Vinny Lingham's Blog

Because my resolution this week was to write a blog a day, I now have blogger’s block – and it’s only Tuesday! Luckily blogger’s block is alot different than writer’s block – mainly because we don’t have editors to weed out the crap, so we don’t hold back when writing it!

One of our developers came to me today and told me the frustrations he had with XML product feeds from online merchants (for those of you who don’t have a clue what I just said, and XML product feed is like an electronic catalog, detailing all the items a merchant offers through his website, with information about the product etc.)

What he is finding is that merchants tend not to maintain their catalog and have duplicates, bad data, bad links etc in the XML feed and this leads to poor results for publishers who use them.

An electronic product catalogue is literally the same as paper catalog, yet those are maintained alot better – why? Probably because it’s taken years to build them up so it’s in a bit of routine to manage them. Companies don’t want to outsource this function, because they think it’s core to their business – wake up – it’s not!! If you can’t do it properly and it’s core to your revenue, let a professional company do it and save yourself the hassle. Online shopping is booming, and if you want a piece of the action, ensure that the websites out there that want to promote your products have what they need, or else you’re not going to make the sales!

Visit DealBay (Still in Alpha Development stage – lots of bugs) for an example of a product search engine that utilizes XML feeds to list products from merchants.

The other issue that’s been overlooked is that most partner websites that will display your XML really want realtime data – they’d rather not send a customer to you if you’re out of stock.

Anyways, on a less technical note, iPods are all the rage at the moment, if you don’t have one – what’s wrong with you? HP has just released an iPod – made by Apple – it’s amazing how brands try to get share of market by following a multi-brand/same product approach. What’s even more amazing, is that it actually works. It’s the usual supermarket dilemna :

You walk into a supermarket and go over to the pasta shelf – 25 different brands, 7 companies, 3 factories – the more shelf space, the more likely you are to make a sale. It’s the same thing online, the more websites selling the same stuff with a different look & feel, the more market share you’re likely to get…

I’m off the V & A Waterfront in Cape Town now for dinner. There is a restaurant called Belthazar there, and it comes highly recommended! Will post comments tomorrow!

Guess I’m not posting as often as I promised, but now that I’ve resolved all the technical issues, I hope things will pick up.

In the online marketing arena, what strikes me as very unsettling, I find media owners and publishers seem to consistently overvalue their inventory. Let’s recap on what we have seen over the past 5 years:

Previously flat-rate sponsorships were all the rage – you could not buy on a CPC or CPM. Unfortunately, sponsorships never guaranteed traffic and were volatile at am impression level, to say the least.

Effect: Advertisers stopped purchasing sponsorships and that market collapsed.

Advertisers started purchasing on a CPM (Cost Per Thousand Impressions) and to this day, some still do. To gauge how the market has dropped, I recall being offered inventory 3 years ago at $150-$200 CPM by some silly UK publishers (no names mentioned). Again, an impression does not guarantee a click-through to the advertisers’s website – no click – no customer!

Effect: Advertisers stopped purchasing CPM inventory (in fact the market has declined by up to 80% according to some market research companies).

***EXCEPTION CLAUSE*** In countries like South Africa, where there is low Internet penetration, large corporates with dumb money (“branding” – no direct ROI measurable) seem to be willing to spend money on a CPM basis and line the pockets of the few big media owners which seem to dominate the online space, only because it’s not profitable for more competitors to enter. This is bound to change as soon as South African companies start understanding the revolution of online marketing from an international standpoint.

Cost Per Click (CPC) inventory is all the rage at the moment. Why? Well, firstly it means that the advertiser is only paying when someone visits their website. This is 2 steps closer to performance marketing than sponsorships. The risk of the click converting then rests on the advertiser. Advertisers need to ensure that their websites convert Clicks2Customers in the most cost effective way. There are obviously other concerns like click fraud or poor traffic, but that lesson is for another day.

Effect: Advertisers are focusing on ensuring that clicks they pay for are converted into customers. The higher the conversion rate, the more inventory they can affort to purchase, especially in auction based CPC media buys such as Google Adwords, Overture & FindWhat.

What’s next? Media owners are becoming more favourable to displaying ads on an affiliate basis. Remember that if your traffic converts into customers, there is no reason why you wouldn’t want to take a bit of risk. Networks such as TrafficSynergy and CJ facilitates this type of relationship – otherwise known as performance marketing. Overture has already moved to a Cost Per Lead basis to capitalise on the fact that advertisers are willing to pay more for a lead than a click.

I will be speaking at CJU in Santa Barbara, CA next week, if anyone would like to meet up, please drop me a note and let’s arrange something.

I had dinner at another fine restuarant in Cape Town last weekend, Five Flies. If you ever get a chance to visit it, you will be more than pleasantly surprise. I had my favourite meal there, a seafood platter, with langoustines, prawns and crayfish.

In addition, I finally received my order from Amazon for CSI Season 2 & 3! Looking forward to lots of CSI on the plane – for those of you that are not aware, it’s about 28 hours travelling from Cape Town to Santa Barbara!