Cost Per What? A Marketing Tale of Horror

Mo Money, Mo Questions

Part of a continuing series of moments from my career, in which great breakthroughs came from great setbacks. The point, as always, is to work away from fear, and learn from every mistake. Besides, they make for better stories.

When you work in the Wild West, otherwise known as the first 15-odd years of Web start ups, you really can not complain when the outlaws run through town and shoot the place up. You chose to try to make a living in frontier times for the possible gold rush gains. Risk is part of the landscape.

A moment of risk not working out hit me at the end of the last Horror column, when a billionaire decided to avoid the second round of promised funding, and my fun time marketing job evaporated without warning or severance. Which brought me, less than a month later, to another Sili Valley office in another interview session, where the gig was to oversee lead generation for a SaaS provider with some genius code under the hood.

Well, sure. Game on. The interview starts and is going well, with lots of good back and forth, and they are impressed by what I'm bringing to the table. So we turn to that portion of the program where the interviewer asks if you have any questions, and well, you want me to execute a program. I've got questions.

"What's your cost per lead?"

"Cost per... yeah. That's exactly the sort of thing we're hoping you can tell us."

To my credit, I kept my jaw off the floor and my head off the desk, mostly by just concentrating on my notes and writing this down as if it weren't terrifying. But hey, you are engineering geniuses. Let's just move on.

"What's your marketing budget?"

"Two million."

Phew. OK, it's B2B and SaaS, so that might not spend as far as you like, but I can work with...

"We've spent $1.8 million already."

Whoops. Well, it's mid-September when this interview is happening, so I've got 90 days to figure out your cost per lead and then get things moving in Q1...

"And our fiscal year starts on April 1."

April Fools! Wow, you guys really had me go... nope, not a joke.

Long story short... I wound up taking the gig anyway, mostly because the engineering really was best in class, the business looked highly scalable, and the value of the product was just breakthrough. It was basically a Cloud solution, only a dozen years before anyone knew what that was. Besides, I needed a gig, and the pay was good.

What happened next? Well, a neglected telemarketing team turned out to be a source of strength with a better script. A modest postcard campaign showed wins after brainstorming helped to produce a new control message. Educational webinars took the fear out of what we were proposing as a solution, and helped cut down the length of the funnel. Some delicate tap dancing with print advertisers got us some writedowns to free up other funds. The cost per lead was determined, and quickly cut by over 60%.

Lessons learned?

1) A lack of measurement is a wealth of opportunity.

As soon as you can start putting data on aspects of your program, you can start taking the emotion out of decisions, and the simple act of measuring will get you past a lot of poor ideas. It turns out that a good chunk of the budget was going to highway signs and radio spots. Which leads us to...

2) The wrong money will get you killed.

You will be shocked, shocked, to learn that premium marketing plays in outdoor and radio for a tech start-up with no brand equity, with a SaaS product that might only apply to 1 out of every 10,000 drivers, do not drive a great cost per lead. Why did they do it in the first place? Because a powerful board member wanted to be just like our biggest competitor, who was sitting on a quarter billion in post-IPO cash, and trying to impress the investing community with these spends. More about that later.

3) You can always negotiate, or, at least, try to.

With 90% of my budget locked down and six months to go before the end of the fiscal year, it looked like I had no options during ramp up. But it turned out that my employer had been paying full rate card, so simply going to their longtime partners and letting them know that, at the very least, that wasn't going to continue, led to some knowing chuckles and good-faith writedowns. If you don't ask, you don't get.

4) To avoid looking like you are bleeding edge, use old school methods.

We had aspects of the program that were far more techie than postcards, telemarketing and a webinar, and our SaaS product was ideally targeted to CTOs, as it was a very advanced platform and approach. Grounding the product in traditional pieces took the fear of bleeding edge out of the offer, and helped to shorten the funnel. Changing the copy to be more about benefits, and less about technical separation from competitors, also helped make lead gen more efficient.

At this point, you might be asking... where's the Horror? I promised you Horror, right up there in the header. And here it is...

5) If you smell too much smoke, you might be too late to stop the fire.

After 90 days, we had upgraded the control work, dramatically increased the participant count on webinars, driven dozens of high quality leads, identified the cost per lead, and then cut that number by over 60%. I was fired up by what we were doing, and so was everyone on the team. There was still a lot to fix, but we were making good progress.

Then, the board cut the funding for the company, and we were all looking for work. At Christmas, without severance. It was a very interesting year, really.

Why did the ax fall? Because our competitor was just deemed as too dominant, and the determination was made that it was better to take a tax write off than risk being just a break-even also-ran.

It didn't make sense to me then or now, but then again, neither does not knowing your cost per lead. It's not like I didn't have fair warning.

The Wild, Wild Web, folks! It's not for the faint of heart. But I did learn a lot, and hopefully, you have now as well.

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You've read this far, so feel free to connect with me on LinkedIn. I also welcome email to davidlmountain at gmail dot com, or you can use the top right form on this page. 

In addition to copywriting, direction and strategy, we also provide design, illustration, photography, coding and hosting. Tell us what you need done, and your budget, and we'll work out an RFP. I also welcome email at davidlmountain at gmail dot com.

Why the NBA Will, Eventually, Overtake the NFL

Adam Silver, Establishing Rank

Tonight, the conference finals (i.e., the final four of the NBA) began, and as basketball is one of my great loves, along with marketing and advertising, I have a few words to say about it. Trust me, we will get to marketing and advertising fairly soon.

When I was growing up (yes, too long ago) in the US, there was a much closer race for the top spot in American sports. For big events, nothing was bigger than boxing. If teams from big markets were in the World Series, it got a lot of attention.  More people seemed to care about tennis, horse racing, the Olympics, and golf. You would constantly hear about how soccer / rest of world football was going to be the most popular sport later. Pro and college football might have been in the top position, but it was debatable, and coverage outside of the regular season and playoffs was rare.

At the time, the NBA was in real trouble. While individual players were captivating, the Finals were on late night tape delay (remember, not nearly the same number of channels to put games). The league had major recreational drug abuse issues, more than occasional brawling ugliness, and a bloody civil war around the birth and death of a rival league. Pro basketball was a distant third among league sports, and in many major local markets, fourth, behind hockey.

In the past three decades, boxing has faded dramatically from its health risks and scandals, with elite athletes moving on to other sports. Baseball is fighting against very graying demographics, a seeming disconnect with the current pace of life, lower offense after the steroid scandals, and longtime inequities between markets that seem to sap the life out of less endowed franchises. The Olympics just do not have that same zing without Cold War tensions, and are rife with scandal. Horse racing and tennis have gone back to special event only status. Soccer is bigger than ever before, but still fairly fringe outside of World Cup years. The two leagues that have grown the most are clear – football and basketball.

At times, football’s prevalence seems total. The Super Bowl enjoys media cheer leading for advertising. Time-shifted television ratings has made the high numbers for NFL games much more comparably valuable. The off-season is much less shorter than it used to be, with massive coverage of previously ignored events like the scouting combine, draft, and preseason games. Every time that the league seems to be in danger – from domestic abuse scandals, head trauma cover-ups and settlements, prominent players going to prison, cheating scandals and more – the ratings only seem to go up. Arguing against the league just continuing to run roughshod over the rest of the American scene seems silly.

Yes, that is a tell.  The American scene.

The NBA, unlike the NFL, is in Los Angeles and Canada. Unlike the NFL, professional basketball is played on six continents, and the best players from all of those areas are in this league. International basketball from the Olympics has done wonders to keep the league in the hearts and minds of the world. There are legitimately great players from all over. Knowledgeable NBA fans routinely stare down players in minor leagues and overseas, and the league’s ability to develop its own domestic feeder league has done more to improve the quality of play.

It’s not just limited to these factors. Professional women’s basketball is also a worldwide pastime, with Olympic medals and leagues on multiple continents. (Professional women’s football… involves lingerie. Not really worth discussing.)  The NBA has amazing penetration on a merchandise and awareness level, especially in Asia and South America. Unlike football, players in their prime do not retire due to health concerns, and parents do not feel conflicted to let their children play the game. The best players in the game now (LeBron James, Stephen Curry, James Harden), unlike in the past, have the ball in their hands from the start of a play, rather than requiring a pass from a lesser-known teammate as they grind their way into position near the basket. Three point shooting from long distances has changed the game fundamentally to allow for more players of comparatively modest height to shine, and the league’s crackdown on flagrant fouls and physical play has made for a more free-flowing, aesthetically pleasing game, with more scoring. The NBA is already, by many measures, the #2 league in the US.

Taking over #1 will not happen right away. The NFL has a huge advantage in fantasy league play and gambling interest, an aggressive play towards games in London and Los Angeles, and rule changes on special teams and tackling to make the game less dangerous to the long-term health of its players. If the league adopted minor leagues with relegation, along the lines of English Premier League football, it could likely adopt a year-round schedule in 2-3X the number of markets, and grow dramatically, at the cost of MLB and college football. Even without dramatic upheaval, football is always going to win on a visceral level, and the comparatively rare nature of games will prop up the NFL #1 narrative for a long time.

Unfortunately, football without violence, on some level, is not football, and runs the risk of having a splinter league start to serve the part of the market that wants real contact.  As for big events washing away all problems, well, we could have said the same thing about boxing, not so very long ago.

Personally, I’m not really “rooting” for either. I’m well past the event horizon of being able to choose whether to watch a sport or not; I’m a lifer. Younger folks, newer markets, casual fans? That is where the movement will come. The parallels for marketing and advertising pros that may be outside of their target demographics, or locked into doing things as they have always done, are obvious… and who knows, this might also impact some of your long-term planning, in regards to sponsorships, signage, and so forth.

Oh, and one final thing… go Warriors!

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You've read this much, so connect with me on LinkedIn. And for the record, we do free RFPs for fans of every NBA franchise, and don't even increase the rate for Celtic or Laker fans. Honest.

Viewed But Valueless: Targeting, Tech, and Millennials

Another Kind Of On Demand

I am the proud and loving father of a Millennial, a 15-year-old girl, and we have a couple of shows that we like to watch on demand. As my local cable provider has not monetized that advertising inventory to the same extent that they have “live” ads, the spots are for just a handful of providers, and are (very) repetitive. You also cannot skip through the ads, so you wind up seeing them a lot. It is a worse viewing experience than a live approach, but we are not the best on scheduling, and we do not own a DVR.

On some level, it seems silly to have any complaint about this at all. We did not schedule ahead, but we are still seeing the shows when we want. The tech to skip ads did not exist until my daughter’s lifetime, and when I was a child, skipping ads was either technologically impossible, or required the use of a VHS tape and careful fast-forwarding. Only in the lifetime of this child have we gotten to one-button escapes from this level of irritation. So do we smile when we encounter these likely CPA spots, and think, “Oh well, so much of what we watch doesn’t have these, so I guess it is completely fine that we are seeing these ads a lot”?

Well, um, no. Seeing how that reaction would be right up there with being thankful for smartphones when they drop a call.

My daughter’s hatred of these ads is strong enough that I reach for the mute button to limit the damage. I have even explained the nature of CPA/CPM ad buys, in an effort to try to take her “behind the curtain”, and share just how much better she has it than, well, me, when I was a kid. Mostly, I just try to mute the ad and change the subject by talking about the show we are watching. We talk, or she picks up her ever-present phone and distracts herself with other content.

I share this not to complain about my kid, or dwell on how media is doing a poor job at monetizing on demand programming. Instead, the point is to show how the technology changes the landscape, and how viewable does not equate to valuable.  Every single spot from the on-demand presentation is 100% viewable. However, since 100% of the ads currently shown are not targeted to either my daughter, or myself, in terms of an ad buy, it is little better than black hat bot fraud. Since the last mile of relevant is broken, the spots are doing their advertisers more harm than good. (By the way, there are some very big providers at work on this issue. I will get to that later in the week.)

Beyond the waste… if my daughter or I were so inclined, we could reach a worldwide viral network of people with our mockery of the advertisers in question. Since we are both fans and occasional performers of stand-up comedy, it is possible, since a great source of material is to hit the stuff that everyone hates. Again, this 2-way and viral tech is new, and so is the changing world for the advertiser. A generation ago, an advertiser does not have this concern.

A final point about all of this, and something that everyone involved in marketing and advertising needs to know, deep in their bones… what we do *is* annoying. It may seem acceptable, because it is in a medium where it seems tolerated, or we work on campaigns with high budget and analysis of the creative. If we reach such a targeted list, or in a low visibility / complaint media, we might not ever receive personal blowback, but make no mistake about it. There’s a world filled with people who regard our work as ballast or worse, and would be very glad to be ad-free for the rest of their lives.

They do not believe that the amount that we pay for that exposure is what keeps the lights on for any number of publishers, brands and services. These deniers and degraders exist in every medium, from the people who claim to throw out all of their junk mail, to those who download ad blockers to run with their content in laptop and desktop, to those who DVR and skip everything or don’t watch, and so on, and so on.

As marketing and advertising pros, we can ignore this aspect of our work, or dwell on it, all we like. It is a matter of personal choice.

My choice is to view this as a transition phrase, and trust that tech and a free market will eventually produce a wonderful future of targeting solutions that make advertising safe, legal, and rare…

On the other hand, you can regard that as naïve, since advertising density has only gone in one direction, and expect this generation to eventually conform. They will accept your high frequency campaigns as the (free!) price to pay for preferred content. They will learn your branding, your jingle and your offer the same way that it has worked for decades. A strong creative execution and a saturation campaign to build brand and drive awareness.

However, if you are well and truly invested in that latter option, and cannot imagine things going in any other way?

You probably do not want to know how my Millennial finds out about, and listens to, new music.

Seeing as how that revenue stream also has changed irrevocably during her lifetime, and she is a lot more attached to the musicians she likes than the TV show she watches…

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Connect with me personally on LinkedIn. I also welcome email at davidlmountain at gmail dot com.