Practical Tips from FirstMark Capital’s Online Marketing Summit

I did a post a few days ago around the high level themes from our Online Marketing Summit called “Stop Selling, Start Giving”.  There were enough very practical tactics that emerged from the event that I thought I would share some below.

SEO: 

• The best time to think about SEO is when building a new site.  When using any good CMS system, such as Drupal or Joomla, be sure to use their SEO plug-in modules.  It will make it very tough to not have SEO on the site. 
• Links are very important, particularly ratio of inbound links to outbound links.  Also, the deeper and more specific you can have links to the site (rather than just all to the homepage) that will improve the SEO of the site and pages.  Make sure your content is structured in such a way that incents people to point to deeper pages.
• SEO is a process involving content creation, engineering head count, links, technology, and budget.  Create commitment to SEO in the organization.  Hiring one person cannot change an organization or generate real SEO value.  Consider allocating 10% of engineering time to SEO work.  The best practitioners have everyone in the organization focused and thinking about it.
• Resources:  SEOmoz.com, Conductor.com

SEM/PPC

• Before you spend your budget on an SEM campaign, be sure to take 10% of it FIRST and do a test run.  You can save yourself some major embarassment in case something was not set right and to further tweak. 
• Be very careful using BroadMatch – you could spend money in a heartbeat on terms that are not related to your product or service.
• Keyword research is critical.  Lots of tools out there can help, but also thinking about negative keywords, plural vs singular, etc, are all ways to create variation. 
• Resources:  Clickable’s free guide SEM best practices and tips

Community

• Create a community and empower it to set directions – a censored community is not one at all.  Manage but “with a light touch”.   Allow users to moderate content.
• Recognition is key for community growth – tiered structures, badges, experts, rewards (virtual or physical) are great ways to accomplish this.
• Transparency is critical – if you have an issue, publicly engage the community and tell them what is going on.  Building trust is paramount to a vibrant community.
• Measure the community –  post activities, engagement, session lengths, etc.   The numbers will tell you if your community is active and thriving.  If it’s not working, find out why!  It’s usually something you did.

Email

• Email is NOT for acquisition, it is for retention! 
• The FROM and SUBJECT alone determine if someone opens – the questions they are asking are “DO I KNOW YOU?” AND “DO I CARE?” respectively.  Answer those questions well.
• Build your lists organically by providing VALUE to users such that they want the information rather than a marketing message.  Use things like questions that your customer service receives as material for future newsletters.  You dont need dozens of articles – a few targeted ones that serve a purpose and give value to customers is better.
• Create links back to specific pages on your site so you can track activity and users interests. 
• Make sure you have a sign-up form on ALL pages of your site.  Customize the thank you note when someone does sign up – show genuine appreciation for signing up.
• Most people have images off in their email clients – dont have a huge picture at the top or users will see a big X instead of a message in their preview screen.
• Testing is key – treat email just like PPC.
• Use the word “Feedback” instead of “Survey” – people are much more willing to provide feedback than take a survey.  One improves their life, another takes time from their life.

Marketing Automation

• If you can read the “Digital Body Language” of how customers are interacting with your site, content, and marketing activities, you can calculate how likely they are to buy and where they are in sales cycle.
• Lead scoring is critical to understand when marketing activities transition to sales type of activities.
• Separating FIT of buyer from ENGAGEMENT of a user is critical.  A key decision maker doing a few things online and a summer intern doing a lot online should not have the same lead score.  A CEO doing A LOT is the ideal.  Segment those rigidly and pass on to sales things at the closest intersection to improve MQL close rates.

Integrated Marketing Approach – Case Study of Omniture

• Marketing commits to generating 35-80% of sales accepted leads, and in closing 35-40% of deals in a quarter.  If you do not know what number you are responsible for, you are not strategic.
• Dont do live webinars – record and push it out there – allow your customers to sign on when they can, fast forward to what they want, and interact as they wish.
• It’s hard to find online marketing savvy folks.  If you cant find someone smart, hire an inexperienced, smart person and send him/her to get certifications:  DMA, AdWords, etc.  Make sure they have gone through the formal trainings – well worth the investment, and smart people without legacy biases will get this system.
• Map your marketing process to a sales process – someone looking deep on product page is much further in a funnel than someone downloading whitepapers.   Know that and automate.
• Sample mix of budget:  25% Site and Content, SEO 15%, SEM 15%, Email 20%, 3rd Party Emails 10%, Display Ads 5%, Newsletters 3%, Tradeshows 7%.

John Deighton’s definition of Interactive Marketing:  “The ability to address the customer, remember what the customer says and address the customer again in a way that illustrates that we remember what the customer has told us.”

Any other suggestions, please post below!!

Stop Selling, Start Giving

FirstMark Capital yesterday hosted an Online Marketing Summit for our portfolio companies and friends in the community.  The goal was to bring together the latest thinking across a variety of functions (SEO, SEM, Email, Community, Social, Automation, and others) and to improve the overall fluency of our companies regardless of their field.  If I were to summarize everything I learned at the event, it was to “Stop Selling, Start Giving”.

The Internet has democratized customers’ abilities to learn about new products, instantly provide feedback, and share their experiences with others.  The traditional model where sales controlled the product message to buyers, carefully built relationships, and used those relationships to close deals has been permanently broken.  One way marketing strategies can now be easily sidestepped by a user that self-selects how to use products and research decisions on his or her own.  As a result, marketing’s role has changed to find buyers when they are ready to make a decision based on their OWN actions.  Steven Woods from Eloqua calls it “Digital Body Language”.  By reading the Digital Body Language, sales can step in at an appropriate and desired moment to facilitate the close of a deal at the right moment of intent.

What does it mean to “Stop Selling, Start Giving”?  By that, you should try to begin the dialogue with a customer with a value proposition and an insight that addresses a problem they have.  If they don’t have a problem, they don’t need your solution.  If they do, actively help them understand the PROBLEM better, not your PRODUCT better.  One tactic could be a whitepaper, another could be giving away your product for free initially, another could be hosting a community forum where experts comment on industry issues.  In addition, by actively participating in the customer pain and facilitating their dialogue, you gain a precious opportunity to subtly influence and learn from the dialogue.  Transparency exists whether you want it or not – embrace it!

By the act of giving, you’ll begin to engage a prospective customer in a series of activities.  Each of those activities can be measured online and used to decode where a customer is in their buying process.  Are they just exploring the web site?  What sections?  Have they downloaded a couple of specific whitepapers?  Now moved to using the product?  Asked for some help?  These data points can be mapped to a buying cycle where you can appropriately insert yourself to a sales activity.  Done well, you can tie all of these data into one continguous funnel that starts with first contact at the top and closes with a sale.  But it all starts by giving, not selling!

Jeff Bezos at Wired: Disruptive By Design Conference

I attended the Wired: Disruptive by Design Conference earlier today at the Morgan Library in NYC.  One of the best sessions was of course with Jeff Bezos, CEO of Amazon.com.  I have an incredible amount of respect for Jeff, not only because he stayed true to his strategy in spite of an incredible amount of pressure during the bubble bust, but also because of the spectular innovations that have come out of Amazon over the years.  The Kindle has revolutionized the e-reader market and launched Amazon into a consumer electronics company.  Amazon Web Services of course has transformed Internet economics from fixed costs to variable ones, and unleashed a wave of new companies to boot.  Jeff did not disappoint, and I thought I would share some of his thoughts below.  My favorite from below – “The trick as an entrepreneur is to be stubborn on the big things and be very flexible on the details.”  Enjoy, and feel free to post any other good ones you have from Jeff. 

On the economics of e-books and the Kindle: 

• A text book is re-sold 5 times over it’s life, which is why they cost so much.  With digital books, publishers have the opportunity to sell that 5 times to consumers.   The price can now come way down.
• Historically, we have never made money on bestsellers.  We make money on the mix.
• For books where we have both physical and e-book inventory (300,000 books), Kindle unit sales are 35% of the physical book sales.
• “We humans do more of what is made easy”.  You do more when you reduce the friction.  Making buying books so easy makes people buy more.
• Reading is an important enough activity to have it’s own device.
• On multi-function devices versus signle function:  “I like my phone… I like my swiss army knife, but I also like my steak knives too.”
• “The physical book has had a great 500 year run, but it’s time to change”
• “Our vision is to have every book ever printed, in any language, available within 60 seconds.”
• On Google’s pending deal with the US book industry:  “It doesn’t seem right to get a prize for violating a large series of copyrights”

On staying true to the path and entrepreneurship:

• “We always noticed some of our harshest critics were our best customers.  Told us we must be doing something right.”
• Regarding the run up in the bubble: “I always told our employees not to feel 30% smarter when the stock went up by that amount because one day it will go down by the same.”
• “One of the differences with founders and professional managers is that the founders care about the detail of the vision.”
• Regarding vision and strategy:  “The trick as an entrepreneur is to be stubborn on the big things and be very flexible on the details.”
• “If you disrupt something, you have to be willing to be misunderstood for long periods of time.”
• Regarding products that seem very different:  “A question people at large companies don’t ask enough is “Why not?”” 
• “I wouldnt know how to respond to someone if they said, “We cant do this because it’s not in our knitting.'”
• “The two things we do is work backwards from customer needs and work forward from our set of skills.  AWS is an example of us working forward from our skills, while the Kindle is an example of us working backwards from customer needs.”
• “Many companies believe learning a new skill is akin to leaving your core competency.”
• “Errors of comission are over focused on versus errors of omission.  People over dramatize how expensive failure is.  You never hear of a company getting criticized for failing to try something.”
• On trying different ideas:  “If you are in the investment phase and you stop doing it, the only thing that happens is your profits go up.  How hard can that be?”
• On mistakes:  “We launched Auctions, no one came.  We licensed Google’s search and launced A9 and no one came.  A year after we shut it down it was still my mom’s homepage.”
• Citing another quote in response to why they didn’t better service and if it was deliberate or not: “Never attribute to conspiracy what can be explained by incompetence.”

It was a great session and Jeff had some great lessons.

NYC: The Media Capital in 2020?

Today, I attended the kick-off dinner to the NYC Economic Development Center’s efforts to shape and support NYC’s position as the media capital of the world for the next decade.  The event was held at Gracie Mansion, and included 40-50 of the media industry’s most notable names.  It was a great cross-section – from traditional media to the largest ad agencies to the newest digital media properties to deans of the leading NY universities to various NYC venture capitalists – all assembled to discuss the changes affecting the industry, and specifically how the city can create long term initiatives to ensure NYC remains the media capital in 2020. 

The city seems to take this project quite seriously.  It’s hired Oliver Wyman as lead consultants, it is setting up a website that will leverage the latest technologies to facilitate the dialogue, and has set up a rigorous program by which to have regular discourse and detailed action items.   

The session was kicked off by Mayor Bloomberg, who spent much of his time talking about the need for hope and the belief that the bad times would eventually yield a strong recovery.  He made a number of interesting points, including highlighting an article by Fareed Zakariya that talked about how Canada has had zero bank failures, managed consistent government budget surpluses, has home ownership at the same rate as America without the tax deductibility of mortgage interest payments, and has been growing as a country largely on the backs of sound fiscal policy, common sense and an open immigration policy.   He mentioned a number of interesting statistics about NYC, including that it had more fashion houses than Paris, and took the occasional shot at the folks in Albany.  He also pointed out NYC’s fiscal discipline in cutting expenses in the budget by $3 billion.  It felt like he was beginning his campaign.

After the Mayor spoke, members of the NYC EDC set the stage about the media industry in NYC.  Some relevant facts:

·         Media is the second largest industry in NYC, behind financial services;

·         Media employs over 300,000 people, representing 10% of the total, and over $30 billion in revenues;

·         The 305 large and very large media businesses accounted for only 50% of the media jobs in the city, the remaining 50% came from the 15,000 small and medium sized businesses in the city (driving the point home that supporting innovation and small businesses are high on the agenda).

We then transitioned to a plenary session discussing the positives and negatives of doing business in NYC, and the key issues we would need to deal with to ensure the “Media NYC 2020” vision.  The highlights included:

·         NYC is still “the place” young people want to be, for its energy, arts, culture, and unique mix of people, and that is an important characteristic to maintain and support;

·         The lines between media and technology are blurring, and there is a strong need to improve the quality of the engineering and development talent to face this growing trend, lest Silicon Valley keep all the technology spoils to itself;

o   Many examples of how media firms have simply put their technology development in different geographies because they could not find the needed talent in NYC;

o   A universal sentiment that NYC needed to establish a “Media Center” that brought together academia, industry, and the bleeding media technology issues in a similar manner that MIT has done for Boston/Cambridge or Stanford for the Valley;

o   Discussions about creating engineering scholarship programs to attract the best and smartest students from around the globe to the city;

o   Discussions about tax incentives and credits for startups to combat both the higher cost of living and the more lucrative salaries that financial services firms had paid techies.  One radical idea of creating tax free zones as some other foreign countries have done to foster community and innovation;

·         In the debate about whether the city should support “traditional media” or “new media”, an acknowledgement by several that “big media” could not lead the charge, as it is facing a fundamental shift in market forces and will be permanently in a cost optimization mode for its legacy products.  The key is not who should be protected, but that the industry of content creation, aggregation, distribution, and monetization be supported without regard to old or new so that NYC maintains its status as media capital.

It was an interesting night filled with plenty of good conversation.  What other suggestions would you have for the folks at the NYC EDC?  Please post them here, and I’ll be sure to pass them along!

AlwaysOn Panel: “Big Media’s Digital Strategies: Where do Private Companies Fit?”

I moderated a panel this past week at the AlwaysOn OnMedia conference in NYC.  It was an opportunity to get behind what the “big media” folks are thinking in this economy, and how they interact with startups.  The panelists were Jessica Schell, SVP, NBC Universal; Walker Jacobs, SVP at Turner Digital; Vivek Shah, Group President Digital, Time; Jim Spanfeller, President, Forbes.com; and Sanjaya Krishna, Principal & US Digital Services Leader, KPMG.  Below are the most interesting takeaways I got from the session.  For the full panel, click here.

·         On the overall economy, as expected most of the panelists indicated it was tough going out there, and they were focused on partnerships that drove revenue.   In fact, given the pressures in the broader market, they were “more open than ever” to partner.   Some of the panelists highlighted their willingness to do deals in areas like content as evidence of that openness.

·         One of the key challenges they saw in unlocking more digital dollars was translating brand advertising into value online.  One of the more interesting ideas was from Vivek Shah, who said that while growth in performance based advertising in a recession is to be expected (as demonstrated by the most recent Google and Yahoo quarterly results), it is akin to harvesting crops.  It’s easy to pull in more food near term by harvesting more (search) but if you don’t plant any seeds (brand advertising), you may find yourself without crops in the future.

·         All the panelists want to find ways to drive additional lift and yield – the “optimization” problem has still not been solved.  Each were working with various contextual, behavioral, and other techniques to try and improve CPMs and deliver a more compelling story for this medium versus other areas of spend to advertisers.  There were a few areas of strength highlighted, including in QSRs (quick service restaurants) and entertainment, to go along the usual weak spots of finance and autos.

·         In defense of traditional media, the panelists pointed out that people turned first to CNN when news of the airplane landing in the Hudson River broke, not the blogosphere.   The panel expressed a need for better curation tools.

·         There was lots of discussion around the dearth or plethora of data online, and the need to make better sense of it all.  Data standardization continues to be a recurring theme.

·         Time Warner and NBCU both highlighted their investment arms (Time Warner Investments and Peacock Equity Fund) as one way to get introduced and a way for them to learn about startups, but quickly pointed out that the best way was to get a direct operational relationship.  An investment did not guarantee a deal, and a deal did not guarantee an investment.

·         In terms of mistakes startups make when engaging with big media, the panel offered the following advice:  1) don’t present a deal that assumes you’d capture the lion share of the economics out of the gate; 2) set expectations appropriately – start small and prove success rather than promising the moon; 3) focus on how to drive revenues in this environment; 4) know what items they are willing to outsource and what items they would never (such as the sales relationship).

·         I concluded asking the panel what company they would start knowing the problems they currently faced in their environments.   The answers:  a next generation data exchange, improving the mobile experience, new back office systems designed for the digital era, improving operational efficiencies.

It was a fun panel to moderate.  The panel cited numerous examples of startups they have successfully partnered with to drive mutual value, but it was clear there was a long way to go.  Those of us part of the startup ecosystem should take heart!

Improving Our Infrastructure, One Election Booth At a Time

What a week!  There has been an enormous amount of press coverage, both domestically and internationally, about the implications of Barack Obama as the next President of the United States.  I do not think they can be overstated.  This election is a testament to the ideals of this country and the power of empassioned masses.   While I am a registered Independent, and prefer to keep my politics out of my regular dialogues, the avid traveler in me cannot help but feel great about the universal refrain of support and acknowledgement from every corner of the globe.  I am quite hopeful in a period that only offers bleak challenges.

Amongst many of President Obama’s policies, one that particularly resonated was the call to upgrade and improve our infrastructure.  Obama’s use of technology has been well documented, from his campaigns online to his engagement with Facebook audiences to his mass SMS message to campaign volunteers acknowledging their work before delivering his acceptance speech.  I believe this country has not come close to generating the efficiencies possible by leveraging the latest information technology.  Nowhere was this more evident than at the voting booth where I cast my vote.

On an electrifying Tuesday morning, rather than casting my absentee vote, I walked over to the Prince Georges Hotel on 28^th Street in Manhattan to cast my vote in person.  The line rounded the corner, but this was my day to participate in all this country offers.  I waited patiently for an hour before getting inside.  When I entered the hotel, I felt like I had been thrown back centuries.  I was greeted by a woman who had a crumpled up piece of paper with handwritten numbers, which would identify which machine I would stand in line to vote from.   These numbers were misaligned and looked like chicken scratch.  She directed me to the line for “12”. 

The line for “12” overlapped with the lines for “28”, “51”, “13”, and others.  They wound and zigzagged around each other in a swirling mess.  Once I got to the front, I was greeted by a woman who checked my ID and pointed me towards a booth.  The booth itself was enormous.  Twice the size of those usual “Polaroid” photo booths that you would take pictures in as a kid at an amusement park.  Inside this big, old grey piece of metal were columns for the candidates.  Next to the names were manual black knobs.  At the bottom of this machine was a massive (3 foot long) rusted red lever.  I had no idea what I was supposed to do, and still uncertain after reading the three point instruction at the top.   Turns out you have to take this massive lever and push it all the way to the right.  Then you had to turn each manual knob counter clockwise for the candidates you wanted.  And when you were done, you pulled the lever all the way to the left again.  After that, you stood there and hoped something happened.  There was no feedback, no click, no guidance.  I walked out scratching my head, until another woman came over, pulled some other lever in the back to reset the machine for the next person.  It somehow implicitly validated I did something.  Nothing about the registration of my vote was tied in the machine to who I was (ie, did I vote?).  Maybe some manual reconciliation happens afterwards.  And I couldn’t tell how this machine could possibly do anything but offer very high level total calculations via an internal abacus.  All in all, this machine could have easily been built in the era of the Guttenberg press back in the 1400s. 

My tiny experience at the voting booth could have gone radically different, and generated massive savings all around.  The first issue that struck me was the opportunity for human error.  From the first woman and her hand written notes, to the swirling chaotic lines, to the archaic machine, each of these had material >5% chance of errors, especially in light of the volumes of people.  Compounded, it could lead to material errors in votes – the fundamental priviledge of our citizenhood!  Second, there is a huge manual effort that could be entirely eliminated by using a modern booth as available in select other states.  No counting votes, or manually inputting data into computers, it would happen instantaneously.  This could lead to substantive savings if implemented in a standardized manner on a national basis.  Third, while safeguarding the privacy and sanctity of the actual vote, is the opportunity to take the information from these machines to understand and improve our democratic process. 

Technology cannot cure all ails.  It is not magic.  But if used effectively it can transform how we leverage and process information.  This little example is one of an infinite number of inefficiencies that exist within our government.  Even the smallest of focus on these can lead to substantive productivity and cost improvements that can go towards any number of the major issues facing the country.  I am hopeful our new President elect will push the drive to modernizing our state.

Advertising in 2009

As many of you know, Ad-Tech is in NYC this week.  It’s a great conference that brings together some of the leading traditional and digital thinkers to explore the latest topics affecting the industry.  The timing of this Ad-Tech was particularly interesting given the broader market environment. 

I had the pleasure of being on a panel entitled “The Digital Economy” with David Moore of 24/7, Bob Raciti of GE, Imran Khan of JP Morgan Chase, and moderated by Henry Blodget.  Much of the discussion focused on the state of the online advertising market.  I thought I’d share some of my predictions:

·      2009 will mark a very, very tough year for overall advertising, and I would not be surprised if the total ad market (which exceeds $230 billion) declines by 10% or more.  Mary Meeker had put out an interesting analysis that showed the correlation between GDP and advertising spend at 81%.  Based on that analysis, at a 0% GDP growth rate, one would see a 4% decline in overall advertising.  With a 2% contraction in GDP, one would expect to see 8% decline in advertising.  I believe 10% is a real possibility.

·      There will be a continuing rotation of dollars from legacy advertising markets to online advertising.  The overall online advertising market (which is only $25 billion out of that $230 billion pie) will grow, though at much more muted levels than the 15%+ currently predicted by the market.  More likely is mid single digits overall.  History shows that advertising eventually follows the user, and given how woefully behind ad dollars are to the time spent online, growth should be expected.  This will be offset by declines in the unit pricing, both on a CPM and CPC/A basis.  Clicks or actions won’t matter if the consumer cannot ultimately convert because they don’t have the money.   

·      We will not see the 25% drop that we saw between 2001 -2003, for two reasons:  1) Overinflated tech startups are not buying from other overinflated startups.  Online is mainstream and touches nearly every industry in a meaningful way.  2)  The inventory being offered has evolved from display only many years back to display, search, SEO, email, lead generation, affiliate, etc. 

·      This contraction could put MAJOR pressure on the traditional media players.  In particular, I worry about the newspapers, who still generate over $38 billion in advertising, with content that is often readily available from hundreds of sources, including blogs of which many are viewed as more “authentic” to young readers.  I think we can see some major failures over the next few years.  Those who produce premium content, or content that has a high cost of production, controlled distribution, and long shelf life (eg the networks, film studios, etc) will have to work through their transitional issues and the current tough environment but will survive and thrive online.  

·      Within online advertising, consistent with prior recessions, we will see retrenchment to direct response/performance oriented spending.  Search will grow much faster than display, as people will release dollars only to the extent they are certain they will see them back very shortly. 

·      Other areas of robust growth will include online video and in gaming advertising, as people increase time on leisure entertainment.  Online video will get even more compelling as we get beyond the pre-roll only.  There is such a rich opportunity to make advertising within a video context so much more engaging and real-time.  You can engage the users with calls to action, can make real time “hot lead” phone connections, can offer incentives to induce immediate behavior.  We should watch for some exciting innovations.

We are still early in many aspects of the online revolution.  One of my companies, Conductor, just released a report that showed over 75% of the Fortune 500 have no presence for their keywords and brands in the natural search domain.  Consistency of measurement has continued to prove a challenge to unlocking more spend.  We have plenty of data, just no good idea how to agree on it.  Increasing fragmentation in the sources of online spend in a market where people had enough to do with just TV and newspapers will require much more robust technology for automation.   The whole concept of de-portalization and free flowing content will necessitate a re-writing of all of our Web 1.0 and 2.0 tools.  There is still a lot more innovation needed to move the rest of the $200 billion or so that is not yet online, and so while the short term market looks tough, the long term opportunities remain exciting.