Kill the CPM!

Let’s kill the CPM (Cost Per Mille of online ads – cost per thousand impressions) is an interesting post written by Shelby Bonnie – The CEO of Whiskey Media – on TechCrunch.

Marketers, agencies and publishers are all in the ban of CPM.
He explains that CPM is not relevant anymore as page impressions are not in relation to interest from people. Moreover the metric of CPM can be changed easily by the publishers as they can increase the number of ads on their website.

Kill advertising instead?

However as he states in the article: people being bombarded with advertising every day CPM doesn’t matter anymore.

Maybe CPM isn’t the problem.
Advertising itself has / might have become the problem.

People are overwhelmed by advertising:
- Broadcast: The TV commercials getting zapped away for other content
- Print: ad pages are turned over quickly
- Internet: Online ads are ignored as we filter them out visually
- Post: Direct mails are field vertically
- Emails: Emails are deleted by the receiver as only a few are relevant
- Outdoor: Billboards still get attention because of boredom of that moment
- Product placement: Brand awareness at a high cost

Viral marketing campaigns have been successful for only a handful of companies reaching a large audience. An audience that might not always be the intended target market.

Not only the overwhelming presence of advertising but also the credibility of ads will not help their impact as more and more people have disbelieve and turn away.
These matters have become the fundamental problems for advertising:
- Nobody takes notice
- Nobody believes anymore the messages
Then why not just kill advertising?

Outbound vs Inbound marketing

Can we kill advertising?
Not really as branding and creating awareness is still important.
However the importance given and the amounts of money spend on advertising should be reduced in favor of other means and methods that generate attention like content marketing.

Instead of outbound marketing, inbound marketing is increasing in importance as people want to find and explore themselves solutions to their problems.
Of course this will demand another set of tools and solutions in order to cope with the change from outbound to inbound marketing.

Is CPM dictating your marketing?
Could you do without advertising?
What will you benefit the most of in the near future: outbound or inbound marketing?

Customers urging for attention

Customers or leads that make the most noise get the most attention. It is like crying babies getting our attention even if they scream for little problems.
It is not because these customers or leads demand a lot of attention they are really worth all of your time.
Somehow you should have a metric to dose the amount of your time for each customer or lead.

Quiet customers need attention

On the other hand when kids are quiet it is when you need to pay attention as they usually are doing things that they shouldn’t. Exactly the same as when you don’t hear from your customer it is urgent to contact them and find out if anything is up or not. They might be considering switching supplier.

A customer or lead that contacts you is actually helping you getting the conversation going.

A customer you don’t hear from is a problem: he needs to be addressed with the best possible and suited message or question. Just sending a newsletter by email is not good enough to engage him: you need to address him with something that relates or matters to him. Using the Internet or RSS feeds for starting to look into their company news, news of their competitors, industry news or market trends in order to formulate a message or a question that could start a conversation.

Distribution if your attention

Still the problem remains as how to distribute your time in relation to the importance of the business or profit they generate. Not easy to measure.

How do you distribute your attention?

The human touch

If you are an online business you are faced with the problem of telephone calls. Even though your entire business can be handled by your website and email there will always be customers that want to speak to you directly.
- They want to have human contact.
- They want to know who is behind the website and the service.
- They want to assure if their money is safely spend with trustworthy people.

All information is available on your website, pricing is on demand, a payment processor securely handles the payments, invoices are being sent almost immediately and support is by email.
Still some potential customers insist on have a chat or discuss. In most cases they want to discus pricing – special pricing for them.

Not calling: benefits for both parties

There are advantages and benefits for both parties involved to handle sales and support by email over a telephone call.

Telephone calls:
- Are interruptive for both customer and vendor
- Require immediate reply or queuing if no solution available
- Specific questions require the specialist to be available
- Single language (most likely)
- Verbal explanations are more difficult to understand than written
- Verbal explained solutions are likely to be forgotten
- Open only during business hours – if no outsourced call center
- Are hard to log, track and search
- Indicating or guiding to a webpage for information is cumbersome
- Are more human
- Costly: (international) telephone costs, work hours and availability

Email follow-up system:
- Is efficient – no interruption
- Can be handled by the most appropriate person
- Clearly stated responses and solutions
- Multi language
- Allows for forwarding the reply to someone else
- Can be printed and saved for later use
- Open to receive all day – Open to reply during business hours
- Not sending auto-reply answers
- Indicating a webpage for additional information is simple
- Replies within 12 hours (max. 24 hours)
- Lower cost: the medium is free: email, writing time and when suited

Online chat
Online chat combines the best parts of both solutions:
- Live
- Only to be used for customers – avoiding the vendor calls
- Can be logged and tracked
- Explains clearly as it is in writing
- Indicating web pages is easy
- No communication costs – still work hours

Our experience

Of the total number of calls Engago Technologies receives 96% are vendors trying to sell their services to us. This costs time and isn’t improving our business immediately.
In order to approach demand of customers we have installed a chat system on the website.

Or should the potential customer prefer a 24 x 7 outsourced call operating center service ? Having people operating far away from the real business and not really related to the business?

What are your experiences ?

Many companies start out as a project business and over time they start to make products or start to resell products. This is a very slow process from one-off projects that needs follow-up step by step for invoicing to products that get invoices the moment they get shipped out.

A limited number of companies have made the transition from a product company to a project company.
During the end of the product life-cycle when price pressure becomes the fieriest then the project business (that uses your products) is becoming tempting as the margins are higher. Achieving the switch successfully is a huge management undertaking.

The Product company:
- Selling tangible goods.
- Invoices are directly booked (recognized) as revenue.
- Commission can be paid as soon as the invoice is printed or the customer pays.
- Relatively short sales cycle: more effort, more people: more sales.
- Even shorter sales cycle if online sales.
- Raw materials, components or products need to be ordered involving the ERP (Enterprise Resource Planning).
- Products need to the manufactured before shipping and invoicing.
- ERP system needs to keep track of purchasing, logistics, manufacturing, after sales .
- Sales manager can make budget on many items sold in many regions.

The Project company:
- Selling intangible services.
- Invoices although paid can only be recognized (booked) when parts of the projects have been accepted.
- Commissions can only be paid when the project is finished or partly accepted.
- The long complex sale: don’t hurry – don’t push.
- Projects get mostly done at the customer’s site;
- ERP system needs to keep track of project progress and delays.
- Sales manager has to budget based on the current pipeline / funnel.

If you ever have worked in both a project company and a product company then you know there is a huge difference in the daily business: from marketing, to sales, to operations, to management.

DELL acquiring Perot Systems

On September 21, 2009 DELL declared to have the intention to acquire Perot Systems.

The main thing both founders have in common is their modest beginnings:
- DELL from his dorm room as a freshman at the university in 1984.
- Perot from his kitchen table in 1988.
That’s where it ends.

DELL:
- Targets small, medium and large companies
- Short sales cycles (even online) of PC’s.
- Selling on price and quality.
- Selling even to consumers!
- PC’s are exchangeable goods for CEO’s: PC’s won’t matter in the bottom line.
- PC come in through the ‘back door’ of a company.
- Fierce price competition from all PC manufacturers
- Company culture is: design, build, market, sell, deliver, invoice – all clearly measurable

Perot Systems:
- Targets large corporations, health-care and governments.
- Long complex sale of projects
- Selling on skills and service
- Selling solely to corporations, health-care and governments.
- IT projects do bother the CEO as the service is not easy exchanged by another supplier
- IT projects enter through the front door of any organization
- Stiff competition from IBM/PWC and HP/EDS having more skills in the house
- Company culture is: excellence – not really measurable

DELL wants to compete with HP having acquired EDS and IBM with PWC Consulting. However both other companies have had since long a foothold in the high priced consulting business and the high priced systems business, whereas DELL has mainly been selling desktops and portables.

Managing Sales and Marketing of a fast moving product company is completely different from the slow moving consulting and systems integration business.

Just compare these commercials:

Sales and Marketing people are known for being positive in their speaking and use superlatives to praise the products they sell.
Some do exaggerate with positive keywords like Apple management during their keynote show on September 2009:

Due to the editing of the video it becomes clear that during the 70 minute show Steve Jobs & co used:
Great: 35 times – Incredible: 21 – Amazing: 15 – Easy: 16 – Nice: 8 – Wonderful: 5
If this would be any other successful company nobody would buy it.

Keywords that engender positive feelings:
Great, amazing, incredible, gorgeous, absolutely gorgeous, beautiful, cool, better, smarter, awesome, really nice, really easy, priceless, unbelievable, outstanding, fantastic, wonderful.

Repeating keywords:
Repeating the same words is a trick used by sales people probably since ever. Repeat the same words over and over again so it will remain, get stuck or burn into the brain of the audience(s).
It is very effective as being brainwashed the listeners will mainly remember the repeated product names and the repeated keywords words.

Press on being successful:
Just tell people you and your products are successful and they start believing it even more. Apple tells extensively they have sold millions of this product and this product in such a short amount of time.

Guidelines for upbeat presentations:
If you hold such presentations filled with (self-) praising keywords and pep talk make sure:
- You look serious (Apple uses a black background)
- You are really successful in business (Apple is successful)
- Be aware that your speech can seem hollow and becomes meaningless as you just try to motivate the potential resellers and buyers endlessly.

Has Apple become Big Brother?
Apple management has given an awesome great incredible example of how to hypnotize your customers in order to sell overprized devices or products that people don’t really need.
Until it becomes repugnant.

We are a long way from the 1984 Apple’s Macintosh ‘BIG BROTHER’ Commercial as Apple seems to have become BIG BROTER itself brainwashing the people it once intended to liberate:

The full Apple keynote show September 9 2009:

Apple Keynote Septiembre 2009 from MacGenio on Vimeo.

If you would try to sell B2B like a sprint, you will never achieve the marathon.

In consumer and retail business selling is like a sprint as people can decide within a few seconds as in many occasions the decisions are subjective. A salesman can even accelerate the buying process by giving advice or influencing the buyer.

Endurance for the B2B complex sale

In business to business it just takes longer: from problem definition, over presentation, over evaluation, over the last round, to the final decision. It is a much more rational buying decision.

You can try to move ahead for an intermediate step, but you will not be able to overhaul your competitors as a consensus by all the different people involved needs to be obtained.
They decide and control the speed of the buying process, not you.

Endurance is required to sustain the contacts and relations and keep the focus of closing the deal.

The fast competitor isn’t necessary winning

Of course a competitor can try to move or even move ahead faster; however as the purchase process takes more time they can or will become exhausted by the time the closing of the contract is in sight.
Or your fast competitor could just loose interest himself as it takes too long.

As the fast moving competitor might have been pushing too much a decision taker or an influencer the sales process this might just turn against them.

The B2B complex sale is not a sprint – it is a marathon.
If you try to run the B2B sales process like a sprint, you will never finish the marathon.

Are you a sprinter or a marathon runner?

Outbound marketing is similar to ‘hit and run’:
A high speed engine that doesn’t last long: the fast (Italian) sports car.

Inbound marketing is long lasting.
Just like an old diesel engine that takes time to come up to speed, but once momentum builds up it overtakes (outbound marketing) and lasts many times longer.

Outbound marketing

Outbound marketing like direct mail campaigns, email campaigns, telephone campaigns and cold calling can bring instant success as you reach people that targets people that may not even know they have a need or are not aware of your solutions.

The advantage for sales people is in the opportunity controlling the education of the prospect and initiating the buying process.

Outbound marketing can accelerate the pipeline as more leads than normal come in over a short period of time. The problem is outbound marketing just lasts as long as the campaign is running.
It is a controlled process as you decide to when to have a campaign, what message is spread, how to reach out and to harvest almost at your pace.

Inbound marketing

Inbound marketing will mainly capture people and companies that are:
- Aware of their problem
- Looking for a solution
- Already aware about a possible or similar solution
- Looking for a competitor or alternative.

The constraints of inbound marketing are partially beyond your control as it largely depends on third party collaborators or services:
- Search findability:
  You can increase your amount of content on the Internet
  However the search engines need to index it and rank the website.
- Press releases:
  You can send out as many press releases as you want.
  Still they need to get picked up by journalists and bloggers for effectively spreading your message.
- Brand name:
  Building a brand name building and creating awareness takes time and can depend on external factors.
- Advocates
  Advocates on forums and social websites will grow your Internet presence for you.

It takes long to build up the momentum but the effect lasts long.

Outbound marketing: aversion – Inbound marketing: riding the ‘On Demand’

Due to the overwhelming number of outbound marketing interruptions the effectiveness is becoming less effective and diminishing as people have gotten an aversion for all these marketing messages.

Inbound marketing has the winning hand as people want ‘On Demand’ information and solutions. Right here – right now.
They certainly don’t want to be interrupted by outbound marketing as it is often not appropriate (Not On Demand) at that very moment.
The Internet has brought the power of on demand by the search engines what people effective use for solving their problems.

Co-existence

Outbound and inbound marketing can co-exist where:
- The outbound is used to create the first spike of interest
- The inbound marketing efforts will generate and drive the long-term results.
Every now and then an outbound campaign can be used to generate a spike of additional interest.

What do you use: Outbound or Inbound marketing?

In marketing the best that can happen is the Word Of Mouth.
Once people start talking about your products or solutions, due to the multiplication effect the spreading of your message is enormous and goes many times beyond your normal reach.
Word Of Mouth brings another magnitude to your branding or recognition of you products or solutions and eventually will generate leads and bring in new customers.

There are 2 types of Word Of Mouth:
- The quick fires
- The slow burning fires

The quick fires:

A spike of Word Of Mouth is induced by an event:
- An article in national press
- A business magazine coverage
- A report on a TV show
- A mention on TV news show
- An award on a trade show
- A launch show for start-ups

Launch show examples: TechCrunch 50 – Demo – SeedCamp – RedHerring – Le Web – …

This spike of interest can be huge by growing fast and die out as quickly due to the fact that:
- The real underlying interest or benefit is not present.
- The novelty was wearing off quickly.

Over a short time-span you will receive a lot of interest and inquiries for your products or solutions that all required to be investigated and evaluated in order to qualify as lead and be followed-up.
This spike of interest results in a big load of work beyond your capacity with apparently interesting inquiries and potential propositions that distracts you from your normal work and your business focus: too many opportunities. Opportunities that evaporate once you start digging into those great potential deals.
Much wasted effort for nothing or very little sales.
Thus you have spent and invested too much time and money for the revenue obtained: your ROI is not good and your business is probably not sustainable.

The slow burning fires:

The real Word Of Mouth can only be generated and built up slowly: it takes years to have the Word Of Mouth going.
This type of WOM starts from your customers or users without any clear indication or reason of the origin.
Who, when or where the Word Of Mouth for your products or solutions have ignited is hard to define.
Just like slow burning fires burn the hottest, your slow started Word Of Mouth will become strong and will last long.

As the interest builds-up at a manageable and reasonable pace, you will be able to increase your workforce and capacity as needed. This will allow building your business in a profitable way: your ROI will be beneficial as you keep control over your costs.

WOM for sustainable business

Don’t aim for a quick fire spike, but try to ignite a slow burning fire as Word Of Mouth.
Even if it never happens, you will have build-up a sustainable business.

Has Word Of Mouth ever occurred for your products or solutions?

Successful companies are those companies that take the least bad or wrong decisions during any day.
Great companies are not solely made by having superb ideas that are brought successfully to the market or great innovations. Only a minority of companies are truly innovative, still there are many more successful companies in each industry.

Decisions decide

Great companies are those that make the least bad decisions.
Not taking any decision can also be a bad or wrong decision, but it takes longer to notice it was a bad decision not deciding.
During any day all companies take decisions on purchases, on personnel, on marketing, on products, on pricing, on competitors, …
The stream of decisions and decision points never stops as there is always a next decision:
- To be taken
- Not to be taken
- Postponed until later.

During any day:
The best companies take the least number of bad decisions.

The worst companies take the largest number of bad decisions.

The main problem is that one cannot look into the future, making all decisions equal good when taken.
It is only afterwards that the real verdict becomes clear.

Innovation is no guarantee for success

It is not the genius CEO with the great ideas, innovation or market concepts that make a company successful as there are not so many alternatives and variations on the same theme in a certain business.
Many companies with great new or very innovative concepts or products have failed or have gotten acquired to be forgotten. In the end it is the company that makes most profit that survives, rules and is successful. Innovation doesn’t bring revenue.
Innovation is not a guarantee for success – for becoming a successful company.
Moreover the more innovative the more new and fresh problems arise in a company that need to be decided upon. The more likely the wrong decision can be made.

Decisions of competitors

It is not just the number of good or bad decisions: it is the level of bad and good decisions compare to the competitors that make a difference.
If your competitor is making a lot dumb decisions, your company can take advantage by making less stupid decisions.

In order to be successful, try to make less bad decisions than your competitors.

What’s your average bad and good decision rate?
Is your company making more ‘good’ than ‘bad’ decisions or more ‘bad’ than ‘good’ decisions?
Are the competitors making less or more bad decisions?

 The acquisition of SUN Microsystems by ORACLE – known from the data base and business software – is a big deal.
In the European edition of the Wall Street Journal and on the website of ORACLE a full-page ad appeared for expressing the intentions of ORACLE with SUN Mircrosystems in order not to lose too many SUN customers due to this acquisition.

In order to retain the customers they insist on the continuity of the SUN products and solutions. This they claim by stating to increase the investments for development for the main products:
- The server hardware
- The server software

However nothing is said about the other important products like java and the even more important MySQL.

The statement without liability

Please note the very careful wording: “Plans To:”.
Even in case none of the planned investments are made or executed, ORACLE has no liability.

Although the statements are positive for the current customers, one can expect other things will change too as investments need to get paid by additional margins or profits. It is likely that maintenance contracts will increase and there will be more sales people calling upon customers and potential customers.
Maybe that is not such a positive message after all.

A common enemy for a tribe

The ad clearly states ORACLE sees IBM as the main competitor and wants to “win”.
This has 2 reasons:
- Aim of power of ORACLE.
- The tribe
ORACLE gambles on defining the “common enemy” IBM for both ORACLE and SUN customers in order to increase or revamp the tribe that SUN Microsystems had build once.
Once people are within a tribe their decisions are less rational and more passion driven. Meaning more wins for ORACLE.
In its long history ORACLE never has been able to create a tribe, whereas SUN Microsystems with “The Network is the Computer” (by Don Tennant) has achieved this in the past.
More about tribes by Seth Godin.

The network is the computer by the browser

One more question is about the chosen battlefield of large information systems where IBM rules: is this right market?
In times where the business world is moving towards Cloud Computing where Amazon Web Services has taken the lead, the “enemy” might be Amazon as the Network has become your computer through the browser.

What do you think?