Google Think Mobile in Stockholm

My last visit to Google Think in Copenhagen last time  gave a great impression. Usually these events leave me yawning as they are mostly a sales event for the companies involved with few or no new insights shared. But the event in Copenhagen was good, and I have high expectations of todays even @ Tekniska Museet in Stockholm.

Some more Groupon bashing

I am an outspoken disliker of Groupon. I don’t see it being lasting and succesful, and I would never invest in the company.

Groupon is now looking to raise $750 million in IPO to go public – and need to open up their books for this. The numbers are less than great. Investing heavily in marketing costs and expansion of number of employees the company turned in a loss of over $400 million in 2010.

Why I wouldn’t invest in Groupon
- Easily copied business model that relies heavily on size of membership. Facebook already has more than 600m members worldwide, Groupon has 83m.
- Members are more loyal to the coupon, and businesses running Groupon campaigns have a hard time making return business (ROI). If companies running campaigns on Groupon can’t turn a profit, they will stop marketing on Groupon.

If I was one of the exec’s at Google who pushed on buying Groupon I would be thanking my lucky star that the offer was turned down.

What others have to say about Groupon

Just to tie in with my post from yesterday where I explained why I wouldn’t spend my money on Groupon, here are some interesting link.

Groupon satisfaction rate not so hot – a study presented in the Wall Street Journal, where 40% of the merchants responding said they wouldn’t run such a promotion again. One of the most common findings was that Groupon users were bargain hunters that wouldn’t spend more and return to the business at full price was low.

Posies Bakery and Café explains how they lost $8000 doing a Groupon deal – a post from last year that has spread tremendeously online. Of course they did some basic mistakes (for example not capping the deal), but their complaints about the way Groupon deals work are similar to my reasons in yesterdays post. The customers are a terrible return on investment; they will not spend more than the coupon they have in hand, and they will not return (they will go to the next local deal next for the next purchase)

Not surprisingly though, Groupon states that 97% of featured businesses ask to be featured again.

Why I don’t spend marketing money on Groupon

Location Based Services (LBS) – currently the great hype

About 10 years ago a local online newspaper had an idea. They started a service with different offers and if enough people signed up for the offer it would be released. Sure sounds like a great idea doesn’t it?

Well the whole project went down the drain after a couple of months. The idea was good, and the products and services offered were great (hell of a lot better than the products and services that GroupOn in Sweden is offering), but the timing was not right. Internet users weren’t ready for this. People were sceptical of purchasing online.

Today consumers are more secure in online commerce and Groupon is one of the fastest growing companies in the world. Also it seems like EVERYONE is jumping on the location-based-deal-bandwagon, not only Facebook with its Facebook Deals.

In Sweden there are at least 3 major online directories that have released their own LBS promotions.

- Eniro Deals by Eniro (online phone book/yellowpages /search listing)
- Let’s Deal by Hitta.se (same as above) + Blocket (marketplace similar to craigslist) + Svd (daily newspaper)
- Lokaldealen by MSN and LokalDelen = same as Eniro but considerably smaller, owned by European Directories

I am getting calls from at least one LBS-company a day from all around Europe. They all require at least 50% discount. As the company I work at do not have sale margins coming close to that, I decline every time – to the great amazement of the seller as “this is the biggest thing  right now – you can not afford not to do this”

Well, there are a couple of reasons why I do afford not to make throw my money down the drain in the LBS-hype right now.
- Bargain hunters are not quality customers. The way that the current LBS-campaigns are run of discount of at least 50% will mainly attract customers whose brand loyalty will be low, and who spends less. Let’s face it, the customer is attracted by a big -XX%, and not my product.
- The value of the consumers generated by the campaign is a loss even in the long run – no matter what the sales person says. The cost of giving a >50% discount is huge for most services and products, and if I’m going to spend that amount on a CPA (cost per acquisition) I’m going after a consumer who will spend money. I’d rather give a 0% discount, and use the whole margin in generating the sale as I know that a consumer who pays full price is interested in my product and will more likely return next time if the experience was satisfactory.  I will probably not acquire the same amount of sales as with a Groupon deal, but my return-on-investment will be greater, which is the bottom line.

I am not saying that the idea of LBS is bad. It’s actually really good. The problem is the current execution which is diluting the market, the products and services offered is uniform and uninteresting, and businesses willing to give a +50% discount will run out as they realize the low value of the Groupon customer.

So, what kind of LBS would make me interested as a marketer? Well, that would be one that is realistic and actually similar to the one here in southern Sweden 10 years ago. I have a deal (that is decent, maybe a 15% discount or an added product with a good value – this way I know that they are interested in my product and not my huge discount) and if enough people sign up for it, it will be released.

But as long there is a requirement of a 50% discount, GroupOn will never be able to offer my companiy’s products to their members, and will have to keep providing hotel nights, restaurant deals and cheap neon watches to their members.

And yes, their members will grow tired of receiving two e-mails with 60% discounts on Spa treatments, hotel nights and restaurant dinners every day.

95% of iPad users in Sweden are men

An article in one of the leading Swedish daily newspapers gives us some interesting statistics on iPad users in Sweden.

- 95% of users are male
- the average weekly iPad usage is 16,4 hours
- 86% responded that they mainly use their iPad between 6pm and 12am
- 47% of the respondents said they could consider paying for apps that are used for productivity, but not willing to pay for social media apps.

So what does this tell us? Well, men are more likely to be early adopters in technology (and my guess is that it is also viewed as a status symbol, e.g. penis enhancer), and that iPads are used mainly for recreational purposes – media, games and social media.

What’s the value of the ‘Like’?

This question is hard to answer. There are a lot of variables that need to be accounted for, and the ultimate question is what kind of value you want to measure.

According to this Adweek article, Vitrue (a social media company) calculated the value of a ‘fan’ to £3.60 when considering media impression

Vitrue arrived at its $3.6 million figure by working off a $5 CPM, meaning a brand’s 1 million fans generate about $300,000 in media value each month. Using Vitrue’s calculation, Starbucks’ 6.5 million fan base — acquired in part with several big ad buys — is worth $23.4 million in media annually.

For an e-commerce marketer the value of each like in ROI on sales would be even more interesting – is it worth to have a budget on increasing the Facebook fan base?

I fellow online marketer in e-commerce shared some numbers and figures with me.  Without disclosing too much confidential information we concluded that each fan who liked the company was worth 1.5 in ROI on sales as they had invested in gaining likes on Facebook to their company.

A good number, but of course not as helpful to you readers as there is a lot of crucial details not shown (due to confidentiality). But it does show that social media budgets do have a good direct return on investment.

Of course, you also need to know how to communicate effectfully with your fans after you have gathered them to make sure that you get that ROI.

Why do you still pay for SEO-management?

The last couple of years I’ve heard many marketing directors and CEO’s in e-commerce making similar statements; “we need to be top ranked on google organic search for important search terms”.

The follow up question should naturally be – why? Is it to drive awareness? Build brand equity? Increase visitors? Increase sales?

10 times out of 10, the response is that the need for top ranking on google is to drive sales. There are many research studies and graphs providing evidence that the top positions in the search engine results are the ones that get most attention and clicks. An eye tracking study done at Cornell University shows how attention and clicks are distributed among search engine results. Number one gets 56% of the clicks, number two gets 13% and number three gets 9% of the clicks, everything below this is a marginal.

Of course, SEO-companies are really pushing these studies and results in their sales pitches. It’s hard to argue against it. Of course you want 56% of clicks from all searches made on “men’s clothing” if you run a site selling men’s clothing online.

I say kill your SEO budget and quit wasting your money.

1. As shown, only top position has a significant effect. Already if your down on position number two, you will only receive 13% of the clicks.

2. If you’re in a highly competitive field the chance is pretty good that everyone on the first two pages of the search results are paying SEO-agencies and experts a good deal in trying to reach that top 3 positions – of which I already showed you that you’re basically invisible if you’re not number 1 – and usually this will be the market leader.

3. The market leader is not ranked number one because they have the best SEO agency, they are on top of search rankings because they have a great site that users love, good brand recognition and they are doing a lot of other great online marketing activities that strengthens their online presence. The top 10 in the search rankings on highly competitive keywords basically have equally good SEO-agencies – the difference in success lies elsewhere.

4. The amount of keywords you can optimize your website for is highly limited. If you’re selling men’s clothing online there are many different keywords that are equally strong. First the general words such as men’s clothing, online mens clothes, mens fashion, mens fashion online, clothes online. And then there is the endless varieties ofmore specific search terms – men’s shoes, men’s shirts, men’s suits, mens suits online etc.

5. You can only present limited and very general information in the title and site description that appears in the search results. No sales information, no specials promotions or offers. For best SEO results you need to follow a strict guideline that keeps your options very limited in what you can tell google users about your site.

6. Last, but not least: google users have learned to use the sponsored links when searching with shopping in mind. The information presented in the sponsored links is more relevant for the shopping minded searcher. If I am searching for sites that are selling classic mens bow ties, I will most likely find relevant search results in the sponsored links.

If you have the greatest site you will eventually end up in top position on the google search rankings whithout spending anything on expensive SEO expertise. Google builds their business on giving their users what they are looking for, as relevant as possible, and there is no way a site that doesn’t deliver will be top ranked no matter how much money is spent on SEO agencies.

So, drop your expensive SEO agencies and look elsewhere to spend that budget. Adwords is a good alternative. You can target potential customers with relevant information, and there is no limit on the amount of keywords you can optimize your ads for. Also, make sure you have a great site that users love. There is nothing that beats satisfied customers in increasing search engine rankings – they will link to your site, blog about it and recommend it to their friends on facebook and twitter.

The mobile slumber – when are businesses gonna wake up?

Where are all the excellent mobile shopping sites?

I could imagine that this is how eager marketing professionals must have felt in the mid and late 90′s when internet usage started to increase in households. Here was a great channel for marketing, but nobody is realizing potential – except for the porn industry which has historically been an early adopter of new technology.

Today online usage in mobile devices such as smartphones, iPads and similar is increasing faster every day. Most projections show that the usage of internet in mobile devices will surpass the desktop computers in 2-4 years. This is mainly due to the heavy usage of social media sites and apps in our mobile devices, but my guess is that our regular browsing behaviour will also change with our mobile devices.

So where are all the great websites created with the mobile user in mind? There are a lot of companies with regular e-commerce sites that have created great apps, but this is not the future and I can’t understand why they don’t understand this. I don’t wan’t to fill my Android with a lot of different apps for the same purpose (shopping), especially as I only make a purchase from most of them maybe once or twice a year. I want to keep my android free from clutter and easy accessible, and basically my Android attention span is 10 great apps – that’s it.

So, why are we still seeing all these great apps, and so few great mobile websites?