The area that has been most on my mind is reflected below in response to the question “how is online marketing falling short?”  It’s pretty clear that we, as an industry, have gotten so stuck on getting more, faster, and better data that we too often forget to focus on and stick to the problems we are trying to solve.  More below…

All Marketers Are Geniuses: How to Leverage (and Streamline) Data for Marketing Success

The first installment of “All Marketers Are Geniuses” features Harrison Magun, SVP of Paid Media & Analytics at Covario. Magun leads Covario’s team focused on service and software solutions, as well as analytics, for paid search, display advertising, video ads and paid social media.

When did you realize you wanted to be a marketer?

My focus in graduate school was not on marketing; it was on international business and finance. My first job out of grad school was at American Express, working on a team tasked with building out and monetizing a fleet of ATMs. As part of my role, I experimented with how to drive increased transactions and revenue, including adding bank and network logos to signage, advertising relevant ATM-dispensed coupons and increasing the size of the enclosure. I found that even small changes to the appearance of the ATM could double or triple the number of transactions and the volume of revenue. Ultimately, it was the cool blend of creative marketing and the science of analytics that sold me on the career I have now.

Complete this sentence: Marketers are geniuses because….

We tend to leverage metrics and data, all of which point to the fact that 94.5% of marketers are geniuses. Just ask one.

If I weren’t a marketer, I would be…

Probably a scientist or a physician. Sick people everywhere should be very happy I did not pursue this path.

Where do you think marketers will be spending the largest amount of time, effort and money reaching out to their customers over the next ten years — TV, print, digital, SEM or display advertising?

A few macro trends are at work here. Dollars follow eyeballs online. IAB reported a 23% year-over-year increase in online spending for the first quarter. We are experiencing the continuing trend of consumers wanting to live online, not just transact online. Another significant trend within digital marketing revenue growth is the increase in display advertising spend, which is expected by many (including eMarketer) to eclipse search in three years. So we’ll see more digital dollars, and, specifically, more display dollars.

But, don’t think this bodes ill for search engine marketing. The technologies responsible for helping advertisers win in search are precisely the same technologies that advertisers will need to win in the new display world. Hand-vended display ads sold with a dinner and a wink is not where the growth will come. As biddable display advertising is increasingly bought and sold on exchanges, display begins to look and smell a lot like the way search campaigns are executed – very data heavy, very complicated and very analytical. People and platforms that enable this kind of execution and optimization for display will receive increased investment from advertisers, so this is another area where dollars will flow.

How has search impacted today’s digital display market?

With search we’ve created a population of analysts and a set of tools that are beginning to influence the display world, as I mentioned before. Another, more obvious influence is around search retargeting. Search retargeting gives advertisers a second chance to reach consumers who might have not been ready to transact during their search experience. Search retargeting is the gateway to display opportunities for search advertisers.

In your eMarketer interview, you mentioned that search and retargeting makes for a “one-two punch” – can you elaborate on this?

Some consumers buy right away after searching for a product or service. Some never buy. Most are somewhere in between. Retargeting, especially when combined with the right data – such as where consumers are in their consideration process and what their needs are at any given point in time – allows marketers to reach consumers with the right information at the right moment.

The best analogy I can think of is the following retail scenario. Since I am from Seattle, I’ll use REI, where I recently bought a pair of running shoes. Here is the first case: Suppose the salesperson at the front of the store just walked away after hearing me answer “No” to the question “Can I help you with anything?”

Now picture a second salesperson who sees me in the apparel department and asks “Is there anything particular in this department you are looking for?” and directs me to shoes. And then picture another salesperson in the shoe department asking me “What kind of running do you do? …oh ok, this one is on sale.”

This second case is search retargeting – finding the appropriate time and manner to help someone buy something (and help someone sell something).

Where is digital marketing falling short?

We have more data than we have ever had with search data, Web analytics data, ad server data, social data, CRM data, etc. And we have more levers to pull as marketers – it’s not just search and display anymore. As an industry, we seem to think that we can cram all of this stuff on a dashboard. If we did this kind of dashboard-cramming in today’s cars, my Subaru would look like the cockpit of a 747. We need to get better at understanding what marketing problems are solvable, which ones we want to solve (and in what order), and what data we don’t need. The industry has become so accustomed to trying to acquire more and more data that we’ve lost track of what we are trying to do with it.

Where do you think the largest opportunity exists for marketers to prove their genius?

I think we, as digital marketers, proved we are very smart by handling very complex tasks. To prove we are geniuses? Make them easier.

Below is my full-yet-brief take on Google’s recent “+1″ launch and impact to marketers.

Net/net: marketers need not stress…the party has not started yet. But it could be rockin’ when it does.

Paid Search advertisers most likely  will see little or no impact from the “+1” in the short term, although the long term potential for “+1” as  an important lever could be very significant. Why we are not too concerned in the short term:

First, Google has said (in their FAQ) “[+1] does not change how we determine your ad’s relevance of quality” so advertisers need not worry about changes to relevancy. (although Matt Cutts was quoted by yesterday ““we’ll look at it as a potential signal to improve search quality” presumably in reference to organic search.

Second, the “+1” is only valuable to the extent that a logged-in Google user sees an ad that one of their Google “contacts” endorsed with a “+1.” Since Google lacks the obvious social network functionality of Facebook or Linkedin, it’s unclear how many Google users leverage Google’s ability to store contacts, via Gmail or Chat.   If users are not logged in and/or don’t have a lot of Gmail/Chat contacts, then they will only see aggregated “+1″s which ostensibly would be less impactful than  personalized recommendations.

Third: the +1 can only be accessed or seen on search ads today. Google has stated their intentions to add the “+1” button functionality to websites, similar to Facebook’s ubiquitous “Like” button.  When this happens, I would expect that usage increases significantly.

Lastly, there is no reporting yet within AdWords or Google Analytics. So even if the “+1” does impact ad performance, those performance metrics are elusive (for now.)

As Google extends this to Android devices, allows website owners to button it to their pages, and gives advertisers the data and ability to optimize, the impact of the “+1” can easily become an important lever in paid search marketing.

My oldest boy is 10. When he was born, we used our cell phones to call family to announce his arrival.

Our middle boy is 7. I sent emails from a coffee shop near the hospital where he was born.

Sidney, our youngest, was born yesterday. I posted on Facebook from my mobile device in the hospital room.

My heart is bursting with joy over little Sidney, and my brain is just a  bit stunned by the evolving role technology plays in our lives.

Sony Betamax

I then did a bit of digging. I could be missing something, but I can’t see affiliate marketing, in its present state at least, becoming a growth industry. In fact, I can see how it might cease to exist completely, at least in its present form.

According to Forrester projections (passed on by affiliate marketing blog  AMnavigator) affiliate marketing continues to be a small percentage of online media spend, representing ~$2B in 2009 (in a roughly $70B global digital media industry, according to Magna).
While the value to advertisers of free acquisition is clear, it’s hard to see how affiliates can continue to secure the cheap inventory and traffic on which they rely.  Three traffic sources affiliates rely on will continue to become less available to them:

1. Paid Search – as CPCs increase, CPC-to-CPA arbitrage will be less of an opportunity to affiliates, as large marketers continue to optimize their own websites and web marketing programs, adding to competition.
2. SEO – Especially with Bing’s attack on Google, the search relevancy battle will continue to work in favor of major brands and authentic  sources, and SEO efforts of affiliates will continue to decline in effectiveness as Google and Bing continue to strive for relevancy.
3. Cheap RON (run of network) display: Exchanges, DSPs, and DMP (data management platforms) will continue to allow advertisers and publishers to better optimize the kind of high volume/ low cost inventory, driving up the cost of the banners and links typically bought by affiliates to arbitrage CPM into CPA.

If that’s not enough, the increased focus advertisers have on conversion attribution, or looking beyond the last click to determine conversion credit, will only serve to take credit from the channels, such as affiliate, which rely on their ability to generate clicks which directly precede coversions, regardless of causality.

I’d love to hear from folks who have been closer to affiliate marketing than I have been…

 This is part three of five in digitalCMO’s Seattle interview series.

digitalCMO: You are on the investment team at NCT Ventures, a VC firm. You are based in Seattle, and NCT is based in Columbus, Ohio. NCT is not well known in Seattle, can you tell me something about the firm?

Jeff Bell, Partner, NCT Ventures

Jeff: NCT Ventures is a venture capital firm founded by entrepreneurs. We are passionate about people and believe that an idea is only as good as the entrepreneur tasked with turning that idea into a great business model.  Over the past 20 years, we have helped build many successful companies and are always excited about sharing our experiences, methods and time with entrepreneurs through hands-on operational support.  My role as a Venture Partner, is to help select companies in which to invest, and then grow them.  I also try to introduce the partnership to investment opportunities here in the greater-Seattle area.

digitalCMO: ClearSaleing was one of your recent investments, which was just sold 18 months after your investment. Can you talk about your investment philosophy, and how ClearSaleing fit into that?

Jeff: Our experience is in marketing and logistics.  We have built and exited several successful companies in that space. However, as a rule of thumb, we like any business model that disrupts traditional thinking or meets a need more efficiently through technology.  My focus is upon start-ups in the media, marketing and consumer products industries. I have a profound passion for Media and Web Analytics. That is why we invested in ClearSaleing, and why we worked with them to grow their business.  Another company in our portfolio, DOmedia, helps CMOs gain control over their Return on Marketing Investment and their media effectiveness. I also serve on the Board of Embrace Pet Insurance and GotCast which are using the web to serve customers in new ways in the pet health care and entertainment industries.

digitalCMO: What are some other investments?

Jeff: I also serve on the Board of Embrace Pet Insurance and GotCast which are using the web to serve customers in new ways in the pet health care and entertainment industries.  Overall, I try and work with investments which help me stay connected to leading edge technologies and marketing tactics. My work with Driverside, Tangible Worldwide and Digital Lifeboat has kept me close to the Automotive, Creative Services and Consumer Software Services categories.

digitalCMO: Seattle is the epicenter of Microsoft, where I work, but is an outpost for your company, NCT, which is based in Columbus, Ohio. What advice to you have for people who are responsible for strategic decisions, but are not in the home office?

Jeff: I have found the bureaucracy and politics of large organizations to be very time-consuming.  If I am honest with myself, it is not something that turns me on, but rather something I was forced to do.  I like being outside the “Headquarters.”  I learned this when I lived and worked in Europe for Ford Motor Company.  There is an independence and empowerment which I find refreshing.  I think the key to success is in sharing all the good ideas and practices you have when you are in the “satellite” and minimizing any bad news.  Success breeds empowerment, and hopefully more success.

digitalCMO: You spent some time at Microsoft. Can you tell me about that? Specifically, would love to hear what you learned at MS that you have been able to leverage after MS? And, secondly, what did you learn at MS that has not been relevant since then?

Jeff: I left Chrysler because in 2006 I saw the writing on the wall.  I joined Microsoft over Google because of Peter Moore (who left Microsoft in 2007 and is now President of EA Sports).  He is a great visionary and leader.   I also wish I would have known that Bill Gates was retiring (which he did within 60 days of my arrival).  The two of them shared a vision of a world of Connected Entertainment beyond the disk.  That vision has died, and was replaced by a very traditional model from the video game business.  More importantly, the struggles of Windows Mobile, and its business model, made expansion into that space by Interactive Entertainment almost impossible.  I wanted games, music, movies and TV not just on the Xbox, but also on the PC, and on the mobile phone.  The problem is that Windows Mobile licenses its operating software, and when you talk about adding an entertainment service stack which would be monetized by subscriptions, downloads and advertising, both the hardware manufacturers and the wireless carriers resist.  They want that action, and/or they don’t want to pay Microsoft any more than they have to.

As far as what I’ve learned, I can thank Microsoft for giving me the opportunity to do great marketing in a non-auto environment.  We won the highest honor in marketing in 2008 at Cannes for our launch of Halo 3.  We were able to do some really cutting edge programs online, and in production of assets, and this was very valuable and rewarding.  What is not so relevant is the traditional business models that the present leadership insists on in all cases.

Rand founded SEOmoz in 2004 in Seattle, where he still leads the company. Only on digitalCMO can you discover:

• How Rand thinks about  transparency, leadership, and hiring
• Annual revenues and margins of SEOmoz.org (a privately-held co.)
• Mean things and hard stuff
• How crappy is www.digitalCMO.com from an organic search perspective and what can I do about it?

The interview below and the conversation around it was fun and inspiring for me – I hope you enjoy as much as I did.

digitalCMO:You’ve mentioned to me how important ‘transparency’ is to you.  Can you talk about how this shows up in your role as founder and CEO of SEOmoz?

Rand Fishkin, CEO SEOmoz

Rand:Transparency is one of our core values at SEOmoz (a full list is here). We believe in sharing what we know and do with those in our community (and anyone who’s interested) for a number of reasons:

• It builds accountability and trust through openness
• Anyone can understand our processes and the way we arrived at ideas or conclusions (which can sometimes be as valuable or more than the data itself)
• We want our community to participate in the adventure of SEOmoz’s startup experience

As CEO, it’s my responsibility to embody all of our core values and represent them visibly both internally and externally. This means doing a lot of sharing with the team not only about the direction we’re going but why and how we arrived at those decisions. It also means spending a lot of time facing externally, sharing our learnings and getting feedback from customers and marketing professionals. It’s one of the reasons I’m on the road so much.

digitalCMO: So, in order:  how much revenue did SEOmoz generate last year, what were your margins, and what was the meanest thing a customer said about you?

Rand: We did ~$5.6 million in revenue in 2010. The breakdown was 100% software/product vs. previous years where consulting revenue played a part (e.g. in 2009, we did $4.1 million total, $3.2 million of which came from software).

Our gross margins hover between 80-85% on software (the year-end close for 2010 is still a week or two away, but it will be in that range).

The meanest thing a customer said is hard, because it was likely behind our back. That said, we do send weekly digests of reasons customers cancelled and what they said when they cancelled. Most of these are extremely nice, but a few can be harsh. Here’s a sampling of some of the worst ones – not surprisingly, these came just after we released the new beta of our web app back in August 2010:

• “Campaign is a bit buggy… doesn’t pin point some errors. Ticket support only tells you to use other tools on PRO package for assistance which also do not help. The service doesn’t seem to meet the suggested monthly value of the membership fees.”
• “1. Ranking, specially for google ALWAYS grossly incorrect. 2. Link Juice tool useless unless my competition is willing to backlink to my site.”
• “ I don’t like waiting a week for crawl updates. One of my sites has 50 subdomains, you only crawled www. I like some of the tools but some seem totally redundant/silly.”
• “Reports are too complex and not easily actionable.”
• “Your tools seem to analyze the situation well but did not seem to give any concrete advice how to deal with issues they found. I am a photographer, not a nerd, I don´d have time to dive deep into seo, I need concrete advice.”

Those aren’t particularly mean, I suppose, but we take them all really seriously. Perhaps more on the mean side comes from anonymous folks. My Threewords.me account gave me a good look into this:

• Anonymous said randfishkin is completely, fullof, and bullshit (Kind of a tosser to boot.)
• Anonymous said randfishkin is HasConfused, MorePeople, and ThanAnyone
• Anonymous said randfishkin is egotistical, bullshitter, and quack

digitalCMO:  Let’s talk about hiring. What do you look for when you hire people?

Rand: Above all else, they need to be a cultural fit. That means they can adopt our core values as their own and make them a part of how they live their professional lives. People at SEOmoz also need to have a strong desire to work on and solve the problems we’re pursuing. If their hearts are in it, long hours and tough setbacks will be nothing but bumps in the road. I’m really proud to say that our team today fulfills all of these individually and as a group. 

There’s also prerequisites around competency, brains and experience, but these actually take a back seat to the cultural fit elements. We’ve seen how one misaligned person on a team can drag down the whole organization, even when they’re tremendously smart and capable. 

digitalCMO: What was the toughest decision you have made as a founder/CEO, and how did you make it?

Rand: Collectively, I’d have to say the selection and formation of the executive team – our COO (Sarah) and VPs of Marketing (Jamie), Product (Adam) and Engineering (Kate).

Identifying and recruiting for some of these positions took 6+ months, all painful. It would have been easy to choose candidates that weren’t perfect fits but could have capably done the job, and it likely would have saved other team members and myself months of even longer, tougher hours. It’s almost certainly the most challenging assignment I’ve been through with success (I also tried to raise capital for the company in summer 2009 and failed).

digitalCMO: How did it turn out?

Rand: So far, amazingly well. Our team is poised to accomplish even more remarkable things than what we’ve done in the past on every front – growing our audience, adding features our users care about (and some we think they want but haven’t said), delighting our customers and building a great work environment for our team.

Time will tell, though. My biggest fears at the company are less around accomplishing or failing at specific goals and more around maintaining culture, integrity and commitment on the team. I believe if we do that, we’re unstoppable. 

digitalCMO: SEOmoz focuses on mid-market SEO software.  What makes servicing mid-market companies different from servicing the largest advertisers and agencies?

Rand: It’s actually a big difference, even though the product doesn’t change dramatically. When you build software for large agencies and enterprises, there’s payment orders, ranks of executives giving approvals, SLA (Service-Level-Agreements), lengthy contracts and installation. All of this requires a professional sales team (we don’t have even one salesperson on staff), account management (again, something we don’t have), a strong setup and training process (which our members do themselves online through our blog and free resources). Selling to enterprises also means a long sales cycle and a commitment period on the software itself (usually at least a year).

SEOmoz uses a self-service monthly subscription or “web app” model, which has its pros and cons. It requires no sales team, which lowers costs substantially. But, it means that the product has to sell itself without any human interaction. Demand creation, therefore, can’t be based on relationship I or a sales team has with a few dozen – hundred individuals, but instead relies on our years in the field and understanding of the market to create a product we think marketing professionals will want. Finally, because there’s no installation or setup hoops to jump through, cancelling is as easy as clicking a button, so our product has to keep providing value every month or our users will cancel.

We’ve done a reasonably good job with this system, but we’re always working on ways to improve. We’ve got a product roadmap that carries us into 2013 and it will probably always be that way, but the good part is that 7,500+ subscribers are giving us feedback on what they want, and every 2 weeks, we roll out upgrades and fixes to assist. It’s certainly a lot less work than customizing software for each individual customer (as often happens with enterprise deals).

digitalCMO: What SEO advice to you have for my blog digitalCMO.com and will you give me a link on your site?

Rand: A few things caught my eye:

• You’ve got an error that reads “Fatal error: Using $this when not in object context in/homepages/20/d300771726/htdocs/wordpress/wp-includes/default-widgets.php on line 537” on the bottom of all your pages
• It looks like, despite being deep in the world of search, your blog posts tend not to target keywords with search volume. That’s probably the biggest area you’d get value. For example, a post like http://digitalcmo.com/2010/05/01/digital-sausage-for-managers/ could be titled “Digital Marketing Metrics: How the Digital Sausage is Made” (or something similar) and hit a keyword that gets 100+ searches / month like “digital marketing metrics.” You likely wouldn’t rank #1 for all those phrases, but at least giving it a shot would likely, over time, bring considerably more search traffic to your site.
• You’ve got lots of friends and compatriots in the web marketing sphere who’d likely love to hear from you, yet there’s not a lot of links going to your site right now (see OpenSiteExplorer). It might be highly worthwhile to offer to guest post for some of those friends, reach out to the close ones and tell them about your blog (they’ll probably be happy to link over) and generally be more of a marketer for your own site! I wrote a whole post here with some link building tips that might be handy.

And yes – happy to link to you

Chris graciously agreed to share his thoughts on start-ups, capital, and innovation:

digitalCMO: What inspired you to start Founders Co-op?

Chris: In late 2007 my business partner (Andy Sack) and I sold our previous company, a venture-backed local search business called Judy’s Book.  We knew we wanted to keep working as partners but weren’t sure we wanted to go heads-down on another startup.  In late 2007 and early 2008 we helped several other entrepreneurs create new companies as non-operating co-founders, investors and board members. We had so much fun playing the crazy blend of of talent scout, coach and advisor that you do as an early stage investor that we decided to make it our full-time job and raised our first fund in the summer of 2008.

1. “If you were shrunk to the size of a pencil and put in a blender, how would you get out?”

Asked at Goldman Sachs.

2. “How many ridges [are there] around a quarter?” Asked at Deloitte.

3. “What is the philosophy of Martial Arts?” Asked at Aflac.

4. “Explain [to] me what has happened in this country during the last 10 years.” Asked at Boston Consulting.

5. “Rate yourself on a scale of 1 to 10 how weird you are.” Asked at Capital One.

6. “How many basketball[s] can you fit in this room”

Asked at Google.

7. “Out of 25 horses, pick the fastest 3 horses. In each race, only 5 horses can run at the same time. What is the minimum number of races required?” Asked at Bloomberg LP.

8. “If you could be any superhero, who would it be?” Asked at AT&T.

9. “You have a birthday cake and have exactly 3 slices to cut it into 8 equal pieces. How do you do it?” Asked at Blackrock.

10. “Given the numbers 1 to 1000, what is the minimum numbers guesses needed to find a specific number if you are given the hint “higher” or “lower” for each guess you make.” –Asked at Facebook.

11. “If you had 5,623 participants in a tournament, how many games would need to be played to determine the winner?” Asked at Amazon.

12. “An apple costs 20 cents, an orange costs 40 cents, and a grapefruit costs 60 cents, how much is a pear?” Asked at Epic Systems.

13. “There are three boxes, one contains only apples, one contains only oranges, and one contains both apples and oranges. The boxes have been incorrectly labeled such that no label identifies the actual contents of the box it labels. Opening just one box, and without looking in the box, you take out one piece of fruit. By looking at the fruit, how can you immediately label all of the boxes correctly?” Asked at Apple.

14. “How many traffic lights in Manhattan?” Asked at Argus Information & Advisory Services.

15. “You are in a dark room with no light. You need matching socks for your interview and you have 19 gray socks and 25 black socks. What are the chances you will get a matching pair? “Asked at Eze Castle.

16. “What do wood and alcohol have in common?” Asked at Guardsmark.

17. “How do you weigh an elephant without using a weigh machine?” Asked at IBM.

18. “You have 8 pennies, 7 weight the same, one weighs less. You also have a judges scale. Find the one that weighs less in less than 3 steps.” Asked at Intel.

19. “Why do you think only a small percentage of the population makes over $150K?” Asked at New York Life.

20. “You are in charge of 20 people, organize them to figure out how many bicycles were sold in your area last year.” Asked at Schlumberger.

21. “How many bottles of beer are drank in the city over the week.” Asked at The Nielsen Company.

22. “What’s the square root of 2000?” Asked at UBS. 23. “A train leaves San Antonio for Huston at 60mph. Another train leaves Huston for San Antonio at 80mph. Huston and San Antonio are 300 miles apart. If a bird leaves San Antonio at 100mph, and turns around and flies back once it reaches the Huston train, and continues to fly between the two, how far will it have flown when they collide.” Asked at USAA.

24. “How are M&M’s made?” Asked at US Bank.

25. “What would you do if you just inherit a pizzeria from your uncle?” Asked at Volkswagen.

Second List (for Analysts) :  34 Mathematical Principles

Never Ending Math Equation