Richard Kraneis Blog

Tips on Buying Flat-Rate Text Ads – Thanks Danielle

It’s hard learning online marketing on your own. But it’s easier when you have people like MSDanielle at www.msdanielle.com .

Recently Danielle wrote an article named Tips on Buying Flat-Rate Text Ads.

For most people, her article laced with new concepts and formulas for advertising profitably with flat-rate text ads (such as AdBrite) isn’t your normal easy blog reading. To quote Danielle, “Hope you all enjoy algebra!”.

I took Danielle’s blog article and her flat-rate text ad formulas and built my own Excel spreadsheets for using them.

Danielle’s blog showed you how to calculate gross margins and conversion rates. My Excel spreadsheet can be found here.Download tips_on_buying_flatrate_text_ads.xls

My Excel spreadsheet has these 3 important worksheets (and a few others).

1) Selling – Danielle Example – This worksheet does exactly what Danielle’s blog told you to do. I just created an Excel spreadsheet for it.
2) Selling – iPhones Example – This worksheet uses Danielle’s logic in selling the iPhone to consumers using a flat rate text ad. Using sales prices of the iPhone on the Internet, and researching early reports on the gross margin for the iPhone, I just built the spreadsheet. The key point is cell D26. That’s the conversion rate needed to sell iPhones using flat-rate text ads while still earning a 50% gross margin.
3) Selling – Richard’s Client – This is one of my client’s. Their name is confidential. They’re mythical average Internet sale is $49 and I can only guess at what their profit margin might be. I guessed 25%. If I really wanted to know their profit margin, I could probably pay for a report at www.Hoovers.com to find out that information. Or, I could just ask my client and hope for the information. Once again, cell D26 is the critical cell.
4) More – There are other worksheets in my spreadsheet, but the first 3 are the most important.

Excel’s Tools – Goal Seek

Excel has a wonderful feature named Goal - Seek. It’s found in the Tools menu.

I used a goal seek in the Danielle Example. Then I theorized on how to sell Apple iPhones (strictly fictitious). Then I did an example using a client of mine, but protecting their identify. Look at cell D26 in the Danielle Example.

If you click on the last cell with 49.99% and then click the Tools – Goal Seek menu command, you’ll be able to figure out the tool.

Set cell: D34
To value: .35
By changing cell: $D$26

Then click the OK button.

There’s good news, if the customer accepts a 35% gross margin, the conversion rate can drop to .055 (selling 5.5 subscriptions per 100 clicks).

Great Stuff, Thanks Danielle

There was much I enjoyed in Danielle’s blog article. For one thing, she raised the concept of gross margins.

1) Some client’s accept proven losses with flat rate advertising (banner and text) because they provide unquantifiable, “brand lift”. Danielle proves there are ways of measuring flat rate text ad profitability.
2) I was settling for profitable advertising when now I’ll be looking for advertising that meets the profitability measures of the client: gross margin.
3) Danielle’s article promotes not only good math but also the use of gross margins in calculating profitability of flat rate advertising. Now, I’ll always have this spreadsheet in my arsenal of tools for SEM.

For another, Danielle gave us some formulas to work on. Now, I’ve given you the spreadsheets.

Ultimately, Danielle opened a window to the online marketing world of a PPC and flat-rate advertising expert. Thanks Danielle, I’ll join you in that larger marketing world soon.

Discovering iGoogle

Currently I’m reading a few books, and one of them is Rule the Web by Mark Frauenfelder. It’s the kind of book that you skim.

But after skimming through it and sticking little pieces of paper into it, I decided that there must be something in the book that would be especially worthwhile. And then I remembered it had 2-3 pages just on cool Google things.

On page 220 of Rule the Web, Mark Frauenfelder talks about Google Bookmarks. Portable bookmarks for a Google account on any computer. And that discussion led me to research the feature and discover: www.iGoogle.com .

Saying I discovered www.iGoogle.com is certainly like Columbus saying he discovered America (it was there all the time, he wasn’t the first, he won’t be the last). But for me it was a great discovery of a productivity tool.

So after a day of puttering around with the interface, this is what my new home page in Internet Explorer looks like.

So my new power tool for a web browser is www.iGoogle.com . At work I’m forced into using Internet Explorer. At home, I use www.mozilla.com . Wherever, I now use www.iGoogle.com .

Themes - You can pick various themes for the top look of iGoogle. I chose a photo of earth. To choose a new theme, use the Select Theme link at the right of the interface.
Tabs – My tabs are Home, News, Business, etc. You’ll notice that SEM and Spanish have their own tabs. I needed a page just for Search Engine Marketing and I’m learning Spanish in my spare time (I speak a passable Russian, and a little German).
Bookmarks – This widget is found along the left side of my www.iGoogle.com web page. I can add bookmarks and make folders for them. So I can use www.iGoogle.com from most any web browser and use my common bookmarks (hurray).
Widgets – All the cool objects on Home tab are widgets. This is really very powerful stuff. A widget is a programmed object that gives you dependable functionality on a web page. My widgets are a To Do list, a weather widget, and a Wikipedia widget. You can add a new widget to any tab of www.iGoogle.com using the Add Stuff link on the right side of www.iGoogle.com .

Small problems to solve…

You can’t just import your favorite bookmarks into the Google bookmark widget, so you need to build them manually, over time. You won’t enjoy that, but the journey is worth it.
Be careful in choosing a theme. The widgets on each tab are slideable into 3 columns. But you will find that some widgets can’t slide properly into the 3rd column when you choose certain themes (the teahouse theme was nice but it didn’t work properly).

On the whole, using www.iGoogle.com is workable and not too time consuming. I look forward to refining it as my web browser tool of choice. Perhaps you will too.

SEM and ROI

I sometimes wonder how businesses smaller than $1,000,000 might be able to afford professional SEM help.

How can they afford it?

Perhaps the better question is how can they afford not to?

Last night for dinner we had some guests over. One friend mentioned that her boss, the owner of an electrical contracting firm wants more sales over the Internet. I of course suggested my services.

Here’s what Google looks like for Chicago electrical contractors. It's a bit crowded.

I came up with two good question for my friend’s boss, the Chicago electrical contractor.

How much Internet sales do you wish to generate? How much money are you willing to invest to increase your sales?

My friend said her boss would be happy if he had a 10X return. I said, wouldn’t we all be happy with $10 earned for $1 of investment. “No,” I said, “I don’t think expecting a 10X return is terribly realistic.

The flip side to these questions is the following:

How much are you willing to invest in Internet marketing and web development? How much do you want your Internet related sales to increase as a result of your new Internet costs?

Although both sets of questions sound similar, I think they are different.

So, the next time someone asks for some SEM advice I’ll still render some helpful information. But I’ll be ready with my ROI questions when the time is right.