Archive for May, 2008

Rick Shwartz’ “Vertisi” Interactive Display Advertising

Down in Orlando this week is the Targeted Traffic Show, put on by the Domain King himself, Rick Schwartz. Prior to the conference, Rick promised attendees a revolutionary new product that he expects to be the “next big thing”.

Ron Jackson in his Daily Lowdown of the TRAFFIC conference reported,

“[It] was unveiled right after lunch and the product – dubbed Vertisi – did indeed appear to be a show stopper. Vertisi allows you to lay a piece of film over any piece of glass and that layer of film becomes an interactive touch sensitive display that can be used for anything from store displays to public Internet access available from any surface the film is applied to. A projection unit casts the interactive image on the film. Schwartz has bought 10% of the company and has an option on another 13%. The live demo of Vertisi pulled a shoulder to shoulder capacity crowd into the conference room where it was unveiled.”

Now I am not sure why it was a show stopper, nor do I understand why Owen Frager, someone whom I respect a great deal and is someone who truly “gets it”, would paraphrase Jackson on his blog with the sensational headline of “Schwartz Launches Next Revolution at Traffic“.

From what I understand, this technology has been around for a couple of years now. It looks like Vertisi signed a deal with Portuguese-based Displax back in 2006 according to archived pages on the Vertisi website.

Displax was featured in the 2006 Best Business Ideas by CoolBusinessIdeas.com with the following description:

Displax® projects itself in a transparent, holographic display, with high definition, visible at daylight, captures the customers attention, bonds with the reality of the business of any kind of organization and has customized sizes, witch allows its placement in window stores of banks or telecommunications store, with the certainty that, whoever passes by, will not be indifferent to it. It has a great impact! Displax® – Interactive window will be released in three versions. Displax® Interactive is the solution that allows people to interact with a projected multimedia application, just pressing the display with a finger. Displax® – Network allows managing displays placed in any location of the world, in a remote and central way. Displax® – Show allows you to present, in an innovative way, the products in a display, set in a window-store or inside the shop.

But perhaps this is just another example that those of us who are fully immersed in the next, “new, new thing” always think that everyone is already where we are. Case in point, I was having a conversation about domain names in a general networking session the other day and someone asked me “what a domain was?” [Honest!]. When I got over my shock, showed him the “.com” on my business card, I realized that there is an entire market of laggards and late majority technology adopters that are not where we are yet.

And perhaps it will be the endorsement of someone like Rick that is going to propel this technology forward. After all, the first domain names registered were in 1985-86 and it wasn’t until Rick (and a few others) spearheaded a marketing Eureka! that many still have not heard of.

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May 23, 2008 at 1:51 pm 4 comments

Does Direct Mail Work?

I was at a client’s site today, and one of the questions that was asked of me was, “Does direct mail work, and do you recommend it?” I said an emphatic no… but then I gave an explanation and issued a caveat. Here is my rationale:

Let’s assume that you are like my North Vancouver client and can spend about $1000 on getting one customer (this client figures the lifetime value of each client is about $5000, but over that same lifetime it takes about $4000 to service them). Consequently, if you spend more than this, you lose money on every sale. For every $100 you do not spend in customer acquisition, you have $100 that goes directly into your pocket.

Now his conversion rate was about 1 in 20 leads turn into a paying customer. In other words, $1000/20 =$50 per lead in acquisition costs that he is able to spend without losing money.

Now let’s reverse engineer a direct marketing program. If you have a standard postcard/letter campaign, I have always found that you will at a minimum spend about $1 per piece. This factors in the approximately $0.50 in postage, plus production costs. Of course, I have received some pretty elaborate direct marketing pieces over the years that blow this budget out of the water, but I digress and it is easier on my math if we just keep it at a $1 total.

Most direct mail campaigns have two underlying calls to action: visit this website and take a particular action, or phone this number. In retail, you may have a third option that encourages a person to take a coupon into a store to redeem a particular offer. While many direct marketers have “fish tales” about the campaign that netted a 40-50% response rate, and they frequently cite examples that have 5% response rates, I would bet that if you got a few drinks into them, they would probably admit that if you get a 2% response rate, it is an effective campaign.

So, let’s launch our campaign. You send out 1,000 postcards promoting your business (total cost $1000). Your call to action is to call a phone number. You get 20 phone calls at  a 2% response rate. Now, if you were the customer above, you better hope that every single one of these phone calls resulted in a lead, because given your lead conversion rate, you are going to need all 20 leads to get one sale.

But here is where it gets tricky. For many marketers who are now familiar with web environments and landing pages, a large number of direct marketing campaigns also have to factor in the conversion rate of your website. In the example above, if my call to action was “Visit http://www.mysite.com/special” [which is bad for so many reasons, but that is another post], and I get a 2% conversion rate on my direct marketing campaign, my $1000 spend has just driven 20 people to my website. So what is your website conversion rate. My guess is that you are not going to get all 20 of those website visitors to act. Assuming that once you get them to your site, you get 10% of them to take a further action and complete a form, attend a webinar, or call you, this means that you only get 2 leads into your sales funnel. And given your conversion rates, you will not make money. In fact, for the client above, he would have had to have spent $10,000 to get a single sale that would have netted him $1000… so he would have been down $9k.

Of course, proponents of direct marketing would say things like, “well you’ve got to get better at converting leads into sales” and “you’ve got to get your website converting at a higher rate” and these are all true points. But until you do, stay away from direct marketing.

In fact, before you do any sort of direct campaign (including a purchased email list from a so-called, opt-in list vendor), I would encourage you to run the same calculations. And if you are being solicited by someone selling you such services, an even better approach would be to feed them your conversion numbers and your cost of sale, and let them figure it out. Chances are, you will never hear from them again.

The Caveat

I mentioned in the opening paragraph that I also provided the client with a caveat. I do believe that there is a place for direct marketing as part of an overall brand building exercise to a highly targeted list and you have budget and plans to follow up with an immediate (as in within days) outbound phone campaign. In other words, direct marketing should be about branding, not lead generation. And why would you do this, with all the other low hanging fruit around.

May 21, 2008 at 9:16 pm 7 comments

Vancouver Entrepreneurs’ Meetup at TheNetworkHub.ca

Here I sit on a warm Friday evening, drinking a Grande Java Chip Frappuccino. It finally tastes like summer. Things were hot last night as well at the Vancouver Entrepreneur’s Meetup hosted by Minna and Sam over at TheNetworkHub in their trendy, edge-of-Gastown offices. It was a little warm, but it was nothing that a cool drink couldn’t take care of.

This was the first time I attended this get together and it definitely is good to see the spirit of entrepreneurship alive and well in Vancouver. I had some great conversations, heard about some new business models (I like what Daniel Flippance had to say about his forthcoming Inhabit Street venture… to be unveiled officially  at Launch Party next week). I also have to apologize to Minna and Sam for staying around waaaay too late discussing domain names, internet marketing, and incubation models (though I also blame Pete Quily, an Adult ADD Coach, for this one … Oh and Pete, I started to take the Adult ADD test on your site, but I got distracted by this post).

One of the things that surprised me a little bit is that this little journal of mine has started to pick up some readers (as a couple of people in attendance indicated that they had read some of my thoughts over the preceding weeks). Someone commented [might have been Pete above] that he didn’t like seeing blogs that the person who was writing it was not forthcoming about who they are and what they stand for. For that reason, I will be building out more about who I am and the projects that I am involved in [if they can be disclosed due to client confidentiality] right after I finish this post.

For those too busy (or lazy) to follow a few links and read the “about me”… my name is John Lyotier and I am a veteran of the Vancouver software scene, mostly working at the cross roads of marketing and technology (e.g., internet, domain names, web strategies, marketing automation, product marketing automation, etc.) My bio is public on my resume site here. I am presently working as a consultant to early-stage companies and entrepreneurs advising them on marketing, internet, and launch strategies (while at the same time incubating a few of my own entrepreneurial ventures). My consultancy is currently under a placeholder domain over at LaunchPoint.ca. And no, I haven’t done anything to that domain to market it, promote it, or optimize it for search (it will be disappearing soon as I bring my practice under the LaunchExperts brand… one of the concepts that I am developing).

There, now that that is off my chest, I think I will go finish my Frappuccino before it has completely melted.

May 16, 2008 at 10:11 pm Leave a comment

Pizza.com, Internet Pizza Ordering and Successful Online Marketing

It seems that every business case study or example seems to use a pizzeria as their reference company. Perhaps it is just because the old fashioned pizza restaurant is ubiquitous. Maybe it is because we all like pizza? But the reality was that it always appeared to be a “simple” business model that everyone could understand.

  1. A client phones in his or her order
  2. The pizzeria makes the pizza
  3. The pizzeria delivers the product to the client
  4. The client enjoys said product (and hopefully becomes a repeat customer)

Behind the scenes you have the sourcing of the ingredients, negotiating property leases, the marketing, etc. But the business that many people grew up with is not the business that exists today. You only have to look at the recent news that Papa John’s surpasses $1 billion in online pizza sales to realize that a significant shift is occurring in marketing and delivery [in the story, they indicate that 20% of their sales comes from online orders or from SMS text message ordering].

This story comes on the heels of another story of a few weeks ago that Pizza.com sold for $2.6 million as reported by the Washington Post [though there are some within the domain community, like Andrew over at DomainNameWire, that appear to be questioning the legitimacy of the Pizza.com sale on Sedo].

When I was at the CFA conference last week, I met up with several brand franchise owners in this space, including some of the crew over from New Orleans Pizza [I hope you expand further into BC, people say your pizza is delicious]. Another owner from a different chain joked in a session when it was mentioned that people were selling goods through Second Life, “Ya… but can you get them to buy pizza?” I said, not only would it be easy to set up a virtual pizza shop, whereby you could sell virtual pizza, you could probably tie such a store into your order center without too much complexity and allow the gamer who is sitting at his computer to order a virtual and real pizza at the same time.

[Note on the above: any franchisor who wants to pursue this, drop me a line and we’ll work out the details].

All of the above being said, I believe that the pizzeria is a good business to take advantage of the advances in local-based, paid search advertising. After all, who here reading this hasn’t looked in the Yellow Pages for “Pizza”? But for millions of people (ourselves included), we no longer have that book in the house. And as a result, when hungry, I will go online and search for “Pizza in Maple Ridge” (the results for which shows no paid search advertisers presently).

Perhaps I’ll give a call to the folks over at New Orleans Pizza to see if that can be changed (or at least get them closer to opening a franchise over here, so that they might show up if I searched).

May 12, 2008 at 2:58 pm 1 comment

On Q Communications Doesn’t Get It and is “Irresponsible”

One of the last sessions of the 2008 Canadian Franchise Association’s Annual Conference was provided by On Q Communications in a session entitled Public Relations: Reaching Your Target Audience. While I appreciate their willingness to share their thoughts and opinions on the role that PR has in an integrated marketing strategy, the message that they communicated was, in my opinion, inaccurate and misleading. Another audience member (Nicholas Austin from DraftFCB) commented to me afterward that not only do they not get it, but their message is “irresponsible”. I couldn’t agree more.

While there were several points that I take issue with within their presentation, I feel obliged to comment on one point in particular. Normally, I would just let things slide by, but as the conference provided every attendee with a copy of each of the presentations, I would hate to see not-attending participants misled by what they read. Hopefully, this post will start to clarify some facts. Or at least cause them to question the message before they accept it as gospel.

In their presentation, On Q had the following slide:

Is Advertising Dying?
Prices keep rising, yet audience is declining
Banner click through rates <0.20%
99.8% of advertising dollars wasted!
Measurement flaws

Not only did they butcher John Wanamaker’s famous axiom that “Half the money I spend on advertising is wasted; the trouble is, I don’t know which half””, they misled the audience. Though the actual number is always argued between analysts, search-based advertising represents approximately 40% of online advertising spend (and a 29% increase year-over-year according to Efficient Frontier’s “Search Engine Performance Report: Q4 2007). In fact, one could legitimately argue that because you don’t pay unless someone clicks on your advertisement, there has never been a more effective means of advertising, nor one that is as accountable. One could even argue that 100% of such advertising can be effective in the online world if used appropriately.

If a company who uses search marketing is not seeing a positive, measurable ROI from their campaigns, they are not doing it properly. No other medium can be measured with the detail that paid search can. As the owner of the destination site, you control their experience when they get to your site, you control the lead follow-up, you control the conversion, you even control the keyword that a user is clicking on [it is not the clickers problem if the search phrase and advertisement is not relevant to your business]. The beauty of search marketing is that if you truly can’t find keywords that are affordable within your business model, and you can’t convert them when they get to your site, then you have a flaw in your business model. Period.

One final rant… I am also not advocating using online and search advertising in isolation if your goal is overall brand awareness. There is still a place for “traditional” advertising. A new report by ThinkBox and the IAB indicated that “advertising on TV and online together results in 47% more positivity about a brand than using either in isolation” (see story on UTalkMarketing.com). And just to clarify, I am a huge proponent of integrating public relations into your marketing mix.

After the 2007 conference I came away telling a tale to colleagues about a question asked in marketing-centric session. In that session, a question was asked of the panelists [and I paraphrase], “What do you think of advertising on Google as the YellowPages sales reps were trying to push this”. To which the panelist, a CEO of a highly-successful system [and an award recipient at this year’s conference] replied [and again I paraphrase], “Well, it is not measurable, so she doesn’t recommend it.”

At the time, I wondered how she could have been so misled about the measurability of paid search advertising. However, after sitting through On Q’s presentation, I now know where such misinformation is originating.

It is definitely an uphill battle in communicating the value of new marketing techniques into this vertical. But also, there lies the opportunity.

May 7, 2008 at 9:35 am Leave a comment

Canadian Franchise Association – Sessions and Speeches

The second day of the 2008 Canadian Franchise Association’s (CFA) Annual Conference was a good one — well aside from reeling from a 24-hour bout with the flu, but I think few noticed. Those involved with the CFA, both the coordinators and the participating companies, are very welcoming and open to newbies like myself.

I find tradeshows are a great place to work on your elevator pitch. Where else can you explain your concept over-and-over-and-over-and-over again in a short amount of time. Pitch it once, look for non-verbal cues to comprehension, and then repeat again to the next person, adjusting the message to see what resonates.

One thing that has struck me about those participating (and I found this last year as an exhibitor as well), is that many of the senior executives of franchise systems for the country’s largest companies, just don’t get the Internet yet. It scares them. For those of us who are immersed in the advances of marketing and technology, we start to take it for granted and assume that everyone “gets it”. They don’t. But that’s where opportunities are made.

Case in point: last night there were a series of awards handed out at the annual Frankie Awards dinner. Their were awards from everything from Direct Marketing, Radio spots, TV commercials, Magazine Advertisements, Newspaper Advertisements and even one for best use of advertising on Transit or a Bus Shelter. There was one generic award for “Internet”, but this was more of a “hey… congrats on the new website” kind of award. I won’t spill the beans on who won the awards, but you think the CFA would have put out a news release this morning announcing the winners. There is a missed marketing opportunity right there.

There was one session yesterday facilitated by Sean Saraga of both MrFranchise.ca and now with PostNet called “The Millenial Generation & On-line Social Networking“. I think many in the audience were dumbfounded and a little frightened by what Sean had to say. But he was bang on.

Anyhow, the morning’s sessions are about to start. Until next time.

May 6, 2008 at 7:52 am Leave a comment

Canadian Franchise Association Annual Conference

I’ll come back to continuing the list of who’s who in a bit. For now, I thought I would share with you where I happen to be tonight.

I am sitting in the lounge of the Deerhurst Resort of Huntsville Ontario (about 3 hours north of Toronto). Why am I here (which some would surely classify as close to the middle of nowhere)? Well, I decided it would be good to attend the 2008 annual conference for the Canadian Franchise Association.

Last year I was at the 2007 CFA Conference in Montreal (while working with Marqui). At that time, I participated as an exhibitor. It was my belief that the franchise vertical (that being the companies that controlled the individual franchisees themselves) was an interesting vertical to pursue, and those that were in attendance were c-level decision makers with a need for marketing automation and internet technologies. Unfortunately, I left Marqui a few weeks after participating in last year’s event, so I never had a chance to follow through with many of the leads and conversations that were made. But that was last year.

This year, there are two driving reasons why I am here: first, the same opportunity still exists, and as a marketing and internet consultant, I believe I can help franchisors systematize their marketing, be it to attract new entrepreneurs into their brand, or to market and attract leads to the individual franchisees. It was apparent to me last year that many franchisors still do not understand the power of internet marketing and still remain skeptical that it is possible to provide full accountablity and measurement of your marketing campaigns. I hope to be able to generate a few leads while out here, as I am confident that I can help.

The second reason why I am here, is the concept that I am working on: LaunchExperts.com. LaunchExperts will launch later this spring and will utilize a lot of the good things associated within a brand-franchise concept, while introducing some innovation into the entire industry. And I have a lot to learn. Tonnes.

If you have not read Michael Gerber’s The E-myth, I would strongly encourage you to do so. This should be right at the top of the pile for any prospective entrepreneur’s reading list. In this masterpiece, Gerber emphasizes that it is critical for any entrepreneurial venture–whether it is your intention to franchise your business or not–to build your business out as a franchise prototype. Measure things. Hold yourself accountable. Document procedures, Systematize entire business processes. For me, I am trying to build out my consulting practice as my franchise prototype, and in so doing, create added value for myself and others who may associate themselves with the LaunchExperts brand.

Anyhow, it is a little after 11:00 PM here in Huntsville. My morning started at 3:30 AM PST. And it is going to be a busy few days. I’ll keep you posted.

May 4, 2008 at 8:12 pm 1 comment

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