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THE ONLINE MARKETING ECONOMY

Have you ever heard the phrase, “What’s old is new again?” No truer words were ever spoken when it relates to building a high-performance website to convert visitors into buyers. Whether you are talking about the hottest new style in designer jeans, auto body styles or handbags, styles come and go in predictable cycles. Much like the latest fashions, what is working on the Internet such as viral marketing, social media, sweepstakes, coupons, mail-in rebates and free shipping, has been working in the offline world for decades.

Before we get to work on your website conversion rates, let’s start with a shocking-but-true history lesson.

Back in the 1995, when the hottest fashions were influenced by TV shows like Friends, the concept of eCommerce was brand new. Believe it or not, massive debate and speculation arose as to whether or not eCommerce would take hold. At this time, the multi-billion dollar eCommerce pioneer Amazon was a start-up with its employees working on doors that had been modified into desks. Really!

In 1996, I was sitting around a mahogany boardroom table with a group of razor-sharp marketers employed by small company owned by Bill Gates; a privately-held image licensing company called Corbis. We were having a heated debate as to whether or not to spend our resources building an eCommerce store. eCommerce was so new then, we actually decided AGAINST building an online store as the group didn’t believe it was going to take-off. Really?

Being a Marketer when eCommerce was brand-new offers amazing perspective about how to structure websites for conversion given all the changing technologies used in online marketing. Currently, the leading eCommerce companies, such as Amazon, eBay, Dell, Apple iTunes and Netflix are transacting hundreds of billions of dollars in eCommerce sales each year, which is a long cry from the days debating whether the business model of eCommerce would stick.

Today, eCommerce opportunities exist like never before and these opportunities keep expanding! Companies I work with are using eCommerce to supplement their income, make a great living, or become spectacularly wealthy leveraging the techniques in this book. It is universally understood that the Internet was, and still remains, one of the fastest-growing marketplaces ever experienced in the history of the world. It is now possible to run a highly successful business virtually anywhere in the world.

Each year, I spend a month in a tropical location on a working vacation while running a publishing business. Because of a well-crafted Conversion Marketing strategy, the business never misses a beat. I am able to get online and manage my business affairs from a tablet and a laptop, while sipping an icy refreshment by the pool.

You too can pick and choose when and where you work by creating your own Conversion strategy.

The principles contained in this book include highlights of successful real-life Conversion Marketing campaigns, designed to stimulate ideas for your business. The goal of Conversion Marketing is to equip you with formulas for achieving success in converting Vistors into Buyers.

The experiences shared in this book come from running hundreds of promotional campaigns for leading companies such as Proctor & Gamble, Nissan Motors, Travelocity, CVS Pharmacy and AT&T. Timeless online promotional-marketing expertise, combined with the unique psychology of online Conversion Marketing, can be applied to any marketing organization or product strategy.

As you absorb the ideas presented in this book, you will see how various companies, like well-respected luxury brands BMW, Prada, and Gucci have successfully harnessed the selling power of automated marketing technology to leverage the Internet for their incredible profits. Business-to-business marketers will benefit from the resources, techniques and principles of Conversion Marketing as well. Small businesses equally benefit from learning these tools of influence, as a Conversion Marketing strategy can be deployed with minimal marketing budgets. The psychology of buying goods and services can be applied to your website using these easy-to-follow principles of conversion.

So let’s breakdown Conversion Marketing into the fundamental building blocks. The magic of being a successful Conversion Marketer boils down to your Conversion Rate – your ratio of Visitors to Buyers. Did you know that less than 2% of typical website visitors complete a transaction? Did you also know that millions of websites receives only ten visitors a day? When you do the math, this translates to six online transactions per month. This is hardly compelling and is precisely the purpose of this book; for businesses with hundreds of millions of visitors per month to the small just getting started.

The primary goals of the Conversion Marketer are:

1. Increase Traffic to your website

2. Increase your Rate of Conversion from Visitors to Buyers

With these two primary goals in mind, let’s explore some simple math to better understand the process.

Do you have any idea what a Visitor is worth to your website? On average, it can cost anywhere from $.30 to $275.00 to attract a first time visitor to your website. Perhaps your cost per visitor is significantly more if you sell business jets or luxury vacation homes, but stick with this example for a moment. Let’s assume a first time visitor costs $2.00 per visit. This number needs to factor-in your time, your promotional and advertising costs, design work and overhead. If you are doing a great job and getting a 2% conversion rate, then each new customer you acquire is costing $100.00 per transaction, even if this customer spends $29.97 per transaction. Here’s what that looks like:

It does not take a mathematical wizard to understand that you must do one of 3 things to fully capitalize on this fast-growing marketplace: 1) lower your cost per visitor; 2) increase your conversion rate; or, 3) increase your average purchase dollar value. By understanding the principles in this book, you will fully understand how to accomplish these goals simultaneously, using automation, so that you too can profit from your ideas and enhance your career success.

Many Internet marketers have three common weaknesses when designing their marketing strategy for higher conversions. If you already have an eCommerce website, see if any of these vulnerabilities sound familiar.

Weakness #1 - Audience Targeting: You’re attempting to sell goods to your entire audience of traffic, versus segmenting your website Visitors. With these Conversion Marketing ideas, you will learn how to cater your efforts just to the Buyers by clearly identifying what makes them tick.

Weakness #2 - Single Campaign Optimization: You’re spending your time sequentially, one marketing campaign at a time, to sell a variety of goods and services. In today’s climate, your website will need to cater to multiple audiences simultaneously, which may require launching multiple marketing campaigns with highly specific targeting.

Weakness #3 - Catch-All Philosophy: The Design of your website and promotional messaging are a catch-all for multiple audiences. Ultimately, using a catch-all philosophy only “catches” a few.

In exploring your Conversion Marketing strategy, we will discover how to profile your target audience and increase your conversion rates. The common pitfalls listed above can be remedied with a Conversion Marketing strategy that identifies and caters to the needs of your target audience.

Before we go further, it is important to understand the fundamental building blocks of the Internet economy by understanding how money flows online.

The Flow of Money

Money is made on the Internet in 4 primary methods:

Method #1: Publishing

A fundamental building block of all commerce on the web is inherent in the Publishing business model. Publishing starts with the fundamentals which are essential for understanding how revenue is generated online. We can start with the most basic component of Publishing – traffic and attracting Visitors. There are distinctions to understand how a Publisher thinks about their audience. Here is a high level breakdown:

	Visitors – A total count of how many times your website was visited in a period of time.
	Unique Visitors – Unique Visitors is a culled-down Visitor number to help you understand how many distinct individuals are coming to your website. This number typically represents the core of a buying audience, as it reflects the all-important Repeat Visitor.
	Page Views – Online publishers like to create a user experience encouraging multiple page views per visit. When a Visitor starts to click through the pages on your website, each new click to a new page is called a Page View.
	Ad Views – Ultimately, online Publishing companies (MSNBC, MTV, NYTimes, CondeNet and Yahoo!) measure their success by how many ads they can display to each unique visitor. Back in 1995, the mantra for each Ad View was “nickel, nickel, nickel” as each ad displayed earned a nickel in revenue on average. The value of an Ad View is significantly lower today on average and is measured by a fast-evolving list of metrics that are explored in coming chapters.
	Click-Throughs – Each time a Visitor clicks on a link or display ad. The overall performance of a Publishing website, ad or email is measured by how many Visitors click on on the ad.
	Average time spent on website – Finally, online marketers like to measure how much time each Visitor spends on their websites in order to benchmark the level of engagement and/or appeal of content.

Method #2: Advertising

As a Conversion Marketer, your essential job is to get your website noticed and products/services sold. This is true of whether you are working on a start-up company or for a mega-brand such as Google, Coca-Cola, Nike, Starbucks, Microsoft, Facebook or Estée Lauder. The primary methods which marketers use to get noticed can include advertising and promotion. Marketing is sometimes explained in terms of Above-The-Line advertising and Below-The-Line promotional tactics. Above-the-line marketing is defined as mainstream media advertising and is somewhat weighted to what marketers define as “Branding” activities. Below-the-line advertising is defined by activities such as promotional marketing or viral marketing (often called Word of Mouth advertising).

Above the Line Marketing

Marketers use many different types of advertising and marketing communications for Above-the-Line activities, which include running terrestrial advertisements on TV, radio, newsprint, magazines and outdoor advertising (billboards, stadium advertising or bus stops). Online advertising includes CPM (cost per thousand) banners sometimes called “display ads”, video interstitials (online video commercials viewed as you click-through to desired content), sponsorship, pay-per-click (PPC) and paid placement.

Below the Line Marketing

Below-the-line marketing means affordable yet efficient “call-to-action” marketing, reaching various target groups with promotional methods measured by the cost per response. Marketers can leverage their online advertising performance using Word-of-Mouth tactics such as viral marketing (which we explore in Chapter 5) to increase the effectiveness of their campaigns.

Basically, an advertising budget will be divided up into “buckets” which target the four key areas of the purchase process listed here.

	Awareness: Generating product or brand awareness via advertising or a public relations push.
	Consideration: Increasing active product consideration by engaging your target audience with relevant messages related to your products/services.
	Channel Marketing: Sales channel coverage in retail stores, trade shows, managing distributor relationships or partners who represent your products in certain channels of distribution.
	Call to Action: Closing the sale by getting the benefits of the product to hit home with your consumers, or what is called “Call-to-Action” marketing. Often, Call to Action marketing is referred to as Promotional Marketing.

Method #3: Promotion

When you are planning your online Conversion Marketing strategy, the first exercise is to know your basic marketing parameters, or the Four P’s, in order to understand which tools to use to capture revenues most efficiently.

Parameter #1 – Product: First, knowing why people are buying your Product is essential. Create a clear description that communicates its benefits and features, leaving no room for misconception. Have a vision of your product’s utility to your audience firmly in your mind.

Parameter #2 – Price: The second parameter is Price. Pricing is an essential part of your marketing strategy. Pricing can be difficult to determine if you are introducing a new product to the market. If you want to read more about understanding pricing models, one good resource is The Irresistible Offer: How to Sell Your Product or Service in 3 Seconds or Less by Mark Joyner. Another excellent resource with innovating thinking on pricing is a book called Predictable Irrationality by Dan Ariely. I keep this book next to my desk at all times.

Parameter #3 – Place: The third factor is Place. The physical place of your product can also be defined as your distribution channels. The placement of your online message to generate conversions will directly impact the speed of your results.

Parameter #4 – Promotion: The fourth parameter is Promotion. In today’s eCommerce climate, below-the-line marketing is the clear forerunner when creating online Conversions. Tools which are successful online have been used offline for decades, including:

	Coupons, price discounts
	Sweepstakes and Instant Win Games
	Event marketing
	Lead generation, such as free white papers, free trial, case studies and industry research
	Premium items such as unique pens, coffee cups, beer mugs, calendars, mouse pads or magnetized shopping list tablets.

So, what will YOU promote? Will you use a 50-percent-off sale, coupon offers, two-for-one specials or a targeted-sweepstakes offer? How about a free-trial period? Is my offer compelling enough? The answers to these questions are fundamental to the Conversion Marketer’s success.

An important note is that some Promotional tools are not right for every company. If you market luxury items or manage a premium brand, such as Waterford Crystal, Rolex, Armani, or Mercedes Benz, then some promotional tools are likely not useful to you. Why? When you sell a premium-branded item, you use the allure of the brand image to draw buyers to your company. Consider running branding campaigns, event sponsorships and paid celebrity endorsers, which are of high value to keep your brand image top-of-mind with your audiences.

If you manage consumable products such as bottled coffee drinks, digital cameras or dry cleaning services, then promotional tools are proven to generate cost-effective sales conversions. Products that are in highly competitive categories or are high-impulse items benefit greatly from the visibility that promotion creates. Business-to-business promotional offers are almost universally effective in generating qualified leads into your sales channel(s).

Method #4: Branding

New and established companies alike need to build the bond of TRUST when planning to convert website traffic into revenue. One study by the Harvard School of Business shows that a consumer needs three to seven brand repetitions before the bond of trust is high enough to generate a transaction. Some trust-building methods may be as simple as repeat visits to your website, regularly scheduled email communications, search engine exposures or targeted ad banner repetition on well-respected websites. The messages to reinforce through your communications could include:

	Superior customer service (Nordstrom’s)
	Reliability – spend more now and save money over the long haul (John Deere)
	Exceptional Quality or Image (Prada, Gucci, Estée Lauder, Armani, Calvin Klein)

Conversion Marketing

Now, with an understanding of the online marketing fundamentals, we can start our exploration of Conversion Marketing. Once someone starts interacting with your products/services, your opportunity to close the sale is within your grasp. Remember that your eCommerce conversion rates are the key to success. To calculate the ratio of Visitors to Buyers, divide the number of visitors to your site by the number of transactions to get your Conversion rate, as shown below:

Measuring this ratio regularly and tracking your promotional activities are the fundamental building block of your success as a Conversion Marketer.

For a copy of the conversion tracking tool used with my consulting clients, visit the URL below to download an Excel document designed to capture conversion data in an organized fashion.

http://www.conversionmarketingbook.com/resources.html

Abandonment Rate:

Have you ever watched someone standing in a long line at the grocery store? Picture the well-dressed young man I saw last week walk up to the Express Line with his three items – a bunch of bananas, a jar of chocolate sauce, and a half-gallon of Rocky Road ice cream. He’s juggling his load because he didn’t think to grab a hand cart, but he’s sure the line’s going to be quick. Five minutes later, his line hasn’t budged.

The freezing cold ice cream carton is making his hands tingle as he shifts it from one hand to the other. A banana falls off the bunch and lands on the floor. The grumbling starts, the sighing, the craning of the neck, looking for the obstruction at the front of the line. “What is the hold up? I mean, I’ve just got a few – >>CRASH<<! There goes the jar of chocolate sauce, splattering all over the floor. He looks around, wide-eyed and mouth open, everyone staring at him. What do you think he’ll do next? He’ll head for the nearest exit as fast as possible! He’s embarrassed about the scene he caused, mad about the slow checkout lane and is disappointed that he didn’t get to enjoy his dessert. This is an illustration of “Shopping Cart Abandonment”, where shoppers enter your Shopping Cart and leave without making a purchase.

Minimizing the number of clicks between the product pages and checkout in your ecommerce catalog is as important as a fast checkout line at the grocery store.

Minimizing the number of clicks between the product pages and checkout in your ecommerce catalog is as important as a fast checkout line at the grocery store. The standard rule of thumb is to expect a 50% drop-off rate each time a Buyer is required to view an additional page while checking out of your shopping cart. The Abandonment Rate is the rate at which people leave your website in the middle of the transaction. Experienced Conversion Marketers will track the Abandonment Rate of their shopping cart and work to minimize the number of clicks in the checkout process. To illustrate how, let’s run some math.

Suppose it costs roughly $2.00 to get a Visitor to your website. This number factors in all the costs associated with driving traffic – your time, design costs, advertising, promotion, and anything else related to bringing people to your site. Let’s assume you have twelve Visitors who come to your site. If you have two clicks between your product landing page and your checkout, and there’s a 50% drop-out rate between each click, then six of twelve visitors will drop out on the first click, while three of the remaining six will drop out on click number two. This leaves three buyers prior to the entering of payment information. The true cost per Visitor is $8.00, as 75% of interested buyers were lost in the checkout process if your Shopping Cart requires 2 clicks from product to order completion.

This illustration assumes the cost per Visitor is $2.00

When you are able to reduce the number of clicks in your Shopping Cart from 2 to 1 clicks, then the Cost per Buyer drops to $4.00, dramatically reducing your acquisition costs.