Advertising | David Chan

Web Site Advertising for Local Businesses

January 17th, 2010 By DavidChan Leave a Comment

Web site advertising is the most efficient and cost effective option for small businesses these days. This is especially true for businesses who want exposure within their local market, city or county. Examples of local businesses include: real estate brokers, chiropractors, insurance agents and retail shops, to name a few.

There are a number of reasons why web site advertising is so effective. The most compelling reason is that the way people find businesses today has shifted dramatically over the last few years. It’s estimated that 70% or more of people now search for local businesses through online search engines, rather than the traditional methods.

Previously, people searched local listings in the newspaper and the yellow pages. These forms of discovery used to be very effective, especially since there really wasn’t much competition. However, the Internet and search engines such as Google, Bing and Yahoo have changed the game dramatically. These changes are not just about a local company listing, but also about the company’s listing in context to another company’s listing.

Here’s an example of context-related web site advertising for local businesses. Someone looking for a “Turkish restaurant in NYC” would likely key that phrase into one of the major search engines. Google might display 7 or more restaurant profiles matching those criteria. But, in addition to the restaurant profiles, there would likely be links to their websites, restaurant reviews, and perhaps even 3rd party websites offering discount coupons. This is an example of how the search engines provide substantially more value than a static “print” advertisement.

Website advertising for local businesses also has the distinct advantage of precise marketing analytics. Small, local businesses don’t have the luxury of wasting advertising dollars guessing which of their campaigns was successful. With website advertising, every click and ultimate purchase can be tracked right down to the exact wording that drove the customer to the company’s website. In addition, company’s can rotate ADs to determine which one motivates the most number of people to “click through.”

By now, many people have heard of the phrase “getting on the first page of Google.” Statistics suggest that 80% of people searching on the Internet do not go past the first page of search results. These results include both the “paid” advertising slots and the “free” or what is typically called “organic” slots / results.

Just as in the traditional advertising world (print, radio, TV), website advertising for local businesses requires a thoughtful approach to strategy. For example, in the old cable TV world, one might ask “How large of an audience will see my AD?” or “Can I target only three metro cities, instead of the whole county?” The same thought process is necessary for website advertising. The differences; however, are mind-boggling.

For example, with website advertising you can literally put an AD up “on demand.” No more back and forth negotiating or proofing / re-proofing with the cable company. You can precisely target your ADs to a county, city or even zip code. And, you can turn an AD on or off in seconds.

This is just a primer on why website advertising for local businesses is so compelling. There are a thousand more examples of the advertising power of this new channel. The $64,000 question is “Are you ready for the Internet?”

The $10 Million Business Development Experiment

February 21st, 2009 By DavidChan Leave a Comment

I recently read with great interest the cover story in January’s issue of Inc. magazine. The story is about a young man named Markus Frind out of Vancouver, British Columbia. The story describes how he was able to slay Goliath on the Internet in one of the largest categories of online services: Internet dating. And, he did so by charging zero money, nothing, not a cent.

Markus had formidable competition from the major players: Match.com, eHarmony and Chemistry.com. Not only were they already generating revenue, they had an “army” of employees … in some cases as many as 100 people.

What was so unique about Mr. Frind’s business development model? And, why was he able to get on the front cover of Inc. magazine? The whole online business model has changed radically from the days of big enterprise software companies. And, even from the more recent phenomenon of “Software As A Service” or SaaS.

In the enterprise software days, the model was to charge hefty software license fees, plus training, plus support, plus name your fee. By the time one was done with all of these fees, you’re now into the millions, if not hundreds of thousands of dollars. Then the SaaS model evolved. No more need for expensive software licenses, just pay us a monthly fee and all your troubles go away.

The new business development model has really come full circle to Gillette. Give away the razor to sell the blades … or HP for that matter … give away the printer to get the ink sales. Markus couldn’t figure out why people needed to pay money for a dating service. Why not give the service away for free? And, in so doing, drive significant traffic to his website.

And so he did. His site is so successful that he generates $180,000 a week in advertising sales or $10 million dollars a year. Why are companies so eager to advertise with Mr. Frind? One point six billion visitors every month come to his site every month … yes 1.6 Billion visitors … every month.

The new business development model that has evolved here is the strategic decision to give away a service in return for acquiring a loyal subscriber base. Not just any subscriber base, but a HUGE base that covers every demographic: age, sex, religion, etc.

This database is an advertisers’ dream! Every possible way to slice data is available for the advertiser to play with and tweak. So, Mr. Frind’s business development efforts really revolve around which advertisers to allow into his network.

Oh and by the way, did I mention how many employees he has? Three! Yes, 3. His site is so simple to navigate, no fancy graphics or flash animation. In fact, it reminds of a cross between Craigslist and Google. But, it works! And, it doesn’t take an army of people to manage. So, guess what? The other beautiful thing about his business model is that his net profit is 50%! What an enviable position to be in.

The new way of business, then, is how to drive a huge subscriber list. Once you get that list, determine the makeup of that list, their demographics, what sells, how to sell, test and tweak. Simply put, you don’t need huge venture capital anymore, nor do you need to develop complex software either.

If this model doesn’t excite you, I’ve got a bridge to sell you.

Business Development – That Was Then, This Is Now

February 12th, 2009 By DavidChan Leave a Comment

Business development in this new era of Internet and mobile marketing has changed dramatically since the 90s and even early 2000s. In those really “old” days, companies looking to expand built Alliance divisions and signed distribution agreements with 3rd party partners. These 3rd party partners provided much needed support to the host companies in a variety of ways: geographic reach, consulting services, technical support, and distribution logistics.

The 3rd party services provided a lot of value to the host companies. They allowed the host companies to reduce their costs, while increasing their sales, marketing and business development capacity.

However, back in “the day”, in order to have a successful partner program, the host company needed to spend a lot of time on “set up”. Business development involved a lot of “heavy lifting” in the form of recruitment, training, sales tools, technical support and oftentimes co-selling!

My experience in early day business development came from high tech software and hardware companies. The products that we sold were physical products of software applications, servers, peripherals and other related products.

Fast forward to the digital economy … the value chain of manufacturing, distribution, sales, marketing, support and training has been significantly compressed or dis-intermediated. The Internet, broadband speeds and global sourcing, among other things, have created huge opportunities for business development in practically every industry imaginable.

For example, let’s examine the high tech software industry. In the 90s software was an “on premise” solution. This means that people paid LOTs of money to install a company’s software on their premise, i.e. at their office. The whole company was involved from the sales organization to the consulting group to the support team, etc. Sometimes, a partner was involved to augment the services of the host company.

Today, that same software application is not an on premise solution but now managed at some other facility. The host company’s sales person may have sold you the solution or perhaps a partner telemarketer out of India or the Philippines. And, the support could be coming from yet another third party organization.

Business development then logically evolves into a different kind of animal. Instead of building a huge organization to drive new products and services, companies can source and diversify their team across geography, industry and even niches.

New terms have also evolved to describe the actions and responsibilities of the new online business development frontier. For example, what was once known as a reseller in the offline market is now called an “affiliate”. When an affiliate advertises your product online, it’s often called PPC or Pay per Click campaign. In the old days, it was simply called advertising.

Whatever terms you want to use, the online business development model is the digital wave of TODAY and it is accelerating across all industries. If you’re stuck in web 1.0 and static web pages, be prepared to be “leap-frogged” by the new nimble, fleet-footed Online Marketers.