[thelist] should we just give up and buy the darn keywords/ra nkings?

Tue Jun 5 06:35:50 CDT 2001

Memo from Martin P Burns of PricewaterhouseCoopers

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Actually, I'm not *that* upset about it - and I suspect most users won't
be either.

Most consumers don't give a stuff about finding non-paid listings. All
they care about is finding something which matches their needs
well enough. That's why consumers continue to use the yellow pages
(where *all* entries are paid for), and classified pages of newspapers
(likewise).

Now if you're doing real hardcore research, then sure, the best result
regardless of whether its been paid for (and that works both ways btw)
is needed - that's when you hit Google.

The other useful bit of transparency is that you can see *exactly*
how much each advertiser has paid for that link. And of course,
spamming search engines with irrelevant categorisation is going
to get damn expensive - much business advertising effectiveness
is based on cost per response. Where this can be directly attributed
to accuracy of targetting, spamming will reduce.

It works like this - suppose your messages cost $0.10 each. There
is a likely market (ie people who need the stuff you're selling right now
at the price you're selling it, will buy using the medium you're using and
respond to the tone and pitch of the campaign (note that these factors
are in the approximate correct descending order of influence))
 of 1000 people. Your perfect campaign would only send messages
to those thousand people, who would then respond.

Number mailed: 1000
Cost per mailing: $0.10
Total cost: $100
Number responded: 1000
Cost per response = $0.10

If the gross profit margin per product is $5, then your net
profit margin is $4.90, and you just made $4,900. You're
a hero.

Clear?

OK. Now you do the same mailing, but with worse targeting. You mail
100,000 people, but there's only the same target market of 1000. So
only 1000 people respond.

Number mailed: 100,000
Cost per mailing: $0.10
Total cost: $10,000
Number responded: 1000
Cost per response: $10

With the same gross profit margin, you've just lost $5,100 and
probably received an envelope containing a pink slip.

The good direct marketeers always knew this - most good DM
campaigns are *highly* targeted (as is possible within available
data). The vast majority of offers you get are at least in categories
you *might* be interested in. The more data a marketeer has about
consumers, the more they can *exclude* consumers with a lower
propensity to purchase.

As the old marketing dictum goes
"Half my marketing budget is wasted. I wish I knew which half"

Cheers
Martin

Please respond to thelist at lists.evolt.org

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To:   "'thelist at lists.evolt.org'" <thelist at lists.evolt.org>
cc:

Subject:  RE: [thelist] should we just give up and buy the darn keywords/ra
      nkings?

Obviously this is a sad, sad thing for information-rich, money-poor
websites
- the fact that a company PAYS to have its site listed in search results is
in no way a reflection on the quality of the site itself (whether it
contains any actual information)... and those sites that cannot afford to
pay for SE results will likely see far less traffic if this trend
continues.
It's also bad news for surfers, who may not realize that paid placement
does
NOT guarantee keyword relevance, but who may tire of sifting through paid
results before they ever get to the non-paid listings. Hell, this could
cast
a huge pall over the credibility of the entire internet as an information
source, if surfers find that "paid" placements aren't relevant to their
keyword search. Finally, SE's must identify paid placements as just that in
order to protect their own credibility. Bad news, bad new, bad news, IMO.
Janet

-----Original Message-----
From: Fortune Elkins [mailto:fortune_elkins at summithq.com]

this article really kinda threw me into despair:

http://www.nytimes.com/2001/06/04/technology/04GOTO.html

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