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The Long and Winding Path

Last last week Yahoo and worldwide media communications specialist OMD issued a press release regarding a study they jointly conducted entitled “Long and Winding Road: The Route to the Cash Register”. One key finding: Online Research Plays Critical Role in Consumers’ Offline Purchases. Although that finding shouldn’t shock anyone, they went on to describe some interesting things, most notably an analysis of the paths that consumers take while shopping on the Internet. From the press release:

Consumers Travel Four Distinct Paths

The findings from the Long and Winding Road research can help advertisers connect with consumers online at crucial stages of the decision-making process. The study uncovers four distinct paths that consumers take on their way towards making a purchase:

  • QUICK: This path involves little consideration. Consumer packaged goods are often quick paths.
  • WINDING: Comparison shopping between different channels, including online and offline retailers, typifies this path. Retail goods are often winding paths.
  • LONG: This path involves researching various options over an extended period of time. Technology purchases are often long paths, particularly if the price tag is high.
  • LONG AND WINDING: This path requires investing a considerable amount of time researching across several channels. Many big ticket items — including automobiles and financial services — follow a long and winding path. These paths offer marketers the most opportunity to impact and possibly sway a purchase decision in their favor, because consumers of these products are the hungriest for information.

 

As readers of this blog know, it is the long and winding path that ContactAtOnce! customers live beside. I like the illustrative nature of this description. Advertisers trying to ensure that consumers on a long and winding path end up in their showroom or office know that there is no better way than to engage consumers in an interactive conversation.

How does Skype compare to ContactAtOnce!

In the wake of the recent eBay/Skype news, my colleagues and I are commonly asked:
“How does ContactAtOnce! compare to Skype?”. The answers, from the relevant points-of-view….

For consumers the answer is…it doesn’t! Skype and other IM/VoIP clients were designed for person-to-person communication and, accordingly, they’re great! We use these great personal tools ourselves to save on communications costs (e.g., international calls) and to make ourselves more efficient. ContactAtOnce! was designed for a very different purpose – that of better connecting ready-to-buy consumers with advertisers via “presence-aware ads and listings”. That’s all it does. It can’t be used by Jane to contact Fred. ContactAtOnce! surrounds the IM/VoIP capabilities with a unique web-based application for use exclusively by advertisers and publishers. As eBay extends Skype to enable communications between eBay buyers and sellers, and between shoppers and auto dealers on eBay Motors, etc.. the lines may blur a bit, but we’re convinced everyone except perhaps eBay themselves will view ContactAtOnce! as complementary to the various personal communications-oriented IM/VoIP clients like, Skype, Yahoo! Messenger, AIM, MSN Messenger, and Google Talk.

For advertisers the answer is…audience size and business rules & tools. As impressive as Skype’s 100 million registered user count is, it is miniscule compared to the number of consumers that use a browser. Unlike Skype, ContactAtOnce! does not require the consumer viewing and responding to the ad to have a proprietary piece of software on their PC – they need only a browser. Further, when the consumer responds the advertiser wants effective ways to handle the response, for example, allowing several sales reps to handle leads on a “first responder” basis. So…if you are an advertiser and you want to maximize the number of leads your ad or listing generates (who doesn’t?) and effectively handle those leads, then you need to use ContactAtOnce!.

For publishers the answers are…1) see above – maximizing the reach and lead-generating potential is key, 2) trackability 3) competition, and 4) branding. Today’s publishers understand the criticality of tracking leads delivered to advertisers. ContactAtOnce! provides sophisticated analytics to ensure those leads are tracked and appropriately “credited” to the publisher. As eBay acquires more online classified properties and moves into more verticals (e.g. Rent.com, eBay Motors, Kijiji), they have become increasingly competitive with traditional and online-only publishers alike. Better to partner with an ally than a competitor for this important capability. And publishers can brand ContactAtOnce! to their liking. Not so with Skype.

Bottom Line: Publishers and advertisers alike will prefer the features and capabilities of ContactAtOnce! which has been built expressly to meet their requirements. Consumers, meanwhile, should continue to enjoy their favorite personal IM/VoIP client.

eBay&Skype: Fun with Numbers

eBay’s acquisition of Skype, and particularly the price paid, was met with great skepticism — at best — from the pundits. But as eBay provides insights into the business impact of the deal a number of the “experts” may have a different perspective.

As reported at eBay’s Analyst conference on Thursday, the addition of Skype has doubled the average selling price of presence-enabled listings. That, in turn, doubles eBay’s revenue for those presence-enabled listings. As an aside, eBay’s economic model is remarkably transparent and outlined in very publicly available detail and data. For a primer, see eBay’s investor relations revenue model tutorial.

In 2005, eBay earned $3.49B in transactional revenue. Transactional revenue is the kind that doubles with the addition of presence. Transactional revenue is also growing 35% - 40% or so annually.

For arguments sake, let’s apply those actual results from the China listings to all of eBay’s transactional business. In China, 25% listings are currently presence-enabled and the Average Selling Price doubles. We’ll assume for a moment that Skype is fully rolled out in 2007. Extrapolating the same transactional revenue growth from 2005 actual revenue derives the following:
- Guesstimated 2007 Transactional Revenue without Skype: $6.36B
- Transactional Revenue Lift by Presence-enabled listings: $1.59B!

That’s for one year! And that does not include any revenue lift from the new “pay-per-lead” products that Meg Whitman previewed. Nor does it include any lift attributable to more advertising although it’s entirely logical that as sellers recognize a doubling a sales they will, all else being equal, shift more of their advertising dollars to eBay. To make matters even more attractive, eBay’s cost of net revenue was 17.9%. In other words, 80% of the incremental revenue is gross profit. Just to complete the math for those following along, about $1.27B of the presence-enabled lift is gross profit.

How’s that for a different take on a $2.6B acquisition?

eBay-Skype - Meg Whitman on the Future

Very revealing commentary from Meg Whitman, as reported by AuctionBytes, about the current and future of Skype integration into eBay’s online advertising offerings.

Whitman reveals eBay’s plans to continue introduction of Skype in many more categories and geographies. Thus expanding on the European rollout previously reported. No surprise there.

Skype-enabled listings in China, where 25%! of eBay listings are Skype-enabled, sell for an average selling price double that of listings that are not presence-enabled. No surprise that it’s signficantly higher but double?! Wow! More on this later.

Whitman unveiled a “pay-per-lead” prototype designed to go after markets such as travel, autos, real estate and others and touted Skype’s ability to reduce friction in those markets. We know that! But the news is eBay plans to go after those markets. Are you listening out there?

Perhaps most telling of all, the theme of eBay’s Analyst Day was the “The Power of Three,” referring to eBay, PayPal and Skype. Hard to miss the significance that eBay places on presence-enabled ads.

Are you ready to presence-enable your advertisements? ContactAtOnce! pioneered presence-enabled avertising and can help you reap the benefits today.

How To Optimize Pay-per-lead Revenue

Search providers and online publishers pursuing pay-per-lead advertising revenue can learn lessons from the past and begin optimizing their revenues now.

There was a day when pay-per-click ad placement was a simple function of who bid the most. The advertiser with the highest bid for a given keyword could count on their ad being served at the top of the sponsored listings. And the publisher/search provider could count on revenue, of course, but there was doubt about whether such a simple mechanism was optimizing publisher revenue. And to make a long story short, the doubt was well-founded. Google, Yahoo and others proved that they could better optimize revenue using a more sophisticated algorithm. Bid price remained a consideration, but not the only consideration, and although the algorithms remain highly proprietary, the positive impact they’ve had on revenues is no secret.

The “next wave of online advertising” is pay-per-lead advertising – a.k.a. “pay-per-call” (a self-serving term created by the providers of telephony switches, limiting because consumer use channels other than voice calls to interact with merchants). It remains a nascent field, but the Kelsey Group projects that it could grow to be a $4B market by 2009. Instead of paying per click, advertisers pay per lead (i.e. per call, or per interactive conversation with a prospective customer).

Ironically, the early providers of pay-per-lead advertising (e.g. AOL & Miva) are repeating the mistakes of the past. Ad placement is strictly a function of the highest bid.

How can a publisher optimize pay-per-lead advertising revenue? By determining placement with an algorithm that considers which advertisers are most likely to answer, because an unanswered consumer contact is lost revenue, no matter the bid.

With real-time monitoring of the “presence”, or “availability” of an advertiser, combined with historical data concerning an advertiser’s track record for promptly answering leads, a publisher can optimize their pay-per-lead revenues.

The “winners” in pay-per-lead advertising will optimize their revenues – the losers will likely become desperate and try to charge advertisers for leads even when the advertiser wasn’t there or wasn’t available to answer – evil – and self-defeating.

ContactAtOnce! customers are winners…