Tips on Facebook ad campaigns February 16, 2011Posted by jeremyliew in advertising, facebook.
A couple of weeks ago Webtrends analyzed 11,529 Facebook ad campaigns representing 4.5bn impressions to see what conclusions they could draw. It’s worth reading their short white paper on Facebook Advertising Performance Benchmarks and Analysis. Some highlights include:
- Click through rates steadily increase with age up to 65
- State by state CTRs are relatively flat with the exception of North Dakota and Wyoming being substantially higher than the other states
- Fun/entertainment focused campaigns work better than other types of topics
- People who didn’t attend college click more than people who did
- People who attended college use their friends as a filter to determine who to click on more than people who didn’t attend college
- FB ads need new creative after three to five days
I’d urge you to read the whole thing. It’s only seven pages long.
Local has been a category that has long attracted a lot of attention from internet startups. Not surprising given that it is a $130Bn market. Now that Groupon and Living Social (a Lightspeed portfolio company) are growing s0 fast, it is attracting even more attention from startups.
Most of these startups focus on innovating on their product, and aim to have a “sales light” approach.
Usually they start with a self service business model, expecting local businesses to go to the web to sign up for service on their own. They mostly point to Google as the evidence that self service can scale.
I’ve long been skeptical that self service works for selling products to local businesses. From my time at CitySearch in ’96 to today, I haven’t seen this work. In fact, I’d argue that ReachLocal exists as a public company solely because Google can’t get local merchants to self serve. Today, perhaps lost in the holiday shuffle, the WSJ notes that even Google has turned to a call center sales force to reach local merchants.
The Internet-search giant this year has hired several hundred sales representatives to call U.S. businesses such as spas, restaurants and hotels to promote new advertising initiatives, people familiar with the matter said. The effort includes an office in Tempe, Ariz., with around 100 sales representatives, one of these people said.
The other business model that startups attacking local hope to rely on is channel partnerships. Many startups have struck deals with local yellow pages, or newspaper groups, to sell their product too. They have typically been disappointed when sales numbers come in far short of projections. It is hard to get someone elses salesforce to know and care about your product as much as you do, especially when they are used to selling traditional media and not online media.
The winners in this category (Yelp, Groupon, Living Social, Yodle, ReachLocal, CitySearch etc) have all relied on a direct sales force, whether on the phone, or feet on the street, to drive their revenue growth.
If you want to make a business in local online media, you have to control your own destiny and build your own salesforce.
One of Lightspeed’s consumer internet predictions for 2010 is that brand advertising dollars are going to start to flow online at scale. Two thirds of all ad spending in the US is for brand advertising, yet three quarters of online ad spending is direct response.
The recession of the last couple of years has provided a catalyst to drive more brand marketers online in an effort to seek greater efficiency in their media buys, and as they have tasted some success, they will continue to spend online as their marketing budgets recover.
For those of you who won’t, here are some highlight charts:
Marketers believe that the internet can be a branding mechanism:
But the bulk of online advertising volume today is not considered effective for brand building:
This is because most online ad inventory has been optimized for direct response advertisers, whereas brand marketers want to see their traditional metrics (click image to see full detail):
Furthermore, brand advertisers want relationships with the media companies that they work with, not simply self service efficiency (again, click image to see full detail)
Most brand advertisers have primarily stuck with portals and big publishers who offer brand safety, reach/frequency control, reporting on the metrics that they care about and strong relationship, but often tied to higher priced media. As brand advertisers seek better efficiency from their online media budgets, they will turn increasingly to ad networks. Although there are over 300 ad networks today, the vast majority of them have grown over the last 10-15 years by optimizing their offering for the direct response advertisers who have constituted the vast majority of online advertisers to date. I think we’ll see a new generation of ad networks emerge who are tuned to cater to the specific needs of brand advertisers, and I’m actively looking to invest in companies with this mindset.
Gaming business models: Freemium beats advertising July 7, 2009Posted by jeremyliew in advertising, business models, flash, game design, games.
Dan Cook has a great post about business models for flash game developers over at Lost Garden. He says:
Ads are a really crappy revenue sourceFor a recent game my friend Andre released, 2 million unique users yields around $650 from MochiAds. This yields an Average Revenue Per User (ARPU) of only $0.000325 per user. Even when you back in the money that sponsors will pay, I still only get an ARPU of $0.0028 per user. In comparison, a MMO like Puzzle Pirates makes about $0.21 per user that reaches the landing page (and $4.20 per user that registers)What this tells me is that other business models involving selling games on the Internet are several orders of magnitude more effective at making money from an equivalent number of customers. When your means of making money is 1/100th as efficient as money making techniques used by other developers, maybe you’ve found one big reason why developers starve when they make Flash games.
Ask for the money
When game developers ask for money, they are usually pleasantly surprised. Their customers give them money; in some cases, substantial amounts. I witnessed this early in my career making shareware games at Epic in the 90s and I’m seeing the same basic principles are in play with high end Flash games. Fantastic Contraption, for example, pulled in low 6 figures after only a few months on the market. That’s about 100x better than a typical flash game and in-line with many shareware or downloadable titles.
I think his conclusion is right not just for Flash game developers, but for all sorts of game developers, including MMOGs, iPhone games etc. dan runs through some steps that game developers should take to maximize their chances of being able to make a living from designing games, specific ideas about what to charge for, and responses to common objections to getting users to pay. For new or aspiring game designers, it is worth reading the whole thing.
New Media companies should emphasize “media” over “new” June 29, 2009Posted by jeremyliew in advertising, business models, media, startup, startups.
AdAge has a good article today about how AOL has been attacking web publishing where it notes:
In the heady days of early 2000, the megamerger of AOL and Time Warner heralded the web-based future of publishing. It would create a digital platform for Time Inc., the biggest, most-prestigious magazine group in the world.
Needless to say, that didn’t pan out, and here’s where it gets ironic. Just as Time Warner is unwinding that mistake, AOL is figuring out the future of magazine publishing on the web. And it’s doing so without Time Warner’s content assets.
The model goes something like this: Find a vertical with an audience attractive to advertisers, brand it (Daily Finance, Asylum, Lemondrop, Politics Daily), hire five to seven people to run it and plug in AOL’s traffic fire hose. Repeat.
This reminded me a little bit of the continual tension in media companies caused by serving two constituents – readers and advertisers. AOL has clearly discovered one path to repeatable success, which is to start with the needs of advertisers. This is emphasizing the “media” part of new media.
The new media companies that are doing the best in this recession have taken a similar approach. Companies like CafeMom, Flixster (a Lightspeed portfolio company) and Glam have focused on creating highly valuable inventory for endemic advertisers, and on building excellence in sales execution.
In contrast, some other startups have focused on the “new” part of new media. They have often created incredible compelling experiences for users, and have generated impressive traffic. But their monetization ability has lagged; sometimes due to creating inventory that is hard to sell, sometimes because the startu’ps culture is not inimical to ad sales.
Here in Silicon Value there can be a tendency to overemphasize product and technology and underemphasize ad sales. Advertising revenue often scales with ad sales people. Yet I have seen some startups that have been disappointed with their revenue growth but have >10% of their employees focused on revenue.
Like AOL, new media companies should remember that they are also media companies, and organize themselves appropriately. This can include doing things like:
– Building traffic with a consideration for your ability to package and sell it to advertisers
– Placing significant company and senior management attention on revenue. This can mean up to 30-50% of employees working on revenue generating activities
– Adding advertising sales expertise and contacts to the management team
– Being flexible about tradeoffs between advertiser needs and user needs
Many new media companies based outside of Silicon Valley (especially those in New York) grasp this innately.
For more in this vein read two prior posts; on the preeminent importance for sales excellence in ad networks, and on the three ways to build an online media business to $50m in revenue.
Online video CPMs can’t hold up April 26, 2009Posted by jeremyliew in advertising, video.
eMarketer has a couple of interesting charts on CPMs by media types.
First offline media:
Next online video:
Online video preroll CPMs are at $25-35.
TV CPMs are at $6-10.
Even granting some premium for preroll that has to be watched (vs TV which can get skipped), these CPMs can’t hold up.