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Paid Search Wisdom Distilled From Email “Hot Stock Tip” Spam

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I received a curious piece of spam this week. It merits comment as it illustrates a critical concept in direct marketing: list-offer-package. The L-O-P concept also applies to running paid search marketing effectively.

Here’s the spam:

—–Original Message—–
From: gsemlinger@famfontana.com
Sent: Tuesday, June 17, 2008 8:24 AM
Subject: Mar’ket wacth

Now -you can see what we ” were saying.

Fir,m: An gs trom Mico syste ms
Buy as: amgs.ob
Strongly R ec ommend
Rece”nt: .4_0
Vloume: 331,48-5

Atfer the gerat news last week, volumed traded hit 331,485.

Mroe great things to come, t,he cli_ent base is growing and production is boimong A-G,MS is the one to watch.

Stlil a low investment thresh.ol”d, purchase Ang strom in the morning on Teusday.

OK, this is clearly a pump-and-dump stock scam for a penny stock, AGMS.OB. But to defeat Bayesian spam filters, Gsemlinger ran the email through some sort of obfuscation filter, which sometimes tossed in extraneous punctuation (Rece”nt) and sometimes permuted some letters (stlil, Teusday, gerat, boimong).

You can still make sense of the email, but it reads as if it was composed by a moron. Seriously, who in their right mind would take stock investment tips from anyone who writes that poorly?

Hold a sec. Let’s assume that SpamBoy Gsemlinger isn’t stupid. Let’s examine his marketing strategy.

Gsemlinger consciously degraded his response rate (the typos make humans less likely to act on his hot stock tip) in order to increase his list size (the typos make Bayesian filters more likely to let the message pass).

Why?

Why not instead send a beautifully composed long email, effusively and compellingly touting Angstrom MicroSystems, the wonder stock?

Perhaps Gsemlinger knows the List-Offer-Package rule, or L-O-P. Offer trumps Package, and List trumps Offer. It is takes less effort to win by growing the universe than by growing the response rate.

What do I mean by L-O-P? In direct marketing in general and in paid search in specific, who you are talking to (List) matters more than the details of what you are selling (Offer), and how you present your offering (Package) is the least important factor.

This doesn’t mean direct response creative and copy aren’t important; they certainly are. But creative and copy are less important than the offer itself, than what you are selling — the price, quality, and uniqueness of your merchandise; your service, guarantee, support, and shipping policies, etc. And more important than that is the quantity (sheer numbers) and quality (relevance, targeting, prior purchase history) of the prospect universe you’re addressing.

George Michie hits the nail on the head when he discusses how paid search analysts should spend their time to get maximum benefit.

Truly horrible PPC copy can hurt you, yes, but there’s small incremental sales benefit going from “decent” copy to “great” copy (low single digit response lifts, if that).

Truly horrible PPC landing pages can hurt you, true, but the incremental benefit between “decent” and “great” landing pages is small (typically single digit response lifts, if changes are just design and layout).

By all means work on copy and landing pages, particularly if they’re sub-par. But place your emphasis on the size and quality of your marketing universe. It is far far easier to grow your List by 10% or 20% (perhaps even 50%). If you can keep the quality up, increasing the number of individuals to whom you’re marketing increases your sales proportionally, and your profits hyperproportionally. Dollar for dollar and hour for hour, increasing the number of quality prospects with whom you’re speaking is the most cost-effective and time-effective marketing lever you can pull.

Gsemlinger faced an either/or tradeoff, where he opted to buy List (circ) at the cost of Package (response).

Happily, in paid search, we don’t need to degrade our ads to get more volume. In PPC, getting more qualified traffic translates to compulsively-extensive keyword lists, judicious use of match types, and razor-sharp economic-based statistical bidding algorithms.

Keywords, bids, and matchtypes — those are the big levers of paid search. To get your PPC programs generating maximum profit, focus there first.

Or as our friend Gsemlinger would advise: Keywodrs, bids, and match”types — those ar-e the big levesr of pa,id serach. To get your PP-C program,s genertaing maximu.m profit, focus tehre first.

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  • Alan Rimm-Kaufman
    Alan Rimm-Kaufman founded the Rimm-Kaufman Group...
  • Comments
    6 Responses to “Paid Search Wisdom Distilled From Email “Hot Stock Tip” Spam”
    1. Xurxo says:

      I definitely agree with you that keywords, bids and match types are the big levers of paid search, but they are not the only big levers – there is one more: Geo-targeting

      If “who you are talking to matters more than the details of what you are selling, and how you present your offering is the least important factor, then targeting people by geography allows you to ensure you are talking to the right people.

      “but the incremental benefit between “decent” and “great” landing pages is small (typically single digit response lifts, if changes are just design and layout).”

      We’ve seen that design and layout can generate tremendous lift beyond single digit response/conversion rates especially when matching content and calls to action with tightly themed keyword groups as well as geographical location and customized offers to those locations.

      With quality scores and relevance playing a much larger role in paid search efficiency and success these days, it would be counter productive not to spend more time on ad text messaging and landing pages but as you’ve pointed out, only once you’ve reached the right audience through keywords, bids, match types AND geographical targeting.

    2. Ryan Gibson RyanG says:

      Good point, Xurxo. Appropriate geo-targeting can add incremental value to some paid search programs. But it’s important to keep in mind that only geo-targeting a product that’s available nationally, can actually limit your audience.

      The engines only serve geo-targeted ads when they can confirm the location of the IP address of the search. If they don’t know or are unsure of where the search is coming from, the engines will typically not serve the geo-targeted ad; potentially causing you to miss up to 20% of your audience.

      The best solution involves a combination of geo-targeted terms along with similar terms running nationally with geographic modifiers.

      For instance, imagine you’re selling a special kind of widget that’s available only in Pittsburgh. The best solution for capturing the most relevant clicks may be geo-targeting searches in Pittsburgh for “widgets” along with a national campaign with the geo-modified terms like, “Pittsburgh widgets”.

      In this example, the national campaign for “Pittsburgh widgets” would also capture traffic for people in Cleveland who are looking to find “Pittsburgh widgets”.

    3. Xurxo says:

      Ryan, you’re right on the money for some advertisers when you said that “the best solution involves a combination of geo-targeted terms along with similar terms running nationally with geographic modifiers.”

      However a combined strategy won’t work on a global scale where an advertiser is located in the US, wants to market a product they have in the Caribbean exclusively to Europeans. Think of a chain of hotels – by default they will be using keywords containing geographical identifiers, but would only want to display ads when people located in Europe are searching.

      They will miss out on expats and be subject to a 20% margin of error due to IP targeting problems, but they would not want to expand their geographical targeting outside of their target market due to lower conversion rates and increased costs and inefficiencies.

      On another note, I did notice that we both forgot to mention that negative keywords are on their own a big lever of paid search that allows advertisers to make sure they are reaching the right people, but maybe we assumed that everyone knows this already? ;)

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