The Good Stuff

What I was amazingly interested in however, was the contrast between the conversions of clicks to leads that stem from a very warm (and large) e-mail distribution list that has a) heard of Shoemoney before and b) has been communicated to by the list owner. Luckily enough, non other than Mr. Jonathan Volk of JonathanVolk.com decided to openly use a Bit.ly link with his e-mail push which meant we were able to peak into the results.

Bit.ly is a great way (mostly because of accessibility and free cost structure) to track the number of times your link is clicked, when that is, where its from (application) and what country. However, when doing a very public e-mail push, you are going to get called out on it from time to time.

Quick Background

So first things first, how did Jonathan Volk build up this e-mail list.. and how big exactly is that list? Jonathan Volk, Jeremy “Shoemoney” Schoemaker, Frank Kern, Andy Jenkins and a laundry list of others all operate in the affiliate marketing space to a certain degree. Because of that, they have a large audience that overlaps with each other and at the very least has a very similar set of actual needs. When Jonathan Volk wrote an eBook about effectively advertising with Facebook and other affiliate marketing promotional methods, he was able to leverage his existing relationship with people such as John Chow, Shoemoney to pump his eBook to a ready, willing and eager audience while providing value in exchange for a nifty e-mail address.

Jonathan decided to chime in on my Twitter conversation with John Chow to make sure it was stated that he pulled off this e-mail list for JUST the cost of 3 iPads as Chow has stated…

But there were certainly more promotional methods than just this for Volk, but tapping into lists such as Shoemoney, Kern, Chow and Jenkins was a good way to capture the low hanging fruit. I know for a fact that he also used some Sponsored Tweets to promote his book to the affiliate marketing space. (side note: I plan on covering Sponsored Tweets pretty in-depth very soon).

The 150x ROI

The rule of thumb in the list building business is that a targeted e-mail list provides about $10 of profit per year for each subscriber depending on how effectively they are marketed to. So to figure out the total value return of this list for Volk, lets do some simple math that rounds up on the cost of promotion and down on the number of subscribers.

Subscriber Value: $10

Subscribers: 10,000

Average Subscriber Validity: 3 years

Lifetime Value of Subscriber: $300,000

Cost of acquisition: (3 ipads at $500 ea. ) = $1,500 + (sponsored tweets0 = ~$500 : $2,000

With these quick and dirty numbers, Volk can expect to get up to a 150x return on his $2,000. Not a bad return at all if I may say so myself!! So what about this particular launch that we have click and conversion numbers from?

Warm & Communicative vs. Cold & Direct

Volks list produced 1,629 clicks over a roughly 1 week period and two mailings out of list that is known to be at least 10k.

Click through ratio? (clicks/emails) = 16.29% or lower for an “active” list

Number of leads generated? 824.

Conversion Ratio? (leads/clicks) = 50.58% HOLY SHIT THIS IS GOOD

Cost per conversion (cost per lead/conversions) = $2.43 per lead, but has a much longer lifetime value

What were my results with my leads generated through advertisements?

I generated 588 clicks over roughly the same period of time as Volk, relying primarily on SponsoredTweets for Traffic with a total cost of $25.86

Click through ratio? This is hard to tell because I just used Bit.ly and we don’t know view/click data

Number of leads generated? 23

Conversion Ratio? (leads/clicks) = 3.9% MASSIVE DIFFERENCE

Cost per conversion (cost per lead/conversions) = $1.12

Summary

What is amazing about the difference in lists compared advertising for lead generation is the conversion of leads into your relevant product, service or affiliate offer. If you have a list that you have build of good will with in the community you are going to see a MASSIVELY better response rate from your audience and a much larger return.

In regards to me having a much lower cost per conversion for this particular push, it is important to note that while Volks cost if confined to this case study alone would be more than double what I paid, he will have the opportunity to repeatedly market to this audience for a return that is many, many times larger than what I may generate through this study.

Building a List

How can you build a list and start cashing in the huge return that people like Volk are reaping the benefits of? Here is a check list of things to remember when pursuing this opportunity.

1. You absolutely MUST provide value to your market (doesn’t matter if it is Dog tricks or Car Cleaning) in exchange for their opt-in e-mail.

2. You need to establish connections with as many people related to your targeted industry as possible. This is going to give you a much wider audience and essentially allow you to cherry pick the most active and highest paying users from your competitors list for years of marketing success.

3. GET YOUR LIST STARTED TODAY. Getting it started as soon as you possibly can allows you to compound your results and start seeing the power of list building, lifetime returns and a “list ATM” that so many affiliate marketers are used to at this stage in the game. If you are looking for a high quality service provider to use, Aweber comes highly recommended and gives you the first 30 days for ONLY ONE DOLLAR.

Click here to get the massive Aweber deal and start building your client base today.

]]> http://thecollegestartup.com/2010/07/24/warm-leads-vs-cold-leads-case-study/feed/ 3 http://thecollegestartup.com/2010/07/12/ads-vs-premium-vs-freemium/ http://thecollegestartup.com/2010/07/12/ads-vs-premium-vs-freemium/#comments Tue, 13 Jul 2010 01:52:58 +0000 Travis Ketchum http://thecollegestartup.com/?p=451 With all the fanfare surrounding Hulu after it’s launch (especially in the College scene) as a free LEGAL way to watch premium TV shows (movies are available too, but have traditionally been lackluster). As Netflix got serious about their “Watch Instantly” offerings, many people found themselves signing up for the $9.99/month because it brought many students armed with their existing xbox 360 to get quality content onto their TV’s in a way that wouldn’t have the schools IT department knocking on their door and/or turning off their bandwidth.

So what is Hulu’s response to the higher resolution Netflix offerings? Hulu has notoriously been a completely free offering which was monetized through targeted advertisements, so it was only natural that Hulu would try to have more users (or at least more active) by offering higher quality resolution video across more devices (read: iDevices), and that service came under the name of Hulu +. “Great!” you may be thinking, and at a price of $10/month for recent episodes presented in High Definition it sounds fair.. until you realize that they STILL HAVE ADS.

Hulu has proven more than once that they are driven completely by the content owners (read: taken by the balls), so much in fact that the content owners are arrogant enough to think that with the age of the internet, we as consumers are stupid enough to pay for ad laden content. Hulu is even on record for pleading with ABC to NOT launch their free application on the iPad that gives users access to recent, quality content without an added fee.

Recently, according to ComScore, Netflix has edged out Hulu in traffic across their domain. While ComScore is not a greatly reliable source for accurate information, their trending data is a great gauge for how consumers are voting with their dollars. Why isn’t Hulu absolutely CRUSHING IT with a freemium model right now? Hulu could easily be syndicating their Advertisement laden content across as many devices as possible at standard definition, with an upsell of advertisement free and higher resolution content. In the Internet age, customers are voting that with ads the content should be free, and with a fee it should be high quality and delivered without advertisements.

Freemium is an amazing way to drive user base, upsell opportunities and other revenue generating procedures that continue to drive value for the consumers in exchange for their usage and/or their dollars.

As entrepreneurs we are often blinded by the enthusiasm behind our ideas, our passions and our drive to make it all come together. This thought process is made even less logical when you have tasted success in the past, but now must face the reality of a shifting market, a down economy and a business that is bleeding cash. I recently had a prospective client come to me who was in dire straights; her business had once been pretty profitable but is now dumping money left and right. This prospective client came to me because she had no web presence at all and her retail store has been losing money for over a year.

Her biggest question was “How do we capture users through the internet to grow my business?”. The sad answer to this was that in her particular category the margins were low (in dollars, but but high in percentage) and depended on high volume to make sense financially. As I looked through Google search volume in her appropriate keyword set it became apparent that the reason her retail store was dying off wasn’t just do to this area, but in fact the entire market has shifted away from her category. The only real way she would have had a chance right now is if she had been a first mover to shift towards the web and become an authority for her sector. Unfortunately now though, her sector is saturated, dying and EXTREMELY competitive; the numbers just simply don’t make sense anymore.

Her passion is admirable, and her work ethic is on par with what is needed to run a profitable business; however fire and hunger are simply not enough to make an unworthy market sector work. So as entrepreneurs, what have you done to create a separation from your idea to make the most logical and reasonable decisions about staying in business or not? The best entrepreneurs are the ones who have failed the most, but also known when to cut their loses and move on to a new idea.

The particularly interesting thing about this commercial is that Google was able to evoke a sense of emotion simply from search queries and Google maps. They understand that when you take data like that you can tell a lot about someones life, but more importantly it took what was simply a service and brought out emotion towards their brands and products that most people had never felt before. This type of story telling is exactly what will help Google remain as a top of mind company and allude to the “Don’t be evil” mantra that Steve Jobs calls bullshit.

So what does this have to do with your business or start-up? If you have ever listened to a venture capitalist talk about why they invest in some companies but not others, no one has made it as clear as Y-Combinator has that they don’t invest in businesses but they actually just invest in people.

Why invest in people?

I have always said that “When you invest in people, you will always have a positive ROI”. This is not only because of the positive social effects that stem from investing in one another but also because when there is an exceptional story there will be exceptional success. The best founders and co-founders make a team that has an ability to tell a story through their product or service. The notorious PayPal founders have been absolute rock-stars within the tech start-ups and will continue to do so because they have cultivated their purple cow.

Once you understand how to tell your story in a way that not only adds value to your user base, but that actually connects with them in a meaningful way you are going to be able to build a loyal user group that will carry you to your end goal. We as consumers purchase content, use products and connect with people because it genuinely makes our lives better. Our life is the story, just make sure that you are at least a chapter or two in order to achieve your goals.

Coincidentally Google launched a “Search Stories Creator” that is pretty slick and easy to use. I gave it a go with creating my own search story for MyBigGive which is currently up for a grant from Pepsi Refresh Everything.

If you want more things like this, I am going to start sending out special posts through my newsletter which also comes with a free 7 week business builder course that will hopefully help you create more meaningful connections with your customers and reach the goals that I know every ambitious entrepreneur has. So go ahead and sign up in the sidebar!

One of the Hallmarks of being a college student, and especially being one who is driving as many dollars into their start-up as possible is that sometimes we have to make the hard choice of where that last $5 of ours is going to go.. shampoo or deodorant (btw, pick the deodorant, we will all thank you later). But what about filling your tank so that you can still focus in class during the day and put in the hustle for your business at night? Top Ramen can only go so far, and at roughly $1 per package it is a pretty tempting offer. However, it really doesn’t take that long to get sick of all the salt (5000% daily sodium anyone?) and want something with a little better substance to it to keep you going.

I rarely take any sponsored opportunities, but when Tony’s pizza offered for me to try some of their new crisp crust pizzas which retail for UNDER $2 I knew that you guys would want to know about it. Seriously, when you get to the end of the month with your pockets feeling a little thin but you are still craving some cheese smothered goodness, what is a good college student to do? Luckily Tony’s now has you covered with something that doesn’t taste like cheap cardboard as many other budget frozen pizzas do.

For a little variety, check out their 3 flavors:

• Pepperoni
• Cheese
• Supreme

My personal favorite was the supreme (because I dig all the goodies… and it is the same price). So check em out and tell me what you think, worth the few bucks? And if you really are a broke college student (hey.. we have all been there. No shame in it at all). Then make sure to follow me on Twitter where I will be sending one lucky follower a few coupons to try them out for free!

Tony’s Pizza

How does a company who runs in a highly competitive field continue to acquire users? With the rising cost of Google AdWords for affiliate companies, they are running out of cost effective options to reach new publishers as well as advertisers but still need to get their name out there in order to even maintain their current volume.

So what are some of the options? You can obviously target ‘authority’ publishers within your space which most of the top affiliate networks already do (read: Shoemoney, John Chow) in order to raise brand awareness, even if the CPM rate doesn’t make since from a pure ad performance standpoint, they are able to make it back in the perceived valued of their brand.

So how is Affiliate.com trying to utilize their resources in order to build awareness, backlinks and a little bit of grass roots press? They are sending bloggers a pretty sweet T-Shirt in exchange for a blog entry. Their incentive is not only the shirt, but additionally they are going to award a $1,000 donation to the American Red Cross Haiti relief fund (which fits in nicely with my beliefs that investing in people is simply good business), but they are also offering the winning blogger a $1,000 bounty. So what would I do with this bonus cash if I am to be selected as the winning post? That money will be directly invested into my philanthropic web startup http://www.mybiggive.com.

This tee made for a good party shirt last weekend during some card games, fun socialization and an overall good time. Rocking the King of diamonds may just be my new good luck charm, and I am sure this network won’t complain about me wearing this shirt in a social setting since it has it’s URL plastered across the back

Affiliate.com has made a good move here by offloading the shirts they had originally produced for Affiliate Summit West by getting a little extra press, some back link love in addition to some good will from bloggers and users! So if you are looking for a good group to be working with make sure you check out Affiliate.com as either a publisher or an advertiser.

Specifically, the case study of MyBigGive has found that utilizing Facebook Fans and Twitter followers result in some of the most engaged users that convert into much larger purchases than any other referring website. This can mostly be attributed to friend-friend recommendation that adds validity to the offering.

In order to achieve increased Fan Page user growth, MyBigGive decided to offer up an iPod Nano contest when a particular goal is met, check the video below to see the offering.

First, a quick synopsis on MyBigGive (MBG) of the purpose and drive behind the whole site. First and foremost, MyBigGive aims to be an alternative for shoppers who care to help out a cause but aren’t necessarily willing and/or capable to give extra dollars away to a charity. Or perhaps, as is the case for many customers so far; MBG offers a supplemental way to support the causes that we all know and love in a way that is easy but still still adds value to the process. This works by utilizing performance based agreements (affiliate marketing) for the vendor list to provide a commission without adding to the cost of the transaction. This process is incentivized to the user by a known entity (in this case a charity benefactor) that they are able to choose from in order to “pledge” their support for the upcoming round of payouts.

In essence MBG socializes the shopping experience online for both the votes of the public, but as well as investing in community services and helping out those who are less fortunate for a variety of reasons. This idea of community is what will most likely drive the sustainable growth of future web based businesses and with any luck, MBG will have the opportunity to be an adapted voice for Corporate social responsibility on the grand scale and build a name that consumers can trust to be rewarding both the world, and the shareholders simultaneously.

So, now that you have an overview of what constitutes MBG now we get to dive into the facets of this start-up that have been most interesting. First and foremost, as has been preached time and time again by the crew at Y Combinator and various other startup success stories is to just get something out there! While this seems simple in theory, the best thing a web creator can do is to get something out there for people to try, break and repeat. No matter how well you think you know your market, you are nearly always off the mark and require real user feedback and trials to understand what you need to bring to the site in order to make it a value added service. If there is no value, there is no service and there will be no customer base.

Secondly, when dreaming up everything a site “could be”, you should rank the features in order of importance and adjust as the trials/feedback come in for your site. Never try to launch a full-featured site all at once because it will not only make it harder to identify which variables might be turning users off, but if your customer base hates particular features you will have just sunk a lot of your resources into developing a feature that nobody wanted in the first place (perfect example: Look at the failure rates of Yahoo! projects over the last 3 years… test with your user base!)

In the next post about MBG I will be going into the value of offline and online networks, how they differ and how they can really build upon one another. A friend of mine always preaches about building a community around your product/service/company and he has a real point: Without a community, it is very difficult for your business to grow organically, and will therefore cost you a truckload more money to achieve the same sales results.