The Largest Driver of Revenue that the Most Successful Advertisers Implement Over the Least Successful

This is a guest post by Elizabeth Yin, CEO & Co-Founder of LaunchBit.

 

I was curious to know what the difference was between the most successful and the least successful advertisers.  So, I analyzed the data in our ad network, LaunchBit.  LaunchBit serves up millions of ad impressions every week in hundreds of email newsletters for startups through Fortune1000 clients.  The most common trend we noticed was that most of our successful advertisers did not generate revenue from their campaigns right away.  Instead, they directed potential customers to sign up on a landing page to monetize and upsell those leads later.  Here are just a few examples of how our most successful advertisers created successful lead generation programs: 

 

Offer white papers & webinars 

If you run a B2B company, teaching your customer information or tips that can help them become better at their job is often an effective lead generation tactic.  Hubspot does this very well.  Their target demographic is online marketers.  And, they are a machine in cranking out new ebooks and webinars teaching their customers about new online marketing tactics.  

Hubspot-leadgen

 

Although you might think that asking for a lot of information in your sign up process would lead to a low conversion rate, Hubspot has publicly stated that they are able to get users to convert at a “good percentage” despite these extra fields.  If you need this extra information to vet your leads, then you should not be afraid to include these fields.  Their layout is clean.  The form is on the right; the copy is on the left.  They have a great title format that they use repeatedly: x # of tips to make you successful at some type of marketing.  They tell you exactly what you will learn in the ebook.  All of their landing pages have the same format.  

 

Discount Notifications and Daily deals

Ecomom focuses on capturing contact information by prompting new site visitors to sign up for their discount notifications before they start browsing the site.  So, even if someone doesn’t buy right away, Ecomom is able to reach potential customers and earn their trust until they are ready to buy.  

Ecomom-leadgen

They run different newsletters to disseminate different information to their two lists: the daily deals list for bargain hunters and a traditional newsletter with tips and occasional offers.  

 

Giveaways and contests 

A number of advertisers in our network like to do freebies, giveaways, and run contests.  This can definitely increase the conversion rate on a landing page.  AppSumo, for example, has held a series of contests to get more subscribers to their daily deals list.  

Appsumo-leadgen

We’ve had a number of advertisers host contests, and conversions for them generally range between 25-70%.  However, we’ve learned from our advertisers that you should be careful when selecting your contest giveaways.  If a giveaway is too far removed from your product/service, people who convert do not necessarily turn into relevant paying customers later.  

 

Most advertisers in our network have not built sophisticated lead generation programs and expect customers to buy right away.  But, unless you have a product that is conducive to quick transactions, conversions typically trend below 3%.  It may take some effort, but good lead generation that educates and offers freebies and discounts is a good opportunity to nurture leads into paying customers.   

 

About the Author

Elizabeth Yin is a the CEO and a co-founder of LaunchBit, an ad network for email.  With LaunchBit, advertisers can reach their target demographics through relevant email newsletters.  Prior to LaunchBit, Elizabeth was a product marketing manager at Google.  

 

New Data: Groupon Slashing Online Ad Spending in Q3

This post is the first in our AdWatch series. At MixRank, we’ve built the world’s largest database of display and contextual ads, tracking over 600,000 advertisers advertising on 100,000 publishers. We’ll be bringing you interesting insights into advertisers’ strategies and industry trends based on this data through MixRank AdWatch posts.

Is Groupon pivoting away from daily deals?

New ad data from MixRank shows that Groupon, Inc is dramatically slashing US online ad spending for its flagship daily deals product.

For every advertiser we monitor, we compute an Ad Performance score based on sampling ad impressions and other metrics. Our Ad Performance Score is an internal metric we use to estimate how much traffic an advertiser’s ads are getting. The actual number is arbitrary, but can be used to compare advertisers and correlates very strongly with impressions, clicks, and spend. A higher performance score means an advertiser’s ads are getting more traffic (generally because the advertiser is spending more).

Our ad performance data shows that Groupon (NASDAQ:GRPN) has cut spending on US-targeted display and contextual ads more than 80% in the past few months- a staggering cut for a company spending $100 million a month on advertising.

Here’s a chart of the MixRank Ad Performance Score for groupon.com’s contextual and display ads for the past two quarters of 2012. This data only reflects ads geotargeted at consumers in the United States.

Groupon ad performance

View more detailed data about Groupon’s ads.

The massive, rapid drop occurs on July 1, the first day of the third quarter, and Groupon’s ad spend has not recovered since. The fact that this drop occurred exactly at the start of Q3 implies this was a major strategic decision with budgeting for the third quarter rather than a tactical tweak in allocating spend.

Much has been written about Groupon’s mounting customer acquisition costs standing in the way of profitability, and as data from their latest quarterly report shows, Groupon has been making deep cuts to marketing spending for a while.

Groupon ad performance

But Q3 2012 marks the biggest drop by far in Groupon’s online advertising spending for daily deals since we’ve started tracking their ads over a year ago.

This data is just one signal, and it could have several explanations. Maybe Groupon has saturated the daily deals market in the United States and is shifting spending overseas. Or maybe Groupon’s revenues for the next quarter are lower than the market’s expectations, and executives made the decision to cut marketing spending further to reach profitability.

Or maybe Groupon just isn’t that interested in daily deals anymore.

So what does this change mean? Groupon has just announced that they’re taking on Square and offering a payments and credit card processing solution to its merchants. Groupon CEO Andrew Mason has defined the company’s vision as an “operating system for small business”.

Is the shift in marketing strategy a sign Groupon is on its way to abandoning the maturing daily deals industry it created and transitioning to a B2B company? 

Such a rapid, dramatic pivot would be unprecedented for a multi billion dollar publicly traded company. Then again, Groupon has never been one for convention.

 

Are daily deal sites the right marketing program for your business? – Part 4

Daily deal sites like Groupon and Living Social are taking off with consumers, but how do you decide if it’s the right marketing program for your business?  Part 1 and Part 2 of this blog series explains the top 5 things to consider before participating in a daily deal site.   Part 3 covers three types of business models who will most likely succeed from a daily deal site.

 

Today’s post is the final piece of this series, discussing the business types that will most likely suffer from this marketing strategy.  The reason being: the business will take a financial loss up front and have a slim chance of converting those coupon-hunting consumers into loyal return-customers.

 

You may consider refraining from a daily deal site if you fall within these Top 3 Business Types That Will Suffer From Daily Deal Sites.

 

1.  Established local businesses with loyal customers:  If you’re in good financial standing right now, growing and selling at the projected pace, why mess that up?  There are many local businesses that have regular customers and consistent sales that make ends meet.  There’s no reason to risk taking a financial loss when you’re already doing so well!

 

2.  Products with low profit margins:  Marketing programs are supposed to cost you money initially but should bring in leads and new lifetime customers over time.  For daily deal sites, it’s hard to forecast what will come of it; what if your existing customers purchase the deal?  Then you’ve cut even deeper into your potential profit.  So, if you are selling a product with a low (anything less than 50%) profit margin, a daily deal program will guarantee financial failure. Instead, you should try a direct marketing approach and offer a similar coupon via snail mail.  This way you won’t have to give half of that revenue away and you only take a loss on those who use the coupon.

 

3.  Luxury goods: Coupon clippers aren’t your target market, so are you really going to get new lifetime customers from this deal?  Probably not. And, isn’t the whole reason why people pay thousands of dollars on luxury items is because of their exclusivity?  If word gets out that you’re offering heavy discounts on authentic merchandise, your actual target market may no longer value your brand.  Beware of how a daily deal site could inflict your brand presence among your existing customers.

 

Bonus: Service-based businesses: If you’re offering massages, mani-pedis, or even an educational class at a discount, the people who purchase your service through a daily deal site would rather continue to look for another similar deal than pay full price.  Here’s the logic behind this: all of these services are offered to enhance someone’s life, but aren’t necessarily required to live.  So, from a consumer’s perspective, someone who already knows that coupons exist, why bother paying full price?  Here’s my recommendation to capitalize on these “deal-hunters”: it’ll be hard to convert these new leads into lifetime customers based on price alone.  Make sure you provide amazing service during these sessions and consider offering a loyalty card or reward system if they return for more.  For example, you could offer a free mani-pedi for every 10 she pays for.

 

Good luck with your marketing programs! Follow me on Twitter or add me to your Google+ circles for more marketing insights.

 

Are Daily Deal Sites The Right Marketing Program For Your Business? – Part 3

Daily deal sites like Groupon and Living Social are blowing up all over the web.  I’m sure you’ve been wondering, “how do I decide if Groupon is the right marketing program for my business?” 

 

Part 1 and Part 2 of this blog series explains the 5 Most Important Factors Marketers Should Consider Before Participating In Any Daily Deals Site.  Today’s discussion will focus on business types that would see significant results with this type of marketing program. 

 

Consider growing your customer list with a daily deal site if you’re business falls within the Top 3 Business Types That Will Benefit From A Daily Deal Site:

 

1. New Local Businesses – A lot of daily deal sites require users to add their location to sign-up for deals in their area.  New local businesses are already operating at a loss.  Although a daily deal site wouldn’t provide any immediate financial gains, these new businesses could really benefit from the geo-targeted exposure.

2. Subscription-based products – Subscription-based products could include magazines, data and/or software applications.  The costs for subscription-based products are fairly low to offer the subscription to another buyer, but the potential gains from customers becoming full subscribers are rather high. 

3. Software products – For software products, the product is already built.  Your main goal with software is to sell the license to more people.  The beauty of daily deal sites allows you to offer the software at a discounted price, but possibly acquiring a lifetime customer.  Once someone is familiar with your software, you’ll benefit from all the additional revenue generated from a loyal customer.

 

Check out the last piece of this blog series. It warns you about the types of businesses that should refrain from participating in a daily deal site and why. Have an opinion about daily deal sites? Feel free to share them with me by commenting on this blog post.

 

Thanks for reading! For more marketing insights, follow me on Twitter or add me to your Google+ circles.

 

Are Daily Deal Sites The Right Marketing Program For Your Business? – Part 2

There has been a ton of negative press around Groupon and similar daily deal sites for businesses.  However, there have also been some huge success stories.  So, as a marketer, how do you decide if Groupon is the right marketing program for your business? 

 

In the last post, I walked you through three of the 5 Most Important Factors Marketers Should Consider Before Participating In Any Daily Deals Site.  Here are the last 2 plus an added bonus tip:

 

Target Market:  Many daily deal site subscribers are coupon hunters. Is that in line with your target audience?  There are several other factors to consider including a potential customer’s demographics, income, and location.  Make sure to find out exactly whom the deal will be sent to before participating.  You want to make sure that the deal site is going to target a highly relevant audience.  If you don’t believe the audience is relevant to your business, pass on the daily deal sites.

 

Terms & Conditions:  When you’re done evaluating the previous factors for a daily deal site and still want to move forward, there is one last thing you should consider before approving your coupon.  Make sure to include your additional terms and conditions.  It should make sense for your business goals (financial, marketing and performance goals).  I’ve heard of a few horror stories in which some business owners did not add terms and conditions before the deal went live, dampening their campaign performance and incurring significant losses. Here are just a few of the terms you can include:

  • Expiration date
  • Limited number of purchases
  • Limited number of redeemable coupons per visit
  • Availability to all or new customers only
  • Valid on certain products, items, or times of the day (for example: coupon not valid on clearance items, coupon not valid during happy hour, etc) 

 

Bonus Tip: Try asking for a reference from the daily deal site.  Getting a reference from a business that offers similar goods or services to you would be the most useful so you can understand exactly how their promotion went.  However, if you’re not comfortable talking to the competition, any reference is probably better than none, right? Just keep in mind that references are provided by the site, and they most likely wouldn’t refer you to someone who had a truly negative experience.  On the other hand though, you do have the ability to ask deeper questions that you can’t find in a case study, so it’s a golden opportunity to gain answers to your burning questions!

 

Read Part 3, introducing my recommendations for types of businesses that would benefit from participating in daily deals sites. Part 4 will cover businesses models that should refrain from daily deals sites and why.

 

Thanks for reading! Follow me on Twitter or add me to your Google+ circles for more marketing insights.  If you’ve tried running a coupon on a daily deal site, share your story with me!

 

Are Daily Deal Sites The Right Marketing Program For Your Business? – Part 1

There has been a ton of negative press around Groupon and similar daily deal sites for businesses.  However, there has also been some huge success stories that inspire us to embrace this type of marketing channel.  So, as a marketer, how do you decide if Groupon is the right marketing program for your business? Part 1 of this 4-part series covers what factors you should consider before participating in any daily deals site.

 

5 Most Important Factors Marketers Should Consider Before Participating In Any Daily Deals Site:

 

Profit Margin of Your Product/Service: Marketers have to look at the numbers before offering any type of coupon.  That’s a given for any marketing program.  However, with a daily deal site, companies like Groupon pocket half of the money from the sold coupons and they typically want coupons that 50% off or more. So, what does that mean for you? You’ll need to carefully understand what type of profit margins you are giving up with this promotion.  For example, say your merchandise has a typical profit margin of 75% and you’re offering a Groupon for 50% off.  Any consumer who buys and uses the Groupon will be taking straight from your profit margin, leaving you with a 25% profit margin.  However, since Groupon absolves half of the paid Groupon value, for any coupon users, you end up breaking even.  In that case, would it make much sense for you to participate in this program if your profit margin is less than 75%? This leads to the next factor to consider. 

 

Performance Goals: What are your performance goals with coupons?  There are a number of goals you can have, but here are a top few: financial gains, selling products during their shelf-life, and/or consumer awareness goals.  Financially, if you’re not prepared to take a loss for any kind, there’s no point in participating in a daily deal site unless you’ve done the math and will for sure, come out ahead.  On the other hand, if you know you are going to take a loss, Groupons may still make sense for your business, especially if you need to sell products before their shelf-life expires.  Similarly, a Groupon could be helpful for your company to get exposed to hundreds of thousands of locals.  When evaluating how much you would pay for consumer awareness, think about your marketing program’s end-goals.

 

Marketing Program End-Goal: Whether you’re a new business or a business that’s ambitious to grow, acquiring new customers should be a top priority.  You’ll most likely need to run some kind of promotion  to generate demand and start building a loyal customer base.  Groupon or any similar daily deal site that has a potential to reach millions could be a great program to start generating demand.  So, think about these questions when evaluating Groupon as a viable marketing solution for your business.  What is your projected or actual customer lifetime value?  How much are you willing to pay for a lead or potential loyal customer?  Is that more or less than the profit margin you risk losing from a daily deals site?  Given that you get potential loyal customers at a price you’re willing to pay with Groupon, maybe it’s worth trying out?

 

Well before you jump the gun, there are 2 other factors you should consider before agreeing to participate in a daily deals site.  Read Part 2 of our series for two additional factors you should consider when deciding if daily deals sites are right for your business.

 

Part 3 will introduce types of businesses that would benefit from participating in daily deals sites and Part 4 discusses businesses models that should refrain from daily deals sites and why.

 

Follow me on Twitter or add me to your Google+ circles for more marketing insights.