What does the Safe Harbor Legal Ruling mean for Marketers?

As a guy who straddles the line between technology and marketing, this is an interesting week. If you haven’t heard, the European Court of Justice struck down the Safe Harbor agreement from 2000 that protects your ability to move data from the European Union to the U.S.  A lot has been written about how this affects IT or big cloud companies, but not a lot about how it impacts marketers. Well it  definitely has an impact on you. And the ruling affected the agreement immediately.

In essence, it means that marketers on the whole need to get smarter about technology and understand it much better. This is my legal take on the Safe Harbor ruling and it’s written in my layman’s terms. If you do business in Europe or pull data from Europe to the US (including for employees), you need to call your attorney today and figure out what is next. You need a legal opinion that you can stand behind.

Here’s my initial take on some of the ramifications:

  1. Big versus small. This ruling seems aimed at Facebook, Amazon and the other big players, but it actually impacts the small guys in a much more meaningful way. The big guys have data centers in Europe and already have some legal protections in place for what they are doing. The small guys don’t and will need them fast. It also impacts the costs of expanding into Europe for marketing teams – additional safeguards on data will be required.
  2. Data streams. Suddenly marketers need to understand their data flow. Where “in the cloud” are you storing data? The key question is around European privacy. If you’re taking data that can identify a person in Europe and moving it to a cloud service in the US or to your servers, this ruling impacts you. You’ll need cloud services that store data in Europe and some safeguards that keep personally identifiable data from flowing to the US.
  3. Lawsuits. The door is now open to lawsuits from EU residents who feel you are not protecting their privacy. US laws are very lax on privacy whereas the EU takes it very seriously. So far, US companies have been able to ignore EU privacy laws for the most part, that is not true post-ruling (until a Safe Harbor 2.0 gets nailed down).
  4. Protections. Again, this is my opinion and I am not an attorney. Talk to yours. Here are some ways to try and protect yourself from this ruling:
    1. Require EU users to agree that you can transfer their data overseas. It also helps if you have a rational need as to why the data is transferred, e.g. we ship from the US, etc. This is a good way to protect yourself for ecommerce retailers.
    2. Use one-way encryption algorithms to encode the data and dump personally identifiable information. If you don’t need to identify the specific person, then don’t. This way you can continue to use data for analytics and modeling, but you protect yourself from privacy lapses.
    3. Model Clauses. This is the way big guys deal with it. Talk to an attorney.

I’m hearing two things: small guys feel like they will never get noticed or they haven’t even heard of the Safe Harbor ruling. Both are dangerous. My understanding is that any E.U. user can file the lawsuit that causes you problems. So being small isn’t a big protection if you’re doing business in Europe.

I recommend at a minimum that you take the time to write up a legal blurb that says “if you click this button, your data will be used in the United States” etc. And understand why you need the data here. If you’re collecting a lot of E.U. personal data, I recommend figuring out your data flows and making sure you keep the E.U. data in the E.U. unless you have a clear, documented rationale why that won’t work.

More to come in the next week as attorneys start parsing the ruling and its ramifications. On a side note, we need to push the U.S. to get the Safe Harbor 2.0 done, so write or call your congressman. Rumors are that it is delayed over access to data by U.S. government groups. That’s frankly ridiculous in my opinion.

Have I missed something? Or stated it wrong? Please let me know in the comments.

2015 Christmas: Another Year of Heavy Discounts

Consider this a prognostication on the future. Translated: my best guess with a bit of intelligence thrown in for good luck.

I’m taking what is actually happening in the economy and going to the logical conclusion for this holiday season (to be more politically correct). Here’s a few key data points to start the discussion:

All in all, I think we’re shaping up for a tough Christmas season. The combination of high unemployment and low wage growth typically results in lower consumer spending. Add in high inventories at companies and I think you’ll see a brutal season of markdowns and less-than-ideal margins on the retail side of things. This will add to the downward pressure on spending (people are saving the extra money, not splurging at this point) and creates a downward cycle.

How are you planning your 2015 holiday sales? Heavy on discounts? Big sales gains expected? I’m curious where business are planning because they have the best intelligence on what is happening now. But my economic look into the future seems to indicate heavy discounts and less spending.

Reuters has an interesting article on retail sales projections here.

The Death of Banner Ads – and the Implications

Right around the corner we have iOS9 (just ask Siri for a hint). And with it we get Apple’s adblocking technology. At first blush, big deal, right? But after looking under the covers, I think it’s going to be a very big deal.

First, a little reality for you: banner ads are not effective advertising. Agencies keep selling them and ad buyers keep buying, but the real data is monstrously bad. And there’s a reason for that: (a) most banner ads aren’t visible by humans; (b) visible banner ads are ignored by 82% of the people that might see them; and (c) Most banner clicks are accidental (especially on mobile). All of which leads to horribly bad recall, low interaction and a lack of value in banner ads for marketers and consumers. Including the accidental clicks, the click-through rates tend to be less than 1 per 1,000 viewers. That’s insanely bad marketing spend.

However, banner ads do work in certain instances, mainly around retargeting. If a user visits your ecommerce site then goes to the WSJ or a blog, it’s worth targeting them. Because they are familiar with your brand, they tend to have more awareness of the ad and click through rates are higher. So the modern marketer can use banner ads for other things than burning through all that pre-IPO, pre-revenue cash. And on the other side, they provide content producers with a critical stream of revenue that helps keep content free. Would your favorite blogger work as hard without some ad revenue to make him feel like it’s worthwhile? (Obviously I’m the exception, I don’t make a freakin’ thing on this blog).

Saying all of that, iOS9 only impacts mobile usage, so this doesn’t mean instantly banner ads go to zero. And it needs to be utilized by end users, which will take time. However, marketers need to get ready for ramifications of this change, which I think will be huge a year from now. Here are some conclusions I’ve drawn about what it means to block mobile banner ads:

  • Eventually it means the death of the banner ad as we know it. Mobile is rapidly gaining share on virtually all sites. If you aren’t at 50% of visits now, you’re probably close. This could quickly wipe out half of ad impressions available outside of bots (e.g. non-human viewers) and make 0.06% click through rates look impressive. In the short term, it probably means increased cost per view with lower inventory.
  • It drives up the value of content to marketers. Instead of placing banner ads, we’ll look to place inline content on blogs and heavily trafficked media sites. The banner ad budget might transition more into something like a PR/media campaign aimed at getting space on targeted blogs. And this likely means paid placement along with a content creation budget.
  • Ironically, this isn’t likely to have much impact on sales for ecommerce players. In order to make banner ads look like they are driving sales, you had to do analytical gymnastics with the numbers. All it impacts is those questionable awareness or engagement numbers that implied you were hitting 70% of the target market. Hell, it might make you more profitable.
  • It’s also likely to move banner ad budgets more toward social media. Facebook and Twitter are apps that can find a way to fit and pseudo-target your population. They will become the de facto place to drive online awareness through a mobile device. There are very few ad-friendly other places you’ll be able to find folks on mobile.
  • For content producers, it may lead to app creation and even charging for content. You’ll have to be very good to get folks to pay, but I could see building out an app that can circumvent the ad blocking technology. I’m still thinking through this angle.
  • And, of course, it supports Apple’s new News app, which isn’t likely to have issues with blocked ads. These ads are not nearly as targeted and only for large marketers (read: rich marketers). It isn’t a cheap place to show up, which helps with the brand value of the marketing, but makes those that calculate cost per click very uncomfortable.

Online advertising is moving more and more toward creating branded experiences for your most loyal fans. Immersive sites that entertain as much as they educate will continue to drive visits, awareness and affection toward your brand, which hopefully results in sales. But I think we need to start thinking about a post-banner ad world and how we drive traffic through content.

Banner ads have long been the most pathetic form of online advertising. Bad creative around jumping monkeys or deceptively concealed ads don’t help anyone. Consumers hate the retargeted ads that follow them around the internet. So I’m not sure we lose a lot in throwing out banner ads (except for the publishers, of course). But I think we do need to rethink how to recreate our marketing campaigns without the ad spend toward banners. Search can’t soak up more dollars (everyone is maxed out there). It has to be good creative and good content that can be repurposed across key websites.

Do you agree? Also see Doc Searl’s take on adtech here, which I appreciated.

Memories of ringing the NYSE Bell

My grandfather was as blue collar as you get. He worked in an Atlanta Ford plant his entire working career – and not in an office. A good man who worked hard and took the lessons of the depression seriously. He saved a lot and invested over and over in one company (Southern Company) which had a cyclical stock. When he died he left his children a sum far above that expected from a blue collar guy. When I think of ringing the bell at the NYSE, I can’t help but think of my grandfather who probably never imagined me being there. He would have loved these memories.

Professionally, this is probably one of the things I get asked about the most. Mainly people wonder what the exchange floor is like (small). Or how the pomp and circumstance plays out (more casual than you think). I have a few extremely distinct memories: standing by the bull (you know the one), being amazed by the technology throughout the exchange, having a huge breakfast, and the moment when we (by that, I mean Teavana’s CEO) rang the bell to open the NYSE. But it was more than that and this is my attempt to detail what happened and how I remember it. This is a personal recollection and I’m not sure it’s valuable for anything more.Our Ritz hotel room

Teavana went public on July 28, 2011. The prior day we flew up and stayed at the Ritz Carlton Battery Park with rooms overlooking the Statue of Liberty. Each room included a telescope for a better look at Lady Liberty – and New Jersey, of course. That night we had a great dinner in a private, second-story room at Megu in Tribeca. The food was good and the restaurant seemed perfect for an Asian-themed retailer to go public. They had a cool ice Buddha sculpture that was changed daily. I particularly remember the Sake and enjoying a fun night with co-workers. That night our CEO announced the higher-than-expected price we were going to launch TEA at. It was fun all around.Megu Ice Sculpture

The next morning everyone woke early and headed over to the NYSE. I walked over with David Staels, our VP of HR, and we made a point to walk directly past the bull. I remember being energized and very excited. The NYSE was adorned with Teavana banners and featured a geisha out front performing the Japanese Tea Ceremony and serving many cups of Teavana matcha.NYSE Teavana launch

One funny story: early in the history of Teavana, we used a specific Japanese model as a geisha in what became an iconic Teavana image. Our CEO tracked down the model to use as the geisha in our NYSE activities. We assumed she knew how to make matcha (it’s not that difficult!). However, when she arrived we found out fast that she wasn’t a tea drinker at all. So she was given a quick lesson in matcha and the Japanese tea service on the morning of our public launch. It worked out great, but you’re never prepared for every eventuality.

Once inside the NYSE, the technology is what struck me. Walls were covered with screens that branded the NYSE and offered information to guests. It’s an old building, but the rebirth of the NYSE as a technology-first company, where the technology is maybe the only thing that matters, really came across. We still think of the NYSE floor as the center of the financial world, but it’s the servers that do the actual work. The floor isn’t pure drama and acting at this point, but it’s also not a necessary component of the NYSE’s trading. That revelation stuck with me going forward and has become more true over the years. How long will people continue coming to ring the bell?NYSE from Bell Ringing Balcony

We started the day with a great breakfast deep inside the NYSE. The room featured a mock Teavana tea wall along with a massive breakfast table. It was a nice meal that ended with the president of the NYSE offering a plaque to our CEO as a reminder of the day. Then, right on cue, we all walked up a hallway to the small balcony where the button to ring the bell is located. It is an actual button that theoretically kicks off the market activities for the day. CNBC was broadcast into our offices back in Atlanta so the rest of the gang could celebrate with us. I stood on the left side of the balcony right behind our SVP of Stores and we were told when our CEO was supposed to push the button. We stayed for a few minutes after and then walked down to the floor.NYSE Small Floor

I’m sure you’ve heard this before, but the floor of the NYSE is very small. It seemed smaller than the room we had breakfast in, but of course it wasn’t. It was much smaller than it looks to me on tv. I was told this repeatedly before going, but I can’t emphasize it enough: that floor is small. We walked down stairs onto the floor and waited near a terminal to hear where TEA (our ticker symbol) would begin trading. It took longer than I expected for us to get the first price, but it was interesting watching the guys in the blue jackets do their thing. It made me think of the old market makers on the floor actually conducting the business in a crazy environment. The floor activities still seem the same: guys yelling what sounds like prices and participating in an event that has driven the world for a long, long time.Trading TEA

Eventually, the floor trader looking at our position turned and announced TEA’s opening price. It was significantly up from where we priced the stock (everybody prices too low these days). Good news all around and a hell of a way to start a day. I think at this point I was half giddy, half dazed and maybe a little amazed at the overall event. We walked out of the relatively dim floor into bright, sunny daylight in lower Manhattan. After ringing the bell, we took pictures in front of the NYSE and walked over to the bull. We also took pictures there, but found out later that the enterprising artist expects a payment if those pictures are used in public way. So I’m not sure where they ended up.bull

It was a pretty amazing twenty four hours in NYC that I’m not likely to forget. And going from a private company to a public one is a pretty significant shift in all things; it was transformational not just personally, but professionally as well.

Afterwards, we enjoyed NYC for a bit and then headed back to the airport towards Atlanta. My grandfather had passed away, obviously, before my voyage to the NYSE. But what I wouldn’t give to have a conversation with him about it. It would have meant so much to me.

Hope you enjoyed my thoughts. Not too detailed, but fun to remember!

The B2B Miss: Ecommerce Excellence

B2B ecommerce is an interesting conundrum. It has the ability to both cut expenses and drive up sales, however it rarely gets the funding or attention needed to succeed. There are exceptions of course, like Staples, that understand the massive value capture that can be made with a solid ecommerce presence. However the development of a B2B ecommerce site usually falls not under marketing, but under a sales executive, who has no experience in driving ecommerce in a way that really gets to the value available.

On the buyer side, B2B ecommerce is in high demand. Business buyers shop online in their personal lives and are very comfortable with it. In fact, research here and here (as examples) show that B2B buyers are digitally moving through the sales funnel without assistance from salespeople more and more. Sales is focusing on closing (as they should) but if your digital isn’t doing the work, you’re missing out on long-term growth opportunities. Add to that the ability for digital to personalize, which translates to upselling and cross-selling to your buyers. This drives real value that is difficult to get through a salesperson in 2015.

The world is moving and many, many businesses are missing the boat.

What is the problem? As I mentioned above, a lot of times the problem is in the structure of the company. B2B sales is under a sales team and lead by an executive who doesn’t really understand why marketing matters. But ecommerce strength comes from marketing, not sales, and requires an experienced marketer to do well. In order to excel, a business needs to bring in the skill set from outside and give them the support they need. Which takes us to the second problem: money.

It takes investment. In a time where we’re cutting costs left and right, investing in a strong ecommerce platform seems expensive. Isn’t it just exchanging one channel for another? In my experience, a good ecommerce and digital marketing arm can give you a significant lift in sales from your current customer base in addition to cutting costs over time (typically you can reduce customer service and sales team members with a good ecommerce presence). The initial bump is seen from your smaller or less important customers, because they aren’t getting the sales attention they need now. But even the bigger guys will respond as well.

Finally, the single biggest problem is that B2B executives often don’t realize the potential value of ecommerce in their business. It takes real digging to understand the costs of taking an order today versus taking one online. And it takes experience to realize how digital marketing can lift sales; e.g. why the investment should be made. This is a cultural shift in the company and a political problem over and above the first two issues. It’s more likely to change due to competitive shifts or threats than it is due to a lightbulb going off in someone’s head. Unfortunately, that means a lot of businesses are going to be eaten alive in the new digital world. That’s already happening now (taxis, department stores, even cigarettes are being eaten by digital) and will continue to happen. Is your industry next?

My recommendation is to bring in talent and invest in the plans. Early on focus on email and paid search to start supporting your sales them. Then add ecommerce and make it world-class instead of focusing on reducing the investment. Long-term it has a massive payoff for most companies. It won’t save a company with poor products, but it absolutely can drive good product to the next level. Your customers are shopping online just as they do at home. You should be there to meet them.

 

Ecommerce Acquisition: Where do customers come from?

I talk a lot to B2C ecommerce folks, both small and big. And one of the most frequent questions I hear is something along the lines of “where should I be getting customers?” Sometimes this is asked about a specific channel (should they be xx percent of acquisition?) and sometimes about the whole (how do I get more free customers?). But it’s asked a lot.

There are guidelines around B2C customer acquisition that are reasonable across most industries and most target markets. However, I would preface the discussion by saying these are averages. And like the average human, they don’t really exist. Virtually no one will fit comfortably into this breakdown, since everyone does something a little better/worse than others. However, how you fit (or don’t) will tell you a lot about your business.

Here’s what I’ve seen:

Tactic % of sales Comments
Paid Search 20 – 30%  
Organic Search 15 – 25%  
Email 15 – 20%  
Display 8 – 15% Can be higher for high margin businesses. Includes retargeting.
Direct Traffic 8 – 15% Wide variability based on offline marketing & brand strength
Affiliate 3 – 11% Trending down as affiliate loses its luster
Marketplaces 4 – 9%  
Referral Traffic 3 – 7%  
Social Media 0 – 2% Can be slightly higher, but rare

 

Almost everyone has at least one exception to this. First, Display, Affiliate and Marketplaces don’t exist for all ecommerce folks, but you can remove them and disperse their percentage over the rest. Second, retailers with strong offline marketing (commercial TV, direct mail, etc) are likely to have higher Direct Traffic and search numbers.

Other thoughts:

“FREE” Marketing: One of the biggest problems is when Free Programs aren’t making up enough of your sales. I use parenthesis around “FREE” because these all require effort and costs, but you don’t pay by the customer typically. Organic Search, Email and Direct Traffic need to push close to 50% of sales in order to help pay for some of the other programs (particularly if you’re doing Display). This is probably the number one issue I see with struggling retailers: they are paying too many tolls on their customers.

The Paid/Organic ratio: A related problem is around Paid Search versus Organic Search. Logically, these programs are in competition with each other. They are very tied together, but almost never make up the same amount of sales. I’ll commonly see a Paid Search program that makes up 30% of sales connected with an organic program that makes up 6% of sales. This means you need to work on organic. They should be closer to one another, however they rarely are very close. Google now takes up 90% of the above-the-fold space on the search page with paid ads, so Paid typically dominates by about 500 basis points.

Content marketing: Content drives the free programs, so good content can pay for itself fast (and keep giving over time). The move for ecommerce guys towards content is really a move to capture more sales through Organic, Email, Direct, Referral and Social traffic. If those five are all hurting, it’s likely more a content problem than a technical issue.

Social Media marketing: Social will not be a huge part of your sales. Yes, there are stories of ecommerce plays that do very well through social media marketing. Typically these are targeted at very young people and are very small businesses. For a medium-sized business, social is a customer service arm and an awareness play. Note that the one exception to this tends to be Pinterest. Pinterest doesn’t consider itself a social media website; they believe they are a search and shopping site. This is much more accurate. Good, helpful content on Pinterest can drive your social numbers up. But they are still unlikely to get to 5% of sales. Very unlikely.

Hopefully this is helpful. If you’re willing to share how you differ from the above, I’m glad to give you my two cents as to why you likely differ. Reach me at jay [.] m [.] allen [at] gmail. Leave out the brackets.

Digital Marketing for B2B: Where to Start?

Trends tend to move from consumer to B2B over time and digital is no exception. B2B customers are, after all, consumers at home and now enjoy the luxury of knowing or ordering or managing anything, anytime, anywhere. And, as Kevin Hillstrom points out, digital hates inefficiency. So B2B marketing is seeing inefficiencies in sales generation driven out using digital techniques.

These changes have been weaving their way into the B2B world. First, B2B buyers began doing a lot of research before they ever called a sales guy. Who wants an hour long conversation if the tool won’t work anyway? So more and more content was added to B2B websites – including pricing information – that was not contemplated just five years ago. And once the buyer informed themselves before ever contacting a sales rep, sales became all about closing the deal. Sales salaries moved over to website content and marketing funding. You started seeing more power in the marketing departments, particularly in digital marketing, alongside a slippage of power in the B2B Sales departments. And I think that trend is increasing.

Along those lines, B2C marketers have had more opportunities to grow into B2B arenas over the past two years especially. But where to start in a B2B environment? Is it much different than B2C marketing? The answer is yes and no. Yes, it’s definitely different and some things just won’t work. But it is getting more and more similar to B2C than it was years ago. Here are the tactics that work:

Content. B2B requires even more content than B2C marketing. White papers, conference sessions, webex, etc. A lot of this is taking what works in B2B sales and making digital versions of it. A webex after all is simply a sales call that reaches hundreds of potential candidates rather than one at a time. One benefit to B2B content is that it typically lives a lot longer than content on the B2C side. This helps to justify the expense and makes it easier to tie back sales over a cycle.

Lead gen. B2B marketing is not about closing the sale. It’s about generating leads and pushing those leads down a funnel that ends with a sales call. Lead gen fills the top of that funnel and generally starts with paid search followed by sponsorships on other websites or email programs. Organic traffic is key to keeping your costs down and also helps justify the content expense. But paid search is just as important in B2B as it is to B2C marketers.

Email. This is the big gorilla of B2B online marketing. Although it contains a component of batch-and-blast or seasonal marketing strategies, what really works is marketing automation through email. Something Salesforce + Pardot has done extremely well in recent years. Your site should be geared toward lead gen and once a lead is collected, it should be segmented and fed a continuous stream of targeted email content that moves them down the funnel. This is true online sales programming and it widens your sales funnel.

Tracking and data analysis are also just as important in B2B as B2C. And, in my experience, B2B marketers don’t yet have all their leads tied back as cleanly as they do in B2C, so there’s an opportunity to be better than the competition here.

In terms of online marketing, here’s what doesn’t work (and the exceptions to the rule):

Banner ads (not including retargeting). Banner ads continue to get a bad rap for good reasons. Sales practices around them are questionable and their efficacy is as well. It takes a huge marketing budget to really use these effectively and they are hard to justify in a true B2B sales environment. The one exception is retargeting ads, which are focused on known prospects. Note that this does not include sponsored ads in targeted emails, which can work well for B2B marketers. This is specifically around doing large banner buys through an agency targeted at a specific demographic group.

Social media (except LinkedIn). When folks interact with social media, they typically do it as a consumer. It’s about interacting with friends, not shopping for brands. Unless you are targeting a very young demographic, it’s difficult to find value in paid social advertising. The one exception is LinkedIn because it’s unique status as a professional forum. I have seen good, effective advertising that is very, very targeted here. Don’t do this without someone who knows what they are doing.

Affiliate. Affiliate is always attractive to sales folks because of the nature of the offering: you only pay when you get a sale. It really doesn’t work well for B2B (and I would argue that it’s questionable for B2C as well). Don’t spend time here.

That’s my high level list of what works and what doesn’t. If you need to start fast, start with Paid Search and email. If you need it cheap, start with email and written content, then kick on Paid Search once the funnel is working. Email tends to make all other marketing activities look more profitable and more effective, so I always recommend it early in the process. A lot of B2B strategy is figuring out how to lead a prospect through the sales cycle without a sales person. And then keeping them informed into the future.

Good luck!

 

Creating the demand you collect

Ahh, the good old days. When AdWords were five cents a click and affiliate programs actually worked without 50% discounts. But the one thing about good old days: they never last. Eventually everyone discovered how to get traffic to their website and costs went up, Google got rich and customer attention became hard to come by. Back then there was more demand available than marketers investing and the hordes of visitors you could pull to your site were profitable on the first shot.

Now things are harder. But it seems that some things are getting lost in translation. I think part of this is because of who became digital marketers and who didn’t. A lot of the digital folks either came up through IT or through direct marketing. Not many came from brand marketing. So digital has always been focused on efficiently getting sales, possibly at the expense of brand growth. The past few years this has started to change, primarily with the big brand marketers. But it needs to change more.

The biggest problem, as I see it, with digital marketing is that it fails to distinguish between demand creation and demand harvesting. Demand creation is the act of actually making someone want your product. Demand harvesting is simply getting an order from someone who already wants it. These skill sets are inherently different and one is much, much harder than the other.

Going back to the early days, many retailers were able to harvest very efficiently. Paid search, SEO, affiliate and even retargeting are all about harvesting demand. Customers have to be looking for or searching for your product. Nike would make them want it, they would hit Google and search for it, and whomever delivered the best deal would get the click and the sale. Anyone can harvest and efficiency wins.

Generating demand is really hard. It requires TV commercials and catalogs mailed and other marketing techniques that interrupt the customer with a product and try to get them to buy it. Digitally speaking, banner ads were always the great white whale of digital demand generation. However, the corruption and absolute crap going on with banner ads have relegated them to a wasteland. I see people trying to generated demand through social (small, but can be effective) or YouTube online nowadays. There is still no great way online to generate demand at scale. And those with proprietary products can’t just harvest; they have to create demand.

So generating demand requires more skill, more work and more investment. Good PR can do it, if you’re small. TV is still the medium that does it well and big. Product placement is doing well online, but again it isn’t at scale. To create demand requires a big, great idea plus good execution in a channel that interrupts your target customer. And gets mass attention.

What I see these days is brands who have hit a wall in SEM and have declining results in other channels like Amazon (still requires demand already be present) or affiliate. The problem is that they are no longer creating demand; maybe they scaled back on catalog mailings or stopped those expensive TV ads or closed stores. Their online marketing loses effectiveness (or profitability) because it was simply collecting demand from the things that created demand. Now that that has stopped, there is less to collect.

What do you do in this situation? Find a way to create demand. It’s possible even on a limited budget. My favorite example is how Duluth Trading Company went from being a catalog company to a direct marketing company using TV ads. That’s the model you should look at (not Apple, not Amazon).

More to come on this.

Improving Your Amazon Sales, Part III: Investing in Amazon

This is the third in a three part series on increasing your sales on Amazon.com. It makes sense to read part one, Quick Wins, and part two, Repackage Yourself, first.

This article focuses on ways to invest in your Amazon presence to drive additional sales. These tactics should be tested thoroughly before rolling out; they don’t work equally effectively across all Amazon sellers. Here’s what I suggest you try:

Advertise on Amazon

In some categories, Amazon still allows Amazon Sponsored Ads. These show up at the bottom of a search result page and drive customers to your product page on Amazon.com. They work very similarly to Google paid search ads. And you pay for them by the click, similar to Google.

This tactic is extremely effective for proprietary product that sells on Amazon, but doesn’t get enough exposure. This can improve the number of people that see your product and increase the number of visits to your Amazon product pages. If they convert to buyers, it’s a huge boost. Amazon won’t show your ad unless you are winning the buy box, so there is some protection from advertising for your competitors.

You do have to be careful not to overspend. You’re already paying Amazon a hefty commission on the sale and this results in more margin going to Amazon. On proprietary product, where you have higher margins, it can be a way to fuel sales. But it doesn’t work well on items that you’re discounting heavily in order to win the buy box.

Get a Lightning Deal

The Amazon Deals Page  is the most visited page on Amazon besides the homepage. Needless to say, it gets millions of shoppers every day. The best (and easiest) way to show up there is to get a Lightning Deal. Lightning Deals move a lot of product. Typically they can sell two weeks worth of goods in two hours. If you make it to the actual deals page, you’ll move two months worth in two hours (roughly).

However, to get a Lightning Deal you have to have enough inventory at Amazon (FBA) to cover their projections and you have to discount at least 20% below the price over the last 30 days and Amazon has to believe it’s a desirable product. Once you pass that hurdle, what is the value in a Lightning Deal?

Well, here’s the theory: Sales Rank means a lot on Amazon. Higher sales rank means you show up higher in search results. You get more merchandising, which means showing up in more emails and on other Amazon.com pages. So theoretically, if you can drive up your Sales Rank, you can lift sales of a product into the future. And the extra merchandising will help hold up those sales.

So, if you have a product that you want to drive, get a Lightning Deal (which lasts 2 hours) and let it drive up your sales rank in order to drive future sales at a (hopefully) higher price and margin. In my experience, this works extremely well for some products and awful for others. It’s something you have to test. In some instances, I also see a halo effect on related products that you sell (they are typically merchandised on the Amazon product detail page). So that’s valuable as well.

This is more of a one-off way to drive a specific product, but it’s worth considering.

Sell Direct to Amazon

Proprietary product is hard on Amazon. The reason is: people don’t really shop on Amazon (or rarely). They buy on Amazon. That means they only visit once they’ve already decided what they need. So if people aren’t searching on Amazon for your product, it can often sit unnoticed without a lot of sales. And proprietary product tends to sit unnoticed.

So consider selling directly to Amazon. If Amazon buys a product and owns it, they have a better reason to merchandise it and move units. In my experience it often drives sales up 3x by selling direct. You do have to give Amazon a wholesale price and to guarantee that you are not selling it cheaper to others. And it needs to be at least 20% below the list price. But you can stop selling to Amazon whenever you see fit and it is a way to move more goods.

The biggest concern here is that Amazon does not adhere (or agree to) MAP policies. So if your product is being discounted virtually anywhere online, Amazon will discount it. They desire to be the lowest price and they generally win that battle. So don’t do it if a discounted price would hurt the rest of your corporate sales too much.

Bonus Idea: Visit Amazon

Buy a plane ticket and go visit your Amazon category reps. This is a fantastic way to improve your Amazon sales and it costs little. I recommend setting up as many meetings as you can with key Amazon employees and talking to them about your business. This keeps your brand front and center in front of them, while also giving you better information about what Amazon wants and needs. It’s a great way to get in on alpha and beta tests as well.

Not enough folks do this. If Amazon is a significant part of your business, you should be talking to them face to face. Take them to dinner. Just hang out some. It’s worth every penny.

Last Thoughts

If I have to leave you with one idea it would be this: Keep Testing. Keep Trying. Keep Learning.

Try new things. See what works and what doesn’t. And move on. Also keep close to Amazon. They are always trying new experiments and usually looking for people to be part of it. There are so many buyers on Amazon.com that almost everyone has a business opportunity on the site. The question is: how can you maximize gross profit dollars?

Good luck!

Improving Your Amazon Sales, Part II: Repackage Yourself

This is the second part of a three part series on increasing your ecommerce sales on Amazon.com. The first article, Quick Wins offers some quick ways to help drive up your Amazon sales. This article focuses on some alternative ways to improve sales that are a bit less obvious.

Not all sales drivers on Amazon involve dropping your price. Some are available to you by thinking differently. These ideas may not work for everyone, but consider how they might impact your business.

Sell in Case Packs

This is a classic way of reducing competition on items where price has become the dominate way of winning. And it works well on Amazon. So think about your items and see if there are ways you could package sets or multiples in a way that consumers will care about.

These GE Water Filters are a perfect example. Notice that there are 45 competitors on the one pack, but only 11 on the two and only nine on the six pack.

If you have a product that folks will buy in bulk or repeatedly over time, put it in a case pack and ship it to Amazon. This also drives up your average order value, which can improve your margins (lower cost to ship in terms of a percentage).

Frustration Free Packaging

If you want to be more aggressive, test out Amazon’s Frustration Free Packaging. Basically you have to create easy-to-open packaging for your goods and get it certified from Amazon as “Frustration Free.” Amazon typically makes the frustration-free option the default when you click from a search results page. I say typically, because I have seen a few instances where this is not true, but it happens 99% of the time when I’m on Amazon.

If you’re the only Frustration-free offer, you win the buy box. The customer would have to select off “Frustration-Free Packaging” in order to even see the competitors, which seems unlikely. So it should reduce price competition, particularly among smaller players who don’t have the resources to go through the certification process.

Be careful with this option: it’s not proven and, as with anything, Amazon can change the rules at any time. But I do think it’s worth testing to see if you can get a bump.

Conclusion

This is the shortest of the three articles on driving up Amazon sales and this one tends to be more about reducing competition, rather than driving up pricing. But on Amazon less competition translates to more sales, so these are still worthwhile tests. Good luck!