Informational products have always been an interesting beast, there is certainly value in information as Google has completely solidified, but what is it worth and who should actually buy it? That is a tough question to answer, but it is a question that so many so eager to fulfill.

Why they suck

We all need information. That much is fact, but the question is not “do we need it” but rather “who is best to give us this information?”. Often times we buy from people we have heard of, not people who are actually the authorities in any given field. This is the same reason that Tiger Woods is paid millions to represent Buick, when we all know that Tiger Woods is not the best mechanic on the face of the earth (among other things). While this is not always the case, it seems that far too frequently the people who are least qualified to be creating and promoting an information product are the leaders in the pack.

Who makes money

Importantly, the often is not the person who ends up buying the product to fulfill a need they think is currently unmet. Many of these products prey demographics who shouldn’t be shelling out the $50, $500 or $5,000 to “get started” when they could instead be paying off Credit Cards, Loans and other things that are absolutely eating them alive. So many times it seems that informational products pitch “How To’s” based on theory, models that no longer work or BOTH. So who really makes money off of these products? It’s often times JUST the information product producer who leaves little value on the table that can be quantified by customer.

Apologies

Here is where I directly apologize to you and the community as a whole. Not because I have created an information product and charged for it (I haven’t), not because I have made money from informational products (I have..), but mainly because I have subjected my audience to the same flavor of bullshit that has been floating around in the performance marketing industry for the past6 months more than ever. I am sorry for sharing information products that made me money because now I feel like I have done a disservice to you.

From here on out, I promise to more heavily screen the people and offers that I connect you to and make sure that the value is easily quantifiable for YOU before wasting your time talking about it. I hope that you can forgive me for buying into the hype a little bit, I just wanted to set things straight.

Interviews are daunting, and quite frankly they suck. With the economy how it is, what is a potential employee supposed to do in order to differentiate themselves from the rest of the applicants? In a word: Personal Brand.

People like @Garyvee have been promoting personal brands as a way to get to the next level, but what about if you can’t afford to jump right into the lush lifestyle of a talent agency representing you with speaking deals, book gigs and other lavish luxuries that people in that caliber are enjoying from their personal brand? What if, as crazy as it sounds you need to “take the deal” as Seth Godin says and go for a ‘regular’ job to earn more money?

All Hail the Personal Brand

While some employers may be timid about hiring an up and coming personality that is building their brand, the smart employers also know that the value you can bring to the table far exceeds the risk of losing you to bigger and better things. How will they know this? Because someone who is working on building their personal brand through blogs, social media, forums and other forms of communication really understands what is going on in the technology, marketing, communication, pr etc.

Personal brands are a great way to showcase your creativity, enthusiasm for whatever category you want to work in and give a potential employer some insight into who you ARE as opposed to just what you can DO. Personalities are equally as important as abilities to many employers, how are you building your brand?

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.

Today on TWiT Live, Digg founder and overall Angel investor Kevin Rose talked about a number of interesting things. One of those key things however was a sneak preview of long awaited and anticipated fourth version of Digg.com; which frankly is quite cool but the real question is how will the audience react? Only a few short years ago, this type of revision would have blown the doors off of the competition, but now it feels like more of a catch up release rather than a serious innovation cycle. Don’t get me wrong, the updated Digg is incredibly clean and just feels polished. The love for Apple, and admiration for their design ability by Kevin Rose  is far from hidden in this release; but much like the release of iOS4 this release of Digg feels stunning yet underwhelming at the same time.

The Vision(ary)

If you own an Android based phone, or have been using the Internet since before 2007, then there is a high likelihood that you have heard about Kevin Rose somewhere. Kevin received much of his press attention after bolstering Digg out of the gate with democratizing news for a tech and web based audience. The idea was simple, elegant for the time and solved an inevitable pain in the marketplace of reading the really good off-beat news that just wouldn’t be on the home page of CNN or similar news sources. Kevin quickly became entrenched with other successful ventures such as Revision3 (which just celebrated its 5th birthday a few days ago) through popular shows such as Diggnation and others. He also played his cards with Angel Investing to help get new and exciting start-ups into a (hopefully) stable development cycle and keep pushing innovation forward for the tech industry as a whole. Now, however, Kevin has picked up the reins once again as the CEO of Digg to really focus on the value proposition, positioning and ways to keep his once game changing service relevant for the world of Facebook and Twitter.

The Positioning Statement

How do people share things today? That is probably one of the first questions that Kevin asked himself as he took a look at why users chose to come to Digg and share stories, view new content and explore categories that interested them. He recognized why there is an addicting quality to the Facebook Newsfeed, realized the entrenchment that Facebook has and that there are areas of improvement as to how people consume content, not just statuses. Facebook uses an algorithim to decide how many people ultimately see your posted content based on projected engagement levels, as opposed to allowing all content to be pushed to people who essentially “opt-in” to see what you have to say.

Twitter on the other hand is able to avoid this lack of visibility seen inside of the Facebook ecosystem because users who you follow have all of their content pushed into your feed. However, the issue with this model, according to Rose is that “You may be interested in the articles of Tony Hawk.. but not that he just dropped his kids off at school”. The idea of authority figures within interest categories is being sought out, but Digg v4 hopes to solve the clutter of Twitter yet still have more promised visibility to your follows than Facebook.

Taming the Social Graph

In 2007 at the Facebook F8 conference, Mark Zuckerberg would not stop talking about the “Social Graph” which is now unfortunately one of the most overused buzz words today. However, the idea of a network effect through the people you know and who follow you may never have the same value proposition as what Kevin is proposing with the new Digg v4. The idea that quality content has the opportunity to surface within interest categories gives it a much needed enhancement for the ability to spread. This means you are going to see not only higher targeted content, but more of it; and both of these factors lead to a better internet experience.

So while Digg is going to have to work in order to please their current audience as well as be inviting to new “average” users (read: not hordes of geeky males), I think that the upcoming version of Digg fills a very real need within the marketplace. Additionally I think they are doing it in a way that truly comes with differentiators that matter to users when comparing the service to Twitter and Facebook (as well as Buzz or Wave if you actually use those services). The fact that services now have to clearly state their mission and work extremely efficiently to deliver value, is a strong indicator of the competitive times. Gone are the days of the “do everything” start-up approach that had worked so well for many, including Kevin Rose. Instead we are seeing a shift to niche level services and aggregation tools that allow each component of the web to be the best it can possibly be, and in the end, the consumer wins.

While some lucky bastards people have been getting their iPhone 4 early thanks to a FedEx slip-up, the rest of the United States will be getting their new iPhones tomorrow (myself included). But what is most interesting about this new iPhone launch is that is going to finally popularize a high quality camera in consumer devices. Yes, other phones have had high-end camera components.. and yes, Flip HD cams have been an affordable option for many to start producing 720p video clips for YouTube. However, one of the single best selling hand held cameras continues to be the Apple iPhone.

So, you understand why I mentioned Steve Jobs in the title (CEO & Co-Founder of Apple); but what the hell does Gary Vaynerchuk have to do with a hardware release? Gary’s first book “Crush It!”, a #2 NYT best-seller, talks about the paradigm shift we are seeing in our culture thanks to technology. The new and vastly affordable technology that allows us to connect is also changing the way we consume. Where do you watch your news clips now? Likely online if you are reading this blog, and having a quality 720p camera in your pocket and on a device that can directly upload to YouTube is MASSIVE for the Internet as a platform. As Steve Jobs said when the Apple TV was introduced in 2007 (along the same timeline as the original iPhone) was that YouTube is great, but the consumer source devices were the biggest hold up in the platform for a great user experience.

Paradigm Shifts

As with nearly everything technology based, it feels like the rate of innovation is accelerating at a break neck speed. This has never been more true however than it is currently in the smart phone innovation cycle. We are getting faster chips, better screens and vastly better cameras. Google is outpacing everyone in the past 5-7 months though, ever since the introduction of Android 2.0 with the Motorla Droid. This new combination of feature rich, and capable handsets has helped throw fuel on the competitive fire and pushed every partner in the value chain produce better products at lower price. This is a huge win for consumers and software platform developers, nothing proves this more than the over 220,000 Apps for the iPhone App store at the time of this writing.

The consumer is now a creator, the developer is now an artist and every industry that has been stagnant for centuries (read: news, media etc) is being turned upside down. The people in control of those industries hate it because they are afraid of change, afraid of new models, and afraid of letting consumers have the collective power they have always been on the brink of realizing. However, if these organizations do not realize that ‘resistance is futile’ i.e. RIAA & MPAA, and that consumers are ultimately in control but that we are a) willing to pay for great content & great services; as well as b) if these content & service providers don’t give the market what they want, the market simply navigates around the obstacles to consume how they want.

If these content and service organizations realized that on the flip-side of locking down their content and sticking to their old business models; that in fact going for affordable, mass consumption not only relates to higher revenues, more profit and better business than they might actually wake up to the shift that is already in full swing.

How do you see these new devices changing the way you create, consume or manipulate content? I for one, am very excited at the potential of these devices and can’t wait to get my paws on the new iPhone bright and early tomorrow!

One thing that we seem to often lose sight of as entrepreneurs is how freaking lucky we are RIGHT NOW. Obviously things are tough out there, and many of you are probably ‘leveraged’ financially like I am to try and grow your business as strong as hard as humanly possible. But while we are very ambitious people, we need to take a minute every now and then to enjoy the little things in our life that are consistently bringing us joy (or at least should be).

Make sure you take a few minutes each day to spend with your family, friends or looking out over a beach. These times are going to help remind you how lucky we are to be entrepreneurs across the world, and especially if you are in America. We have so many advantages afforded to us, don’t take them for granted. I am personally spending a few days in Lake Chelan to kick back and relax with some of my favorite people (WiFi is needed of course) but there will be plenty of time on the Sea-Doo and other festivities.

When talking with other entrepreneurs, far too many say something along the lines of “we are too small to compete with the big guys”. The general mentality is that the competition is just so large and so strong that there is no logical way for them to fall 2nd place to a hungry and innovative start-up. As evidenced by the banking crisis and others, being “too big to fail” is certainly far from the truth as the banking system in the United States is on welfare as far as I am concerned.

Think Google just got lucky? When they originally launched there were at least 5 established search engines available on across the web who had saturated market share, and the appearance of being unstoppable. Remember Altavista? The reason that Google is dominating the market right now wasn’t because of some mysterious series of windfalls, but rather BECAUSE they were small.

How can being small be an advantage?

Being a small and “hungry” company gives you the advantage of compounding innovation. Think about how long it takes these giant companies to roll out any meaningful changes, shifts in policy or new products. By being a small company you are able to test your product in a more meaningful way, produce useful changes at a speed that very few companies have the opportunity to do. This pace of innovation over time can show a drastic difference between the quality of a product (especially in software) over even 6 months time.

So as Steve Jobs says “stay hungry, stay foolish” but most importantly use your unique ability to compound innovation against the big guys and stop thinking that being small is a downfall. The process of building something is what should be getting you excited to get up in the morning, and what will ultimately lead you to the success you are after.

In the last post, we talked about how the stories and relationships are what really motivate users to care about our products and services, but there is an even more fundamental dynamic that goes on for everyone to drive purchasing decisions. As you come to understand this dynamic more and more, you will realize how to cater to your audience, sell more, get more traction and have an overall better success rate with your customers.

From point A to point B

If you really think about why we do the things we do, it is because everyone is going from point A (current lifestyle, habits, physical condition etc.)  to hopefully to get to point B (new salary, new location, healthier lifestyle, more time etc.). So the real question now becomes that, if your potential customers are indeed motivated by getting from one place in their lives to another.. how does your product or service help them do that? Keeping with the Facebook example from last time, it is clear that people not only value their relationships, but want to have a closer connection to those they care about. Facebook “solved” this problem by giving users the tools required to be more connected, and continue to push towards such a goal.

What about Google? People don’t just want a search engine to find things, they want to be educated. There is a clear and distinct difference between the two, as we only need to find things when we lack the knowledge in the first place. Understanding that users want to feel educated, have answers and therefore live a better life; their ideology of “organizing the world” makes sense.

Have you ever taken a step back to think about what makes a story REALLY good? I am not just saying what makes a story “ok” or “kind of interesting”. I am talking about the kind of stories that completely draw you in, and make you feel for each character within the story in a way that is hard to explain. You feel what they feel, you fear what they fear and you are completely engrossed in what is happening. If you look at WHY this is the way it is, you will notice a single reoccurring theme, it is always the relationships within the story that make you CARE.

One of the biggest problems that start-ups struggle with is how to make their potential users care about their product, their service in a sea of offerings. The common misguided ideology is that customers will pick them based solely on price, features, convenience etc. While these are all factors in the buying process, if the customer simply doesn’t care about why the product or service exists then it is all futile. So think about the connection that your product or service can have with your customers to build meaningful relationships (either directly or indirectly). Facebook has done a beautiful job creating relationship value indirectly for their users through creating a service that connects offline connections online. This service has garnished a valuation similar to Ford Motor company and at a breath taking pace.

In tomorrow’s post we will talk about the components that make a successful relationship just that, and help you understand how you can take your product and/or service and approach prospects in a way that gives it meaning, value and a relationship in their minds. Ready?