The Three Things, Edition 28

Welcome to 28th edition of The Three Things, the weekly update of three links, podcasts, videos, or books you can’t miss from Michael Schechter (HonoraA Better Mess), Gini Dietrich (Arment Dietrich, Spin Sucks), and – me!

Please note Gini is on vacation creating international kerfuffles in France soLindsay Bell is subbing for her.

For those of you new to this series, The Three Things arrives in your inbox on Sunday mornings (unless you don’t subscribe, but that can easily be fixed if you hurry over and enter your email address or add to your RSS feed) so you have some extra time to spend perusing the obscure content we’ve curated for you (and one another) before your week begins and deadlines, meetings, and work takes over.

This week we have thoughts on telling better stories with your life, the decline of real news, and an ancient addition to the illegal ivory trade.

A Million Miles in a Thousand Years by Donald Miller

Michael on Story: Here’s something you probably wouldn’t expect… an agnostic Jewish New Yorker is about to suggest that you read a book from a Christian spirituality writer… Yeah… that just happened…

I’ve loved A Million Miles in a Thousand Years ever since Chris Brogan posted about it back in 2010. The book chronicles author Donald Miller’s experiences as he adapts his book Blue Like Jazz into a movie. As Miller learns what makes for a good movie, he is inspired to tell a better story with his life.

I’ve been rereading it this week and nothing else I’ve come across comes close. There’s a slight religious slant to the book, which may not appeal to some, but I’m as non-religious as they come and it is one of my favorites. If you’re looking to tell a better story with your life, start by reading this book. No matter what you believe, you’ll want to do better.

No News Isn’t Good News by The Economist

Howie on the News Media: This article is really a wake up call. Our Fourth Estate is in trouble but maybe finally figuring out how to rebound. When Cable TV exploded and viewers fragmented, TV production companies did less orginal big budget shows and more reality due to the new economics.

Who cares if instead of X-Files they made Super Nanny or Celebrity Rehab. This didn’t affect me. But without the resources for our news companies to keep government and business in check, our democracy could be in danger.

The most shocking part is the explosion of PR infiltrating the news creation process. This didn’t have to happen had digital agencies not falsely promoted online ads as a revenue replacement for subscriptions and paid content.

Sometimes people are suckers. Sometimes whole industries.

Of Mammoths and Men by National Geographic

Lindsay on Science: Anyone who knows me know I’m a total science geek. Like, spends Friday nights watching documentaries, subscribes to National Geographic science geek. While archeology fascinates me, what truly blows my tiny mind is our more recent past. How herds of prehistoric animals were still roaming this earth as recently as ten thousand years ago. Like mammoths, for example.

While scientists and others have discovered incredibly preserved mammoth specimens in the far north before, there’s a new breed of hunter trolling the frozen northern wastelands. And while they’re looking for mammoth remains, they have one goal in mind: Profit.

The trade in mammoth tusk ivory is brisk, with an estimated 60 tons a year being hauled out of Siberia. I’m not sure how I feel about this. If it saves one elephant from poachers it’s a good thing. But how many potential archeological sites are plundered for this ancient ivory? How many ancient secrets will we never discover? Read about Siberian mammoth tusk hunter Karl Gorokhov, and the five months a year he spends 600 miles north of the Arctic Circle.

Now it’s your turn. Is there a podcast, video, book, or article you think we need to see?

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How to Estimate your Cost per Sales Conversion

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I know it is April. That is Vermont for you!

I know two posts in two days. You are wondering how that happened? It is Friday and there is an ice pellet storm passing through Vermont…in April. Just as all the snow is melted and I see grass.

Yesterday the discussion was about determining the cost per person (or 1000 people) to see a paid media placement. Today we want to go one step further. How to figure out the cost per sales conversion. The achilles heel of marketing vs any other business discipline like manufacturing, R&D, or direct sales, is how hard it can be to measure invested resources and the outcome from that.

Today with so many points of contact by Brands across many channels on and offline to determine which channels pay off is tough. Plus there are so many outside variables. Maybe the economy is bad or really good. Maybe the new product line blows away the old or is a step back? Are you a household name where you sell? How much competition do you have? How easy is it for someone to substitute what you sell for something else?

A big Brand with a mega marketing budget and years of historical reference can probably get a feel for what impacts their business more. A small business this is harder but still possible. And even then the math here is sadly squishy.

A: The most simple way to measure is to figure out your total sales each month and divide into the total marketing spent. You can then see what percent of sales went to marketing.

March 2013 – $1000 in sales, $100 spent on Marketing  = 10%

What if next year in March -$1500 in sales, $125 spent on Marketing = 8.3%

The reason the math is squishy is you have to decide if spending the extra $25 (25% increase)  was the reason sales went up 50%. If the answer is yes wouldn’t you always spend the extra $25?

B: Next you can go by customers. You might know the value of a new customer (hopefully you do).

March 2013 – 1000 customers – $100 in marketing = $0.10 per customer

March 2014 – 1500 customers – $125 in marketing = $0.083 per customers.

You might also know that at 1000 customers the average customer spends $10 with a $3 net profit. You might also know that once you have 1250 customers the net profit goes up to $3.25 due to economies of scale. That gives an added incentive to send the extra $25!

C: What about the marketing channels? There are ways to measure but only if you incorporate specific ‘unique tags’ to ensure you can determine where a sale came from.

Forms of ‘tags or identifiers’:

  1. QR Code that is unique for that media channel
  2. Unique phone number for a phone sale
  3. A Coupon
  4. Pay Per Click Digital Ad
  5. Unique Web URL
  6. Unique Call To Action
    • ‘special webstore coupon code’
    • Post a secret word on Facebook (Say Shopping at Check out get a free hand bag with $100 purchase)
    • Location Based Service Check In

A smart marketer will mix things up to gauge impact and record these. You can then start planning your marketing spend well in advance. And while I am the first to always want to know why…..sometimes there is no why. Maybe for some reason in May every year if you double up on cable TV ads sales triples. The one year you didn’t sales were flat. In my humble opinion question what isn’t working first and spend on what is.

Need some help figuring this all out with your own business let me know. Have a question or want to share what works for you please comment below!

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How Brands Can Figure Out Their Real Cost for Media

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This is our baby sitters farm in Mad River Valley, Vermont

This has been simmering for awhile. I have noticed since transitioning from B2B direct sales to Advertising/Marketing that my new industry uses Jargon to sell books, to mystify ignorant people, and to fleece clients. When I found out Brands paid for impressions my reaction was ‘Are these Brands really that dumb?’ The answer has been yes and no.

Do you believe the Nielsen Ratings? Facebook Stats? Billboard Views? Print Ads Seen? The job of the media Channel is to maximize their profits just like it is for your business. Figure out the real value for your business of all these activities. To get decent statistics you just need to know basic math.

The two main variables are:

  1. Did they see my ad?
  2. How much is a sale conversion worth?

I preach finding the value of your sales and marketing channels. The price you are charged isn’t the real price you pay. If a Magazine tells me they have 1 million issues sold each month and claim 2.9 readers per issue (industry standard who came up with this?) So in effect 2.9 million MIGHT see my ad. and that the CPM rate is using easy numbers $100. And my cost per ‘Impression’ is $0.10 each. That is what my invoice will say after I run my ad.

Billions of dollars in deals are done this way. On paper. The agency will do all their accounting based on this. They sold me 2.9 million impressions at $0.10 each.

The smart Brand will not. The smart Brand will never hire someone to do marketing who places the ad and sends back the exact same accounting. In fact each Brand should do their own, and each time this should come out differently because different people will believe/assume different things.

This example is for determining how many people actually saw my ad. My next post will cover valuing conversions.

Brand places full page Ad is placed on page 5.

Questions:

  1. How many people do you think actually read the issue per unit?
  2. Is there value for the same person to see the ad more than once?
  3. How many unique readers saw the ad.
  4. What percentage of reads saw your ad.
    1.  Each page has a different likelihood of your ad being seen. For example you are on page 89 out of 102. How many get that far? Or your ad is across from a full age Bikini Photo in say Maxxim. That might get seen many times?

This Brand has their own rule of thumb for this Magazine: 1.9 readers per issue. 1.3 unique readers.

If the ad has added impact if seen twice or more they will use 1.9 as their base number. If not 1.3 (or something in between). So now your readership is between 1.3 million and 1.9 million and you discount the CPM by the % lower your estimated readership is.

2.9 million / 1.3 million = 2.23 x $100 = $223/CPM

2.9 million / 1.9 million = 1.52 x $100 = $152 CPM

This can be done with all media channels. You decide what you believe. When I discuss conversions there is similar variables. What kind of Ad/Content/Campaign? What are you selling? What is a sale worth to you?

So the Magazine might say the CPM is $100 but if you respond ‘No it is $152 for us’, you are right not them.

If you have a question about valuing the real cost of a media placement please contact me.

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