But sometimes measurement can inspire you. I know a guy who is a competitive runner, but he hates races. He competes with himself. If he runs a segment in 9:03 one day, the next day he’ll go all out to run it in 9:02 or better.

I believe marketing agencies have to become more like my runner friend and a lot less like those little kids we used to be (or still are — don’t make me call you out).

Because we can measure and interpret all kinds of results beyond the classic results of calls, clicks and sales using sophisticated statistical models, we’re able to see such things as the relationship between the timing and message of, say, the placement of an offer in an eNewsletter and its changing response over time. The more we’re able to reliably measure in a variety of ways, the more we’re able to figure out how to execute better — which leads to continuously improving results at lower cost for our clients.

I see some skeptical faces out there. So let me regale you with a real-life example.

eNewsletter: Analysis is the heart of the data

One of our longest-running projects is a monthly eNewsletter that has the mission to entertain, inform and sell. Now, it’s a tough proposition to keep an audience interested and engaged over the course of years. It’s an even tougher proposition to increase the interaction with that audience from month to month, but that’s what we’ve managed to do. That’s also why we’ve managed to keep this account.

There’s no magic here. There’s just the careful analysis of as much data as we can get. Sure we have the usual calls clicks, and sales (and never discount the value of the usual suspects). But what else do we have? We have, among many other things, time data — the delay between people receiving the eNewsletter and actually opening it and then clicking through. There are always hints and relationships in this kind of data. Certain subject lines result in shorter lag times to open the communication. The placement of various pieces of information on the page affects the time between open and click-through.

Further, we’ve instituted quick mini-surveys and respond to them using dynamic content so that recipients get what they want. But that’s not enough either. We compare what people say in their surveys vs. their actual clicking behavior. They may say they want X, but their history proves they choose Y more often.

What have we found? Nothing works all the time. You can’t just build a template of the perfect way to do something and repeat it forever. You’ve got to constantly evolve, based on what you learn from that latest data.

The tiny improvements you make every month add up over the long term into significant aggregate results. Our overall results, measured by the classic calls, clicks and sales, are roughly double industry average. There was no “Aha!” moment that got us there. It was the simple hard work of taking the measurement every single month and using it to incrementally improve our execution for the next month.

From micro to macro

That eNewsletter example is the microscopic picture, the daily grunt work it takes to generate genuine and lasting improvement. But now let’s get a little dizzy and pull back to a big view.

What if we had data and analysis that would let us apply the same kind of grunt work mentality to not just a single project, but to the entire marketing investment of a complex corporation? What if we were able to know that people who received our eNewsletter and who had viewed our DRTV spot within the last 18 hours and who had seen a mention of us on Twitter within the last two hours were, say, six times more likely to buy our product? How might that change your execution?

You see where I’m going. We’ve gotten way beyond the old-school ways of direct marketing and graduated into the new-school ways of what we call enterprise spectrum marketing. It’s precisely the same mentality and process we use for managing that eNewsletter project, but we apply it to everything the corporation is doing to market its goods and services.

Working this way makes me feel like my runner friend. Every day, we do everything we can to beat the results we got from the day before. Pretty soon you look around and realize all those other kids are way behind you.

Looking over some of the slides from the talk, it is clear that despite its early tendency to continually fail, Twitter has some sharp technologists on staff. Not mentioned in the slides but apparently during the talk, comes a surprising traffic figure. So often the attention focuses on how many users the company has and the volume of messages, which seems low at hundreds per second.

Related to user stats, talk also tends to focus on the activity curve, namely the relatively low return rate of the average user and the lopsided nature of the messages with a small percentage contributing the bulk of messages. Not as much has been made of how the site gets its activity, and if the Guardian article is correct, only 20% of Twitter’s total traffic comes from visitors to twitter.com. Hubspot performed an analysis of roughly 500,000 tweets and found a slightly higher percentage, just shy of 50%, of the traffic came via direct usage of the site. Either way, that an incredibly popular company, one of the fastest growing, most lauded, receives certainly less than half of its use from its site seems almost counter intuitive. But, therein lies the brilliance of Twitter and what makes it a new paradigm for not just how people share and receive information but for entrepreneurship as well.

Unlike Google, which thanks to its volume and complexity has spawned countless specialists, like SEM and SEO firms, Twitter itself couldn’t present itself as any less complex. Users get 140 characters with which to compose a message, and only a handful of additional options exist, namely the less intuitive ones for newer users such as replies and direct messages. Twitter often receives credit for the @ nomenclature, e.g. @username, but they just instituted a convention frequently used in blog/website comments.

If anything, the replies combined with the @ nomenclature can make for a cluttered experience when reading a friends’ feed, as many will contain parts of an ongoing conversation between them and others that are shared publicly. Then you have the convention of a retweet, where people will post to their followers something said by another used, beginning with “RT.” For someone hoping to gain more exposure, getting retweets is wonderful because it means that your message was now seen by another group of people.

Again, though, there is so much that Twitter doesn’t do, but can do, that it has created an entire ecosystem of start-ups who without Twitter would have no reason to exist. Yet, thanks to Twitter’s bare bones approach, while they rely on Twitter, they in many ways are better to use than Twitter itself. And, I think that is one of the reasons why so much Twitter volume doesn’t go through Twitter itself.

One of the more interesting companies to have risen to prominence from Twitter also has a most simplistic function at heart – URL shortening. I remember receiving an email years and years ago with a shortened URL, and I didn’t really understand the point. If you click on the link, you still get to where you need, and most people will at worst copy/paste instead of typing in the URL. That’s because I almost always had smarter email clients. Many people (circa 1996 – 2002) received only plain text and links would break if they wrapped from one line to the next, so it made sense to shorten them.

Today, URL shortening is nothing more than a redirect, and those in the performance marketing space have long used (shorter) redirects. Most companies have vanity redirect URLs that look more appealing when seen rather than using a lengthier and more revealing corporate name. With the space constraints in Twitter, all of a sudden, shorter URLs take on a more vital importance. They become a necessary evil in fact as lengthier URLs help with natural search but eat away precious room from the actual body of the message. The leader in the shortening space was also the pioneer – www.tinyurl.com – who, according to their site, had shortened more than 275 million resulting in their seeing 2 billion hits per month. They were the natural choice for those using Twitter and should have created an indefensible business, but that wasn’t the case.

While TinyURL handled the vast majority of Twitter links, another company has done what would have seemed impossible, eclipse them. Bit.ly, did just that, and it happened for reasons that could easily alter the way you think about Twitter and webservices. The value of a URL shortening service is partly the length of the name. Bit.ly wins there – five characters versus ten, but shortening is a commodity, anyone can do it, and more than 100 different services exist.

What makes bit.ly special is they realized what tinyurl didn’t (or didn’t’ act on fast enough), that the real value is the data, the insight from seeing all the shared links. Bit.ly takes a necessary evil (and one that slows down the internet) and turns it into something social. Create a shortened URL, and once you do, they offer all sort of interesting tracking. You can view detailed stats on the number of clicks your URL received, along with what social media references use it, and if you happened to pick a link already shortened, you will see how much traffic the overall link receives and your contribution to that total. Spend some time comparing it to tinyurl, and it becomes clear why they win. Spend some time playing with it regardless, because they have created a great user-interface and user-flow. Our space, the equivalent might be Tracking202, and it makes perfect sense why they have become so dominant.

They offer a necessary function for free, but Tracking202 also wins with the visibility received. We have become very bullish on these opportunities and expect to see many more just in the performance marketing space alone. As for bit.ly, if Quantcast can try to raise $50 million off of a $300 million pre-money valuation, then the $2 million invested into bit.ly will become one hell of a return for their VC’s.

Courtesy of DM Confidential Editor

Apparently, you begin an attack on their core business, the one that defined the company and created multiple billionaires in the process. That at least seems like Google’s strategy. Either that, or they decided they felt under-appreciated in the press and wanted the spotlight pointed their way. Either way, it worked. And, in typical Google fashion, the vast majority of the world would have found out about the company’s latest endeavor from its blog.

As the Official Google Blog states, “…we’re announcing a new project that’s a natural extension of Google Chrome — the Google Chrome Operating System.” For the layperson, i.e. me, Google’s mobile phone operating system, Android, would seem like a more natural extension for a computer-focued OS as opposed to a browser turned into an operating system. That “the operating systems that browsers run on were designed in an era where there was no web,” doesn’t naturally imply to me that a browser would thus make an intuitive infrastructure for an OS. But, I am old-school, thinking of operating systems as a means for hosted applications, whereas Google is most certainly not.

Google’s upcoming Chrome OS doesn’t go after Microsoft so much head-on as it does act like a railway switch. It focuses on a small but growing percentage of the computing market, netbooks, which according to ABI research, will see some 35 million computers shipped this year, rising to an estimated 139 million by 2013. And, despite the perception that Linux rules the operating system world on netbooks, Microsoft does. A PCWorld article claims that upwards of 90% of current netbooks run on a Windows based OS.

But, because netbooks, almost by definition, focus on activities reliant on the web, Google sees this as a natural extension of their territory. As Microsoft showed with the browser, own the operating system, and you can in many areas own your destiny (with the exception of search apparently). Google’s web browser has 30 million active users, but that represents only a fraction of the total browser population. And, much like Microsoft’s Bing, while a solid browser, it will not unseat the incumbents on its own. It needs leverage, and being the default browser on a computer is how you do that. Not that Google will publicly state the goal as such. Instead, you hear words like “speed,” “reliability,” and “security” not “market share,” “profit,” and “monopoly.”

We at least aren’t the only ones confused over Google’s explanation of their strategy, e.g. how Chrome OS “is being designed to power computers ranging from small netbooks to full-size desktop systems.” And that the folks at Google apparently “hear a lot from our users and their message is clear — computers need to get better.” Techdirt writes, for example, “Chrome itself still needs a ton of work. I’ve tried using it, and it’s crazy buggy and so unstable — I simply gave up and went back to Firefox. Jumping from just browser functionality to a full on OS before the browser code is really stable seems like a big leap.” And, “In fact, it was partly Netscape’s desire to take down Windows by making Netscape more OS-like that caused Netscape to get so bloated as to be nearly useless.”

One of the commenters made the best point, that Google Chrome OS doesn’t actually want to be an operating system. It just wants to get users online to Google, and netbooks, again, by virtue of being primarily dummy machines for online activities, provide the best expansion for doing so. Do users inundate Google saying how they “want to get to their email instantly, without wasting time waiting for their computers to boot and browsers to start up,” or is it more that Google wants them to get to their properties without others potentially gaining access?

One of the bigger intellectual debates centers on just how much this move is designed towards attacking Microsoft versus operating on their own agenda for growth. Perhaps the two are intertwined. The Wall Street Journal has a great piece exploring early meetings at Google along with CEO Schmidt’s background in desktop computing. While we may not know the answer to their motivation for some time, one thing we can assume though about the new operating system is that Google will undoubtedly do some smart things to bridge the traditional gap between online and offline, which to date has meant having certain files on the computer and certain online.

And, it is both scary and brilliant or even scary brilliant to think of a computer where you login to the machine using your Google account. In addition, with Google running as the operating system, all of a sudden so many of their half-successful products seem to make more sense. Much of why they didn’t succeed came down to scale, but if they become the de facto programs for users, that issue goes away.

Equally important to their success comes from Google making the operating system open source. Instead of only relying on internal developers they can tap into an incredibly passionate, almost invaluable pool of talent. Just look at what that did for Firefox, and if Google Chrome OS can make that kind of headway in the OS market, watch out Microsoft indeed. Lastly, Google benefits from timing. They undoubtedly wanted to do this years ago, regardless of Microsoft, but the web technology simply wasn’t there. It’s why so many Web 2.0 successes are just remakes of older ideas, succeeding because the products can match the vision.

Good or bad, Google Chrome OS succeeds only if the major hardware manufacturers use it. That will be a hard battle with leverage going towards Microsoft. If only the Google Chrome logo didn’t remind us of the game Simon or resemble a creepy all seeing eye. Oh wait, it is.

Courtesy of DM Confidential editor

The bad news for many companies in our space, especially those that have gotten used to record month after record month, is the proverb, all good things must come to an end. We can’t quite predict when, but we can provide our view on why they have been able to flourish as they have. These are the factors that have nourished the sites and fostered their proliferation. While we could probably list 10 or more good reasons, the following comprise the ones that we find necessary for their for existence.

1. Depressed Prices

The rate of inventory continues to increase almost exponentially. At the same time, the growth in new advertisers that can perform at the lowest level necessary has not. Or, put less eloquently, there is a glut of inventory out there. Not only is there a glut of inventory, the yields on that inventory have dropped steadily since the onset of the credit crisis. We’re in a situation not too dissimilar from the bursting of the tech bubble where sites once used to premium cpm’s found themselves having to embrace companies they once scoffed – ad networks, performance-based advertisers, and a variety of others pushing unbranded products and services.

The rate of inventory continues to increase almost exponentially. At the same time, the growth in new advertisers that can perform at the lowest level necessary has not. Or, put less eloquently, there is a glut of inventory out there. Not only is there a glut of inventory, the yields on that inventory have dropped steadily since the onset of the credit crisis. We’re in a situation not too dissimilar from the bursting of the tech bubble where sites once used to premium cpm’s found themselves having to embrace companies they once scoffed – ad networks, performance-based advertisers, and a variety of others pushing unbranded products and services.

When bubbles burst, it isn’t the premium sites and premium inventory which open up (although it certainly does to a degree), it was the middle tail – sites with the video-equivalent of advertiser safe, professionally produced content, that up until the collapse enjoyed sold-out status at favorable rates. That’s where the majority of high value inventory comes from, as well as non-premium inventory on more premium sites, such as Email, News, Weather, and Horoscopes. The long-tail of sites – profile pages, low end game sites, humor, etc. has lots of impressions but outside of companies who have tailored their model for that inventory, e.g., Gamevance, don’t move the needle for the broader set of run of network campaigns.

2. Unfair Economics

It’s not as though no alternative advertisers exist. At present though, not enough of them can compete with the performance of the evolving online version of the advertorial. Phrased somewhat as an exaggeration, legitimate guys can’t compete with cheaters. It’s one thing for companies with a physical presence to try and compete with more nimble players, but when those nimble players also don’t have to follow the same rules… you could be the heavy weight champion, but you probably won’t win a fight where the other guy has a knife.

The secret to the unfair economics comes from two things – the deceptive nature of the pages which equates to inflated clicks on the offer and conversions, along with the common bundling of offers. Most success stories on the fake sites rely on the promotion of two products. And, each product carries an enormous bounty for a free trial – $30 to $40. The products themselves charge a high monthly fee, aren’t the easiest to unsubscribe from and require fewer months to break even. It’s stacking the deck in favor of those promoting deceptively.

3. Publisher Passivity/Ignorance/Control

This one was hard to word, but if you look at Google and certain parts of Facebook, it is clear that certain large sources of traffic have found a way to discourage the running of this style of offers. Do they still deliver some volume? Yes, but disproportionately less than they could if they didn’t have restrictions. Other sources of traffic have not followed suit, either by choice, ignorance, lack of controls, or some combination of the above. In other words, there probably is someone at MSN who if they truly understood how the ads worked would not allow them to run on their properties. Then again, they might not because they like the economics, don’t believe them to be an issue, and/or assume that anything running has passed proper legal hurdles.

This one was hard to word, but if you look at Google and certain parts of Facebook, it is clear that certain large sources of traffic have found a way to discourage the running of this style of offers. Do they still deliver some volume? Yes, but disproportionately less than they could if they didn’t have restrictions. Other sources of traffic have not followed suit, either by choice, ignorance, lack of controls, or some combination of the above. In other words, there probably is someone at MSN who if they truly understood how the ads worked would not allow them to run on their properties. Then again, they might not because they like the economics, don’t believe them to be an issue, and/or assume that anything running has passed proper legal hurdles.

There is a technical hurdle as well. Sites that run ad network tags do not know exactly what runs. I had hoped that one could create a sniffer that monitored all ads, but it doesn’t look easy. As I learned, since most ad network tags use iframes, the hosting website can’t access the frame; it’s an issue of browser security that would do more harm than good if modified.

4. Lack of Self-Regulation / Inertia

At present, there aren’t enough companies in the fakevertising food chain who are willing to take a stand against the current practices, or at the very least to define standards by which all must follow in order to receive payment. Then again, there isn’t much desire to do so. The hard part comes from the lack of trust and a recurring trend in so many types of business – the race to the bottom. If someone takes a stand to be the clean leader, what do they get? Their has to be a big enough deterrent to make everybody want to fall in line, and as of yet, there isn’t.

At present, there aren’t enough companies in the fakevertising food chain who are willing to take a stand against the current practices, or at the very least to define standards by which all must follow in order to receive payment. Then again, there isn’t much desire to do so. The hard part comes from the lack of trust and a recurring trend in so many types of business – the race to the bottom. If someone takes a stand to be the clean leader, what do they get? Their has to be a big enough deterrent to make everybody want to fall in line, and as of yet, there isn’t.

When Facebook took action against two third-party ad networks for displaying ads the company felt deceptive, other networks and app developers quickly toed the line. In that ecosystem, Facebook has the power to take away their business with a few strokes of a keyboard, but in the broader ecosystem, media is fragmented, and the threat of legal challenges not strong enough. Almost every player knows that some action will ultimately happen, but they will get hit whether they run it or not, and in the past, the most ultimately profitable action has been to get it while the gettin’ is good. You might pay a fine and have to change your ways, but you’re better off having that pool of funds. Those gains then act like an internal VC fund to provide the company a runway for going more legitimate.

Where Does That Leave Us

The truly complex part of the problem comes from the size of the un-branded continuity program market and just how much it is helping certain companies hit their numbers, along with what happens were it to go away. In so many respects, the current fakevertising trend is the 2008-9 equivalent of the mortgage advertising boom from 2002-2006. The big difference of course is what it means to the consumer. With mortgage, filling out a form didn’t have any direct cost. With fakevertising, they enter their credit card number. Mortgage ads weren’t perfect, and those promoting them arguably contributed to something much greater of a problem, but they didn’t do so knowingly or willingly. In other words, there is nothing inherently wrong with taking advantage of an opportunity, but there is something wrong in manipulating the market to take advantage of an opportunity.

The truly complex part of the problem comes from the size of the un-branded continuity program market and just how much it is helping certain companies hit their numbers, along with what happens were it to go away. In so many respects, the current fakevertising trend is the 2008-9 equivalent of the mortgage advertising boom from 2002-2006. The big difference of course is what it means to the consumer. With mortgage, filling out a form didn’t have any direct cost. With fakevertising, they enter their credit card number. Mortgage ads weren’t perfect, and those promoting them arguably contributed to something much greater of a problem, but they didn’t do so knowingly or willingly. In other words, there is nothing inherently wrong with taking advantage of an opportunity, but there is something wrong in manipulating the market to take advantage of an opportunity.

We’ve already seen how things will play it. More and more media sources will crack down on the ads; it will happen slowly and in order of those who can afford to take a long-term stance or are forced to. Some of the key players will fade away for the same reasons – product companies shutting down because of investigation and cpa networks choosing to become more strict with respect to how they allow their arbitragers to run the offers.

At the same time, media costs will rise as advertisers increase spends, new advertisers come on board, and inefficiencies decreased. Is it six months, one year, or longer? That’s hard to say because this event is tied to a macro-event (credit crisis) but not tied to an event in the same way mortgage advertising was. No matter how long, we’ll still have those who continue to push the boundary, just like we still have spam, but those playing in the ecosystem will move on until the next Perfect Storm.

The FTC Guides Concerning Use of Endorsement and Testimonials in Advertising is not new. Much of the document dates to the first publication of it in 1975 with a revision in the 1980′s to create the standards by which marketers, particularly television commercials could use endorsements and testimonials. And, while television still plays a large role in marketing, the Internet’s influence has reached a critical mass, i.e. the FTC has received a large enough pool of complaints regarding certain practices that they feel it necessary to dictate allowable behavior.

In this case, the format in question revolves around blogs and bloggers. That the FTC might look to regulate bloggers in a revision to their guidelines is also not new, with mentions beginning in November 2008 with proposed changes being published and picking up again at the very end of April 2009 and throughout May. The topic has gained momentum in the past few days because of a recent AP article that was revisited on Cnet.

The AP article begins, “Savvy consumers often go online for independent consumer reviews of products and services…” “to help them find a gem or shun a lemon. What some fail to realize, though, is that such reviews can be tainted: Many bloggers have accepted perks…” and “Bloggers vary in how they disclose such freebies, if they do so at all.” It’s important because it would be the first time that FTC has proposed any sort of rules for bloggers specifically.

For the individual blogger this can sound scary. A classic example comes from an ex-coworker who started a beauty blog, and as it started to gain a little bit of a following, she started receiving not just requests to cover a product but incentives for a review, the implication being that she would write positively. Such one offs aren’t unusual. Entire companies even exist to help advertisers receive coverage from bloggers. PayPerPost for example has created an entire marketplace whereby companies can find bloggers who will write about their products or services with the advertiser having final approval of whether they will pay for a particular post.

Intellectually, this is an interesting and important topic. As mentioned in one of the articles, “If you walk into a department store, you know the (sales) clerk is a clerk,” said Rich Cleland, assistant director in the FTC’s division of advertising practices. “Online, if you think that somebody is providing you with independent advice and … they have an economic motive for what they’re saying, that’s information a consumer should know.” And unlike more traditional media where those reporting are held accountable for what they say (the exception being Fox News), in the solo journalism world of blogging, no such code of ethics and enforcement exists. Yet, as we see day in and day out, people believe bloggers.

The ones most worried about the changes are not surprisingly the people who rely on the incremental the most, the stereotyped single mother who earns $1000 per month through blogging, now concerned that she might make an accidental mistake to get her in trouble. It makes for an emotionally charged example in theory suggesting caution in adding the oversight but doesn’t represent reality. The FTC is not the music industry, willing to sue an individual for $20,000 per song for downloading and sharing 20 songs. Things start to get screwy, though, if bloggers can’t link to books, movies, etc. using affiliate programs. As to the specific changes, they haven’t been finalized but should be later this year.

It’s hard to say what changes will be made to existing language but clearly much effort focuses less on the medium, i.e., that it now would include enforcement over blogs, and more on the nature of testimonials and endorsements – what can be said, what can’t, and what disclosures are necessary. Two recurring themes emerge, one summarized by this statement on the November 2008 document, “Businesses are entitled to compete based on truthful, nonmisleading advertising claims, but they are not entitled to use techniques that mislead consumers.”

The second theme will sound more than familiar to those who went through the changes in ringtone marketing – the use of “clearly and conspicuosly,” e.g., “the advertisement should clearly and conspicuously disclose either what the generally expected performance would be in the depicted circumstances or the limited applicability of the endorser’s experience to what consumers may generally expect to achieve.” The challenge has been and will be what is “clearly and conspicuously,” but a litmus test could be – if you’re trying to deceive, Then that’s a problem.

Not everyone will agree, but more than not do seem to think that FTC generally strikes an appropriate balance between “protecting consumers and allowing advertisers to communicate creatively and effectively to potential customers.” (When they raid your office without warning, seizing property, that’s another story.) When the new guidelines come out, it seems that the biggest change is that those using testimonials and endorsements, in the case of weight loss, will need to know not only what you can lose (the testimonial/endorsement) but what the average person would expect to lose.

Reading between the lines, what we think we see is an emphasis on areas that have truly quantifiable results, such as weight loss. You can measure pounds, but you can’t measure wrinkles. So, we’re likely to see a crackdown on weight loss and a shift in marketing towards those where no such scale exists. Who really wins, though? Your lawyer. You’ll need one now more than ever to comply.

For an indepth look at the new Guides with commentary, see:
http://blog.seorevolution.com/2009/05/30/ftc-change-in-endorsements-and-testimonials-policy/

 Courtesy of DM Confidential editor

DM CONFIDENTIAL

A former Microsoft employee that I know likes it. He was proud of his former company and found the interface and layout helpful. A Googler that I know has actually switched to Bing to see whether his preference for search depends on the actual relevancy of the results or the habit of using one browser for so long. When a query gave results that he didn’t like or couldn’t find fast enough, he then goes to Google to see if it provides a better experience. (It turns out that the number of times both scenarios have happened are much lower than he would have anticipated, two in a week’s worth of use.) A Barista at Starbucks wondered if it was like Chrome, and a young lawyer who uses Google to search and Hotmail for email had no idea. In other words, outside of our industry and the very well informed, the launch of Bing didn’t really happen.

The initial talk of Bing centered around the obvious – will Microsoft’s long-awaited real-entry into the search market make a dent in Google’s market share? After the initial traffic surge of window shoppers, current numbers point to a tiny uptick. That tiny uptick could mean a hundred million dollar increase, but to a company like Microsoft, such revenue is a rounding error on their overall numbers. Reading how the CEO’s of Microsoft and Google feel about Bing’s impact and chances for success makes for a story in and off itself.

The never one to hold back Henry Blodgett covers Microsoft’s chances for success here and his staff member finds some great material from Google CEO Schmidt’s point of view. Their public posturing aside, instead of looking at the more immediately quantifiable angle of traffic, what we should be looking at is what Bing means to search, regardless of where we search. Bing could be monumental, not for what it does for Microsoft, but what it could mean for Google if they choose to follow suit. The entry of Bing has less to do with Microsoft vs Google, and everything to do with the role of the search engine.

For those who haven’t seen Bing, it has an innocuous enough, perhaps even pretty, home page, which for now has built in hotspots to trigger queries. The left hand nav bar mirrors the functionality seen on the top portion of Google. The latter has links to Web, Images, Video, Maps, News, Shopping, and Gmail, whereas Bing does not have a link for mail but Travel instead. No webmail link at all, instead you have to move your eye to an unnatural place away from the current focus to see a confusion of their other brands – MSN and Windows Live.

The differences between Bing and another engine appear subtly if you begin with standard queries. The biggest differences come when queries are entered that come close to matching one of the specialized areas, i.e., “Images, Video, Maps, News, Shopping, and Travel” but mainly shopping and travel. Unlike Google which has evolved incrementally and cannot afford major interface changes, Bing had the luxury of designing their interface from scratch with years of search learning already in place and to suit their long-term goals. Here are the results for “samsung led tvs” after entering it from the Bing homepage.

You will notice they look pretty similar, i.e., there are differences, many of which are helpful, but nothing too fundamentally different that it might cause a stuck in their way searcher to flee quickly. There is also nothing to make an advertiser wary. Where things start to get interesting, though, is when a person clicks on the left nav bar for shopping or the center result for “shop for..” Here the search experiences differs dramatically, and Microsoft gets it right. They appeal to a sense of savings. Google’s shopping product page if you navigate towards it has plenty of merchants who offer Google Checkout, but the page doesn’t scream ‘save!’ like Microsoft’s does.

Bing’s cashback signs are much more enticing than a page with shopping carts on it. Plus, while a merchant doesn’t lose that much by not offering Google Checkout, what merchant won’t want to participate and look like the one not saving money. Select a model, and you see a page showing final prices after cashback.

Selecting the expand sign next to a merchant explains more.

Click on store, and you go here.

Where the power of cashback becomes even more obvious is when looking at the sponsored ads from the comparison page.

The ad includes the logo for cashback, which puts even more pressure on the AdCenter advertisers to participate, not to mention many more clicks for those who do. A click on the ad takes you to a similar landing page for a participating merchant.

The above are a lot of screenshots, but it’s worth seeing the experience for those who might not have already. More importantly, shopping is just a warm-up for the bigger disruption – travel. That’s where any in the aggregation business should worry. Navigate to the travel section of Bing, and you notice a start page rather un-search like – more like that of an online travel agent site (orbitz, expedia, etc.) The functionality is the same too. Enter a flight query and what you get back is the same type of experience had you performed a search query and clicked on an ad from of the major online travel sites.

As is the case with shopping, they are (through previous acquisitions) their own aggregator. Cleverly, though, they also monetize the site well from the sites they are displacing. Check out the logos on the top right, the sponsored results. Because Bing has captured the exact query, when they send the user off to the advertiser’s site, the user sees the same results as though they had performed the query there. It’s quite beautiful because Microsoft gets a higher yield CPC, more clicks per unique user, and they can sell it as value add because the user experience is more seamless. It’s the great travel circle jerk which has become ever more popular as travel sites try to monetize since they keep cutting their own booking fees.

After using Bing just for a bit, it looks less and less like a search engine and more like a different version of Microsoft Office. Instead of Word, PowerPoint, etc., we have Travel, Shopping. Bing is not a search engine but the earliest true formations of an internet operating system. Such a notion has been discussed by technology pundits since 2004, and rumblings of that being Google’s goal since almost then. Bing just makes the idea more of a reality in that we can visualize what such a thing might mean. And from the looks of it, what we see are the traditional aggregators getting disintermediated. What happens when that gets applied outward to other areas? More importantly, what happens when Google starts to do this. Despite their innovation talk, they really know how to make existing concepts better.

Courtesy of DM Confidential editor

There’s another that those in our space use much more than they fly. They come in different sizes, shades, and colors, are used all over the world, and while they can’t cause any physical harm, they can lead to ruin if used in improperly. We’re talking of course about credit and credit cards, arguably the single most important players in ecosystem outside of the cpa networks. Every body has their favorite card or cards; even though, at their core, credit cards are a complete commodity, especially when looking at the establishments which accept all major cards.

Any difference has nothing to do with their transactional capacity. Instead they come down to the emotional factors, ones that have you using one card over the other and defending it in conversations. Let’s face it. In our space, it’s not about APR and initial credit limits. Gaining your loyalty comes from how well they do three things – customer service, rewards, and ego.

Customer Service

As an industry, we spend a lot of money with credit cards. Think of the billions that now get charged to Google and other platforms that didn’t exist before. For us, credit cards aren’t just a helpful tool but a necessity. Cards issued by major banks and the major card issuers have 24-hour support. Only a handful of cards issued by regional banks don’t offer as robust support, although they usually outsource the customer service to a call center with shared operations to expand the coverage.

Most people, though, only call their card service department a handful of times a year, and that experience – the level of personalization, security, and feeling that they are working on your behalf can lock in loyalty. For example, when trouble arises, we want to feel like someone on the other end of the phone cares about our success and will work as hard as we do, like it’s their money too.

Rewards

Almost every CPA Network currently has or has offered a rewards program. AzoogleAds has long had some of the more enticing programs, including their current promotions featuring a chance to earn your way to the Playboy Mansion and large cash prizes for performance on selected campaigns. While I haven’t quite seen a credit card that offers access to the Mansion, most have full flushed out loyalty programs which can include everything from early access to tickets to a year’s rental of an exotic car.

The decision among most cards is whether to choose miles, points, or cash back. Mileage cards work well for those dedicated to a particular airline or airline group, and the economics work out a little better than using points. With points, each dollar accounts for one point. The standard ratio is a 1% return on spend up to an unlimited amount. Spend 10,000 get 10,000 points. Spend 1,000,000 get 1,000,000. As an aside, the number of people who could do the latter used to remain low as even many businesses didn’t accept credit cards for large transactions; instead of credit, it was more old fashioned loans or lines of credit. The advent of self-service platforms in online advertising has completely democratized the nature of big spending and had card companies rethinking their customer base.

With individuals now spending hundreds of thousands of dollar and in quite a few cases tens of millions of dollars, they have an over abundance of points. For them American Express tends to be the preferred card because of their robust rewards catalog. Their daily operations of using a card, something they would have to do anyway, all of a sudden means frequent getaways and other perks that now have no incremental cost.

It would be economically more beneficial to get cash back, but any card offering greater than 1% cash back has restrictions, e.g., total amount of cash back available, limits to what earns cash back, etc. Discover card gives unlimited 1% cash back which parallels the 1% return on capital spent redemption value of points (100,000 points buys a product worth $100). Miles can be a little different. Take a ticket that costs $400 coast to coast, conservatively 4000 miles round trip. Free round trips using miles are around 40,000 miles domestic.

That 40,000 miles to earn at our early ratio means a spend of ten trips (10 x 4000 miles) or 40,000 dollars. In other words, it’s just about a wash as paying with points would cost 40,000 points for a 400 ticket. Some cards will offer double miles up to a certain amount spent on travel, so for big spenders on media, it doesn’t matter as much. In the end, it will be a Coke / Pepsi preference with some people justifying miles, others points, or cash back. And when talking about a spend of 50,000 or less annually, the difference can actually matter – take the cash if greater than 1%. For the ballers in our space, it’s about something else.

Ego

There are two levels of customer service. All card members qualify for customer service, but not all get the treatment – service perks above and beyond the standard toll-free number, a dedicated number, concierge, verbal fluffer. Points are good. Lots of points are better, but in the end it’s about feeling like you’ve made it, verbal cues like a Rolex on the wrist. That one card engenders more of an emotional connection than others is simply amazing. It’s just like Coke and Pepsi. They taste different, but blindfold people, and it’s amazing how poorly they pick their supposed favorite.

It’s technically the same here. People should pick the card with the best limit, but the cards rely on us wanting the more exclusive card or in Capital One’s case, the most personalized card, so that we use it above all others. For the average person, though, credit cards are really about access to credit – limits and aprs (on purchases and transfers). It’s for the person who truly needs the service, like the self-funded startup, the small to medium sized business with revenues and costs too close to another. It’s the company that needs employee cards and to track their spending easily. For the new elite, the media elite, credit cards are the symbol of success and we look at the other person’s card like adolescents admiring the kid that has the new car or the gorilla who turned silver back first.

The topic of cards matter for so many reasons, the least of which deals with their importance in our daily lives; instead it’s all about how a commoditized product achieves differentiation. When an affiliate can get the same offer from more than one place and when weekly payments (credit) don’t distinguish, it really is about engendering loyalty in less measurable, i.e., emotional ways.

Courtesy of DM Confidential Editor

According a Myers Publishing study conducted in 2007, 17 percent of respondents said they trusted advertisers. A Gallup poll conducted in 2008 found that just 10 percent of respondents said advertisers could be trusted.

On the other hand, a Bridge Ratings survey conducted in 2007 found that U.S. consumers viewed their friends, family and acquaintances as their most trusted sources of information. A TNS poll conducted in 2009 found that recommendations made by friends were the most trusted source of information across all media.

Of all purchases U.S. consumers make, the food they eat at restaurants is influenced the most by what they hear from their friends, according to BIGresearch in an October 2008 study.

According to the study, 52.9 percent of all respondents said word-of-mouth influenced the restaurants they ate at. This was followed by electronics (44.4 percent), grocery (40.7 percent), home improvement (35.2 percent) and apparel/clothing (34.3 percent).

This order was the same for white consumers, though for African-Americans, Asians and Hispanics, apparel/clothing purchases were influenced more by word-of-mouth than home improvement purchases.

“Leveraging word-of-mouth marketing initiatives might matter more to some retailers and product sellers than to others—but whether to a greater or lesser extent, word-of-mouth matters, always,” said an eMarketer post about these findings.

eMarketer also highlighted a survey conducted by Duke University’s Fuqua School of Business which was commissioned by the American Marketing Association in late February.

The survey found that excellent service was the top customer priority in the next 12 months according to U.S. marketers, with 70 percent of the response.

This was followed by building a trusting relationship with 65 percent, offering superior product quality with 60 percent, low prices with 55 percent, superior innovation with 27 percent and brand with 25 percent.

According to a survey conducted earlier this year by AdMedia Partners, 77 percent of respondents said they would boost their spending on word-of-mouth and social media marketing initiatives in 2009.

Courtesy of DM Confidential editor

Its Harry Potter length with non-Harry Potter sized font meant we weren’t exactly rushing to read this true-story tome. Yet, once we finally got over our hesitation, i.e. ran out of our mystery-fiction thrillers, Conspiracy of Fools has proven one of the most insightful books imaginable, and in many ways downright scarier than any mystery thriller we’ve read. For those who haven’t heard of a 700-plus page story from the award winning New York Times author Kurt Eichenwald, Conspiracy of Fools meticulously chronicles the rise and spectacular fall of Enron – a fall that not only saw the collapse of the once-Fortune 50 company with more than 22,000 employees but also the fall of the storied accounting firm Arthur Andersen.

The once high-flying energy company reached well beyond its Houston headquarters and into Washington with the “Enron scandal” being one of the driving factors behind the sweeping Sarbanes-Oxley Act of 2002. It’s not every company whose leading financial officer manages to siphon off roughly $55 million while simultaneously crafting deals which would lead to the bankruptcy of said company. It might be simply a scandal were they a private company, but this was a public company that lost employees and shareholders billions of dollars.

While we recommend any read the book, this is the performance marketing community we’re talking about, the same one who tells us our articles are generally too long. Jokes of length of the book aside, the foibles of a public energy company’s issues might not seem germane to our much more nimble, much less public segment of the online advertising industry, but as it turns out the same issues which plague us are the same that brought down the Enron house of cards. In one sentence, the story of Enron is about controls (or lack thereof) and conflicts of interest. The issues below are the issues that any company must solve and hopefully avoid to have long-term success.

- Company vs. self – We once joked that the arbitragers motto is “Ask not what you can do for the user, but what they can do for you.” It’s not that much of a stretch, and for better or worse we can rationalize why they often take the approach they do. As an arbitrager, you can almost get away with that attitude because your dollars are on the line. It doesn’t mean free reign to deceive and act illegally, but you are your main constituent. Employees don’t deserve that luxury. The company is to whom you are beholden and for whom your actions should benefit, both good actions and avoiding bad. For a variety of reasons in our modern era, employee trust outside all but a handful of companies is low. If that’s how you feel, then you should leave versus engaging in acts that benefit you but not the company.

- Ego and entitlement – In many ways the notions of ego and entitlement are a precursor for some other issues. I think of an army. In theory it’s a large machine of people dedicated to serving a mission greater than themselves, who follow orders almost too well, to a point where you could make the case that such entities take away individuality. And while they may be an extreme on the spectrum, they function well and only well when people are aligned and not letting feelings of self-importance get in the way. The best companies create their own little soldiers, who relish the chance to serve that larger entity. The ones who struggle have employees who feel they deserve more and add friction to the equation as a result. Unfortunately, their behavior while bad is sometimes a symptom of the corporate culture not a cause.

- “Key talent” – A professor of mine once quipped, “If you meet someone at a bar and then later find out they have a drinking problem,… Duh.” The same goes with people. Let’s say you hire someone for their creativity in the art of gray, because they know how to bend the rules. Don’t be surprised if you find them doing things that you don’t know about or feel comfortable with. You didn’t hire them to toe the line, and once the need for the creativity goes, don’t think it leaves them.

- Not listening to true key talent – One of the most powerful takeaways from Enron’s fall is that it takes a wealth of wonderfully capable people to grow a business, but only two to destroy it. The first person is the one who does the action. The second is the person that didn’t head the warnings from others. The disaster could have been avoided in many ways, through some decisions, but chief among those ways was listening to the people who recognized an issue. Startups can take an all or nothing approach, but that doesn’t work so well with presumably stable public companies.

- Nepotism – It’s never a problem to hire friends and family. Startups especially thrive on that because it’s often friends and family who will work hard for less, or at least work for less and during times that are uncertain. But, those same early assets can easily turn into great liabilities later. Even when companies and managers don’t mean to give preferential treatment, actions can easily be viewed that way by others. And, heaven forbid you hire a friendly who is just wrong, it’s all the more reason to have a solid base of real talent to run the show. Just make sure they don’t get tempted to start looking out for themselves.

- Confrontation now/lower profits now or shame later – I am certainly the expert at postponing painful events and other forms of confrontation, but what is hard to keep in mind is that time acts logarithmically, so each delay doesn’t just add a little additional future pain, it adds a lot. In the pressure to hit certain targets, avoid showing mistakes, etc., it’s too easy to want to do anything but deal with the facts now. Enron could have avoided going under by admitting to some of the crap investments that would have hurt them initially but not ruined them ultimately.

- Good economy vs. bad – If anything, the story of Enron shows how a rising tide lifts all boats, even one with a big hole and all anchors down. In a normal world for example, you couldn’t sign a high level business development deal that doesn’t generate revenue but does have promise to and use that as the basis for a public spinoff. A moral of their story seems to be that in tougher times, we can avoid some of these issues because people have a more realistic view of themselves, the job market, and the work needed for success.

Ultimately, it’s real simple. If you are wondering whether to do a particular act, and the above doesn’t help qualify it, use our simple checklist:

Is it crazy?
Is it based on secrecy?

Would others internally and/or externally find it sleazy?
If the answer to any of the above is yes, especially to the third one, then don’t do it.

Courtesy of DM Confidential editor.

DM CONFIDENTIAL

While the usefulness of utilizing President Obama’s first 100 days in office as a lens through which to view the spam world is dubious, McAfee broke this timeline down into chunks of about 30 days.

During days 1-30, Obama-related spam declined sharply after Inauguration Day, according to McAfee. Valentine’s Day-related spam did not see quite the surge that was expected.

Days 31-60 saw the increase of “classmates” spam, which flowed over into Facebook by the second week of March. The Conficker zombie botnet also made a foray into the main spotlight as April began.

During days 61-100 saw spam levels nearly double across the globe between April 1 and April 8, according to McAfee, “moving from a three-month low to a four-month high.”

The company concluded that “the first 100 days of Obama’s presidency were mostly business as usual in the spam world.”

McAfee went on to highlight a troubling trend: e-mail users have become lax in monitoring their inboxes because of their reliance on improved anti-spam filters.

“This carelessness can result in a higher click rate on the fewer spam messages that do bypass the filters. We expect this unfortunate trend will continue,” McAfee noted in its report.

Three e-mail features were underscored as examples of tactics leading to phishing and spam campaigns.

Branding was the first, and is categorized as e-mails with the appearance of originating from a trusted source “because they look just like the real thing.” Branded campaigns from late February and early March involving Classmates and Facebook were cited, where links were placed for users to download a “Flash player installer,” which was actually malware. In March, Web sites attempted to look like genuine video feeds from Reuters.

Images was the second, a tactic in which images associated with pharmaceuticals, notably via Chinese Web sites are used.

Headline spam was the third, which involves a “subject line or short message blurb” with a link in the e-mail. McAfee noted that swine flu presented the perfect example of this.

In the conclusion, the company notes that as long as e-mail users “continue to behave as suckers, spammers will use sophisticated tactics to separate us from our money.”

A separate report released by Symantec’s MessageLabs revealed that 90.4 percent of all e-mail was spam in May, a 5 percentage point increase from the previous month.

Courtesy of DM Confidential editor.