The Coupon Site Misrepresentation

Coupon site’s claim their value is similar to the value of the coupon section of the newspapers. The theoretical value proposition is that consumers are perusing sales and by seeing the coupon code, the consumer is then motivated to purchase from the retailer’s store. In practice, however, the coupon sites simply target consumers who were already going to the retail store. To compound the lack of value, the coupon site usually just repeats the coupon or sale that is prominently featured on the retail website. This is critical for retailers to understand – the coupon sites SIMPLY TARGET CONSUMERS WHO WERE ALREADY GOING OR HAD ALREADY VISITED the online retail store. Additionally, the coupon site usually highlights the deals that are either ALREADY DISPLAYED PROMINENTLY ON YOUR WEBSITE or expired.

How the Coupon Sites Create a Toll

To illustrate how the coupon site toll works, let’s walk through two scenarios of how consumers interact on the web and how the coupon site gets a commission.

Toll Scenario #1:

The base case is that the consumer starts to type in the retailers store online (e.g. target.com). Google, in its effort to help consumers, defaults into the search box coupons. The retailer, however, should note that the consumer was already searching and intending to visit their online retail store and likely will see any coupons on the site directly. However, the consumer might skip the retail site and goes first to the coupon site who is offering ‘special deals’. In reality, the coupon site often repeats basic promotions and/or general policies. A common promotion on the coupon site is Free Shipping for orders over $X which is usually basic policy for any retailer. The user then clicks on the free shipping “promotion” and goes to the website to purchase a product. The coupon site gets a commission for the following:
(1) Re-directing traffic heading towards retailer in the first place
(2) Offering a basic promotion such as Free Shipping that the consumer would have gotten without going to the coupon site.

Toll Scenario #2:

The consumer is already on the retailer website and identifies a product to purchase. Before purchasing, the consumer decides to look for additional coupons and then searches for coupons and goes to a coupon site. The coupon site actually provides no additional discounts, but the user – for convenience reasons only – clicks on the link back to the retailer website to complete her purchase. In this case, the coupon site still gets a commission for the sale because of the convenience click even as the coupon site neither attracted the consumer in the first place nor added any additional value to make the sale.

www.RetailMeNot.com Toll on Target.Com Profits

To see an example of the coupon site toll in action, search on Target Coupons and click on www.RetailMeNot.com – usually on the first page results. I have attached a screen shot below. You should first notice that the coupons include a free shipping coupon on purchases over $50. Free shipping, of course, is just Target.com standard policy not something Target should be giving a commission to RetailMeNot. You should also note how much they encourage the visitor to click on their links as that is how they receive a commission. Finally, the other ‘coupons’ are out of date and thus worthless for Target but still provide a commission for RetailMeNot.

In summary, Retail Me Not provides no benefit to Target and simply collects a toll if a visitor happens to go to RetailMeNot.com before they go to Target.com. It is a great business model for the coupon sites and terrible for the retailer.

Posted by Jeff Aliotta

The first would be Greenpeace or any environmental non-profit organization. Regardless of who is to blame, the oil spill illustrates how human error can lead to tragic consequences regarding the environment. For these organizations, they have the opportunity to connect with a much larger base of citizens concerned about the environmental impact of the gulf oil spill

The second would be manufacturers of hybrid or electronic cars. They could emphasize the angle of by owning an electronic car, the oil companies won’t be drilling for oil for you. There could even be a guilt marketing play that says that anyone who drives a non-electric car is at least partially to blame for the oil spill.

The third organization that would benefit from actively marketing to those searching on the BP oil spill would actually be BP itself. To their credit, I have actually seen some ads offering information to citizens on how they are trying to address both stopping the well and protecting the environment from the oil that has already escaped. Although BP is suffering a public relations nightmare, someone on the search engine marketing side was at least paying attention.

To show that Anova Group puts our money where our mouth is, we ourselves have launched our own agile marketing campaign. This includes the blog that you are currently reading as well as a search marketing campaign shown in the screen shot below. You will notice that only BP and Anova Group have taken advantage of paid search marketing here. We will let you know how it turns out!

June 21st Update
Two weeks after we wrote this blog, NPR had an article on BP bidding on search results which caused a furor on how BP was spending money.

Anova Group differentiates ourselves from other digital marketing agencies (whether they are a Google Certified Partner or not) by ensuring that our compensation is aligned with our clients’ interests. We accomplish this by structuring our engagements so that on average, 75% of all our compensation comes from performance-based fees. This model let’s our clients know that Anova Group will always go the extra mile to improve our customers’ bottom line results. Furthermore, our clients know that we have the confidence to put our fees at risk and are not expecting our clients to assume all the risks associated with digital marketing.

If you would like a digital marketing partner whose interests are aligned with your business goals, we would welcome the opportunity to speak with you.

Bay Bridge Construction

Contact Anova Group if you would like information on how we help our clients maximize their digital marketing investment through Just In Time Digital Marketing.

By their very nature, no marketer can predict exactly an upcoming social media mania. However, at the same time, I would bet that some social media activity concerning Olympic curling is not that surprising given the history of jokes (at least in the U.S.) about this sport. Furthermore, while a few entrepreneurs have jumped on the bandwagon in attempting to sell similarly styled golf pants, for the most part, this social media event may live and die without any marketing gurus taking advantage of the situation.

The lesson, I think, is that marketers who want to take advantage of social media should both be constantly brainstorming potential social media manias and have the capabilities in place to pounce within days or perhaps hours upon the temporal mania. For large companies, this is a scary proposition to have a team plotting for a social media eruption and expect that team to respond quickly without bureaucratic reviews and approvals. At the same time, considering the recent Toyota recall fiasco, not having a team in place to respond to social media eruptions may soon be the cause of senior executive firings.

Posted by Jeff Aliotta of Anova Group.

Push Theorem of Social Media

As we examine different digital marketing portfolios, we conceptually need to discriminate social media from other types of digital marketing. The most fundamental conceptual difference between Social Media and other channels can be illustrated by a push-pull continuum. In the diagram below, we divide the major digital marketing channels across this continuum.

The Pull

Beginning on the ‘pull’ side of the continuum, SEM and SEO are the main channels for a pull marketing strategy. Prospective customers search for the exact products/brands they desire (e.g. Harry Potter and the Half Blood Prince DVD) and the advertiser is able to respond back exactly with that product. In SEM and SEO, the prospective customer initiates and drives the conversation.

The Opt-In Push – The Middle

E-mail marketing as well as Social Media Sign-ups (e.g. Facebook Fan Page) are examples of a mix of push and pull in that the prospective customer has already executed a ‘pull’ via an opt-in, but then the marketer pushes future messages to the prospect. In these cases, the consumer has ‘opted-in’ to future conversations with the expectation that the business will initiate.

The Pure Push – Social Media

Within this push-pull framework, Social Media (Viral) then is the ultimate push marketing channel. Social Media is the digital channel in which messages are delivered to prospective customers without the prospective customer requesting those messages and sometimes without the prospective customer even realizing a message exists. At the same time, the messages sent to the prospective customers occur often without Marketing’s direction thus the etymology of ‘viral marketing.’

Implications of the Push-Pull Understanding

Starting with this Push Theorem, we can now start to understand the implications in marketing across this continuum.

Avoid the Fundamental Mistake

A fundamental mistake in digital marketing is not recognizing how different channels (e.g. Paid search, Social Media) vary under this push-pull framework. As a result, marketers make mistakes such as being overtly transactional in Facebook or overusing Paid Search for brand awareness. Other times, the marketer may mistakenly have the exact same content across the complete push-pull continuum.

Posted by Jeff Aliotta of Anova Group.

Previous Inbound Link Strategy

Previous to hiring Anova Group, the company had made a valiant effort to increase the number of inbound links to their website by posting short answers and mini-blogs throughout the web. Not surprisingly, the impact on organic search was negligible. The mistake, we believe, was that their posts were often relatively minor comments and answers to questions that were only tangentially related to their technology and expertise. So while they increased link quantity, the search engines did not view these links as high quality.

Leveraging An Existing Asset

After reviewing their account, we were impressed by the academic journal articles published by the founders. While they had posted a handful on their website, the article visibility was nearly absent on the web. For us, these articles were an untapped goldmine to be leveraged for quality in-bound links. As an example, despite a fairly robust section in Wikipedia on related technology, their academically recognized research was nowhere to be found. We knew that by simply summarizing and posting some of their research on Wikipedia, their visibility would be greatly increased which then both directly and indirectly would increase their SEO rankings. (Note to the SEO Gurus: I am intentionally ignoring NO FOLLOW issues as I would argue this often is a distraction to adding high quality links)

Three Lessons Learned

While we admit most of our clients are not academically published or recognized internationally as thought leaders in their field, here are lessons for anyone who is thinking about an inbound linking strategy.

Posted by Jeff Aliotta

• Are you pricing competitively?
• Are you profit maximizing?
• How can you receive a price premium?

Our first step maps both our customer and the competitors into a price-value matrix which crystallizes equilibrium prices that the consumer should be charged.
To illustrate the benefits of this analysis, I have pulled prices (including tax & shipping) for Apple’s iPOD Touch 32 GB (3rd Generation) creating the diagram to the right.

The diagram shows a wide price range (i.e.$260 to $320) even though the product configuration was specific. This dispels a misconception that the value an online retailer provides is limited to the product. For example, Apple (like most manufacturers) may command higher prices because consumers usually perceive value in avoiding the middle man. Specialty retailers often also have higher perceived value (in their specialty), perhaps due to critical knowledge if support is needed, and thus may command premiums.

As an anchor point, Anova Group often views Amazon as a value-neutral player in online retailing. To charge more than Amazon, a retailer has to have additional perceived value such as brand power or customer service. In this example, MacMall can charge a very slight premium to Amazon due to their specialty focus. Additionally, BestBuy may also have some pricing power due to their concentration in electronics. Best Buy receives a higher specialty premium than MacMall due to a more powerful brand. On the other hand, Overstock sells a refurbished iPOD Touch which has a perceived lower value than a new iPOD Touch. As a result, the Overstock price is lower than all new iPOD prices.

This example demonstrates a price-value equilibrium line upon which Apple, Best Buy, Amazon, MacMall and Overstock lie. These retailers should sell their share of iPOD Touch’s at these prices. The exception, in this example, is Babies ‘R Us who has a price above the price-value equilibrium line. From a value standpoint, consumers assign negative value to specialty retailers who attempt to sell products outside their category. Given this problem, Babies ‘R Us’ perceived value is likely less than Amazons. Being off to the high side of the equilibrium line, Babies ‘R Us, outside of a few ‘lucky’ sales, will not sell many iPOD Touches.

While I have just scratched the surface on pricing analysis, this price-value mapping exercise provides critical strategic insight to any online retailer. If you would like assistance in a competitive pricing study, please contact Anova Group.

Posted by Jeff Aliotta

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As a digital marketing professional, I would give this ad a ‘B-‘. The title – via a Google trick – repeats back the keywords entered. On the good side, the actual ad text contains ‘Blood Prince DVD’ which does acknowledge my search request. Additionally, the free shipping promotion is useful given no familiarity with www.HotMovieSale.com. I would have given the ad a ‘B+’ if it had described the different formats (i.e. Blue Ray, DVD, Wide Screen) available. An ‘A’ ad would have provided the actual price rather than the filler words “Low Prices”.

Wal-Mart, of course, also advertises for movies. You can view their Google advertisement in response to my search below. I’ll give Wal-Mart’s ad a generous ‘D-’.

Wal-Mart’s first and biggest mistake is that they do not acknowledge my search. Wal-Mart simply tells me it has the “newest movies” and they “cost less”. The wording of the ad makes me suspicious that after clicking on the ad, I will have to search through a million titles to find the ‘Half Blood Prince’ movie I had already requested. On a related note, I would wager that Wal-Mart is paying higher on a per click basis than the www.hotmoviesale.com website due to the poor ad quality. The only reason this ad did not receive an ‘F’ is that if you click on the ad, Wal-Mart does display Half-Blood Prince DVDs to be purchased. Of course, Wal-Mart does this with a search string which is sub-optimal compared with sending the consumer to the direct page.

The take-away for every small and middle-market business is that more times than not the big guys are beatable even in this case where millions of Half-Blood Prince movies will be sold. The take-away for a Fortune 500 CMO is that you’re leaving money on the table if your SEM campaigns resembles Walmart’s.

Posted by Jeff Aliotta

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However, the 3rd Paid Search advertisement was a firm specializing in providing speaking engagements involving celebrities even though our searches contained the manufacturer and the word ‘Wireless’. Many marketing professionals would simply dismiss this as an unintended consequence of Paid Search as the speaking engagement firm just bid on keywords involving ‘speakers’ which, of course, overlaps with electronic speakers. After all, what is the harm in having that ad show even as consumers are seeking speakers for playing music?

The harm – not understood by most agencies – is that Google punishes advertisers who are showing ads with low relevance to the consumer. The punishment is not limited to a handful a ‘bad’ paid clicks. The real punishment is that Google charges a higher cost per click (CPC) to achieve the same position in the search results. In other words, your overall ad relevance, drives not only your position but also the costs those advertisers must pay for that position.

At Anova Group, we see situations where advertisers are paying $2.50 a click while only achieving a position of 3-4. Most marketing agencies simply dismiss this as a highly competitive situation. However, through our statistically proven techniques, we are able to improve the relevance of those ads to consumer. Google rewards ad relevance by reducing the costs per click (Anova Group typically sees a 25% reduction) while at the same improves the advertiser’s paid search position.

This example is just one reason on why your return on your digital marketing investment may be sub-optimized. If you are wondering whether your return could be improved, you may want to speak with us about our Digital Marketing Health Check.

Posted by Randy Higgins