It's All Geek To Me - August 24th 2005

CPC Bells and Whistles – Don't Get Excited. by Ross Lasley I recently attended an Internet marketing subcommittee meeting for a local organization I belong to – I've attended many such meetings in the past, so I had a pretty good sense how this was going to go.

We discussed statistics, the goals of the web site, marketing opportunities that had come up, and what to do about CPC in the next year. (No idea what CPC is? Click here). As is usual in such situations, people in the room were pretty interested in what this geek might have to say. I complemented the organization on their success in meeting their goals, talked about some general trends within Internet marketing, and then casually mentioned the idea of Geo tracking CPC as a future possibility. For those of you who aren't familiar - - - not just ask for searches of a particular word, but also specify the geographic location of the searcher. (For instance, people who search for “cape cod hotel” who live in London).

As you might expect – something new like Geo tracking CPC can get people pretty excited.

I've observed how often clients and people I speak with get unreasonably excited about Internet marketing concepts. It isn't really too hard for me to see why -- the possibilities in new technologies are very intriguing. Most folks don't know how often the CPC providers are offering new bells and whistles. Typically, new products (or new names for products) are offered as frequently as once a month.

My Recommendation - - don't get excited about bells and whistles, especially if all of your basics aren't in place yet.

CPC is something people have fantasized about for many years – a simple and easy way to buy your way to the top of any engine you want – and yet we find very few people engaged in the appropriate basics. Regardless of what type of system you use, the entire point of CPC marketing is the boring mathematical part.

Every web site has a conversion rate (number of people required to make an order) and an average order profit. This calculation is critical in determining how to spend your Internet marketing dollars. We refer to it as the BECAC or break even customer acquisition cost.

The math is pretty simple: if you have a 1% conversion rate (it takes 100 people coming to your site to make an order) and you have an average order profit of $225, you have a BECAC of $2.25. That means you can reasonably buy clicks for two dollars each and still make good money.

The real trick with effective CPC is to use a system where your conversion rate can be tracked by word. It's easy to understand that one thousand people who search for “real estate” won't convert at the same rate as one thousand people searching for “Waterfront Cape Cod real estate.” Typically, more specific terms, like waterfront, will cost less - but this is not always the case.

The most important thing for your CPC campaigns today is to track your conversion rate by source and by word. This will allow you to increase the efficiency of your spending - as well as spend more money on terms that convert better, and less money on terms that don't convert well.

Remember - - the Yahoos and Googles of this world will always have marketing departments themselves, and those departments spend a lot of time reading about ways to get you excited and to make you spend more money. Resist that temptation. Don't get excited about their latest bells and whistles - keep your basics in mind - and you'll have success with Internet marketing.

ASPs With Bite by Michael McGrath Josiah and I were looking at a web site the other day about a project management system called BaseCamp. We thought it was an interesting piece of software, and as I was thinking about its concept, I began to wonder how many of you are familiar with the notion of software-as-services.

Application service providers (ASP) are online software resources you can rent by the year. Let's say you have a need for a project management system, or a customer relationship management system, but you can't or don't want to pay the $15,000+ purchase price, plus customization, installation and regular system administrative maintenance for it. Well, the market is pretty heavy in those types of online systems at the moment, with (just to name a few) www.salesforce.com, www.netsuite.com, www.rightnow.com, and www.sugarcrm.com, competing for business at various strata of the corporate food chain. Here's how it works.

You rent an account; space is set aside for your private information, the data you will be entering into your account; it's password protected, and you/your staff are the only ones with the keys to the car. You don't have to be at your own cubicle, at your own computer work station - - you can be on your laptop in a hot spot in downtown Manhattan, or your hotel room at Foxwoods Casino, and be able to access your account. All of the data in your system is available to you from anywhere, and you can interact with it (add/edit/delete) any time you want. Pretty nifty, eh?

Still not clear? Most of you are familiar with Hotmail and Yahoo! Mail services, and many of you may have your own address and email boxes there. You don't need to be at your home computer to access your mail, or to send a message - - you can access your account from anywhere at any time. Online software resources, ASPs, work the same way.

The advantages? Well, universal access, so long as you have your user name and password; and, you don't have to come up with heavy front money. You open your account, pay the short walking in money, and then pay monthly thereafter, usually based upon the number of your account's users (your workforce). You don't need to worry about system administration, or a computer crash in your office, as the systems are usually housed in tier one facilities maintained 24/7/365 and always backed up at regular intervals (daily, weekly, monthly). Your data is pretty safe in such a system.

KISS has a great deal of experience in developing and administering these types of systems. DORS (direct online reservation system) is one example, an online booking engine for hotels, motels and b&bs. Closer to home, we developed our own internal CRM system that we call KISSdata, and it's served us well for over two years now. In fact, we're polishing it up, adding a few new and neat features, and intend to offer it for sale/service within the next two quarters, although we're not quite decided yet on how best to roll it out.

Our system differs from those mentioned earlier in a very fundamental way, though. Ours is open source based. It's highly customizable, and scalable to any size and strength. And, as a consequence, it will be less expensive. I won't intrude into Josiah's column in this week's issue, but it takes a similar path.

So, when you're next reading about the Internet, and you come upon the term “software-as-services”, or “application service provider” (ASP), you'll know all about it. Keep your eye open for future news about KISSdata, too. It might turn out to be a pretty nice ASP with a lot of bite.