Posted by Wilson Kanaday on Thu, Jun 16, 2011 @ 05:59 PM
If you know us, you know we live in our clients’ data. If you don’t know us, then please understand... WE LIVE IN OUR CLIENTS’ DATA. The data is where we find the secret map to the buried gold. Here’s a good example. Not too long ago we were preparing to meet with one our clients. Part of this is putting together the PowerPoint slides that walk through our performance over the last month. Not to brag, but it was all good news:
- 5.0x ROI YTD on ALL related spending (media buys, professional services, technology, and attributed in-house resources)
- Total visits up 184% year-over-year
- And ‘non-branded’ organic search (SEO) visits up 231% year-over-year
At this point it is easy to give ourselves a pat on the back and move on to the next task. Seriously, think about it. No client is going to push back on results like that. They are getting what they are paying for (actually 5x what they are paying for). But there is always more!During our monthly analysis the data from the client’s blog jumped out at us. This client has been working on their blog for 16 months. Yep, 60-something entries. Was it always rewarding? Nope. They had several months in the beginning with less than 50 page views per month to their total blog. Translate that into layman’s terms analysis - no one cared they were blogging. But, the last four months their blog averaged 1,600 page views per month. Nice jump. At first this felt like a small victory, but we peeled back another layer of data and it started getting ugly. First, we had to identify the business purpose(s) of the blog: 1) Introduce the brand to potential customers; 2) Convert new potential customers into leads. Quick aside: Don’t mistakenly think the purpose of a blog is to increase SEO mojo. It is unlikely that your customers pay you for your SEO mojo, so it doesn’t qualify as a business purpose.Next we used Google Analytics Advanced Segmenting to really dive into what was happening and separate all of the noise from the true signal. To quote Avinash Kaushik, “You no segment, you no find insights. You no segment, you no have job for long time.” We want to work with our clients for a long time, so we segment.We created the following segments:
- Blog Entrances: These are simply visitors who came to the website through the blog.
- Organic Search Non-Branded Blog Entrances: These are visitors who came to the website through the blog who were not intentionally looking for the brand.
- Non-Branded, Non-Blog Entrances: These are visitors who came to the website without the blog who were not intentionally looking for the brand.
The following table is what we found:
Here are our takeways from this data:
- 31% of visits to the blog are non-branded. So the blog is introducing the brand to people who were not otherwise looking for it. This is a success and a baseline to gauge future improvement.
- Non-branded visitors to the main website behave dramatically different than non-branded visitors to the blog. The Non-Branded, Non-Blog visitors are 1,053% more likely to become a lead! Ouch.
Here is where it gets more fun. Now that we have found a problem we have to ask, “What is it worth to solve it?” From data supplied by the client we know what each lead is worth; a bit less than $200. We’ll use a value of $200 per lead for the sake of making the math easy here.So the current value of the Organic Search Non-Branded Blog Visitors is $1,000. But if we could get the Organic Search Non-Branded Blog Visitors to behave like their cousins the Non-Branded, Non-Blog Visitors and convert to leads 2.54%, then there would be have been 58 (or 53 more) leads! That gets us to $11,600 right there!But lastly, we need an annualized dollar figure so we are making apples-to-apples comparisons prioritizing improvements to the website. In this particular case we could expect an increase in Annualized Revenue of $25,000 if we hit our goal! This tells us that it is well worth some time and effort to solve this problem. This is where the story ends for now. If you want to hear what happens next as we work on this problem be sure to subscribe to our blog for automated updates.
Posted by Wilson Kanaday on Mon, Mar 14, 2011 @ 10:46 AM
You might be asking, "Why are y'all blogging in two different places?" Excellent question. We want to keep this blog relatively dedicated to issues pertaining directly to Vertical Studio.
But at the same time, we are passionate cheerleaders for the entire Arkansas Startup Community (yes, even Northwest Arkansas) so the Innovate Arkansas blog is the best platform for all things "generally startup." Our goal there is to create valuable content for Arkansas' entrepreneurs and investors alike that isn't directly focused on Vertical Studio.
Mark Carter at Arkansas Business was gracious (perhaps foolish) enough to give us a login to the Innovate Arkansas blog. Who says no to that?
We are kicking off our guest blogging with a series response to Michael Peace's blog post 'My Thoughts on a Local Startup Incubator.'
The first part of this series can be found here: You Say You Want a Startup Incubator…
Posted by Wilson Kanaday on Thu, Feb 24, 2011 @ 12:55 AM
Arkansas Senator Mark Pryor recently proposed a bill that would provide a 25% federal income tax credit for investing in small businesses. You can see the details of the bill here.
We got a chance to catch up with several leaders in the startup community, both inside and outside Arkansas, and get their thoughts on Senator Pryor's bill.
"Mark Pryor’s American Opportunity Act is not only great news for investors but for the entire startup community as a whole, especially those who have a far greater chance of succeeding if they’re able to secure seed and early stage funding from local angel investors but who might be too early in stage for (or not need) funding from larger venture capital firms. Our economic future as a country does not solely depend on the outcome and success of giant corporations who have already “made it” and those that encounter no hurdles or challenges in their earliest stages, but also in large part on that of smaller startups that provide tremendous value which may not yet be realized or have not yet made it past a prototype or minimum viable product stage. These type of businesses and entrepreneurs are critical to our country’s economic success and are extremely important for job creation. Mr. Pryor’s bill will help encourage investment in these types of early stage businesses and ambitious entrepreneurs, and is nothing but great news for the entire startup community."
Michael Peace, Angel Investor & Owner of JMP Consulting, LLC
"Senator Pryor's proposed legislation would have a major impact on the future of the American economy by helping to unlock billions of dollars of private capital, and direct that money into the country's entrepreneurial high tech innovation sector. There are currently over 250,000 angel investors in the US, and this legislation has the potential to double that number."
David S. Rose is CEO of Angelsoft (www.angelsoft.net), the official software platform of the Angel Capital Association and the National Association of Seed and Venture Funds. Angelsoft is used by over 30,000 accredited angel investors to collaborate with over 100,000 high-tech entrepreneurs. Mr. Rose is also the founder and Chairman of New York Angels, the leading angel investor network on the East Coast, as well as an active angel investor himself who has helped to fund over 80 high tech startups.
"Most new high wage-rate job growth comes from technology-based start-ups. Venture capital has become less available and more conservative over the past ten years as traditional exits such as IPOs are scarce at best. Senator Pryor's proposed America Opportunity Act acknowledges that early stage business creators are the critical job creators. For early stage innovation-based business, angel investors provide the crucial risk capital available from no other conventional source. Providing a federal equity investment incentive of 25% reduces the considerable downside risk associated with these critically important investments, such that the available investment pool should increase dramatically. Similar programs have been available and very successful at the state level in a variety of states including Arkansas. I applaud Senator Pryor's leadership in putting this bill forward, and I sincerely hope this measure receives broad bipartisan support. Frankly, federal measures such as this are long, long overdue."
Jeff Amerine, PMP
"I think a tax credit for angel investing would spur entrepreneurial growth. There are many more potential angels out there that have not yet started investing, but have the capital to do so. The reason they're likely not investing yet is that they don't feel like they understand the process -- and if they do, they recognize that it's hard to produce a positive return as an angel investor. A meaningful tax credit like the one proposed would likely sway many more angel investors to fund early-stage entrepreneurs."
Dharmesh Shah - Founder of HubSpot and co-author of Inbound Marketing
Posted by Wilson Kanaday on Thu, Feb 03, 2011 @ 01:37 AM
Mike Smith recently wrote an article for Arkansas Business on the state of entrepreneurial development in Arkansas. I don't disagree with anything he said, but I would like to add some color to it. I'm sure Mike's gratitude for this is difficult to measure.'Entrepreneurial Development" being named one of the Top 10 Business stories of 2010 was well deserved. We can argue what specific number was appropriate - Arkansas Business put it at number 10; Mike lobbied for number 2. The point is that - to paraphrase Vice-President Joe Biden - it was a big deal. So why now? Mike attributes this to 10 years of effort in the State of Arkansas. This is warranted for the following reasons:
- The Legislature is fully on board as is evidenced by the tax credits and matching funds that are available to startups in Arkansas.
- Innovate Arkansas - specifically Tom Dalton, Jeff Amerine, Mike Smith, Jr., and Ted Dickey - have done yeoman's work with the startups in Arkansas. I attended the Arkansas Venture Forum in 2008; it wasn't that exciting. In 2010 Vertical Studio was fortunate enough to be one of the presenters among seven other outstanding companies. There were companies that did not get to present in 2010 that would have been the best presentations in 2008. The dramatic increase in quality is largely due to the work of Innovate Arkansas.
- Fund for Arkansas' Future has paved a road for seed stage investing in Arkansas by making several investments in strong companies in recent years. This has spread a lot of confidence to would-be entrepreneurs and other investors.
- Gravity Ventures recently closed a small seed stage fund late in 2010 and it has already begun putting that money to work.
But there are other factors at play too:
- It's easier now to launch a startup than at any point in history. Steve Blank - startup guru - estimates that it is 10x easier.
- There is so much investing in seed stage companies nationwide that some are concerned there might be a startup bubble. I have my reasons to think that is ridiculous, but that is for another post.
So what needs to be next for startups to survive and thrive in Arkansas? Mike identified three primary ingredients for a healthy growing startup environment:
- Ideas
- Management Talent
- Risk Capital
I’d add a fourth to the list: a core competency. A quick witted VC from out of state I spoke with last week offered that our easily identifiable core competency is ‘Feed & Seed’. Clever and true. But then we got to talking about our true core competency; data management. Arkansas, thanks to the roots that gave birth to Axciom, is world class at data management. This is a great place for us to be. The world has more data than ever before and it is growing exponentially. Even small businesses have more data pouring off their website that could be put to good use than they could ever get around to working with. There are few communities in the world better suited to help solve the growing problem of “What do I do with all this data?!” Next, companies are willing to invest a handsome fortune in solving this problem. IBM has invested more than $12 billion in 20-something data analytics companies over the last four years. That is worthy of any one's attention. So what is the next step? I would argue that it is increased risk capital and that capital should come from individuals. (Yes, I understand how self serving this could appear, but it is also for the greater good.)
- We have the ideas. Just look at the stable of Innovate Arkansas clients and the presentations at the Arkansas Venture Forum. I’d guess that there are at least 15 companies in Arkansas that deserve funding.
- Management talent is much more difficult to gauge, but having met many of the Innovate Arkansas clients’ managers, I’m impressed. Can they all manage wildly successful startups? Obviously not. Which ones can and which can’t? Good luck on that one. We’ll just have to let them play in the wild and see who survives. But some of them certainly will. Further, there is a lot of management support available to fill in gaps.
- Risk capital is (at least part of) the missing link. And the most significant gap seems to be the risk capital coming from individuals.
There are a surprising number of wealthy individuals in Arkansas. But at this point they do not put their capital into startup investments. There are two core barriers between these individuals and investing in startups; 1) Knowledge of the process, and; 2) Emotional comfort with participating. There are numerous benefits of seed stage investing if done appropriately.
- The investors should expect over-sized returns across a portfolio overtime.
- Startups are a core catalyst of economic growth. They typically have an average wage greater than the community average which contributes to the tax base. Further, their dependency on the traditional economy - printing, food, supply chain & logistics - is a benefit to many other businesses.
- Well executed startups create wealth in a community very quickly. Imagine a company that requires $1 million of capital, but then sells for $15 million in a few years. Hopefully those were local investors looking for their next startup in which to invest.
- A strong startup community attracts and retains great talent. In Arkansas we often lose some of our top young talent to other cities because they want to go solve the “big problems” and chase dreams they imagine are too large for their backyard.
So we need a way to reach the under utilized cash today that is typically reserved for mutual funds, commercial real estate and timber and get some of it allocated to startups. There needs to be readily available and trustworthy resources that can guide new investors through term sheets and basic due diligence. Rather than one individual coming to invest $25,000 in one company; groups of friends, maybe 6, need to come together with $15,000 each and invest that across 3 to 6 companies. It’s amazing how much that money will do to drive a well managed seed stage company. I don’t have a crystal ball, but I'd be surprised if $180,000 across eight seed stage companies didn't outperform a timber investment of equal size over the same time. So how do we start this? Talking. Read this, send it to your friends and talk to them about it. Find other like minded people - Innovate Arkansas is a good place to start - and connect with them. Organize. Start building social networks. Twitter is an easy start. A Ning community around this would be a great start. Learn how other angel/seed investors operate. There are great resources for this too. Check out Angel List. These are some of the most active and successful angel investors in the country. What is at risk here? That’s a hard call. Really, just lost opportunity. Acumen Holdings is a great example. They are an ecommerce and online technology company in Northwest Arkansas. If you ever met their founder, John James, you should know very quickly that he is worth betting on. I told one investor, “I don’t care if John James thinks he has a better way to sell eggs on the street corner, I’d bet on him.” It’s that obvious. And Acumen Holdings recently closed a $5 million round of investment. But the bulk of the investment came from Georgia. Why’d we let that go to Georgia? It’s like the Lee Ziemba of the startups. Here we have identified four pillars of startup community success. Three of them are already in place. Having a strong core competency like we do around data is unteachable; it’s like speed on a football field. We have been blessed with it. We have the ideas and likely have the management. With the appropriate funding in place we have a great opportunity in front of us that will make a difference in Arkansas for generations.
Posted by Wilson Kanaday on Tue, Jan 11, 2011 @ 11:44 PM
Simple Background
The first time I formally heard of Interactive Attribution was a little over a year ago. Now everyone in web analytics is familiar with the problem that Interactive Attribution is trying to solve; potential clients/customers have numerous touch points with a business before they commit their cash. So which point should an analyst attribute the conversion?
- Google Analytics does it by "last touch", which is to say that the last way a unique visitor came to the website when they converted gets credit for the conversion.
- Google Adwords creates confusion by attributing conversion to the "first touch." If a visitor comes by Adwords and then 30 days later by direct navigation and makes a purchase, then the Adwords ad gets the conversion credit.
Right here - at first glance - separate bodies of Google data do not give an apples-to-apples comparison. There are ways to reconcile this and even hack Google Analytics to adjust the data sets.
You can imagine how complicated this becomes when you factor in email marketing, social media, display campaigns, retargeting and offline advertising.
Who gets credit for the sale? From our view, it seems like everyone should get a little bit of credit for each touch point. But how much? Have fun solving that.
Where Is Interactive Attribution Today?
Dax Hamman from Chango - the Search Retargeting Company - did a piece on his blog back in late November accurately stating that not much happened in the Attribution field in the previous twelve months. A) He's right. B) The lack of progress caught people off guard (at least the few people that were interested) because once Forrester publishes a report on something it is supposed to become the next big thing.
In late 2009 the players Forrester named in Interactive Attribution were (you can download the report here):
- Atlas
- Coremetrics
- Theorem
- TruEffect
- Visual IQ
- [x+1]
- ClearSaleing
ClearSaleing was placed in the prestigious upper right corner. They are still the player today, not much has changed. But the ground is starting to shift a little bit.
Josh Dreller pointed out on iMedia in December that Attribution "adoption is still growing, slowly but surely." In addition, Dreller listed off challenges to Interactive Attribution adoption. The one that strikes me as the most true was #3 - It is not a high enough priority. We speak with Interactive Marketers all of the time. And in passing, they agree Attribution Modeling is a problem. But they don't seem to actually care.
My best guess as to why is a bit of a variant to Dreller's #3 point; it is not a high enough priority because there is too much to do that comes way before that. Dreller mentions budget planning, managing employees, etc.... But I think it is more of a data problem.
THERE IS TOO MUCH DATA ALREADY!!
Interactive Marketers have data coming out of their pores - Google Analytics, Coremetrics, Omniture, ad networks, email marketing and search campaigns. How does a vendor expect to cut through all of that market noise and say, "Hey, look at our really cool data now!" Marketers, in the aggregate, haven't come close to mastering their current data. That's actually being generous. Many marketers don't really have the first clue what their data actually says or what to do because of it.
The current problem Interactive Marketing practitioners are trying to solve - whether they want to admit it or not - is still "more eyeballs." Yep. Super Bowl advertising stuff. "How can we get more people to our website?" It is the rare marketer we come across that really drills into converting the same number of "eyeballs" into more cash. If you aren't focused on conversion, or better yet - Conversion Rate Optimization - how do you get to committing budget to getting the conversion the credit it deserves?
This brings us to the ClearSaleing acquisition.
I don't take this event as a real positive for the Interactive Attribution "industry." The concept of Attribution Modeling is ahead of its time and so is/was ClearSaleing. GSI was likely their largest revenue channel for a year now. This allows GSI to have a technology "add-on" for their 500 clients and gives ClearSaleing better access to that client pool. I am sure that add-on will still cost GSI clients a premium. But this has to hurt ClearSaleing's growth in the long run. Not exactly the rocket ship the industry wanted to see from Interactive Attribution at this point.
Dax Hamman provided some follow up thoughts for this blog post that fit in with how I see Interactive Attribution following the Clear Saleing deal. "ClearSaleing did well in terms of getting an offering into market and have benefited with the acquisition, but it will not be the last deal in this space. TagMan has recently announced additional funding too by iNovia, and further investment and consolidation will come. It is likely that investment will come first to help such firms work out exactly what the offering needs to be, something that is still a grey area, and then in 2012 and 2013 the consolidation will follow."
Hamman's point lines up well with events we have seen in the past in Interactive Advertising; namely, web analytics. WebTrends was the first great web analytics company and they were acquired by NetIQ back in 2001. First movers were into WebTrends, but it couldn't stand on its own at the time. Several years later web analytics saw WebSideStory, Urchin, Visual Sciences, Omniture, Coremetrics and scores of other vendors taking the market by storm in 2006.
I'd expect that we won't see Interactive Attribution gain real traction for years to come; there simply isn't demand for it. But there is a lot of room to run. The catalyst I would look for is when companies start to really fall into a pattern on Conversion Rate Optimization. At that point simple conversion data won't be good enough, marketers will become passionate about more accurate attribution.
Posted by Wilson Kanaday on Mon, Sep 20, 2010 @ 04:37 PM
Hellman & Friedman, a private equity firm based out of San Fransisco, announced they acquired Internet Brands for $640 million. Hellman & Friedman paid roughly 6.4x Internet Brands' 2009 revenue of $99.8 million.
Interestingly, just last week Accumen Holdings, a start up from Arkansas presented at a Venture Forum in Little Rock. Certainly, this acquisition in their space can't make them do anything but smile.
I do have one concern about these media companies. Their processes and algorithms must be awesome. But, they are playing online business like a pure market. So what prevents other large (or small) media companies from entering the space. Are the visitors/clients to/of CarsDirect.com really that loyal to the brand? If they aren't they'll be easy to draw to the next thing. Now maybe that is all accounted for. But it seems like the downward pressure on margins and the lack of personal touch would make it difficult to sustain these businesses over the long haul; much like the old Adsense arbitrage websites.
All of that aside, and my concerns might be absolutely unwarranted, I would continue to bet on any business that has developed the processes to make a strong entrance in the online business realm.
UPDATE: Bob Brisco's comments on the deal can be found here.
Posted by Wilson Kanaday on Fri, Sep 10, 2010 @ 02:39 PM
This is a little experiment we are going to run this year to see how well search behavior can predict actual outcomes. We are using Google's Insights for Search tool to watch how people search for the Heisman candidates.
At this point you can see that Mark Ingram would be the front-runner, but Terrelle Pryor has quite a bit of momentum.
If we wanted to take it a bit deeper we could see which major media markets were searching, since that is where voters are more likely located. We will dive into that later in the season as the race for the Heisman tightens up.
Be sure to subscribe to our blog to get weekly updates on monitoring the Heisman race through Google.
Posted by Wilson Kanaday on Tue, Sep 07, 2010 @ 03:34 PM
We'll be at the Arkansas Venture Forum on September 15th at the Doubletree Hotel in Little Rock.
If you'd be interested in learning more about Vertical Studio's solution for growing online businesses with conversion rate optimization or as an investment opportunity we'd be happy to talk to you.
Posted by Wilson Kanaday on Fri, May 21, 2010 @ 10:48 PM
Okay, so it didn't fire out of the gate. Clearly not another Netscape... Did you expect it to be?
But a local ad network did just pull in $54 million. That is a success story; especially in this "dead" IPO market.
The 'Local' issue is a very significant problem in the current market and ReachLocal has a good solution. I've often thought about how stronger Local Internet Marketing could play out here in Little Rock, AR. Needless to say, I think it would be a strong media option.
Best of luck to ReachLocal. I would not be surprised if they are hot acquisition target in the very future as Interactive Marketing continues to grow and there are any signs of a economic recovery.
Posted by Wilson Kanaday on Fri, Apr 09, 2010 @ 09:56 PM
Twitter CEO, Evan Williams, laid out the rationale for the acquisition pretty clearly:
"Careful analysis of the Twitter user experience in the iTunes AppStore revealed massive room for improvement. People are looking for an app from Twitter, and they’re not finding one. So, they get confused and give up. It’s important that we optimize for user benefit and create an awesome experience."
There you have it. Interestingly, earlier this week Fred Wilson said that he wanted developers to stop building apps that just patched holes in the core offering and start building apps around various vertical industries or striving for that "killer app". Well, Tweetie is a "fill in the gap" app. I would say this was Twitter's shot at developers saying they mean business; "Build killer apps or we will continue to marginalize you."
But what is the revenue model for Twitter app developers to develop the "killer app"? To this point, that isn't clear yet. New developments between Twitter and the development community will be interesting to watch over the near future.