have digestive problems. It’s really not what you should be feeding them.’

So little things like that that seem to be so common knowledge but incorrect are the kinds of things that we would not want to have on the website.

So we probably won’t do that. Our goal is to brand us… and not the other customers. We may at some point have a forum… where people can interact with us, but the scale of that, at times, it becomes so huge that management becomes a challenge. We just started a photo contest this past week. Right now we’ve got 5000 photo entries already in one week, and we’ve got to manage those and determine the winners, and so on.  And I think ditto would happen with a forum.

Now, sounds like a really good marketing message to say, ‘Gordon, did you just hear yourself? If you can bring that many people to your site, wouldn’t you want to do that?’

Well, we do want to have them come but we want to have them be provided accurate information and not just have a cool Web 2.0 interaction with them . We want them to interact with information. At some point we might do the forum so they can interact with each other — I would say there’s some merit to that — but management’s part of the issue for us.

Candidly I think DrsFosterSmith.com’s approach is either a little from the hip or he is just holding back a bit.  In either case I hope Gordon might share more details with us in months ahead.  We marketers are living in historically difficult times where new tools are needed for marketing in the new economy.  As my loyal followers know, I have a decent nose for sniffing out marketing waste and I’ll continue to share my research moving forward.

Still not got your fill of Gordon?  Check out this short interview he was good enough to give me recently while in Chicago.

Click here to view the embedded video.


Read the original:
Using Video to Drive Sales in a Down Market with Trust

You’ll recall part 1 of my interview with Gordon Magee of Drs. Foster Smith.  I’m back to continue learning of his strategic, long-term approach to using video to drive multi-channel sales — and answering your specfic cost questions. After reading part 1 a good number of you wrote to me privately expressing hunger for information on cost.  Gordon didn’t get into the specific cost numbers with me but I can share some of his early struggles and “production / cost migration path” with you.  I wasn’t planning on it so thanks for asking.  I need to know what YOU need to know ) so keep comments coming please.

I’ll return to the overall measurement and “user generated content”  (use of video supplied by customers) questions in a few days.

Let’s first start by understanding the company’s multi-channel approach to advertising…

Gordon Magee: “This past year we decided we would go into television in a larger way. The owners decided to work on a broader campaign strategy for advertising. We have always done print media and that kind of thing as well but we kind of bundled print media and radio advertising. We haven’t done a lot of radio, but television as well.

So we created a television program. Then about a year ago or so I put in a proposal for us to get video on our website and create our own video studio. That got approved and we started building the studio this fall.”

It may be helpful for you to compare this kind of environment to your own when considering approaching cost and budgeting for ecommerce-focused video.  Next, Gordon shared the evolution of his company’s approach to Web video — specific to how they decided to build (invest internally) rather than lease (outsource).  It’s interesting to note that they were already “in video” by creating TV ads.

Gordon Magee: “We outsource in the sense that we use the production company, one in Los Angeles, one in the Twin Cities when we made the last, more recent commercials. We have used a California production company in the past. But the internal decision to create the video studio was definitely Web related as opposed to TV commercial related.

So they really were separate entities in terms of the business case. I think with the advent of higher speed Internet connections for most people these days – there are a smaller and smaller number that are still on dial-up – and then the infrastructure capabilities that the Internet has that’s going to make video just very, very common, even more so than it is now.

It seemed to be that it was the right thing to do. Our company’s ethos, Jeff has always been to do things internally and develop the expertise internally so that we are not dependent on outside sourcing whenever that’s possible. Because we are a catalog company and have essentially a pretty huge creative department, doing our own photography and that kind of thing forever since the advent of the company, the idea to move into video wasn’t a hard decision.”

So as it turns out Gordon’s approach was driven by the company’s traditional, long-standing belief in “owning” the creative production process and a realization that the distribution channel (the Web) WAS going to explode opportunity.

Gordon Magee: “Script development of course was helped greatly by our creative department who wrote script and art direction terms and then we tweaked those. So we had the internal expertise to try it and not be afraid to do it. So we just decided that we were going to go ahead with that.

I think it (the decision to outsource versus build your own competency) really has to do with people’s expectations. As you know, being in the Internet business, expectations on the Internet continue to rise for the consumer. I think the average consumer probably doesn’t realize the effort that goes into making a website very easy for people to use and all of the other things that are on there, ancillary things like video and articles and so on.

But I think with those expectations arising, we know that video is going to be huge. And certainly with things like YouTube and other sites like that, people are going to those sites. We wanted to be part of that for the educational side of the company.”

Yet there’s more to the company’s history that plays into it’s decision to invest in a PUBLISHING company within their direct response/ecommerce selling infrastructure…

Gordon Magee: “When the company started 25 years ago – this is our 25th anniversary literally this year – when they started we were owned by two veterinarians, Dr. Ray Foster and Dr. Marty Smith. When the company started, one of the things they wanted to do was educate pet owners to be able to use products better and to care well for their pet. That came out of their veterinary background.

Certainly that’s a good marketing strategy as well. But the primary thing was let’s make sure pet owners know what they are doing. They can make better buying decisions and so on.

When they started their catalog they went to catalog conferences. They were new at all this. The catalog experts said, ‘You know you guys are devoting way too much space to education in your catalog. You can’t do that on a square inch analysis basis and have it come out in a cost-effective way.’

They decided very early on to ignore that advice. They dedicated I think 10 to 15% of every catalog to educational articles. That really became our niche for the customer. It also provided a good marketing tool in that people kept the catalogs because the articles were in them.

Over time, that trust relationship developed with the customer. So we probably have more articles on pet care and more veterinary articles online than anybody in the country. So to go into video and do the same thing was just a natural outgrowth of what we have been doing for 25 years really.”

Like many pioneers, the founders were told “don’t do THAT!” when it came to innovating.  Much like Buy.com cut against the grain with its approach (proven successful by now?!) to mixing “media company” with “lowest price e-commerce company.”

What say you, Revenews readers?  I hope this may help clear up questions regarding costs and how to approach them in strategic terms.  I’ll return shortly to wrap up with final thoughts on Gordon’s measurement approach and use of user generated video content.


View post:
Case Study: Video Publishing to Drive Sales (PART II)

google-adwords-logoThe potential that AdWords has as an acquisition model should be determined by your pre-existing business model. For instance, any acquisition channel can be approached in one of three general ways: (1) as a top priority, (2) as a necessary evil, or (3) as a robust component to a comprehensive acquisition strategy. In leveraging AdWords then it’s important you do so in the context of your greater acquisition strategy.

AdWords as a Top Priority
If your business model demands a constant and high volume of new customers, then managing your AdWords will require a comprehensive solution. That solution, in turn, should feature a resource (PPC manager, 3rd party agency, etc.) that is experienced with PPC and very knowledgeable about your industry. In addition to monitoring campaign performance, your chosen resource should be providing in-depth analytics on conversions so that your campaigns can be optimized on an ongoing basis.

AdWords as a Necessary Evil
evil-googleConversely, if AdWords is a channel that you plan to leverage just because your competition is doing so, you should consider a solution that can maximize returns on your limited investment in PPC. Here, you will want a resource that can quickly identify the most appropriate keyword sets according to (1) your budget, (2) your niche, and (3) your main competition. In this case, you require an AdWords solution that is intimately familiar with your product and experienced with PPC in general.

AdWords as Only Part of the Picture
Finally, if PPC is just one component to an already comprehensive online acquisition strategy, then you should consider how to both leverage AdWords as a standalone channel, and use it to shore-up your other channels. For instance, you may want to weigh the pros and cons of allowing your affiliates to leverage the channel as well.

Although there is an opportunity here to encourage your affiliates to leverage PPC in doing so you will also need to offer your affiliates additional support and tools so that they can produce results, and not just clicks. Affiliates will require tools and support to optimize their own PPC campaigns.

For example, Google provides excellent analytics on click-through-rates, but it cannot help your affiliates determine the value of each keyword they bid on. If you’re going to encourage your affiliates to use PPC then your affiliate marketing platform should be able to track referrals according to keywords. After all, optimizing a PPC campaign requires that you have detailed reports on all you KPIs. These include referred customers, average transaction, and the long-term revenues generated by each AdWords ad.

Maximizing Your Return on Clicks
Optimizing your PPC strategy requires that you consider how PPC will relate to and affect your overall acquisition strategy. After all, PPC is just one of several acquisitions channels, and should complement your other acquisition efforts.

As with any powerful acquisition channel, PPC has the potential to generate either great returns or great losses. Making sure that your Adwords campaigns are managed with the right experience and supported by tracking software that can collect ongoing intelligence on campaign performance, then, are key components to PPC success.


Here is the original post:
Fitting AdWords into Your Acquisition Strategy

What is an acceptable payoff in terms of time investment put IN and the return taken OUT (actual sales) of social marketing?  What’s reasonable to expect and how soon?  I’ve begun to crack the nut that is this question by talking with people who have direct experience. 

Let’s be honest — when people start talking about marketers becoming publishers in a ’social marketing’ context it can quickly begin to smell like Web marketing snake oil or ‘branded entertainment’ hogwash.  One way of fighting this is to get, as Sam Decker of Bazaarvoice said to me, “operational, not conceptual” — consider less and do more.  But before we start doing it’s critical to justify and plan investments in what amounts to online publishing-with-a-purpose.

Picking up from my prior story, Rok Hrastnik of Direct TV marketer, Studio Moderna (and speaker at the next eComxpo) believes that “the content is your way in … your bargaining chip to win consumers’ attention.”

He says it’s the first step in a relationship (with prospective customers) that, someday, may result in profitable sales.

“The emphasis being on ’some day.”

To me this was beginning to sound a lot like branded entertainment.  Someday?  Yet these are big questions and I knew Rok to be an experienced guy so I pressed him for more.  In fact, I’ll share a couple of examples — focusing on Studio Moderna’s Dormeo.com brand (mattresses and bedding) and Wisconsin pet goods purveyor, DrsFosterSmith.com.  Both companies report steady sales streaming in as a direct result of publishing efforts.

Setting Expectations

How fast have each of these companies managed to track back sales to efforts?  In a matter of months — and make no mistake these are direct response marketing companies that have been around for a good while.  They know how to get things done on the Web (built for direct response).

Ok — so I’ll make quick work of how this gets done. First, this “marketing as publishing” model is not a short-term vehicle as evidenced by companies like Drs. Foster Smith who’s PetEducation.com site produces audio-visual content internally (they don’t outsource).  That takes time to build and get good at (production value) yet Drs Foster Smith have decades of content creation to lean on (they pioneered “magalogs” — content-heavy magazines).

On the other side, the Dormeo brand leverages outside writers to create e-mail newsletter content that establishes continuous, often viral relationships with ’someday customers.’  When I say ‘viral’ (another voodoo word) I’m referring to customers who love to pass Dormeo’s content to family and friends under promotional incentive.

“Content creation and publishing is the long term thing you do to gradually convert your prospects into customers in ways they may actually welcome,” says Hrastnik who’s busy selling products that consumers don’t exactly purchase frequently or on impluse — mattresses!

Yes, “It Depends”

Sure how fast you’ll see results and what those results look like will vary… but be assured the metrics are not “videos viewed” and/or “e-mail open rates.”  They’re far more serious — metrics that please CFOs and CEOs.  No, they’re not always focused on the immediate sales transaction.  Think “actions taken” that involve interaction with the brand itself (sign-ups, registrations, downloads etc.).  Things you’re doing that help prospects move forward along their “chronology of purchase intent” — toward purchase.

Nobody expects immediate results these days.  They just expect you to have a plan that can be measured and adjusted as you execute it.

Don’t forget the most important aspect — making *occasional* calls to action.  Pitching content-lovin’ prospects what you’ve got to sell.  What’s the proper mix of content + sales pitching?  Again, that depends on what you’re pitching to a degree and Hrastnik only tends to talk about it “offline” )

Talk Talk

What to talk about?  Stated plainly, Hrastnik suggests if you’re selling things like mattresses, don’t limit yourself to talking with customers about sleeping or your brand — “talk about sex, relationships, health, productivity, motivation, success and other things that people actually care about.”

How do you say it?

Although Bazaarvoices’ Decker is invested in the concept of customer-generated content, he admits, “Customers won’t create content in all the places you need to reach the market and at the times you need to hit your goals.”

“The key is to leverage their voices, either in the creation of your marketing or by using their words directly, to make your ‘talking-at-them’ more authentic, credible and relevant,” says Decker who recommends a listen-and-react model to creating content that could be published as text/email or video.

Aagin, Hrastnik outsources to a team of external writers and graphic artists to get the job done but holds on to the promotional and database marketing aspects.

Just Do It

“Get operational, not conceptual,” says Decker who worries that too many marketers invest time planning and not executing.

He also suggests creating an internal “council” focused on forward-thinking ideas — working to drive them forward across multiple functions and make them happen.  This, he says, fosters the required cultural shift that crosses multiple departments.  Essentially, “it takes a company” to plan and execute a content-driven lead or sales generation strategy.

In the end all of this can be a little scary.  Yet by tying even the smallest of “baby step” trials to their impact on sales — and ultimately profit and loss — progress can be made.  Marketers simply must take a little risk and definately take a note from the book of direct response marketing.


See the original post here:
Justifying Social Marketing: From Publishing to Sales

While the economy may look pretty bleak and online ad revenue is down, there is good news when it comes to ecommerce.  Why? Well, online retail sales were up in the first quarter of 2009.

A survey conducted by Shop.org and Forrester in early April noted that almost sixty percent of retailers reported that their online sales increased during this time period.  In this study, a total of eighty retailers participated. Other findings discovered that thirteen percent of the online retailers noted that business remained flat – in other words, their business did not decrease at all due to the recession.

What Types of Businesses Do Particularly Well?

Larger retailers, those business earning $100 million dollars in online annual sales in particular, did quite well – as a full eighty-seven percent of these retailers noted an increase in online revenue.  However, about half of the smaller retailers, those businesses that earn $10 million and below in sales) and medium sized businesses, online businesses that earn $10 million to $100 million per year, reported an increase in sales as well.

Almost seventy percent of brand name manufacturers and multichannel retailers noted their sales increased during the first quarter of 2009.  Lastly, forty percent of online retailers reported an increase in sales during this time period.  Not bad at all!

Etsy.com Flourishes During This Downturn

All that said, there are certain businesses that are flourishing during this economic downturn.  One stand out is Etsy.com.  In fact, in December of 2008, Etsy sold $12.9 million dollars worth of items from their website. Moreover, the site had 411 million page views and 165,000 new Etsy accounts were created in December.  In January and February of 2009, the website sold $10 million and $10.3 million worth of items respectively.  In particular, the vintage category is doing really well on the Etsy site.

Marketing at Etsy.com

As far as marketing goes, the largest source of traffic to the site is derived from word-of-mouth advertising.  Etsy also has a cooperative subsidized advertising program.  Moreover, the company also as an Ad Words expert, recently hired an email marketing expert on its staff and have been revamping their site to make it more SEM and SEO friendly.  The company is also taking advantage of the ever popular social media marketing route.  In fact, Twitter is the third-largest source of Etsy’s traffic at present.

All in all, while many brick and mortar businesses languish during this recession, many online businesses continue to prosper.


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Online Retail Sales Strong Despite Recession

ad:tech moved to Moscone West this year which I didn’t notice until I walked into RSA and worried that I had the wrong week for ad:tech. A short walk and I was Moscone West a new three storey convention hall.  The first floor was jam packed with people.

If you thought the line at AffiliateSummit was bad in Vegas, you would be amazed.  There were 12,000 people registered and it looked like most of them were in line waiting for their registration material. Luckily I had a press pass and headed inside past the waiting throngs. As with AffiliateSummit, they were forced to tell everyone to just head upstairs and go to sessions without passes.

Talking with ad:tech staff I found that registrations were slightly lower than last year, but you really can’t tel with the show split over three floors.  The exhibit hall is two floors, and all the sessions are on the top floor. The ones I went to were pretty full and the enthusiasm was still abundant.

The ad market is still alive.  Numbers are interesting.  Talking with Frank Addante of Rubicon about the market he sees that while CPMs might be dropping, inventory is growing at a pace that publishers are making about the same money from their growing inventory.  He ses this continuing a bit more, but he also sees more money coming into online with a net gain as time goes on.

Of course, the highlight of the show was the Affiliate Summit Beer Garden.

Excerpted from:
ad:tech Day One: Recesssion? What Recesssion?