Internet Business Insights Volume 2 – Full Article

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Hey All!

Here is Insights #2! Reminder, these posts are a little long in nature, I recommend scanning the headlines and only reading what can be relevant to your business.

In volume 2, there are 8 topics that I cover, which include; The CRO and paid media connection, title tags beyond rankings, hard conversions, when you need a mobile app, brand media protection, 18.5b Snapchat value and what that means to you, ways of selling on Amazon, and evolutionary web design.

If you care to share or read in a browser, here is the link, it has a little better formatting than the email version:  http://www.dannydemichele.com/internet-business-insights-volume-2/

1. CRO and Paid Media: Tied Together

Conversion Rate Optimization and Paid Media are very connected to each other and need to be part of the same agency / internal group, or worst case, a process needs to be put in place to connect the parties together. Conversion rate increases are not isolated to a landing page, the entire user journey will affect conversion.

Example: A user starts their product journey on a search engine. They typed in a keyword and were presented with 10 website options to click on. They chose an ad and clicked on it because that ad resonated with them. If they then end up on a landing page or site where someone else is testing ad copy that is not directly correlated to the ad they clicked on, you are going to lose that conversion. The landing page simply being relevant to the previous keyword or ad is not enough. The content needs to be a direct reflection of the previous action the visitor took.

There is another big benefit you will get with having Paid Media and CRO being part of the same team. The paid media person is testing ad copies and what gets the highest click through rate. If it is working on a search engine, and they are finding messaging/copy that has higher click through, then don’t you think the same content would also work on the website?

Make sure these two departments have a process to communicate and collaborate each other’s findings, and most importantly, don’t test ad or website content in isolation, which highly disrupts your user experience and inevitably hurts conversion rates.

2. Title and Meta Needs to be Sales Copy, Not Keyword Stuffing and It Is Not Only Hurting Your SEO Traffic.

This one seems obvious, but I keep running into it and it really bothers me. Companies typically use Title and Meta data for SEO purposes of tricking Google into ranking better. Not only is this a bad strategy for Google (they are smarter than that), but it is bad across the board. A bad Title and Meta description will hurt you in a couple of ways:

SEO – Ranking a page with a poorly worded Title and Meta data won’t get clicks. Just like the importance of solid ad copy for a Paid Media campaign, users read and decide what they are going to click on before randomly clicking. I would take a position 5 in Google with a well thought out and high click through Title and Description than a #1 position with random garbage for text.

Social Shares – People are sharing more and more on Facebook, LinkedIn, Twitter, etc. Most of these platforms pull in the Title and Description tags for the visible description. If this is a poorly written version or just stuffed with a ton of keywords, the share will result in very little traffic. Really think about and put time into what these things say!

3. Not going after the hard conversion in ecommerce. Information gathering could make you more money.

Most websites selling something, (product or service) typically focus most of their site around getting a user to convert the first time they hit the site. The challenge with this is that no matter how valuable your product or service is, it is very hard to get above a 3% ecommerce conversion rate unless you are a large trusted brand. However, if your only focus was to capture data of users coming to your site, (email, social interaction, cookies) you could get conversion rates in the 15-20% zone. Check out the math: If you can get to a 20% conversion on capturing data, with a strong remarking strategy (emails, retargeting, etc.) you may be able to convert a third of these in the coming months. Your net website conversion would now be 6.5% versus the 3% top out from getting direct transactions.

I am not saying not to try and capture the sale, my advice in most situations is to focus equally on both and have ways to track the remarking efforts to ensure that you are truly increasing your net conversion rate.

4. When Do You Need an App? Hardly Ever.

Just about every client I talk to thinks they need a mobile app. In my experience, only about 10% of companies need an app, and even less will be successful with one. Here are some of my thoughts and questions you should ask yourself before jumping on the app hype.

If a mobile website wont work – What will an app do for me that a very strong mobile website cannot? If you have content that are significant in size and bandwidth, this could be a good reason. This could be large videos, interactive experiences, etc. Basically, things that would not perform well on a mobile website experience.

App Open Rate – The average number of times an app is used once it has been downloaded is 2 on the high side. If you are like me, and have hundreds of apps, there must be a real reason to need to use it again or it gets lost, or deleted.

Heavy Repeat Users – Do you have a product/service that has a reason or need for people to log in more than 2-3 times a week? Bank of America is a great example of a real reason to have an app. People like to login daily to check balances, make deposits, etc. This is a very specific need for the consumer. On the flip side, if you sell a product or service where people only need to come back a few times a year, then your app will be forgotten and has no value to the user as a download.

Phone Notifications – This is a great reason for wanting an app, but there must be a reason. Users do not like getting alerts that don’t provide the value around the original intent for why they downloaded it in the first place. As an example, if a user downloaded an app that alerted them of new concerts in their area, that could be a good reason for creating an app. You could use geo-targeted data to alert them when its relevant. Just because you can use the notification feature, doesn’t mean you should. Really think this through this from a user’s perspective and if it provides value to them, not just potentially to the business.

In App Purchases – Do you sell a service that could utilize in-app purchase? Remember, you cannot use in-app purchase for physical goods, as well, the fee (30%) would prevent most product-based companies from realizing a margin. If you have a real strategy for using in-app purchases, then that could be a reason to build an app.

Marketing apps is more limiting than marketing a website, and you are putting quite a big block from landing them on a mobile website, you are telling them to download something on their advice, which is not all that easy. Sure, there are ways to target media to a direct app download, but getting people to pull the trigger on downloading and using the app is a different story, and in most cases, you will go a lot further with a well thought out mobile website experience.

5. When protecting your brand with paid media is worthwhile and when it’s a waste of money

You will likely be recommended by your paid media staff or agency partner to always buy branded search keywords in Google/Bing/Amazon as it typically results in the highest-converting traffic that you will get to your website. In many cases this could be good advice, but it is certainly not universal to all companies. Here are some tips to help you evaluate whether you should be spending Paid Media dollars for branded keywords:

Do you currently own the top spots in Google/Amazon/other search engines for your brand term organically?
-If the answer is “No”, then 100% you need to be buying your branded terms
-If the answer is “Yes”, then go to the next couple of points.

Are direct brand competitors aggressively poaching on your branded terms?
-If the answer is “No”, then you may be wasting your money. Typically, you only need to spend Paid Media dollars if aggressive poaching is going on and you are not visible organically.
-If the answer is “Yes”, then you need to be buying your branded search terms.

Are retailers and partners bidding on your branded terms?
This is where it gets a little cloudy and you need to try and make the best possible business decision. If you are a brand that relies on retailers or partners to sell your product, and you are ok with the wholesale margin, I would not buy your branded terms and compete against them. Let them fight for it and capture some of that low hanging fruit. If you make them happy with some easy conversions they may promote your product more on their own site, it is just helpful to the relationship. If you are transitioning to a more direct to consumer model and you don’t care about helping them, then start competing against them!

The point of this clip is that there are positives and negatives to bidding on your branded terms and it shouldn’t be treated as a universal strategy that fits everyone. Not only could it soak up a lot of budget for traffic and sales you may have already received anyways, but you may piss off your partners as well.


6. What does the $18.5b Snapchat IPO mean to your tech business? Absolutely Nothing.

Unicorn Valuations (billion dollar+) are what fill most of the news these days. There are shows spinning out (IE: Silicon Valley on HBO) and if you were not that connected to the tech industry, you would assume that this is the norm. Come up with an idea, create a half-assed prototype, raise money at a 9 figure or billion-dollar valuation and exit, right? Wrong. With this mindset, I would recommend you going to your local liquor store and buy a bunch of lottery tickets, it probably has a similar success rate.

Focus on creating a company that drives value to users and has the potential to make a profit. As simple as this sounds, most of the businesses I am introduced to for investment ignore the part of creating a business that makes money. If you make a real business that operates at a profit, you open yourself to any option you want, and you won’t have to be in a permanent fund raising mode. You can decide if you want to go big one day and exit, or just keep an awesome business and enjoy it. If you create an idea for a business without a real game plan to make money, you have a near non-existent chance of succeeding.

I would have hope this point was more obvious, but you would be surprised!


7. Selling to Amazon or selling through Amazon?

Amazon is capturing close to 50% of online commerce transactions in the US, and it’s only going up. Although it has taken longer than I predicted, big brands and agencies are finally understanding that there are many options of how to sell on the Amazon website, and the unique differences between the two platforms. I will follow up with more specific drill downs on specific options in later newsletters, but for this one, I am going to simply address the different ways you can sell on Amazon.

Before I go into them, one important thing to note is that we have seen no evidence that you can sell a higher volume under either scenario. Amazon does not increase exposure products they sell direct over products being sold through their 3rd party platform. There are some marketing offerings that you only get if you sell to Amazon, but these promotions are quite costly and typically utilized by larger brands with big marketing budgets.

Option 1 – Selling to Amazon: You can sell your product to Amazon as you would to Walmart, Target, etc. Essentially, you sell on a wholesale basis and Amazon will mark it up to their desired selling price. Some high-level points on selling to Amazon:

-The name for this is either Vendor, 1p or Direct. You will hear these three terms thrown around.

-One of the biggest issues is that you have little control of the listing itself, as well as no control on the price at all. Amazon will lower and raise the price to what they feel is the best value to their customer in relation to all other websites selling it. They literally spider the web and other major retailers to ensure they are basically the lowest. Don’t like the price they are selling at? Tough luck says Amazon. Amazon will then direct you to other sites like Target and Walmart and tell you to tell them to raise their price before they raise Amazon back up. This is one of the bigger pain points with brands as it disrupts their retailer relationships.

-You will not only be selling at wholesale pricing, but you will also be paying fees to Amazon for return allowances, slow movers, marketing co-op funds, etc. This often means a 10% decrease in your margin-

-You have no control over the customer experience. Meaning, you will not be able to respond to customers when they have an issue with your product. You can respond to customers when you sell yourself on the Amazon platform.

-One of the big benefits with selling to Amazon that you get paid very quickly, offering options to get funds in as little as a few days upon completion of the Purchase Order.

-If you want to accelerate your sales you will need to spend money with Amazon for marketing. The only issue here is the analytics insights you receive from this advertising is lacking at best. There is not a lot of transparency and the sales attribution is tough. It really is a blind marketing purchase.

Option 2 – Selling through Amazon: You can also take advantage of using the Amazon platform to sell “through”. You operate your own seller account as you would on EBay or Etsy by signing up for a “Seller Central” account. You list your own products, manage your own inventory, send in your inventory (if you want to take advantage of Prime), etc. Here are a couple high-level differences in selling through Amazon with their 3rd party seller platform:

-You have absolute control of your listing price. This is a primary highlight and a core reason why brands often opt for this channel.

-You have near 100% control of your listing content, which helps your product rank organically on their search results pages. You can also control the quality of content to help increase conversions when a user does see the listing.

-You have two opportunities to reach out to the customer that buys your product. You can use this opportunity to request a review or to deal with issues before it becomes a negative review.

-To play a part in their “Prime shipping” option, you would need to send pallets of product to Amazon for them store and ship on your behalf. This typically comes with a 20% fee off the top of your revenue. Some products you can get away with what is called “Merchant Fulfilled” where you send the products to the customer yourself. The downside to the merchant fulfilled option is that you will capture significantly fewer orders as most Amazon customers want the Prime Shipping option.

-Amazon gets a sales commission on top of the Prime Fulfillment fee mentioned above. This is 8% for electronics and 15% for basically everything else. If you combine the commission with the Prime option, you will lose 35% off the top, plus your marketing.

-Marketing – You have almost every option that Vendor Sellers have when it comes to marketing and you have much deeper visibility into how it is working. You can see marketing-to-sales attribution, although it’s not quite as transparent as Google Analytics or your own website data. Typically, your marketing dollars will yield greater than a 10-1 sales-marketing cost or more. This is better than what you would get on Google, but remember you are also paying them a 15% commission on the sale too, which needs to be baked into the formula.

-The biggest downside is you will generally not receive all your money for sales for 45-60 days from when you send the product into their fulfillment center. The cash load is a lot heavier on 3p than selling to Amazon via their vendor program.

We recommend trying to utilize both options, which I will get into on a later post.


8. New website conversion issues and evolutionary web design

Have you ever gone to a large site like Amazon or Google only to see that everything has changed? You haven’t, and you won’t! They make incremental changes to their site over time by testing data to make decisions based off data, not opinion. This is a term called Evolutionary Web Design. While this is costlier about site overhauls it is usually much less risky.

Most companies do website overhauls every couple of years. The thought is, if the site “looks” more relevant and up-to-date, it will convert better. That’s a nice thought, and maybe if your previous site was a disaster it could help, but most of the time this is far from reality. Yes, a site needs to appear somewhat relevant to other websites out there, it cannot look 15 years old, but there are downsides to a complete overhaul. Some of these include:

-If you have a high level of repeat customers, changing the experience will throw them off. Many times, when you switch to your new site, your conversion will be lower for the following few months until existing users/customers get used to the new experience.

-Many companies do not plan properly with SEO, established customer accounts and referral landing pages and they don’t get migrated correctly to the new website, so existing traffic sources can get alienated.

-A site that looks good is quite low on the list to of improving conversion rate. Things like headlines, images, site speed, traffic quality and re-marketing efforts are bigger drivers of conversion, not a pretty website.

On the flip side, many companies are opting to change their website overtime, continuously, and do so based off data. There are upsides and downsides to this:

-Cost. It can cost 2x or more in time and money to do evolutionary web design than periodic site overhauls. Not only are you going to permanently be spending money with designs and developers, but a lot of what you make, since you are testing theories, gets thrown away if it doesn’t work.

-Evolutionary web design, if done the right way with data driving decisions, usually requires a website to have 50,000+ 5,000 conversions a month to get enough data to make changes. This tends to eliminate about 90% of websites.

-As mentioned previously, one upsides to evolutionary web design is that you are not ever alienating visitors if they were on your site a few days before looking at a product, only to have to start the learning of the experience over again.

-Testing data is driving decisions, not the opinion of someone who happens to like what another website looks like. (Or, in our experience, company executives getting family members involved with no internet experience who suggest opinions that are then passed to the website design team.)
Regardless of where you fall from a budget or traffic amount standpoint, it is always good to evolve your site in- between overhauls. Always be testing! At the very least, if you change along the way and still decide you need a website overhaul, you will at the very least have some indicators as to what your audience is receptive to.
Thats it for Volume 2, I hope you enjoyed it. If any of these topics were important to you and you want a deeper dive into them, I am happy to expand through an email or phone call. I may have a solution internally, and if I don’t, I will know a person or firm that can help.

Have a great one!

Regards,

Danny DeMichele

760.494.0404 LinkedIn
2544 Gateway Rd., Carlsbad, Ca 92009