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 I mentioned in my HasOffers open house post, I had the change to meet Jeremy Schoemaker (better known as “Shoemoney”) which was a little different experience than I had anticipated.

First thing’s first: Online persona and Offline persona are usually two different things.

Shoemoney is a pretty damn genuine guy, and he doesn’t dance around the fact that his persona online is out to polarize popular opinion. What happens when you polarize an audience? You get debate, traffic and page views; in a word “genius”. Additionally, while Shoemoney knows that he is a idolized in the Affiliate Marketing / Blogging space to the point of minor rockstar-dom he can keep his cool and bullshit with everyone else.. because at the end of the day he is just another guy enjoying a little Captain Morgans.

The Shoemoney Team

I have been lucky enough to deal with the Shoemoney team before meeting them in person (@ddn @tighb @shoemoney primarily) and found that they take a no-nonsense approach to projects, people and business. In person wasn’t much different and I really hope that I have an opportunity to work with them again.

Have any of you met Shoemoney or his team? If so, what did you think?

http://www.shoemoney.com

I just wanted to take a minute and thank all those entrepreneurs out there who chose the grueling hustle over the 9 to 5 options. There is absolutely nothing wrong with taking the stable paycheck that the 9 to 5 offers, in fact I have a TON of respect for those who do because put quite simply I don’t think I could stay sane doing that. I don’t leave for stability (but there are a lot of reasons why people would), I don’t even necessarily live for the money that can come with working your face off but instead I live for the thrill, the challenge and opportunity to shake things up. Keeping people on their toes, actually BUILDING something and the satisfaction of leaving a mark is what makes me so ridiculously happy with what I do.

So my question for the people out there, what do you live for? What makes you roll out of bed in the morning? Are you an entrepreneur or someone who takes the steady paycheck? I want to hear from you about what motivates you, gets your engine past idle and how you go there. If you aren’t happy, I also want to know what you are doing to make sure that in a reasonable amount of time (read: actual, tangible goal) you are going to change that. Is there anyway that I can help you achieve that goal?

Today I pitched my reason to Oprah why I think that MyBigGive is an excellent candidate to be blessed with the “Oprah Effect”, and also told Azoogle Ads why they should pick ME to go party with them at the Playboy mansion this August. You know what is so freaking awesome about 2010 that wasn’t the case even 10 years? How many college kids were you hearing about in 2000 that were able to hit up major networks (both television and affiliate) and tell them exactly why they think they should and listen AND have them at least hear out the message?

The world is changing my friends, how are you going to make sure you have it by the tail moving forward?

Think about the last time you purchased something based on a recommendation. Who suggested that you buy it? Was it a friend, a co-worker, an online persona? How did they solve your problem and what made you respect what they had to say to the point that you actually made your final decisions? These are all things that you probably don’t think about while you are in pursuit of a purchase (or often times, you weren’t actively looking to start with) but ultimately separate you from your dollars in exchange for a product or service.

Before we go any deeper, lets take a look at what the word “arbitrage” means. Arbitrage is simply the difference between two markets, or the under/over valuation that someone has over resources that are currently at a different value somewhere else. The most simplistic form of arbitrage is often found on auction sites like eBay where we see the effects of supply and demand between markets. Remember the red hot items like when the PS3 first came out? It was selling for 2-3x the retail price that customers were paying in stores.

Online Marketing

No one understands the value of arbitrage more than online marketers (such as Jeremy Schoemaker or John Chow), and because of that they were quick to realize the power of building trust with their readers and what financial value that represents. The personality that is involved with marketing products online is really in the business of building relationships with an audience so that you will trust them and act upon their ‘suggestions’ so they then don’t have to take in the advertising costs of reaching you on a transactional basis, or suffer the accompanying dismal conversion rates associated with what I refer to as ‘first encounter’ sales (where the consumer has no awareness of you prior to the landing page).

Your Business

So how does this apply to your startup, or even fortune 500 companies? As you start to understand the value of your relationship with customers and the trust that they subsequently have with your brand; it is only then that you can put a value on what people are willing to pay (and therefore help you profit) simply because they TRUST who you are and what you are doing. You then only need to keep a channel of communication open between you and your customers (typically one way, but listening is a separate but important aspect of success) through e-mail lists, social media and websites. Thankfully technology has opened up all of these avenues to facilitate this relationship.

The Impact

So how is this going to change the landscape of how business is done? It is widely accepted that an online presence is a necessity for any business in operation within the United States today, so how is the process of acquiring users going to change with our new found knowledge? As Gary Vaynerchuk has clearly pointed out, the future will require us to build brands not only around businesses but around ourselves. Society can no longer hide things from each other (at least for very long) so it is very important that we establish ourselves based on tangible qualities that resonate with our audience.

Only after you have developed a relationship centered around trust can you then start to ‘suggest’ relevant products and services to your audience that will expand your verticals while continuing to offer value. This is very do-able for anyone with an online presence, and if you take the approach of building relationships you will see your conversion rates, prosperity and acceptance go through the roof.

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.

So you have worked so hard in order to get users to your website, now what? What is it specifically that you want those users to do once they get to your site? Getting users to  operating specific goals is referred to as your “Marketing Funnel” because, much like a regular funnel you have every web page hit at the top, and only a certain percentage of users ultimately end up completing the action(s) you want them to.

An important aspect to remember when deciding how your users will interact with your goal is that each layer, or step that you add for the visitor to do, the greater the probability there is that they will “abandon” your funnel for either more content or worst case scenario even leave your website entirely.

Goals

Before you get rolling, you need to decide what exactly you want your users to be doing on your website. More complex sites can have multiple channels for their users to start down individual funnels, but for this example let’s assume you only have one primary objective to achieve with your users; what is it?

Tracking

Once you have decided what needs to be happening to create value from your users on the site, trace the path that a user would need to take from landing on your home page to completing the intended action. Each click or decision should count as a “checkpoint” for this funnel in order to track where you need to improve the process.

Action

What action is worth value to you as a site owner/operator? If you are an ecommerce site you would be wanting customers to purchase a product. What about content sites? Maybe your funnel includes getting that user to sign up for a newsletter, or other action that makes them more ‘sticky’ to your site to ultimately improve pageview counts, conversions into affiliate programs etc.

One you have nailed down this action, along with critical checkpoints along the way you will be able to start testing conversion rates and generate a value that each customer is worth. Start with trying to improve abandonment rates (i.e. reduce the number of users ditching your funnel at each step). A great tool for this is Google website optimizer, however it does have a bit of a delay on the data that will force you to take a little time in order to make the right decision.

Lead Value vs. Lead Cost

This is one of the last, but probably the most critical portion of your business that you need to understand. How much money is each lead worth to you after they have been pushed through the funnel at your best possible conversion rate? It is actually pretty simple to figure this out by taking the total amount of revenue calculated against your conversion rate.

For example:

If I had a funnel that starts with 100,000 leads that initiate the funnel with a 6% conversion ratio (to funnel completion) and that generates a total profit of $20,000; this would mean that as long as I spend less than 20 cents per lead I should be making money.

Now you may be thinking, “But I can easily just calculate what I am making per lead without knowing the conversion rate, why do I care?”. This is a valid point, but it is key to understand your conversion rate because this will be the most cost effective item to change in order to boost your profitability per lead and be more capable to scale your business. With a 6% conversion rate and $20,000 in profit as stated in the above example this would mean that for each per who converted was worth $3.33 cents in profit. Imagine if you could boost your conversion rate to 12%? Then you would be able to spend 40 cents in order to obtain a lead and still be profitable which puts you above the average costs for highly targeted PPC advertising and thus allows you scale more feasibly.

So now that you know the basics of a funnel, how to optimize them and what numbers should be driving your business building decisions, start figuring out how you can implement these steps as soon as possible so you are more effectively managing your business and producing results.

2010 is not only a new year, it is a new decade. And with this seemingly normal step of New Years passing, everyone gets a sense of renewed energy with a new decade. If you take a look at the way the face of business has changed over the past 10 years it is pretty humbling to think what might be in store for us in the next 10 years. The last decade spurred the very idea of internet millionaires, eCommerce and has effectively killed off media outlets that don’t offer their readership methods of engagement (video etc.)

So what are the up and coming opportunities for 2010 and beyond? Thanks to new and empowering technologies like Android 3.0, a 4th generation iPhone and advanced cloud computing we are going to see more web based entrepreneurs this decade than every before.

1. Small Business Marketing

Over the last 10 years, only big brands or those with large amounts of capital were able to effectively push their brand and story online to grow their sales and/or clientele. With all the new technologies however that small business have available, but more importantly the aspiring marketers who know how to use them we will see an influx of firms looking to build their business online. Even brands like Pepsi who just announced that they will forgo their annual SuperBowl advertisement for the biggest social media push to date is just more validation around creating conversations about your brand.

The key success platforms will come in various forms depending on the objective, but include:

Social Media

Ad.ly : Arguably the most aggressive social advertising platform available for larger brands to reach their audience. They have recently launched a Twitter analytics tool to help Twitter accounts look at the demographics of their following. They currently give those people with Twitter accounts the ability to monetize their feed from big brands but are about to announce a self service platform. Check it out here: http://bit.ly/44xZT

Sponsored Tweets : An “Izea Innovation” by CEO Ted Murphy, Sponsored Tweets is the best currently available self service platform for aspiring marketers to deliver a brand message and conversation into the stream. http://bit.ly/6ihki3

Small Business Affiliate

Shoemoney Tools : Do you have a good understanding of your market? Do business such as your local dentist and car dealerships have an under represented web presence? Check out the Shoemoney Tools designed with the power user in mind. Check out the service for a rock bottom $3.95 trial. http://bit.ly/shoeoffer

2.  Android

Right now the iPhone is dominating the charts, but being tied to one carrier that seems to be overwhelmed by the success and not able to deliver the results that consumers demand. So where is the opportunity? Currently developers for Android are wiping the floor by offering sub-quality apps at a premium price when compared to the iPhone. Applications that are awesome and sell for .99-1.99 on the iPhone are gimped on Android while getting away with $15-$20 price tags. Until more developers get on the platform to create amazing applications at iPhone equivalent price points there is a lot of money to be made my start up developers.

3. Web Based Inventory (Small Business)

One of the biggest challenges for small business when it comes to selling online is the ability to track and manage their inventory when selling across multiple channels. This is something big business have overcome with proprietary databases and expensive merchant solutions. However, the first company to create inventory management that ties into point-of-sale computers as well as online transactions will be able to capitalize on a huge market! I feel that this is the most overlooked category of opportunity.

4. Mobile Transactions

The most talked about mobile commerce platform is easily Square ( https://squareup.com/ ) and many of the heavy hitters in the marchant business are taking notice. The last thing those big firms want is another PayPal situation on their hands, but the company who can effectively tie in the mobile application with quality hardware will win the race.

5. Cloud Storage

Consumers are tired of losing their data, and solid state drives can’t seem to get big enough or cheap enough… fast enough. Google knows that data and knowledge are power on the web and want to capitalize with their Chrome OS which will try and convince people that not managing their data locally is a good thing and that they should trust Google with their precious family photos. DropBox seems very poised to take this market, but any application developer who can overcome a “natural” feel to cloud based storage and syncing between local machines will likely be able to up sell customers from a fremium model.

Do you have a Twitter, Facebook or LinkedIn account? The answer is likely yes as these social platforms are dominating the internet and collecting users faster than my glass table collects dust. However, have you thought about the different ways people are monetizing this “stream” of information? There is a pretty divided debate going on across the internet right now about whether or not Twitter, Facebook etc. should allow their users to interject advertisements into their streams because they are afraid it will damage the overall experience that users have with the services. What the pundits don’t realize about these ads is that all other forms of content publication have been generating revenues for their efforts on blogs, newspapers etc. for decades and there is no reason that someone with a large following should not be allowed to create money from this new age audience as well.

In fact some streams are actually made more interesting with the addition of an advertisement as pointed out by 1938media’s Loren Feldman (a largely anti-social media member). These ads may actually enhance the stream because they offer direct value to the audience (a product, service, event etc.) as opposed to simply being the daily ins and outs of a celebrity. As a follower you may actually be more interested in a marketing platform than if your favorite online marketer has gotten his 3rd cup of coffee today.

The current media and social platform love child for monetization is Ad.ly which has paired “top publishers” with “top brands” for extremely successful payouts, and huge returns for the advertisers. These sponsored streams have garnished a high number of click throughs and a high level of follower trust regardless of their transparent and clearly marked “#ad” or “#spon” denomination. Some of the highest profile users include Internet celebrity “Shoemoney” or Jeremy Schoemaker who has been preaching the benefits of in-stream advertising since day one, including an endorsement for SponsoredTweets.com (an Izea company) even with their low payouts. In fact he has even mentioned that he would be entering the segment had he not signed a non-compete following the sale of his largely successful AuctionAds platform.

What are they doing right?

Ad.ly got it right immediately upon launch, they realized that in order to be successful they needed a volume of publishers (who were willing) and a high payout to keep these publishers motivated to push through the advertisers message. By going with higher profile publishers and advertisers they were able to get a large sample size, prove the model and take only a small cut in the process. This small cut has led to increased payouts to publishers who then wrote up rave reviews and even bragged about how they were absolutely killing it on Twitter by “Making 15k from 6 tweets in a month” etc. If Ad.ly can keep up this momentum (which is likely with their current 12% referral program) they should be able to confidently corner the market and either reap the benefits off of the advertising revenues or sell to a giant such as Google much like Ad Mob did just last month for $750 Million.

What can they do better?

They are extremely sensitive to the fact that in order to become the defacto standard, they must also cater to the smaller scale publishers. Much like AdSense was able to do for small scale publishers in the traditional web content Ad.ly hopes to bring revenues into the long tail by using self service advertisements that allow any advertiser (most potentially affiliate marketers) and infuse their advertisements into a variety of publishers (or publishers based on keywords). These additional dollars will not only allow the small publishers a piece of the action but will allow for relationship control that is not managed by Ad.ly itself.

Arguably these self service platform could diminish the gigantic returns that advertisers and publishers have been seeing through the service, however it should bring enough new faces and dollars into the system that everyone should come out on top. If you are interested in checking out the Ad.ly program we have included a link below, as well as to SponsoredTweets.

For full disclosure, both links below are affiliate links; therefore any sign ups will benefit this blog.

Ad.ly – InStream Advertising

SponsoredTweets – Izea

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.