double POSITIVE Marketing Group, Inc.

Post By
Sean Fenlon

I returned home earlier this week from Ad:tech San Francisco 2007.

It was a great tradeshow with great energy.   Some tend to evaluate tradeshows on the personas and speakers appearing at the event.  I personally tend to evaluate tradeshows at the exhibitor levels. The exhibition floors of most tradeshows often remind me of Malls – a few mega anchor tenants, connected by countless and varied mini merchants.  I tend to evaluate both groups separately as this is where the proverbial foot-traffic-rubber hits the road.
The mega anchor tenants of this show were… actually… no one.  That is, “no one” if you’re thinking about the size of Macy’s at your local Mall relative to the Subway next door to it, there was nothing this big (or this small) relatively speaking.

That said, Google was there.

ValueClick was there.

Microsoft was there.

However, none of these companies stood out prominently.  Ostensibly, the days of the MEGA-SPONSOR seems to have been put on pause (does anyone else remember being virtually assaulted by Intel mega-booth jockeys at the main entrance of virtually EVERY tech trade event in 1999?).

So what DID stand out?… Well, a number of things…

CPM vs. CPA

What stood out the most for me is that very few net-new companies in the CPA ecosystem exhibited, but (surprisingly) quite a few net-new companies in the CPM ecosystem.

I must have witnessed at least 10 net-new Ad Networks exhibiting at Ad:tech SF.  Each new exhibiting tended to have a “spin” on the conventional Ad Network pitch that began last century, but all their economics essentially continues to pull-down to CPM.

One ad network specialized in European and International traffic, another ad network specialize in the health care vertical.  Yet another ad network specialized in TOTAL transparency from their supply side of publisher to their demand side of advertisers.

So, why the sudden shift back to concepts such as ads and CPM?  My guess would be that we are witnessing a reaction to massive amounts of net-new dollars pouring online, and CPM deals will always be the quickest and easiest deals to cut.  As these new dollars mature, we should expect to witness them flowing upstream to higher-value delivery models such as CPC, CPA, CPL, and ultimately per LIVE Hot Transfer.
 

Exchanges to the Rescue

Exchanges also created quite a buzz.  An exchange is like eBay – a market-maker that connects buyers and sellers (internally referred to as supply and demand).  I personally witness at least a half dozen Exchanges at Ad:tech SF 2007: 

CPM (etc.) Exchanges

• Adbrite
• RightMedia
• DoubleClick Exchange
• CPX 

CPA Exchanges

• LeadPoint
• LeadPile
• No One Else*

*I found it interesting that Root Markets did not exhibit nor attend.

I have always tended to resist referring to DoublePositive as an Exchange, since what the input is on the supply is not literally the same as what is pushed out to the demand side – there is indeed a valuable transformation process.
In any case, I cannot say enough good things about Ad:tech 2007 and I look forward to seeing everyone again when DoublePositive exhibits at Ad:tech NYC in November.
SPF

Post By
Sean Fenlon

I feel lucky when someone shares with me a computer shortcut that genuinely saves me significant amounts of time each day.  I would like to share with everyone my #1 time-saving trick… 

Here are the steps: 

1. Open your IE browser
2. Select  Tools |  Internet Options
3. Change default home page to www.google.com
4. Begin enjoying mouse-less web navigation:
   1. To return home (to www.google.com) from any page, use the keyboard shortcut Alt+Home
   2. Type in the root site you would like to navigate to (i.e. amazon, ebay, espn, etc., withouth http or .com, etc.)
   3. Hit TAB twice (to land on the “I’m Feeling Lucky” button on Google)
   4. Press ENTER

So, why is this process special? You don’t have to use the mouse to get virtually anywhere you want to go on the web.  Also, fast-fingered keyboard users will zip from desired site to desired site with lightning fast speed once they memorize the keyboard sequence, whereas the simple reach for the mouse would triple the time at least.  Doesn’t sound like a big deal until you learn how many different sites you visit each day and the amount of time it take to navigate between them.

For those that did not know already, the “I’m feeling lucky” button on Google immediately transports your browser to the #1 site of its organic listing for that particular search term.  With almost every brand of significance, the #1 organic result is the primary site/domain.  GOOD Google users have learned a few hacks that ultimately treat the search box almost like a command-line prompt.

However, a LUCKY Google users have learned to type the bare minimum and simply trust Google Thus, 99% of the time, I find that it is better to be LUCKY than it is to be GOOD.

SPF 

Apropos of Chris’s post below on transparency of information, the following post about Arizona issuing a cease & desist order against Zillow showed upon Techdirt earlier this week:

Earlier this year, an insurance agent was found guilty of the unauthorized practice of law for helping a client draw up a will using Quicken software. A couple of months later, the proprietors of a website that offered to help people file for bankruptcy were dinged for basically the same thing. Both of these cases were disturbing because they were examples of a profession (lawyers) receiving protection against new technologies that could help automate their services and over the long run force them to lower their fees. Since its inception, the popular real estate appraisal website Zillow has been attacked by those in the realty profession, since it has the potential to break up the monopoly that brokers and agents have on real estate information. Now the state of Arizona has issued a cease & deist against the site, because it delivers home price estimates without having appraiser license in the state of Arizona. This is nothing more than a baldfaced attempt to protect members of a certain profession against a new service that might undercut their profits. In fact, it was the Arizona Board of Appraisal that delivered the C&D to Zillow. You can see on the board’s website that nearly half of its members are professional appraisers that would naturally have an interest in keeping out the competition. While this decision obviously helps appraisers, it’s really hard to see how this arrangement benefits the people of Arizona.

What’s clear is that until there is transparency of information, professionals in the real estate industry (and others) are going to have a hard time convincing people that they provide any value beyond serving as mere gatekeepers to that information.  And the more they fight to protect the exclusivity of their access to it, the more they reinforce that suspicion.    These professions would do themselves (and the rest of us) a big favor by opening up access to information, and proving the real value of their expertise and experience.

Post By
Sean Fenlon

Headlines read…

http://news.google.com/news?hl=en&ned=us&q=doubleclick+google&ie=UTF-8&scoring=d 

• Google to buy DoubleClick for $3.1 billion in cash

• Google Pays Exorbitant $3.1 Billion For a $100 – $150 Million DoubleClick

• Google Buys DoubleClick, Leaves Microsoft Way Behind

• Google-DoubleClick: Get ready for the fallout

• Google’s Biggest Acquisition: DoubleClick, for $3.1 Billion — Almost DOUBLE the YouTube deal

• Ad firm DoubleClick fetches $3.1 billion 

Now let’s do the math beyond the headlines…

 

By my math, the price paid by Google for DoubleClick (after DoubleClick’s cash-balance add-back), is at least 10X the DoubleClick top-line 2006 revenue.  In case you are wondering, that is a BIG multiple for any company with a profitable history or otherwise historically measured on earnings.  While this information is interesting water-cooler talk, the more interesting angles points towards Google’s new philosophical direction(s).  With the $3.1 Billion acquisition of DoubleClick, Google philosophically entered the world of Private Equity more so than the world of display advertising (I’ll address the latter in a moment).

 

Private Equity firms execute deals because the “math” supports the decision.  In Private Equity buyouts, the deal elements such as management team mojo, strategic fit/value, and core values of the acquired company take a back seat to back to the question of “if we pay X, and very few trends change fundamentally, what is the probability of a respectable Y ROI.”  In other words, it’s more science than art.  Any partner (read: scientist) at a Private Equity firm that can consistently drive and deliver deals that return 25% IRR consistently will achieve rock star status.  Very few other measures beyond ultimate ROI vis-à-vis IRR will play a roll.  In this current acquisition scenario, if Google only provided “helpful” value (arms-length introductions, advice, etc.) to DoubleClick, they will easily realize a 25% IRR.  Thus, it is Private-Equity-esque math that makes the Google/DoubleClick deal swallow-able. 

 

Now, there is the other philosophical direction to consider – display advertising.  DoubleClick is in the same space as Google – Internet Advertising and Online Marketing – but they are in completely different sandboxes.  Relatively speaking, display advertising inventory is significantly less valuable than search or even contextual advertising inventory.

 

Many will argue that display advertising is not such a stretch for Google, as companies have run display advertising campaigns through their Adwords accounts (across the display-enabled Adsense publisher network) for years.  However displays are files.  The interpretation of the files are not nearly as literal and not nearly as relevant as true text.  Text is the DNA of Google:

 

• Google cut its teeth as no-revenue text-based search engine.  Search terms are text.

• Google’s first and still primary profit center came from trigger advertisements that were highly-correlated to the search term (as determined by the human-based market).

• Google extended this core offering into “contextual” search, where the static content of a web page was essentially inferred down to a few keywords, and advertisements were displayed based on the inference. 

• Ask any search marketer, however, and you’ll hear how Google’s contextual advertising causes the volume to skyrocket and the quality/conversions to plummet relative to the user initiated search.

• The most important feature regarding conTEXTual advertising, however, is the root term “text.” 

• Text ads based on text terms remains somewhat relevant, even if they’re only being inferred from a static page, as opposed to being implied by a live user.

However, display advertising (despite the sophistication of behavioral targeting, optimization, etc.) is fundamentally different than both contextual advertising and especially user-initiated search.  Google has been instantly catapulted into a world where quantity is king and quality is only a mild indicator, even though the Google roots are quite the opposite.

 

Having said all of that, here’s where we’re all wrong with respect to the Google deal to buy DoubleClick…

 

Google has the luxury of placing five and ten year bets.  If Google is bullish on the DoubleClick acquisition to reap rewards 5-10 years out, none of my words (nor any other non-insider voice) will be of much value in assessing the deal.  However, if the CEO of DoubleClick shorts his stock and buys an NBA team, I believe we can officially declare Bubble 2.0 is upon us. :-)

 

SPF

p.s. in the past, I have been asked if my choice of the name DoublePositive was in any way affected by DoubleClick.  The answer is no.  In the spirit of full-disclosure, the name DoublePositive was more influenced by the term “Double Opt-in” than anything else.   Also, look for follow-ups on “What will Google do with Performics, the Affiliate Network acquired by DoubleClick years ago, and still operating under its own brand” and “How Much of the Google/DoubleClick Deal Have to do with the Microsoft angle”

Post By
Sean Fenlon

As the 600lb. gorilla in the mortgage leads space, Lending Tree essentially forced the issue down the throats of the mortgage industry back in 1998 with “When Banks Compete, You Win,” and all the other players (including iLeads, GetSmart, TheLoanPage.com, eLeadz, LowerMyBills, etc.) fell right in line.  In other words, the lead-generation companies were in the driver’s seat – “Oh, you want these leads, Mr. Mortgage Co., OK then, well here’s the deal…”

In online ed, and the other leads verticals, the buyers are/were in the driver’s seat (ostensibly since no big lead gen company came out in their vertical to force the issue).   All other things being equal, what leads buyer would ever want semi-exclusive vs. exclusive?

But all things are NOT equal.

Moreover, it’s not a zero-sum game.  I have yet to witness any lead vertical where there was a finite number of “deals” associated with any lead source and that one single competitor was capable of extract 100% of the available deals to be had.   Rather, I have found the number of deals to be quite elastic to the number of competitors.  In other words, new competitors often extract their own net new deals from lead sources.

Don’t get me wrong, conversion rates do indeed come down when new competitors are introduced, BUT only INCREMENTALLY and NOT at the same slope as the as arithmetic cost-sharing. For example, OnlineEdCo may be enjoying a 5% conversion on their $50 exclusive leads today. However, if the cost of that $50 lead was split with their competitor InternetEdCo, then OnlineEdCo’s marketing costs are instantly cut in half. The downside is that their conversion ratio will indeed drop, but it DOES NOT drop to 2.5% (half of the original 5%). My experience shows only incremental decrease to maybe 4.7% or 4.6% or so. In other words InternetEdCo brought some net new deals to the mix, and anything above 2.5% is FOUND VALUE for OnlineEdCo.

How/why does this happen?

Typically, in any vertical, leads are assigned to individual sales professionals and then tracked individually and in the aggregate. It is the one-company/sales-professional to one-consumer paradigm that causes the inefficiencies. Here are some examples:

Contact patterns – Even with extremely high-quality lead sources, 30-40% NO CONTACT rates are not uncommon.

Consumers that cannot be contacted cannot be sold anything.  Sales professionals typically develop their own unique contact patterns. Some work early shifts and call all their leads as soon as they come into the office. Others work the late shift and call all their leads before they leave. Some prefer email, others ignore email. Since the method and the best-time-to-contact consumers is wildly un-predictable (even if the lead includes “best time to contact” data), overlapping contact patterns is the best way to increase the net contact rate with consumers, hence squeaking out net new deals.

Comfort/Culture Fit – This is simply the first 30-seconds of contact with a consumer. Is this consumer a “Georgia peach” being contacted by a hard-edge Long Island sales veteran with a raspy smoker’s-voice? That deal will obviously face significant friction in just getting to first base. A second call by a soft-spoken female rep with a southern twang may face significantly less friction.

Sales skills – It’s a well documented fact that a lead in the hands of a strong salesperson will often convert into a sale whereas it dies in the hands of a weaker salesperson. We all must concede that many leads are being put in the hands of weaker sales people every day and in every vertical. Thus, putting the lead in the hands on another competitor (who may be a stronger sales person) increases the likelihood of a sale and the value of the overall source of leads in the aggregate – again, creating net new deals.

Nature of the Offer vs. Target – The general offering of every company within a vertical is seldom identical and the likelihood of mis-matches remains quite high irrespective of sophisticated filtering options. For example, Ameriquest is not known for competitive interest rates. Rather, they focus on consumers with significant debt or other cash needs where interest rates aren’t always the driving factor. However, despite their best filter-tweaking efforts, they will often buy a lead which represents a consumer with no debt looking for nothing other than the most competitive market interest rate. In this type of situation, Ameriquest will seldom convert this lead. However, if Countrywide was also a buyer (Countrywide typically DOES offer extremely competitive interest rates) a net new deal can be brought to the table.

Of course the issue of branding somewhat complicates the matter (mortgage is a largely un-branded industry whereas online is ALL about brand), but not to the insurmountable level.

The smoke is clearing and the mirrors are shattering.

SPF

p.s. originally posted as comment/reply on the Jay Weintraub Blog: http://www.jayweintraub.com/2006/02/effectiveness_i.html

If you have 48 minutes to kill (and who doesn’t have 48 minutes to kill), this video is a must see for anyone who wants to understand the intersection between marketing and technology. Seth Godin, author of “All Marketers Are Liars,” recently spoke to an audience of marketers at Google about what, from his perspective, makes so many Google services so popular. When it comes to Adwords, Google has figured out the ultimate way to do permission marketing. Some selected quotes…

“[Remarkable] doesn’t mean beautiful or ideal or perfect. It only means one thing — worth making a remark about.”

“Does the average consumer need more than 2.7GB of storage in their email account? Probably not, but it adds to the story, it’s the fashion, it was something worth talking about…”

“The fashion permission complex… Step 1 – Make something worth talking about. If you can’t do that, start over. Step 2 – Tell it to people who want to hear from you. Step 3 – They do what other people used to think of as marketing. They are the ones that spread the word and tell their friends. Step 4 – The hardest part… Get permission from these people to tell them about your next fashion.”

“(Talking to Google…) Right now you have no idea who i am. You have no idea what I searched for. You have no persmission to talk to me directly. And I want you to do all these things. But you can’t do it unless you ask first. The opportunity with the Google Toolbar and Gmail and all the other things you’re doing,  is to build in a permission asset. No one has done this on the Internet with the notable exceptions of eBay and Amazon.”

Of particular interest to me what the concept of “flipping the funnel,” which sounds like it could be a riff off of “The Long Tail.” Traditionally, marketers dump everything they can drive via broadcast, print, outdoor, direct mail, etc… into the funnel, and what comes out at the bottom is paydirt. But someone who is searching for “espresso machines” on Google is already way down in the funnel. A billboard on the highway doesn’t drive espresso machine sales. An ad on the radio or television won’t do that either. But paid search — ahh yes, that is where you can reach out and tell the person who is proactively expressing interest in espresso machines that you have something for him. But if you can flip the funnel on its side and turn it into a megaphone, well then you let other people tell your story and you get out of the way. Blogs, message boards, instant messaging — these are all ways people can tell the story on your behalf.

Post By
Syed Zaidi

Really, I can.  I can tell you with reasonable certainty that something is going to happen (or not going to happen) and when it may (or may not) happen.  I can see the future – at least when it comes to leads. 

Through the use of a number of methods, not the least of which is multi-variate regression analysis, DoublePositive has developed the most accurate single score to reflect the quality (likelihood of close) of any consumer sales lead.  Think of it as the consumer lead equivalent of a ‘credit score’ or more succinctly a lead economic value score.  We call it the LeadScrub Quality Score (LSQS, for short).  If you want to learn more about LSQS and how it can help you, check out LeadScrub.net – where you can know all there is know about your leads.

I suppose the first logical question one would ask is ‘So what?’.  ‘What if you can tell me what my lead score is, what can I do with that information?’.  Well, as an Internet marketer and lead generator, LeadScrub can arm you with timely and accurate data regarding the quality of your leads.  With real time access to this information you can manage the pricing / volume of your sources to maximize your return (read: profit). 

So what if your not a marketer or a purveyor of fine CPA deals?  Instead your life centers around purchasing leads (or even better, hot transfers), then what?  In that case, the LSQS is even more important for you.  LSQS predicts the probability of closing on any given lead.  The higher the LSQS, the greater the probability that a deal will get done with a particular consumer.  That’s why, when DoublePositive dials on initial expressions of interest for its mortgage, debt, and education programs we only dial on the best leads we can get a hold of – as ranked by the LSQS score.  The result: a top tier quality product for our customers and an increased payout for our suppliers.

 Now, if only I can get this regression thing to work in PowerBall…

At DoublePositive, we’ve been thinking about, writing about, evangelizing, and practicing “lead quality” for years (download our whitepaper “Quality Quantity Cost of Mortgage Lead Generation“). Lead quality is inherent in our LIVE Hot Transfers, which convert conventional data leads into live call transfers of double-qualified consumers to sales professionals.

So I was glad to see the Internet Advertising Bureau last month has now come up with a Lead Quality Ranking System, a way for scoring lead quality based on five specific factors: Lead Origination, Consumer Motivation, Lead Exclusivity, Lead Age, and Verification of Data.

Well if this is how the industry wants to score lead quality, it’s safe to say that DoublePositive’s LIVE Hot Transfers may be the best leads available to lead buyers. Here’s why…

1. Lead Origination: It all starts here — how the leads are generated. All LIVE Hot Transfers start with what we call the “proactive expression of interest.” In other words, our leads all start with someone who has “opted-in” for more information about a product or service.
2. Consumer Motivation: What are the reasons a user submitted his/her personal information? Again, with LIVE Hot Transfers we know the consumers are always motivated because we screen out leads generated through incentivized offers like “Fill out this form to win a free iPod.”
3. Lead Exclusivity: In industries like mortgage, real estate and insurance, semi-exclusive leads are the norm. It’s not uncommon for a lead to be sold 3, 4 or even 5 times now. But with LIVE Hot Transfers there is exclusivity. We never transfer the same consumer twice.
4. Lead Age: Because of the unique relationships we have with our lead partners, this is where LIVE Hot Transfers really stand out. It’s quite possible that from the time a consumer submits his information online, he could be hot-transfered to a sales professional within just a couple of minutes. If there is any confusion about why this is so important, check out our blog post on “Real Time is the Only Time.”
5. Verification of Data: There is a reason why we’ve filed for patent-protection of our LIVE Hot Transfers process. In part, it’s because of our DOUBLEconfirm™ process, which delivers live consumers who have the highest probability of converting into a sale. DOUBLEconfirm™ is how we verify data, providing two layers of verification.

I don’t think the IAB had DoublePositive in mind when it developed its Lead Quality Ranking System, but it might as well have. Just the fact that the leads industry is seriously focusing on lead quality is music to our ears.