Archive for the ‘Active Audience’ Category

Microsoft and Yahoo vs. Google: The Battle for Audience and Keystrokes

February 7, 2008

The Redmond giant has sprung to its feet from its long and comfortable slumber.

Much like the browser business before it, Microsoft has realized it had better get into the search advertising business before its too late.

I think we all know who won the browser war. We also know how they did it.

Even with its proposed acquisition of Yahoo!, Microsoft may have already overslept and thus lost this battle.

On the surface this acquisition looks like a grab for a piece of the search advertising business.

However, just below the surface lie its real targets: the Internet audience and their keystrokes.

Internet Audience?

Keystrokes?

Both beachheads Microsoft has or has had control of nearly since their inception, keystrokes via the personal computer desktop and the Internet audience via browsers – not from birth but before the web’s infancy ended.

Like their importance to Microsoft’s franchise before, both have an equally and even greater importance going forward. Audience begets keystrokes and vice versa. However, It’s hard to control one if you don’t control the other.

Microsoft’s $44 billion offer to acquire Yahoo and its audience is an admission by Microsoft that if they aren’t able to augment their present audience now with an acquisition the size of Yahoo, they won’t ever be able to stem the audience gains being made by Google and their control of the largest and most valuable part of the internet audience – the search audience.

At this point, Microsoft’s not getting control of Yahoo’s audience is the single greatest risk facing their business – hence their offer price and the need to get the deal done. Maybe not today or tomorrow, but let unabated Microsoft faces continued losses in both audience and keystrokes.

Its not a market position Microsoft is familiar with or comfortable.

Why search is the most valuable audience on the Internet.

There are two types of audiences on the Internet. The old and familiar audience type, which is the one served and supported by display advertising.

Advertisers buy ads to reach an audience based on what content a publisher assembles to attract a particular audience. Ads are then priced and sold based on the desirability advertisers have in reaching that particular audience.

At any one time, a large percentage of the publisher’s audience is inactive – not interested in what the advertiser is selling.

Advertisers still have to pay to reach the publishers entire audience regardless of how many people may or may not be interested in the advertiser’s ads or products. Because display advertising is inefficient i.e., reaches more disinterested audience than audience of potential buyers – it sells for less and thus generates less income for publishers.

The other type of audience available to advertisers on the web is search advertising.

Unlike display advertising, search advertising reaches only an active audience – people who have explicitly requested advertisers information about their products or services – by their clicking on ads.

Search advertisers only incur costs to reach their audience when consumers click on their ads. Thus search advertising is significantly more efficient in delivering advertising messages to the exclusively active segment of the Internet audience – people who are actively searching for information.

By definition, search advertising only delivers advertisements to people actively seeking what the advertiser is advertising and selling. Because of this efficiency in targeting and delivery, search advertisers are able to reach more qualified prospects for less than through traditional media.

In turn, search advertising providers like Google are able to charge advertisers commensurate with the value the advertisers receive from reaching a efficiently targeted and active audience.

The result?

By my calculations, Google’s annualized gross revenue from advertising per visitor is roughly twice that of Yahoo’s and nearly four times Microsoft’s (gross advertising revenues divided by web property visits)

At a minimum, a search driven visit is worth at least twice – up to four times more than a non-search driven visit.

This is why Microsoft desperately needs Yahoo’s audience.

Although there are wide discrepancies over what percentage of search each company gets, Google receives between four to twenty times more search traffic than Microsoft and three to five times more search traffic than Yahoo, combined and assuming no market disruption – the two companies would still only generate one fourth to one half the search business of Google.

This acquisition also assumes Yahoo’s ad platform can continue to harvest one half the value Google does whether through Yahoo! or Microsoft’s search product without cultural distraction or interruption from the merger.

Even with their proposed clean room assembly, Microsoft’s acquisition of Yahoo! does not answer how they will make up difference (search volume + gross revenue per visitor).

By doubling their performance (revenue per visit) post merger to meet Google’s present level of performance, a MicroHoo search advertising business gross revenues per visitor would be half of Google’s.

In order for Microsoft to retain Yahoo’s audience, publishers and advertisers- the combined company will also need to produce:

Highly relevant search results for its audience, a functional ad platform for its advertisers, profitable ad distribution for its publishing partners and most importantly: a greater return on its advertisers’ investments.

Without which any new ad platform and search product may grab the attention of a larger audience and gain its keystrokes only to see it lost after they are unable to deliver what the internet audience has already come to expect, find and get from Google.

Of course, this also assumes Microsoft is somehow precluded from using its expanded platform and footprint to reroute ancillary chunks of audience to its new web properties acquired through the proposed acquisition along with their accompanying keystrokes.

In the absence thereof, there may be no stopping Google’s march.

SalesGenie.com Super Bowl Ad

February 5, 2008

97.5 million viewers on average watched Super Bowl XLII.

Advertisers paid $2,700,000 for a 30 second spot. The advertisers effectively paid .027 per impression to reach the second largest television audience ever recorded.

Only large brands or smaller ones betting the company can afford Super Bowl commercials.

An important question for any business contemplating making such a large one-time purchase is – what percentage of the audience is inactive? What percentage of the audience is unreceptive to my company and its offer?

80% inactive audience?

90% inactive audience?

99.99% inactive audience?

100% inactive audience?

More importantly, what percentage of the television audience is an active audience? An audience who will at some point now or in the future be interested in what I am selling let alone buy it?

100% active audience?

10% active audience?

1% active audience?

0% active audience?

It would be an interesting case study to see what amount – if any – Salesgenie.com recoups from its Super Bowl XLII brand messaging and offer investment.

Alternatively with the same $2,700,000, Salesgenie.com could have bought 2,700,000 active audience members @ $1.00 clicks through a Google Advertising Professional.

Even bidding and paying $5.00 a click, SaleGenie.com could have reached and connected with 540,000 American salesmen looking for leads.

I wonder how many sales people acted on their Super Bowl ad? 5 million? I doubt it. There probably aren’t 5 million sales leads buyers in the United States.

What are the odds they reached, fielded let alone converted 540,000 leads (.0055 of the entire Super Bowl audience) from their Super Bowl XLII ad?

Did SalesGenie.com advertising gamble beat the odds or get beaten by them?

Advertiser Know Thy Prospects

November 10, 2006

The following is my reply to a recent media consultant question.

Q: “I’m a media consultant, and buyer. My clients serve the pet industry. Several of my clients are interested in the recent explosion of the (web based magazines catering to niches/target audiences) like Daily Candy and Bowzer. They want to advertise in ezines instead of other less direct methods. I am curious about buying advertising in this medium, as it seems so direct and specific. Do you think the ezine is a media fad, or is it only going to get bigger?”

A: Regardless of the medium, advertisers must have a clear idea who their prospects are before they spend any money to reach them.

If an advertiser expects to acquire new customers profitably they should expect their advertising dollars to produce a measurable return on investment. What business can afford to do otherwise?

Any price paid for advertising failure is too high.

Most advertising is sold on a cost per thousand (CPM) people reached basis. Of the thousand people reached, there are both active (prospects) and inactive audience members. Inactive audience members are the remaining people who aren’t in the market for the product or service being advertised (often as many as one thousand).

If you can’t reach active prospects directly through a traditional cost per thousand advertising model, it is likely your prospects aren’t being reached and served by traditional media at which point ezines may become an attractive option.

To qualify potential ezines for your advertising investment, ask the following questions.

There are two types of ezine – email or those posted on websites.

Ask the media representative if they have any of the following data:

Email ezine:

How they acquired their list

Geographic data and targeting
Age & Gender
Income
Education levels
Lifestyle information
List size
Average open rate
Average bounce rate
List hygiene protocols
Third party or other form of circulation verification
CPM
Repeat advertisers

Web post ezine:

Traffic sources and ratios
Unique visitors to advertisement
Average session length
Average page views per session
Geographic distribution
Age & Gender
Income
Education
Lifestyle information
Alexa rank
Any site statistical data
CPM
Repeat advertisers

After your client has verified the media’s claims regarding their audience size, makeup and location determine your client’s potential conversion ratio per thousand audience members reached.

If the worst case cost per thousand reached doesn’t produce an acceptable return on their advertising investment consider using your audience profile information to reach prospects directly through targeted advertising like Google Adwords.

Instead of the traditional media model measurement of cost per thousand audience members Google Adwords lets you reach prospects on a cost per person basis.

To justify either form of advertising, determine how many active audience members (prospects) you will need to reach and convert into customers then compare those figures with how many inactive audience members you can afford to reach and not convert (if any) into customers before making an advertising investment decision.

An active audience of one more is worth exponentially more than an inactive audience of a thousand.


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