Last week, I had the opportunity to attend the Think Performance event at the Googleplex in Mountain View, CA.
Before jumping into the content, I thought it would be fun to share a few pictures of the campus and life at Google. The first sign that we were getting close to the Googleplex was people riding bikes that were painted yellow, green and red. Google’s bike share program allows people a chance to jump on bike to make it to a meeting in another building.
Our meeting was in a newly renovated building called the Partnerplex. Google opened the building about 3 months ago so that they could have a space that was setup to handle large meetings and showcase some of their new products. It was really nice to be right in the heart of the Google complex. During breaks I would hear engineers chatting about Android APIs and lots of things I didn’t understand. Sorry, I didn’t hear any insider organic algorithm tips.
A few final notes on the experience. The food was great. We tried some of the free fresh juices at Slice (the juice bar). We saw Googlers playing volleyball, soccer, flag football, crossfit, swimming in the lap pool, doing their laundry at the free laundromat, arriving/departing on the free Wifi commuter buses and even a few working :).
Now for the content. The overarching goal of the day was to get performance marketers to re-think the last click attribution model that most of us use today. Last click attribution gives full credit to the source where the visitor actually converted. If someone first learned of a business on twitter, then visited via a PPC ad and finally did a branded search on an organic term before purchasing, last click would credit all of the revenue to organic search. The problem here is that if you only credit organic search you would eventually conclude that your social media and ppc campaigns were not effective and shut them down.
The takeaway: Inventory is limited on the search network. Google has a lot of undervalued inventory on their display network and YouTube. They need to give marketers tools to better understand how to value that inventory so that they use it more.
The first and most interesting speaker was Avinash Kaushik, Google’s Digital Marketing Evangelist who also writes the blog Occam’s Razor. Avinash pushed the idea that marketers are focused too much on the singular end conversion and not focused on all of the micro-conversions that happen leading up to the big conversion. He used build.com as an example of how to weave in lots of opportunities for micro-conversions as well as the primary conversion. Build.com ultimately wants you to buy products but they also have lots of other options like writing reviews, reading reviews, watching videos, viewing competitor prices, getting help through live chat, etc... Avinash pointed out that if someone isn’t ready to buy now then these other actions / micro-conversions might indicate that someone will buy later.
Avinash’s other big point is that most companies are under investing in mobile. He stated that 1% of marketing budgets are being invested in mobile while over 23% of end customer’s time is spent on a mobile device. He stated that if you understand these micro-conversions better, you can put a value on them and then be able to under the ROI of traffic sources that generate lots of micro-conversions but not many leads or purchases.
The takeaway: The days of the big squeeze page are over. We need to give users experiences and options that let potential customers connect with the company earlier in the decision cycle. Oh yeah, and make sure you can get it on a mobile device.
Customer Lifetime Value
Peter Fader, Wharton professor and author of Customer Centricity, was up next. Peter talked about how most companies underestimate the Customer Lifetime Value (CLV). CLV is critical in online marketing because it tells us how much we can spend to acquire a new customer.
The first mistake companies make it using the average retention rate. Peter showed how there is a distribution of customer retention. Normally about 70% of customers stay with the company much longer than the average, 20% slightly under the average and 10% churn out very quickly. If you do a weighted average based on these 3 segments, it shows that customers actually stay longer than the simple average would indicate.
The takaway: You are probably not valuing your customers correctly. That means you can probably increase your target cost per action for customer acquisition.
How Google Can Help
At this point Google had showed that visitors who don’t immediately convert have a value greater than 0 and that we need to measure micro-conversions. We also were told that new customers are probably worth more than we think. We spent the afternoon listening to individual product managers explain how their products could help us. Here is a quick summary and feel free to give us a call for the details:
- Revamped Display Network (formerly known as the Content Network). You can now manage campaigns more like a search network campaign as well as use retargeting and “similar to” targeting options to be more precision in who you reach.
- Revamped YouTube advertising in the form of TruView ads that also work more like keyword advertising.
- Lots of mobile targeting options.
- Better analytics to measure the interconnectedness of these different visits to the website.
What if you don’t advertise with Google?
Many of our customer don’t advertise with Google. Most of what I learned last week is still relevant to you. Here is how:
- We all need to get better at measuring the micro-conversions. If all you measure is a single contact form, you should start thinking about other things to measure (views of a video, whitepapers, recorded webinars, etc...)
- In most cases, leads are worth more than you think. Most people tell me they want to spend no more than $25 / lead regardless of their actual CLV.
- People don’t convert on the first visit to your website. We need to nurture prospects through retargeting, social media and email.
- Mobile is here. As Avinash said... the question is no longer “Why” but “How.” Get going on your mobile plan.
Leave a comment if you have a question or let's talk in the forum.