In a 2005 MIT study, “Zero as a Special Price: The True Value of Free Products,” the power of free was demonstrated by offering Lindt® Truffles &  Hershey’s Kisses® , first at 15 cents for the Truffle & 1 cent for the Kiss, then at 14 cents for the Truffle & the Kiss offered for free.  The participants could only choose one.

The Results:

• When the Kiss was a penny & the Truffle was 15 cents – the selections:
  The Kiss = 14%, The Truffle = 36%, None = 50%
• When the Kiss was free & the Truffle was 14 cents – the selections:
  The Kiss = 42%, The Truffle = 19%, None = 39%
• In a 3rd round, the Kiss was still free & the price of the Truffle was reduced to 10 cents – the selections:
  The Kiss = 40%, The Truffle = 12%, None = 48%

What We Learn

As marketers, there are many take-aways from this study, including:

• With regard to promotional pricing: while the actual dollars and cents may be the same, the BOGO promotion (buy one, get one free) may perform far better than 50% off.
• Free is powerful – but it still may not influence the audience if the perceived value is not there.  39% of the participants didn’t want the free Kiss.
• Price reductions may influence the cost-benefit perception with other associated products (test 3).

The Research

The study was conducted by Kristina Shampanier, Nina Mazar and Dan Ariely in 2005 and contains additional tests, examples and data that sheds light on the power of free products and their influence on purchasing decisions. I highly recommend downloading and reading it – a truly interesting read.

Additionally, Dan Ariely has recently released a book, Predictably Irrational, and should you want to further explore how the world often works according to principles of irrationality in the places where we least expect it, give it a try.

(And, keeping true to our last post, New FTC Guidelines Affect Bloggers & Social Media Marketing,  - Seven Aspens, the publisher of Dallas Marketing Services, is an authorized affiliate of Amazon, should you feel so inclined to click on the book and buy it.)

Seven Aspens is a trademark of Seven Aspens Consulting, LLC.
All other company and product names are the trademarks of their respective owners.

Under new FTC guidelines released this week, bloggers and other “word of mouth” marketers who make an endorsement must disclose if there are material connections with the seller of the product or service.   A material connection can include payments or free products received by the endorsers.

According to the Federal Trade Commission (FTC) press release (5 Oct 2009):

“The post of a blogger who receives cash or in-kind payment to review a product is considered an endorsement. Thus, bloggers who make an endorsement must disclose the material connections they share with the seller of the product or service. Likewise, if a company refers in an advertisement to the findings of a research organization that conducted research sponsored by the company, the advertisement must disclose the connection between the advertiser and the research organization. And a paid endorsement – like any other advertisement – is deceptive if it makes false or misleading claims.”

Given the core of social media is transparency and honest discussion, most bloggers and word of mouth marketers agree with this policy.   We have a published disclosure policy on this blog and have encouraged other bloggers and social media marketers to do the same in the past.  However, for social media marketing, the method for disclosure is not as straight forward.   We occasionally send tweets about our  (Seven Aspens’) clients and/or their products. How do you disclose in a 140 character Twitter message?

With potential hefty fines looming for violators, this is a good time to review your policies, ensure compliance and learn the best practices.  To assist in the education process, the Word of Mouth Marketers Association (WOMMA) is hosting a free webinar Thursday, October 8, to help explain what the new FTC regulations mean for marketers, advertisers and bloggers. Additionally, the Social Media Business Council provides a great Disclosure Best Practices Toolkit.

If you are on Twitter, as you follow more and more people, it can be difficult to keep up with your close friends. There is a really simple solution to keep an eye out for their latest tweets.

Using iGoogle and RSS Feeds to Track Tweets

iGoogle lets you create a personalized homepage that contains a Google search box at the top and your choice of any number of gadgets below.  All iGoogle pages start out with a Home tab on the left side of the page and you can add new tabs to organize your content.   The first step is to add a tab for your Twitter Friends.
Next, with that tab open, click on the “Add Stuff” link in the upper right hand corner.

On the Adding Stuff page, at the bottom of the left column you should see:

Click on the link.

In another tab on your browser, go to the Twitter page of the Twitter user you want to track.

For example, to track Dallas Marketing’s tweets, you would go to http://twitter.com/dallasmarketing

On the bottom of the right sidebar, under the Following images, you should see:

Right click the link and choose “Copy link address.”

Window back to the iGoogle page, click the “Add feed or gadget” link, paste the link and click the Add button.

Click the “Back to iGoogle home” link on the top left and your feed should be on the page.

Simply repeat for all your Twitter friends that you want to track.   Another use for businesses - set up a tab to track your competitors, customers and alliances or partners.   Then just pop over and check on your Twitter tabs a few times throughout the day as you work to check in on everyone.

Follow Dallas Marketing Services on Twitter.
You follow, we follow back.

By now most everyone has heard that more than 60% of US

Twitter users fail to return the following month. But, how about the graying of Twitter?

Twitter Demographics

Citing comScoreMatrix, eMarketer recently published a Twitter Demographic breakdown that shows the largest percentage of tweeters are age 25 – 54.

So, 45-54 year olds are the most likely to visit Twitter.

Guess that means you can forget those Mother’s Day cards for Mom and Grandma – just send them a tweet.

Follow Dallas Marketing Services on Twitter.
You follow, we follow back.
Twitterific.

A new study shows that marketers are slowly making the transition to social media marketing with 63% stating they will increase their social media marketing spend in 2009.

clipped from www.emarketer.com

Let’s talk about budgets.
It took a while.

Even though tens of millions of users were flocking to social media sites every day, most marketers stayed away. They either didn’t understand how to join the conversations—without sounding like shills—or they were frightened away by the prospect of associating their brands with questionable content.

But things are changing.

Companies are learning how to leverage social media and tap into the rising tide of consumers participating in social network sites, blogs, wikis and Twitter.

According to the “The ROI on Social Media Marketing” report by Aberdeen Group, sponsored by Visible Technologies, marketers have developed the tools and methodologies to drive marketing ROI by listening to and learning from customers and prospects.

The money is following the methods.

Aberdeen found that 63% of the companies in their survey (defined as best-in-class) planned to increase their social media marketing budgets this year.

Are you engaging with social media brand evangelists?

“Companies use multiple approaches to identify the individuals who wield the greatest amount of influence in any given topic area and to track changes in their influence over time,” said Jeff Zabin of Aberdeen. “Best-in-class companies engage these top influencers as brand evangelists, and then track the impact of their words and actions in terms of return on marketing investment.”

eMarketer estimates that social network advertising alone will rise over 17% this year to $2.35 billion, up from $2 billion in 2008.

Even though many times there is more creativity in budgets than ads, the easiest way to get a marketer to groan is to tell them to do a marketing budget.

The Marketing Budget Process

The first step in establishing a marketing budget is to remember that marketing goals are simply a means to achieving business goals and should be viewed as such.  As with most things in life, almost anything is possible with enough time and money – it is just not a reasonable and sustainable approach.

For most companies, marketing is a method to get sales leads, so then the first question to be answered is:
What is the value of a qualified sales lead to your business?

If you already know – skip to the next paragraph.  If not, start by determining the average value of a sale, then subtract the fully-burdened (all of your expenses) cost of the sale, to get your profit per sale.   Now you know the estimated maximum to pay for a lead – you need to determine an amount less than this or you lose money.   All that said, this is a generalization – in the case of certain business conditions, like a start-up, many companies are on a (hopefully brief) the more you sell, the more you lose plan.  They just make it up in volume.

Next, determine how many leads you can reasonably handle and effectively close and your average close rate.   Now, just do the math to determine how many leads you need to fill the pipeline (if you can handle 5 sales per month and have 10% close rate, you need 50 leads per month).    Last, take the amount you have determined that is reasonable to pay per lead and multiply it by the number of leads you need to meet your sales goals.

That is your estimated optimum monthly marketing budget – if you pay more, you will be cutting into profits, if you don’t invest that amount in marketing, you will most likely be unhappy with the results.

Or  - you can do what most companies do – from the very large to the small  - and pull a number out of the air. Many times, this amount, is the amount “you can afford.”  This is reasonable – it is hard, especially in this time of restricted credit, to have money to spend that you don’t have.  However, at the same time, expectations need to be reset on the expected outcome.

Next up – putting that marketing budget to work with a tactical marketing plan.

Dallas Marketing Services is a marketing blog
published by Seven Aspens Consulting.

73.1% of North America is using the internet.   Can they find you?

Source: Internet World Stats, rates based on full year 2008.

Search Engine Optimization

Search engine optimization, or SEO, is a process that enables prospects to find your site using organic, or free search. SEO is one of the most cost effective ways to promote a website, increase traffic & improve conversion results. Search engine optimization involves the selection and use of key words and key phrases, combined with numerous other factors, that if successful, result in achieving a higher place in the results returned on a search engine page.

Paid Search or PPC

Unlike SEO, which is free, PPC or pay per click campaigns may be purchased to drive website traffic through advertisements placed on search engine advertising networks.

The two primary methods include:

• Paying a fee for an actual page ranking. In some cases, the more you pay, the higher you will rank. Examples include Shopping.com, NexTag, Pricegrabber and Shopzilla.
• Bidding on keywords or phrases that appear in, or are associated with, text advertisements. Example:  Google AdWords

With careful attention to PPC keywords, ad copy, price, headlines, geo-targeting, dayparting, landing pages & other ROI factors, PPC campaigns can deliver significant results.

Landing Pages

A landing page is a type of greeting page – pages that is an extension of the PPC or direct mail advertisement in look, feel and message and helps bridge the advertisement to the website by greeting the visitor.

Landing pages should let the visitor immediately know they have arrived at the right place and alleviate any concerns that would would cause the visitor to hit the back button. Well-designed landing pages increase conversion rates, such as completing a form, completing a purchase, etc. and improve the ability to track ROI for marketing campaigns.

Social media marketing

Social media sites, when used correctly, can provide an environment for creating business relationships and building awareness with a group of users that can, and probably already are, influencing your market.

According to a September 2008 study conducted by Opinion Research Corporation for Cone, nearly six out of 10 Americans who use social media interact with companies on social media websites. The researchers found 85% of social media users thought companies should interact with their consumers through social media, at least when needed.

Blog Advertising

One popular method of advertising is on blogs and websites through affiliate programs.  Affiliate networks are intermediaries that connect advertisers with websites and manage the payment process.

Affiliate advertising differs from pay per click advertising in that fees are generally paid as a % of sale rather than for the click. The blogger or website owner applies to be accepted into the advertiser’s affiliate program and, if accepted, selects from an inventory of ads to placed on their site. The most common ad is a 125 pixel by 125 pixel size ad format.

When someone clicks the ad, goes to the site and purchases a product, the website owner earns a commission based on an amount that was previously established according to the program.

Blog advertising is increasingly becoming an important part of the online marketing mix. A 2008 Jupiter Research study found that more than a quarter of people that read more than one blog per month trust blog advertising. Additional demographic findings from this study were that multi-blog readers tended to be in their thirties with incomes over $75,000 per year – a demographic sought after by most all online retailers.

Many major blogs offer advertising directly on their websites. Major blogs will have a “how to advertise page” while others can be contacted directly requesting rates.  Rates can range from $10 per month to $10,000 per month.

Considerations prior to advertising include blog content, traffic, impressions and the tactics used to achieve traffic. Alexa ranking, number of comments and page rank should also be taken into consideration, with an understanding that some factors can be manipulated.

Webinars

Webinars are simply seminars conducted over the web using webinar technology that allows everyone to see the same thing, at the same time, while you talk.

Webinars are a very effective marketing tool that can be used in a variety of ways:

Host a webinar on a scheduled basis for prospects, such as once a week, for an online product overview (sign up is via an online form on your website)

Conduct training seminars and product updates for existing customers

Partner with other industry organizations that offer webinars to their user base on current topics and industry education.

Next-> Marketing Budgets

“Reports of my death have been highly exaggerated.”

Samuel Langhorne Clemens (Mark Twain)

We last discussed Awareness Activities, the first in the three categories of marketing opportunities.   While I have been advised by some in recent times that offline marketing and advertising is dead-finished- no more, I think there are a few gasps of breath left in the offline marketing and advertising channel.

Direct Mail Direct Response (DMDR)

According to The DMA 2003 Direct Mail Response Rate Study, the average response rate for the 1,122 industry-specific campaigns The DMA studied was 2.61 percent.

The study found the industries that utilize direct and interactive marketing to achieve above average response rates were:

• Nonprofit Fundraisers (5.35 percent)
• Retail Stores (3.36 percent)
• Establishments Rendering Services to Businesses (3.34 percent)
• Manufacturing (3.17 percent)
• Personal and Repair Services (3.07 percent)
• Travel (2.98 percent)
• Computer & Electronic Products (2.86 percent)
• Packaged Goods (2.79 percent)

So, is direct mail still a profitable marketing tool? That depends, but direct mail is one of the easier ROI calculations to estimate. Simply take the cost of the piece you will be mailing, the cost of the list and labor, if applicable, to reach a total cost.  Next, determine estimated response rate (above), the estimated conversion/close rate and the average value of the sale (profit).

For example, if you mail 1000 pieces and estimate that 2.61% will respond (the average from above) and assume 20% of those will close, then the 1000 pieces should yield about 5 sales (1000 X 2.61% = 26 responders, 26 X 20% = 5 sales).  Now, just determine if the value of the 5 sales is more or less than the total cost of the mailing.  Then, remember these are only estimates and other variables such as the quality of the piece(s) mailed, the quality of the list and the frequency you will be mailing (one time vs a series) can vastly vary the results.

Publication Advertising

Advertisements in publications, especially industry trade publications, can be a great source for building brand awareness and generating sales leads.   Subscribe to all trade publications for the markets you serve, read them, study the ads and then determine which is the best fit for your offering and your budget.   If at all possible, plan a series of ads with a theme and consistent branding to build recognition with readers.

Trade Shows and Conferences

Trade shows and conferences can be used to build awareness, generate leads, find new customers, and maintain or improve current customers’ perceptions.   Trade shows are more effective in some industries than others, so just determine if the reward (other than visiting Vegas, etc.) justifies the expense.

These events present the following promotional opportunities:

♦ Network – meet prospects within the targeted industries to help build overall awareness of your product, set up meetings with other participants, invite clients or prospective customers to visit the booth

♦ Exhibit – Secure exhibit space, logo placement and name in event guide and other promotional assets

♦ Event Sponsorships – Overall show/conference sponsor or smaller, daily event sponsorships through show/conference

♦ Off-Site Event Sponsorships – Sponsor and off-site event that is not offered through the show/conference.  Examples would include dinner at a local restaurant, cocktails at local museum or exhibit, etc.

♦ Speaker – Speak at event or in topic driven forums to share insights and build exposure with industry decision-makers.

Next up:  Part 3: Online Marketing

Dallas Marketing Services is a marketing blog
published by Seven Aspens Consulting

Next-> Opportunities: Online Marketing

Awareness

Definition: knowledge
Antonyms: ignorance, insensitivity, obliviousness, unawareness, unconsciousness
(Answers.com)

A marketing strategy is designed to outline a strategic process that allows businesses to concentrate their limited resources on the best opportunities to increase sales and achieve a sustainable competitive advantage in the marketplace. From the numerous potential opportunities that exist, a marketing plan can then be developed to provide a roadmap for the tactical initiatives that will be implemented.

At a high level, marketing opportunities can be compiled into three main categories:

• Awareness activities
• Offline marketing and advertising campaigns
• Online marketing activities

Today, we cover the first of the three:
Awareness activities

Awareness activities are just that – activities that build awareness of your product or service. They are most effective when targeted at a vertical market, an industry segment, or with advocates and influencers. The key here is exhibiting specialized or subject matter expertise within a defined area.

White papers: White papers are a powerful tool in establishing brand recognition and marketplace credibility. The most successful white papers are not sales brochures and do not mention the writer’s specific product or solution – they inform the reader of a specific trend or issue and identify potential new innovations or alternative ways to solve the problem.

Trade publications: Trade publications catering to identified verticals can be a great prospect for interviews and article submissions. This works especially well if used in conjunction with trade support – purchasing an ad for the purpose of building name awareness, while also requesting to be introduced to a writer to pitch the article idea.

Speaking engagements: Similar to trade publications, speaking engagements are a good opportunity to establish a presence within a vertical market. A call for speakers is normally listed on a conference website by the promoter about 9 months prior to the conference. Information is generally listed on desired presentation length, types of opportunities preferred, etc.

Press releases: Well-written press releases are a great marketing and search engine optimization/link building opportunity. Once the release is written, edited and ready to be published, it should be distributed to maximize awareness and create inbound links to the website, which should include social media sites like docstoc, posting to web sites, and using a PR distribution service such as PRWeb.

Advocates & influencers: As key industry contacts are established, utilization of these resources as influencers can provide one of the fastest ways to achieve recognition and credibility in the marketplace. Build a contact database , even if it is a spreadsheet, an regularly contact these important influencers.  Networking opportunities and speaking engagements at conferences and trade shows provide a great opportunity to meet and establish relationships.

Customer testimonials: Authentic customer testimonials that have specific and quantifiable information and data points can be one of the most effective marketing methods available. Don’t wait for your customers to volunteer their testimonial – most don’t. Ask them for it or, even better, write it for them and have them approve it.

Bloggers: Bloggers are industry experts (well, sometimes) with an easy method of access – their blog. Find bloggers in your industry or market, then subscribe and read the blog consistently before jumping in with comments. Once you have an idea of the types of discussions that occur, begin providing meaningful, relevant comments on posts. Be authentic and don’t add comments filled with links to your website or promoting your product.

Next-> Opportunities: Offline Marketing

Arguably the best point guard ever to play in the NBA, Magic Johnson, exemplified the qualities required of a point guard – running the offense, controlling the tempo, ensuring players are communicating and having a complete understanding of the game plan.

In a similar manner, marketing positioning is the point guard of your marketing communications. Positioning defines and controls the overall identity of your product or service and involves the art of ensuring the unique benefits of your offering are effectively communicated and matched with the prospective customer’s needs and desires.

Time and thought should be devoted to crafting an optimized marketing positioning statement.

• What position do you want to occupy in the customer’s mind?
• What are the truly unique product attributes and benefits of your offering?
• Are these benefits already considered relevant and perceived as valuable by the potential customer?
• What else is perceived by the customer as a similar, better or worse offering?
• Why?

Market Messaging

Good market messaging clearly communicates the key ideas of the positioning statement to the customer in a straightforward, consistent manner that leads them to action.  Great market messaging makes it a memorable experience.

Is Your Positioning an All Star or a Bench Sitter?

Positioning and messaging are topics that many small businesses consider too difficult to tackle and/or are simply stuff that corporate marketing teams, agencies and consultants like to discuss to make them sound important. While the latter part of the statement may be partially true, any business can and should seek to have an All Star positioning statement and marketing messaging.

Customers have a perception of your offering with or without your input. Isn’t it time to run some offense, control the message and ensure clear communication occurs at all points of customer contact?

Dallas Marketing Services is a marketing blog
published by Seven Aspens Consulting.

Please contact us with your marketing service, website design,
social media marketing, search engine optimization
and new product consulting needs.

Next-> Opportunities: Awareness Activities

]]> http://dallasmarketingservices.com/2009/02/the-marketing-point-guard-positioning-and-messaging/feed/ 2