Online Advertising

Email Marketing

As with any mail box that is freely available on the internet, on an average my gmail, yahoo inboxes recieve about 500 mails daily.

Off these 500 mails, may be 2-3 are relavant. The rest are all advertisements from email marketing agencies. Very few of them are worth the read.

But the challenge is this, when the volume is so high and flush with multimedia/HTML content, there is no physical (automated) way to delete them.

Email marketing tricks spam filters into believing that the user has subscribed to the mail. For example, Facebook’s post alerts are never flagged as spam, and so are LinkedIn’s or twitter’s alerts.

Something has to change (other than the classification of email) to make emails from free online services more relavant.¬† The experience right now is very much spammy…

SuperBowl 2017

The Falcons play Patriots today. In due course, A few records are broken during this run up to the superbowl in the advertising industry. Firms¬†paid¬†upwards of $5M for their spot as opposed to $4.5M.¬†The top 10 ads in 2017 are¬†here. What is good this year is that there is a cool combination of the old (McDonald’s) and the new(Wix.com) brands trying to make their mark. Ofcourse, square space launched their domain product online this year too. I am amazed though that Cryptocurrencies or Internet of Things or Mobile apps didn’t have any advertisements. Ofcourse Bitcoin can’t advertise since the network is not owned by anyone. PayPal, bought out a mysterious advertisement about NEW money without any reference to Bitcoin with messaging that looked like democratization of money. May be they are working on their own “token” cryptocurrency – from the looks of the ad here¬†.

Brands spend significant amounts of money for a 30 second spot. The price for the 30 second spots have gone up over the past 10 years, as have the network of viewers.¬†Audi’s¬†2017 was¬†good and there seems to be a lot of free riders on youtube commenting about this ad, giving them even more eyeballs.¬†Superbowl TV viewership has topped all expectations, and today the Superbowl is the most watched single Television event in North America. The 3-4 hours of the game will deliver the most entertainment, and will drive an entire economy.

 

 

The problem of many Social Networks

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On the internet there are many social ‚Äúmedia‚ÄĚ networks where¬†one can participate. Twitter, Facebook, LinkedIn, Tumblr, WordPress, Pinterest, Google plus, and Whatsapp are a few in which I participate. Each one¬†¬†serves¬†some particular purpose¬†and provides¬†a¬†unique value proposition to me.

With Facebook, I keep in touch with my friends and family and a few professional contacts. With LinkedIn, I connect with my professional contacts. With Twitter, I keep in touch with influencers in areas such as Economics, Finance, Technology and Entrepreneurship, and , I try to build an audience for my work. On google plus, there is no particular preference. Anyone whom I choose to email using gmail, or, anyone who happens to be in my adddress book automatically connects to me on google plus. With Tumblr, I try to maintain an active blog on technology, products and entrepreneurism.

While social media participation can be a big time and productivity killer, it is also possible to use this powerful technology to promote to one’s ideas (or business). On social networks, it is possible to actively and passively solicit feedback for your work. Tweet: Some of these thoughts and ideas, which could be converted into

For example, your blog post about a book – could help someone make a purchase decision. A photo that you share on Facebook could inspire someone to visit the gymnasium.¬†An article you write and share via tumblr, could influence others to¬†read it.Some of these thoughts and ideas, which could be converted into ‚Äúposts‚ÄĚ,‚Äúcomments‚ÄĚ or ‚Äútweets‚ÄĚ could help other people to make real life decisions of economic value. With whatever action you take on social media, the reach is so much more, and the impact is so much higher – given the time you spend to make the impactTweet: With whatever action you take on social media, the reach is so much more, and the impact is so much higher - given the time you spend to make the impact. http://ctt.ec/8eRdV+.

Social networks give ordinary voices the ‚ÄúPower‚ÄĚ, if used properly. That is why technology is so empowering. Ofcourse, as with any *fair use* technology, there¬†are also¬†negatives¬†to this, which I shall post in¬† a later article.

One problem I see with maintaining an active status on multiple networks, is the ability to update myself of happenings on all of these networks at once. I have to login to each one separately and use different UI flows to get to updates on my networks.

It may be time to have a service that enables¬†a user¬†to track¬†one‚Äôs activity across networks,¬†and, be able to optimally promote one‚Äôs work –¬†virtually free of cost. No¬†single service exists today to do this. Is it time for a ‚Äú Network of networks‚ÄĚ which could give users¬†seamless¬†visibility¬†into their networks?

Today,¬†there¬†are services which accomplish parts of¬†¬†such a grand plan.For example IFTTT.com – an acronym for ‚ÄúIf This Then That”¬† creates a mechanism for users to share¬†their posts across networks. Another service Klout.com (which was recently acquired for 200 m$) tries to create an “Influence‚ÄĚ score for each individual based on social media activity across networks.

I find these efforts interesting Рsince they are baby steps attempting to unify one’s network identity on the internet. There might be more *unifying services* that  I am unaware off too.

The most important metrics in the internet business

In the internet economy – be it a web2.0 Or the App industry, one of¬†the most important metrics determining a firm‚Äôs value is: ‚ÄúCustomer Lifetime Value‚ÄĚ (CLV).¬† CLV is¬†the value generated by a customer while using the app (or website) that is in turn captured by the website or the app.¬†¬†Another metric of importance is the customer acquisition cost¬† (CAC).¬† CAC is the cost of acquiring a customer through¬† either advertisements, referals or through regular sales cycle.

One of the ways to calculate the CLV is as follows:(A more detailed definition and formula for the same is given here.)

Customer Lifetime Value (CLV) = average  sale  value x number of repeat transactions x average retention time.

For example, Lets say that a Netflix customer uses the service for 5 years (average retention time) and pays 8$ per month (average sale value) and 12 times a year ( i.e. number of repeat transactions).The customer lifetime value for Netflix is 5 X 12 X 8 = 480$.

If Netflix spends 80$ to acquire one customer on average, the net realizable value from a customer is:

CLV –¬†AC¬† ie. 480$ – 80$ = 400$ per customer per year

Obviously the more the number of customers the higher is the firm’s revenue. The net realizable revenue for netflix with 40 million customers is 16billion$ over 5 years. For services that are dependent on advertisements e.g. news sites or google, the average sale value is dependent on the average number of times a customer clicks on an advertisement (CPC ads) OR the number of times an advertisement can be displayed to the customer (Display/banner advertisements).

Most internet firms or apps try to increase their customer lifetime value by increasing either:

a)the number of repeat transactions:  This is achieved by increasing a customer’s time spent using the app (or the website) by making the site’s value proposition very compelling. In addition high repeat transactions are achieved by making customers engage in  actions such as clicking ads or browsing or purchasing digital goods.

b) the retention:  This is achieved by making it very difficult to leave the application or the platform AND by making the user return to the platform  over and over again.

Overall, if an internet business increases the number of repeat transactions and increases the retention of customers while simultaneously increasing the number of  customers, their business  will get very valuable quickly Рlike Whatsapp…