Wednesday, 07 March 2007

Why ‘Care’ for Your Customers when You Can ‘Love’ Them?

This is a delightful and refreshing article that renews one’s faith in leadership and in leaders who dare to think beyond motherhood, who dare to have passion, emotion, and who dare to dream.

I don’t know how many times in my corporate life that I have been told that I’m too emotional and that I care too much. The body corporate doesn’t like these characteristics – and if you have any hope of climbing the corporate ladder or navigating the corporate politics, these emotions (in their eyes, ‘weaknesses’) must be banished for more acceptable corporate behaviour.

Reaching for the stars and aiming beyond the horizon are viewed as silly. The hospitality industry knows it is selling and providing an experience to its customers. And I suppose you can describe an experience in cold and calculating terms like – we aim to exceed customers expectations. Duh! If that’s all you are doing then perhaps you should be selling railway sleepers to the department of transport!

It is precisely this dreaming that spells the difference between being mediocre and being special. Isn’t it time to take out the dusty mission and vision documents and to breath life into them and create a strategy that takes you, your staff and your guests on a magic carpet ride?

Top 10 Trends in the Hospitality Industry

Ernst & Young released a report on February 15, 2007 where they identify ten key trends that will influence the hospitality industry in the US and major hospitality markets internationally.

Top trends that will influence the global hotel industry in the year ahead include the stabilizing of the U.S. lodging market, increasing capital flows into the hospitality sector from a broad range of investors, including offshore funds, and superior performance among luxury hotel brands, according to a report released today by Ernst & Young LLP.

“In this report we’ve identified ten key macro trends that, taken together, we believe will shape the hospitality sector this year and for years to come in the U.S. and in major hospitality markets around the world,” said Michael Fishbin, national director, Hospitality & Leisure, Ernst & Young LLP.

The ten key trends identified in the report are:

#1 Supply and Demand in Balance — Perhaps the biggest positive trend for the industry in 2007 is that supply growth is relatively low with a 2.5 percent increase projected this year. This, combined with last year’s 1.8 percent growth gives owners a chance to upwardly reposition existing hotels and grow revenue per daily room (RevPAR) and average daily room rate (ADR). Stability is good for the industry’s short term profitability and, as a result, the outlook for 2007 is positive.

#2 More Good News for Luxury — The hotel sector generally is experiencing positive growth, but the performance is particularly strong in the upscale sector. With no sign of a drop-off in the primary demographics populating upscale hotels, more stellar performance is expected.

#3 Construction Costs — Developers will have to be more creative in planning and building new hotels due to high construction costs. Look for more mixed-use developments incorporating hotels, especially in the upscale segment, more creative financing strategies and maximizing of project density to make the numbers work in a more expensive development environment.

#4 Operating Costs — For hotel operators, better control of energy and other major operating costs will be a key objective in 2007. For the last two years, costs such as labor, energy and insurance have skyrocketed. While automation has historically helped manufacturing, it has played a very limited role in reducing costs in service-based industries, such as hotels. Yet hotels’ use of web-based systems is increasingly helping the bottom line.

#5 All the World’s a Stage for Hotel Investors — One aspect of the phenomenal influx of capital into the hotel sector is that the sources of this capital wave are truly global, creating a worldwide investment market with growing cross-border transaction activity. In an increasingly complex business environment, investors are likely to seek out deals in all corners of the globe. However, the U.S. hotel sector, as the most transparent market in the world, will continue to garner more than its share of foreign capital.

#6 Will New Passport Rules Dampen Tourism? — The U.S. Western Hemisphere Travel Initiative may cause a short-term drop-off in travel to the Caribbean and Mexico as U.S. tourists balk at the almost $100 passport fee or get caught in a lengthy application process. Some hotels are proactively moving to offset the passport cost by offering discounts to first time passport holders. The passport impact is likely to be short term and may even help U.S. domestic tourism.

#7 Pricing Issues May Cloud Sector’s Future — The last few years have seen solid market fundamentals, limited construction of new product and low interest rates, the combination of which has driven pricing on some deals into the stratosphere. With more construction ahead, hotels’ operating growth levels are unlikely to be sustained. We’ll begin to see this year what return on investment these top premiums will yield.

#8 Private Equity’s Love Affair with Hotels — Private equity players were the biggest single buyers of existing hotels in 2006, and they are expected to continue to buy in 2007. Since many do not have significant lodging industry experience, the question remains, how will they perform as owners? And when and how will they execute their exit strategy? We’ll begin to learn the answers to such questions this year.

#9 Growing pains for condominium hotels — With the U.S. building boom of 2005-2006 now over, there may be headaches on the horizon for developers and owners who jumped into this market with both feet. An estimated 8,000 new units are expected to become operational in the next 12 months in the U.S. despite last year’s cooling of the development market. By 2008, developers and owners will have a good idea of what worked and what didn’t in the condo hotel craze. Meanwhile, the hotel condo craze has hit the Caribbean, Mexico, the Middle East and Europe’s resort vacation spots.

#10 The hotel market as an engine of economic recovery — In Mississippi’s Gulf Coast region, the inventory of hotel rooms leaped 23 percent between March and September 2006, contributing significantly to the area’s tourism and gaming recovery and boosting its struggling economy. Communities around the world have a growing awareness of the impact hotels can have on their economies and will move quickly to support rebuilding of this critical sector in the event of natural disasters or human conflicts.

“In general, the hotel sector continues to perform well and has been especially adept at attracting new investment,” said Fishbin. “But continued growth within the sector depends on many of these factors.”

Ernst & Young offers a range of services for every major hospitality segment, from lodging to travel and from tourism to attractions – including hotels, resorts, mixed use developments, convention and conference centers, stadiums, amusement parks, golf courses, and other leisure-related assets.

For a complete copy of the Ernst & Young Report ‘Top Ten Thoughts for the Hospitality Industry in 2007’ please visit www.ey.com/us/realestate.

Hotel Websites Are Tops in Customer Satisfaction

Recent studies in the US show that hotels' web sites have finally overtaken online agency portals in terms of customer satisfaction. This has been accomplished with a lot of hard work on their websites by the hotels, who can now enjoy a level of independence from the online travel agencies to develop their services for customers and increase their customer loyalty.

The Market Metrix Hospitality Index (MMHI) is a quarterly study that is the largest and most in-depth measure in the US of hospitality company performance. What the data reveals is the increasing popularity of hotel website usage and satisfaction with the online experience. More people are researching their trips online and more people are booking online.

Another significant trend is that people who book online in the US are looking to make their booking directly on the hotel’s website rather than a travel portal. In 2004 and 2005, travel portal sites like Yahoo Travel outstripped hotels sites for satisfaction with the online booking experience. Since then hotels in the US have worked hard on improving their navigation, design, usefulness of information, ease of booking and other critical components of the online experience. As a result of this, hotels are less dependent on the travel site portals, are paying them less and are establishing a relationship directly with their guests.

The message for South Africa is that international customers expect an online experience that is of international standards. If a site doesn’t meet their expectations, they can (and do) quite easily move on to the ones that do - all with the click of a mouse. Online customers expect that they can book easily, safely and securely online, and the US experience shows that customers would prefer to deal directly with hotels for their bookings. They may research, shop around and compare prices and packages in multiple places on the web, but when they come to book, their preference is to book with you directly.

And the reasons are multi-fold. Customers prefer hotel websites because:

  • they can earn rewards points in the loyalty program
  • there are no additional/hidden fees
  • it’s easier to cancel and change the booking
  • they already have an account with the site
  • the hotel site provides true availability
  • they get better customer service
  • they feel hotel websites are more trustworthy

Online travel agencies have the edge when it comes to the selection of hotels on offer, they frequently offer cheaper hotels and the customer can get the best rate guaranteed, and they offer bookings for flights, cars and other activities.

The 5 most important factors that would most influence a US consumer to make a booking on a hotel’s website would be:
  • if hotels offered best rate guaranteed
  • offers of specials and promotions
  • the ability to earn points and rewards
  • making it easy to make, change or cancel reservations
  • to provide better descriptions of rooms on the sites
Loyalty is the big buzzword at the moment. Everyone is trying to develop relationships with the customers and this is more so online than anywhere else. Studies show that certainly in the US, customer loyalty is on the rise. Guest loyalty is important because satisfying and retaining customers helps companies grow revenues, reduce costs, generate referrals, and enjoy price premiums. But loyalty is not rising for all hotels. People tend to be more loyal to the higher priced hotels and less loyal to the lower priced. This is because higher-priced hotels generally offer more attractive loyalty programs, and have a better online booking experience. People booking lower priced hotels tend to be price sensitive bargain hunters who are therefore less loyal to a specific brand.

For more on the above, check out the following links:
Loyalty is the Key to Online Travel Market
Are Online Customers Less Loyal?
Hotel Web sites scroll to the top in customer satisfaction
Hotel Web Sites Now Score Higher In Satisfaction Than Popular Travel Sites

South Africa in E-marketing Drive

In its ongoing commitment towards implementing world-class international tourism strategies in order to increase awareness and grow arrivals to destination South Africa, South African Tourism has kicked off 2007 by sealing a landmark deal with BBC World.

The deal is an e-marketing campaign that comprises online advertising and commercial presentations and will be aired on BBC World across Europe, Africa and North America from February to July this year.

If one asks the age old question –– what’s in it for me (WIIFM) – then I would suggest a lot! This campaign is a great opportunity for all hotels in South Africa who target countries like the UK, Netherlands, France, Germany, Italy, the US and the African states to leverage the South Africa marketing exposure to with their own individual campaigns.

Finding out more about the schedule from the South African Tourism campaign and using it would give individual organisations synergy and publicity that is difficult for one organisation to achieve alone. Indeed a concerted effort by several organisations for the benefit of South Africa Incorporated would bring extraordinary gains for everyone.

2010 – Help for Small Businesses

South African Tourism CEO, Moeketsi Mosola South Africa was speaking at a business forum hosted by the University of the Free State in Bloemfontein when he announced that for the first time in its history, Fifa will be contracting non-hotel accommodation (eg national parks, B&B’s, lodges, guest houses) during 2010.

However, in order to qualify to be contracted the establishment needs to obtain a grading rating from the Tourism Grading Council of South Africa. Establishments can apply to TEP for assistance to partly cover these costs. TEP (Tourism Enterprise Programme) is a R170-million investment by the Environment Affairs and Tourism department to stimulate small, medium and micro enterprise (SMME) development in the tourism sector.

Mosola pointed out to that accommodation is not the only area where people should be looking as there are many other opportunities for 2010 – for example in the support services like housekeeping, food and beverage supply and laundry services.

In writing this, I took a look at the Tourism Grading Council website. The grading process looks time-consuming and bureaucratic, not to mention expensive. The process is still very much document driven but the instructions are reasonably clear and the criteria documents are available to be downloaded directly from the website. The cost is not inconsiderable – if you have a 3-room establishment the cost is R1,292 (R1,236 + R56) and if you have a 30-room establishment the cost is R3,373 (R3,148 +R225) and if you have anything over 151 rooms, the cost is (R5,279 + R225) R5,504.

But the establishment of standards and having a grading system which serves as a communication tool to customers is great. Of course such a system is only as good as the high (world class) standards that are set, the frequency that those standards are revisited and updated, and the organisation and people who manage and enforce them. Gearing up to 2010 and putting in place these systems could indeed help move South Africa towards one of the world’s top destinations of which Mosola talks!

Under-developed Business Travel Could Offer Opportunities

In his address to the African Business Tourism Conference in Sandton, Minister Marthinus van Schalkwyk said that business travel is lagging considerably behind the leisure market, accounting for 5% of the total tourism market.

When you bear in mind that on average business travelers spend three times more than leisure travelers and return to a destination within 5 years, this must surely be an opportunity area. Of course this relies on the fact that business travelers need to, or want to come to South Africa. They will need to come to South Africa if they are doing business with South Africa – so in this sense the hospitality industry is a support or secondary industry to the real driver of businessmen and women to South Africa – business and investment in or with South Africa.

The other side of business travelers coming to South Africa is if they see it as a place to host their meetings and conferences, and in that area we have much to offer as long as we stay competitive with other international destinations. And yes, there’s a lot of competition out there so we need to be able to provide outstanding services at competitive prices.

And of course we can’t hide away from the security issue in our country. These are things we need to address face on to become players in the international economy and to bring benefits, wealth and opportunity to everyone in our country. I refer to the recent survey done by South African Tourism Update (free registration needed for access), an independent monthly trade magazine, in conjunction with the South African Tourism Services Association and other tourism organisations where the results are overwhelmingly conclusive – over a million travelers decided not to come to South Africa because of crime.

The survey conclusion is that crime is holding back the growth of the tourism sector and its ability to create jobs. Natalia Thomson, editor of the magazine asks the thought-provoking question – “where would tourism in South Africa be without crime?” Where indeed! And let’s face it – there are other places in the world to go. But if we get our act together, the tourists and business travelers would come over and over again to our beautiful country with all that it has to offer that is indeed special!

Tourism to South Africa

The tourism industry in South Africa is a significant player in the country’s economy. It brings in money from abroad and is a valued source of employment. Everyone is getting hyped for the opportunities that 2010 will or should bring to the industry. Tourist arrivals are up by 14.5% and from Jan – Sept 2006 over 6 million people visited South Africa.

Tourism Minister Marthinus van Schalkwyk gave 2006 data for SA Tourism in an address to the African Business Tourism Conference in Sandton where he said that Africa had achieved the fastest growth rate of any region worldwide.

A summary of the numbers is:

  • There was a 14.5% increase in 2006 from 2005 in tourism arrivals
  • Over 6 million (6,055,726) people visited South Africa between Jan – Sept 2006.
  • The largest source of arrivals are from Africa – 18.3% are from the African continent.
  • The Number of Visitors from specific regions/countries changes as follows:
  • North America grew by 9.7%
  • Russia grew by 42.4%
  • Hungary grew by 24.1%
  • Finland grew by 17.4%
  • India grew by 17.5%
  • Asia grew by 4.5% (“excellent growth” in arrivals from Japan, Thailand, Singapore, but China, Malaysia and Philippines declined)

The Internet Audience Keeps on Growing

Data released today by comScore for January shows that the internet audience worldwide just keeps growing. The numbers are mind-numbing.

There are 747 million people worldwide using the Internet (some sources have it at over a billion), which is up by 10% from the previous year. The largest country is still the US which grew by 2% to 153,447,000. With seven out of ten people in North America accessing the web that market is already saturated with internet users. The same is true for countries like Germany, UK, France and Spain, where the percentage growth is less than 5%.

But look at China and India. They are both growing at phenomenal rates. China is the second largest country after the US in terms of number of people accessing the Internet (86,757,000). Chinese internet users grew by 20% over the year, yet the penetration of the internet in China is still less than 10%. The story about India is similar though less radical. The total internet user population in India is 21,107,000 and it’s growing at 33%.

Africa is a blip on the radar – in the entire continent of Africa there are 33 million users of the internet, which accounts for only 3% of world internet users. (The total number of people who have access to the internet in South Africa is 5 million of which 2.5 million access it monthly. Yet approximately 7.5 million people access South African internet sites each month, which shows strong foreign interest).

The Latest Outlook Makes E-mail Marketers Unhappy

E-mail marketers are far from happy about the latest release of Microsoft’s Outlook e-mail client, due to be released later this year. Despite its legendary user unfriendliness, Outlook is one of the most widely-used programs for sending and receiving e-mail, so any change in its programming has an impact on the design of e-mail marketing messages. This time those impacts are significant. Where all earlier versions of Outlook have used Microsoft’s Internet Explorer to interpret and present HTML e-mails, the new Outlook will use Microsoft’s Word to do the HTML processing.

That is real cause for concern since in the past Word has had a very clunky and inefficient approach to HTML. Such e-mails typically use a system called Cascading Style sheets or CSS to make the representation of fonts, colours, and images efficient and consistent. A style sheet is essentially a short-cut reference menu where you define a style once (e.g. large headlines are always 14 point Verdana font in orange, left aligned, with specific spacing attributes and so on) that saves you from having to repetitiously write out big chunks of code every time you want to format a frequently occurring component.

Most e-mail programs can accommodate CSS as typically used: either in a complete set of specifications at the top of a message in the hidden header code, or as individual instructions imbedded in the body of the message. The latest Outlook cannot handle that.

Online security is a big and still rapidly growing issue, and one of the penetration vehicles most frequently used by virus designers and hackers is e-mail, particularly HTML. In what appears to be an attempt by Microsoft to pump up the security of HTML e-mail processing, they have reduced the flexibility (and therefore creativity) that e-mail message designers have enjoyed for years.

The reduced flexibility of Outlook 2007 means that HTML designers are going to have to do a lot more coding to get messages to look the way they want them to. And since commonly-used elements such as Flash and animated gifs will simply be removed by the new Outlook, the creative design process will have to be revamped. Outlook 2007 will force designers to go back to techniques long since abandoned, such as using tables to lay out text. It also means that the templates being used by everyone from newsletter senders to legitimate marketing communicators will have to be re-thought and thoroughly tested.

The Best Marketing Blogs

If you are active in the online marketing field, one of the best ways to stay on top of new developments and emerging ideas is to read the more popular blogs that discuss specific aspects that interest you, or to read the often less popular blogs of thought leaders in the field.

Finding those blogs is a process of search and elimination, but since this is the “collaborative web” there’s plenty of advice out there.

A good starting point is Todd Adrlik’s list of the Power 150 Marketing Blogs that he compiled by creating a novel evaluation approach that incorporates the popularity rankings of each blog awarded by a number of different sources. By comparing various indices such as the number of subscribers to each blog as registered by Bloglines, Google’s PageRank, Technorati’s ranking, and some more or less subjective personal criteria, he produced his list of the top 150 marketing blogs in America.

To read each one of these could take you a while, but they are probably all worth a look at least once. Most people will find that they do not have the time to read many blogs on a regular basis, so the trick is to treat a list such as this like a bookshelf in a bookstore: skim through each one when you can and shortlist a few that appeal to you. Then come back and dig deeper into the shortlist, and decide which you want to follow in depth on a daily or weekly basis, and which are worth skimming through every month or so.

You can make this process easier by subscribing to the content of each blog in a feed reader such as Google’s Reader, so it comes to you in one place, rather than you having to go out to each blog to get the latest entries. We’ll cover how to choose and set up an RSS feed reader in the near future.

How Alasoop Uses MailChimp to Help Local Restaurants

MailChimp is an e-mail marketing service provider that makes managing e-mail campaigns very simple. Where services like Constant Contact charge a flat monthly fee that increases with the size of your mailing list, MailChimp charges a very low fee per e-mail sent.

On MailChimp’s site there is a great case study about how Webstellung (a small communications business) in Paris is using MailChimp’s e-mail marketing tools to help local restaurants market themselves.

They created a service whereby they get lunchtime restaurant patrons to sign up to receive via e-mail the daily menus of local restaurants who provide a high-quality but reasonably priced lunch. The service (branded " Alasoop", a tongue-in- cheek phonetic rendition of French for "Dinner's on the table") helps office workers find out about restaurants they may not have tried and let’s them know what’s on special today. It also helps restaurants – none of which have anything like an advertising budget -- find new customers, and to fill their restaurants every lunchtime.

Apparently the restaurants currently piloting the service are receiving increased business and increased repeat business. There is a coupon program built in to the e-mails to provide a little incentive, and it seems there is very little unsubscribing in the mailing lists.

You can read the full case study here on
MailChimp’s site
.

Jeep's Comic Book Competition Seeks Consumer Buzz

In an attempt be more appealing to a younger more environment-conscious consumer, DaimlerChrysler have systematically been rolling out smaller and smaller models in their Jeep range over the past few years. Their latest and cheapest model, the Jeep Patriot, is using some web 2.0 thinking to generate buzz: DaimlerChrysler are asking fans to create a comic book that features the car, if not as the hero, as a key character in the storyline. How’s that for leveraging user generated content?




Together with Marvel Comics, of Spider-Man and X-Men fame, Jeep is inviting budding comic authors to enter “The Patriot Factor” competition and submit story lines for the pending comic book. Marvel’s artists have jump-started the project, posting the first few pages at PatriotAdventure.com

Jeep’s ad agency, Organic, believes that the consumer-generated content approach will help them get exposure in their target demographic which is younger, male, first-time car buyers. They are also pushing the Patriot through social networks and video games, though there is as yet no mention of making it available in Second Life, the virtual world now so popular with marketers. (GM’s Pontiac, Toyota’s Scion, and Nissan’s Sentra have been selling virtual cars there for some time).

The winning entries will get author credits in actual comic books to be drawn and published by Marvel later in the year.

Clothes Shopping 2.0

As the passion for mash-ups and social networking goes mainstream, it was inevitable that shopping for clothes online would start to get more interesting. A number of shopping sites are popping up that let you do more than shop at one brand or one store, but let you put together outfits from components and accessories being sold across many different stores. And it would not be 2.0 if the opportunity for consumers to share ideas, experiences, and recommendations were not also part of the mix.

One site that is creating a buzz right now is FashMatch. FashMatch is a social networking site where visitors can put together various combinations of clothing from different designers, and exchange their combinations and recommendations with other shoppers online. And it has a very user-friendly visual format.



Shoppers can search in a number of different ways (say by price or by style), and can then look for “matches” to see what other shoppers have combined with the item that they are considering. In effect, you get to see what other people are wearing, or at least what they think looks good. A voting system lets visitors express their opinions of other people's outfits -- possibly a introducing a whole new level in peer pressure.



When you have put together the outfit you want, FashMatch helps you buy it from the various designer stores from which you have chosen the items.

Online Businesses Beat Offline Businesses in Customer Satisfaction

One of the prerequisites of successful online business is a commitment to customer satisfaction. The online customer simply doesn’t take the kind of abuse, disregard, or obfuscation that the offline customer is often resigned to. Online customers can go elsewhere at the click of a button; off-line businesses often perceive their customers to be captive because of the difficulty of going elsewhere, which can lead to habitually poor service by offline businesses.

The University of Michigan and ForeSee Results have just released the American Customer Satisfaction Index, which shows that customer satisfaction with e-commerce now surpasses that of offline business by 11.6 percent.

The Customer Satisfaction Index is a 100-point scale, and on that scale e-commerce scored an average of 80 against off-line businesses average of 68.4. Online retail scored 83 as opposed to offline retail’s score of 74.

Pepsi Goes Beyond 2.0

The Pepsi Generation is very much the web 2.0 generation, so it is appropriate that for 2007, Pepsi (through their agency Tribal DDB) is taking consumer online engagement and brand dynamism to a level not often seen.

Pepsi will be launching a new can/bottle design every three weeks, with each can design being themed to a consumer passion, and linked to a different online microsite that engages consumers in generating content around that theme. The dozen or so themes will include cars, music, fashion, entertainment and sports.



Pepsi’s first site was thisisthebeginning, which encouraged visitors to use a series of templated tools to collectively design a Pepsi billboard. The winning design will become a real billboard that will appear in Times Square.



The next site, pepsifreeride.com, focuses on cars, where visitors can play an online driving game and enter a lottery to win a specially customised Subaru Impreza.



Future microsites will let visitors design their own Pepsi can, with the possibility of the winner’s can actually making it onto the market. Another site will let visitors use their computer keyboard to create music.

You can see all of the Pepsi can designs at pepsigallery.com.

Advertising Breakdown by Industry and Type, December 2006 and January 2007

Nielsen//NetRatings have released their December-January report that gives the US industry breakdown of online advertising placements and types, as well as the top 25 companies placing sponsored links. You can see the summary tables at this ClickZ page.

The boom in bandwidth has had an impact on how advertisers are trying to pitch customers. It looks like Flash adverts have finally come into their own in the US, and in many industries the number of impressions that Flash ads received in January exceeded the number of impressions received by standard images. Rich media ads, not surprisingly, are not making much of a showing at all. In South Africa, where bandwidth continues to be in short supply, we can expect Flash and rich media to continue to have a limited presence, at least for another year or two.

For example, the automotive industry had 2.3 billion Flash impressions compared with only 1.3 billion standard image ad impressions. Flash is ahead in the consumer goods industry, entertainment, electronics, software, telecommunications (12.8 billion Flash vs 3.3 billion standard), travel, and even the health industry. Flash still plays second fiddle in financial services, retail, public services, and business-to-business.

The report also details the top 25 companies placing sponsored links. Here eBay still dominates the top slot with 4.6 billion sponsored link impressions, with Google way behind in second place with 1.5 billion impressions and QuinStreet in third place with 1.1 billion.

What keywords do you have to buy to get that kind of exposure? Well among the top keywords that caused eBay links to appear were “happy new year posters” and “new year graphics.” For Google, it was simply “map” and “gmail.”

How does direct marketing firm QuinStreet get so much exposure for its clients? Long tail keywords like “how to apply false eyelashes” seem to do the trick.

If you are using contextual advertising systems like Google’s AdWords, Microsoft’s adCenter, or Yahoo’s Panama, you will find that not only can longer search phrases get you great exposure and click-throughs, they can be a whole lot cheaper than one- or two-word search expressions that everyone else is bidding for.

Online Advertising Set to Hit 20 Percent of Total 2007 Ad Spending

Last year there was a major discrepancy between the share of US marketing budgets going to online media and the share of consumer media consumption time that went to online media (around 20%).

It looks like marketers might be catching up to what their target audiences are doing. According to an advertising spending study just released by Outsell, online ad spend will reach 20 percent of the total U.S. ad spend in 2007. That leaves print at about 40% and TV and radio with the rest.

Pay-per-click (PPC) ads are expected to lose one percent of ad spend share while cost-per-action (CPA) ad spending will increase.

New Google AdSense Policies

AdSense is the Google service that allows websites and (more typically) blogs to host small pay-per-click text advertisements that are dynamically served to their pages depending on the context of the page's content. Keywords that happen to appear on the page trigger the specific ad: write an article about boats, and an advertisement for boats will appear in the Google AdSense placeholder. If a reader clicks the ad, the page owner gets paid a piece of Google's pay-per-click fee.

As with everything Google, there are policies. The AdSense policies have now been updated and made more reader-friendly, having not changed since March last year. Here's what's new:

By far the most significant change is that Google no longer allows its AdSense ads to appear on any site (not just page) which also hosts other non-Google advertising that is formatted to look like AdSense advertisements. Here's their language: "In order to prevent user confusion, we do not permit Google ads or search boxes to be published on websites that also contain other ads or services formatted to use the same layout and colors as the Google ads or search boxes on that site. Although you may sell ads directly on your site, it is your responsibility to ensure these ads cannot be confused with Google ads."

Effectively, Google is enforcing a design trademark on its ads, presumably because it feels that the "look" of its ads conveys some kind of quality to potential clickers, or more likely because it wants to maximise the click rate by eliminating competing ads,particularly other contextually targeted advertisements.

There are other changes that affect sites who host AdSense ads. Sites may now place up to two AdSense referral links or buttons on a page per product referred. And referral offerings must be made without requiring users to provide any information such as e-mail addresses from users.

Many blog authors make significant amounts of money from AdSense, and will go to extraordinary lengths to increase the click rate and therefore their income. So Google is now also regulating the use of images next to AdSense ads. So sites may not draw attention to ads by, for example placing large "Click here" arrows next to the ads, or place any images next to the ads designed to mislead users.

If you use a Google search box on your site, you can now also place an AdSense ad placeholder on the search results page.

Finally, Google has broadened its previous policy which forbad the placement of AdSense ads on pages that contained any media such as MP3s or newsgroup postings to include "web pages with content protected by copyright law unless they have the necessary legal rights to display that content." So don't expect to see AdSense ads on YouTube any time soon!

Google Updates Its Ad Quality Scoring

Google is rolling out an improved ad ranking algorithm for AdWords, with a little more transparency than before. They actually now give you a vague idea of what your ad quality score is.

AdWords is the system that places small text advertisements on a Google search results page or places text/image ads on pages in thousands of AdSense enabled sites around the world. (This is relevant for South African advertisers, because Google lets you target the pages on which your ad may appear by location -- so your ad could show exclusively on South African websites if that was your wish).

Those ads are designed and created by advertisers, and are associated with keywords that the advertiser "bids" for. When a searcher enters a search phrase that is or contains a keyword that an advertiser has bid for, the relevant ad appears as a "sposored link" in the upper right hand corner of the search results page.

But many people will bid for the same keywords, so several ads may appear. And the ad at the top of the list is not necessarily the one whose creator has bid the most for the keyword in question.

The Google algorithm takes more than just bid level into account when deciding which ads get precedence -- the "quality" of the ad plays into the ad ranking as well. (If that sounds confusing, it's because you are not supposed to know how it really works -- that way advertisers can't cheat the system and Google's competitors can't easily copy it).

One of the elements that go into the AdRank calculation which scores the quality of your ad is the quality of the landing page -- the page searchers get to if they click your ad. (The other elements are the actual click through rate your ad gets on Google, and the relevance of your keyword and ad text). In theory even if your bid is low you can have your ad displayed at the top of the list if you have a very high quality score, say because you have a good landing page. And, if your quality score is high, you can find yourself paying less per click than the ads placed below you.

This is because Google does not charge you the maximum you have bid for a keyword. You pay only one US cent more than you would have had to to pay if you were the next highest ranking ad.

Here's an example of how it works. Remember that you never actually get to know what your quality score is -- Google will tell you that it is good, average or bad but will not disclose the number. In any event, the score is recalculated every time a relevant keyword search is run.

Joe's Garage bids a maximum cost per click of $0.40 for the keyword "fanbelt"
Jill's Garage bids $0.65 for the same keyword.
Pete's Garage bids only $0.25.

Joe has a well worded ad that gets better click rates and has a good relevant landing page. Jill has not taken much care over her ad, doesn't get a lot of clicks, and sends clickers to her home page. Pete is somewhere in between. Google does its quality calculations and produces Quality Scores of 1.8, 1.0, and 1.5 for Joe, Jill, and Pete respectively.

Google multiplies Joe's maximum bid by his Quality Score and gives him a ranking number of 0.4 x 1.8 = 0.72.
Jill's ranking number is 0.65, her maximum bid (0.65) times her Quality Score (1.0).
Pete comes out as 0.25 x 1.5 = 0.38.

Joe goes to the top of the list, since he has the highest ranking number, with Jill second and Pete third. But what do they actually pay each time their respective ads get clicked?

For Joe to be listed in second place he would have to pay Jill's ranking number divided by his quality score (0.65/1.8), or $0.36. But he's ranked above her, so he must pay one cent more, or $0.37. Note this is lower than the $0.40 he actually bid.

For Jill to be listed in third place she would have to pay Pete's ranking number divided by her own quality score (0.38/1.0), or $0.38. But she's ranked above Pete so she pays a cent more, or $0.39. That's a lot less than she bid, but it is more than Joe is paying in the top slot.

Pete has nobody below him, so he pays only his minimum threshold fee (in this case only 4 cents) every time someone clicks his ad.

The moral of the story is that you can really lower your CPC rates by making sure you create good ads and use focused relevant landing pages. And being third on the list can be a really cheap option..

To become an instant expert on AdWords, go to Google's AdWords Learning Center".

Advertising Boosts Municipal Wi-Fi Ubiquity

There's nothing new about municipal WiFi. It has been around in the US for at least five years (that's 28 internet years), and longer in Japan and South Korea. Now it's available, or in process, in more than 300 cities across the US, and it is becoming almost the norm in major European cities.

The basic idea is that a municipality decides that broadband internet access is a utility, much like electricity or schooling, and that making it available to everyone within the city limits for free can only be good for the city's economy and education levels. The democratisation of information is a strong political driver, and a pretty powerful economic imperative. So the municipalities put up wide area WiFi networks that anyone in town can access with a WiFi enabled computer, phone, or PDA.

Typically these services are free, or at least they are paid for out of taxes, or they are advertising supported. And they are not that expensive to set up: Philadelphia budgeted only $10 million to WiFi enable the whole city, with ongoing costs of about $1 million a year. That's a small price to pay compared with the potential benefit to small businesses, learners, and government.

In South Africa, Knysna has muni WiFi, and there is talk that Gauteng may WiFi-enable the greater Johannesburg area in conjunction with iBurst. There are, of course, political considerations and pressure from internet providers who see their lucrative markets under threat. But inexpensive muni WiFi is inevitable even in South Africa.

Often muni WiFi is paid for by advertising: when you log on to the service, you see an ad. Often these ads are very local, for businesses within range of the nearest signal source. That produces great opportunities for advertising services for small businesses that otherwise would never consider marketing online: local restaurants, dry cleaners, finacial advisors, or car dealers can communicate with potential customers who are right there in the neighbourhood. Try that with TV or local radio.

In the US, a hotspot and advertising company called JiWire now plans to offer ad-supported Wi-Fi through a relationship with Ultramercial. The ads will appear prior to gaining free Internet access at hotspots. To avoid the initial ads you can simply pay a small fee to get online. Once WiFi providers and income generators like JiWire start investing in muni WiFi infrastructures instead of waiting for municipalities to take the initiative, things start to develop at a very rapid pace.

There's an article on JiWire here

Personalization Desire Outweighs Security Concerns

It is hard to imagine that people who are neurotic about data loss and identity theft would willingly relinquish security for convenience. But time and time again we see consumers acting in a way that might make life harder tomorrow in order to make life easier today. In German supermarkets, people who would refuse to allow their government to capture their fingerprints willingly pay for groceries by pressing their finger on a fingerprint scanner at the till.

The recently publiched "2006 ChoiceStream Personalization Survey" found that over half of the respondents will provide demographic and other personal information in exchange for a personalized online experience.

Part of this is familiarity. Ten years ago when online sites like Amazon.com first started using cookies and subscriber data to customise the shopping experience, people were wary. Suspicions abounded about who might get hold of the information and how it might be abused. But if you don't provide the necessary information, and if you crush your cookies regularly, the online experience can be dry, tedious, and often irrelevant to your interests. Over time, people get accustomed to the personal service and become more willing to give away information. At the same time, they get more sophisticated and discerning, and they actually read privacy policies and make conscious judgement calls about who to trust and who to avoid. The more information consumers are exposed to online and the more decisions they are making online, the more dependent they become on personalisation as a data filter.

According to the report, in the past year, consumer interest in a more personalized experience has increased by 24 percent to 57 percent of respondents. Consumers willing to let a site track clicks, purchases, and other behavior increased by 34 percent in the same period. Concerns over personal data security remained high, with six out of ten people expressing concern.

Not surprisingly, younger age groups have less concern about privacy and more interest in personalisation. Comfort with the norms of social networking sites play a role, with younger people expecting sites to provide personalised recommendations.

original ClickZ article

Nine Questions To Ask About Your E-mail Marketing Campaigns

The more e-mail marketing you do, the easier it is to slip into bad habits or to assume that what you know worked last year will work again this year. Here are nine questions you should ask yourself about your e-marketing campaigns, to try to keep them focused and effective.

1) Is your address list full of black holes?

Your opening rate may be low because you are sending to people who no longer respond. They are not bad addresses, just people who ignore you. Use your metrics to isolate the “black hole” addresses, those who have not opened your mail in more than six months. Then send them a targeted message with a compelling subject line, inviting them to update their mailing preferences, complete a survey, or even get some incentive. Then delete anyone who stays unresponsive.

2) Do you know how your messages look to all of your readers?

What impact will Microsoft’s decision to use Word to render HTML e-mail in Outlook 2007 have on the appearance of your work? How do your e-mails look on a mobile phone, web-based mail, Blackberry, or PDA? How do they come across in different browsers and mail clients? You should test in as many combinations of browser and mail client as you can. There are services that will do this for you. Try SiteVista's email service ($49 per month): you send an HTML email to the address they provide, and immediately view the rendered message as it would appear in various email clients. (To see how your message, or your site, looks on different browsers, use BrowserCam. A one-day pass gives you unlimited screen captures of your web pages using hundreds of combinations of browsers, platforms, resolutions and plug-ins – all for under $20.)

3) Do your opt-in processes actually work, and how porous are they?

The fewer steps a user has to take to get to the final opt-in click, the less likely you are to have people abandon the process mid-way. Test the links and every step that a reader will have to take. If there are five or more clicks from start to finish, you might have a problem. If you can reduce the steps that it takes, do so. Don’t try to get lots of information at the opt-in stage, merely an e-mail address will do – and you can get that automatically with a simple “click-here-to-subscribe”. If you need to know more about your subscriber, fill in the blanks progressively as your relationship matures.


4) Do all the links in your e-mail messages actually work, especially your unsubscribe links?


There are different types of links: internal links to content that allow readers to jump around the e-mail; links to content on websites; links to images not embedded in the e-mail; and service links such as subscribe, forward to a friend, and the all-important unsubscribe. Have someone test all of them before the e-mail goes out, and make sure the actual e-mail as received is tested on a computer other than the one used to create the e-mail.

5) Who is watching the incoming mail, especially in the unexpected mailboxes?

Just because you give people the right links to click dos not mean they will use them. Just because you tell people not to reply to auto-emailed messages does not mean they will obey your instructions. There should never be such a thing as an un-manned e-mail address.

6) How likely is your e-mail to trigger spam filters?

Different spam filters get alarmed by different things. Your images, links, hidden code, and even use of words or capitalisation can get your message bounced before it gets to its destination. Most e-mail marketing services provide an automated spam check of your mailing – use it. Services such as Constant Contact or Mail Chimp will alert you to things you ought to change to increase the likelihood of your e-mail getting through.

7) How does your e-mail display in mail clients using image-blocking and/or preview panes?

Most mail clients (even web-based mail) now provide preview panes that allow users to see the top part of a message without actually opening the whole thing. That’s good because you are not solely dependent on your subject line to get the recipient to open the message rather than delete it; it’s bad because the top part of your e-mail may be a turn-off. At the same time, most mail clients’ default security settings block images in e-mail (whether embedded or linked). So it’s a good idea to use a combination of compelling content and non-image layouts, colours, and fonts to make the first five-ten centimetres of your message as irresistible as possible. Once the reader wants to see your message, they will do the simple click-to-enable the images. To help them decide to do this, make sure you use compelling alt tags with each graphic which will display in place of the image.

8) Are you immediately engaging new subscribers to your list, and trying to ensure those who have recently unsubscribed leave with the best impression of you?

Don’t leave a new subscriber hanging for months after they have made the commitment to join your list. OK, some people fall through the cracks (we all do it), but work on making your cracks a lot smaller. When someone unsubscribes, confirm this in an e-mail or on the unsub landing page, and provide a link to a brief exit questionnaire. You can learn a lot from this feedback that can help you recapture those who you have lost, or prevent more people from leaving for similar reasons. Remember, markets are conversations and everything we do should be geared to facilitating relationships.

9) Are you sending messages too often, or not often enough? Are you sending them at the right time of day, on the right days?

Depending on what it is you are communicating, you might be mailing daily, weekly, bi-weekly, or even seasonally. If your mailing goes out every few months, you risk people not remembering you and unsubscribing. Too frequently, and they will unsubscribe because they feel spammed. The key is to match content to frequency, and frequency to recipient expectations. If you have a large enough list, test different frequencies to see what the success rate is and what the unsubscribe rate is.

Telkom Takes Over Internet Service Provider Africa Online

What do you do when you already own the telecommunications market in your home country? You expand internationally. Telkom has apparently acquired Africa Online, an ISP that operates in ten African countries, including South Africa's neighbours Namibia, Swaziland and Zimbabwe. Telkom will pay R70 million to African Lakes, the UK-based company behind Africa Online.

The penetration of the internet is of course very low outside of South Africa, and there is actually real competition to deal with, so Telkom may find its management competence a little stretched. In South Africa, Telkom's battles with its "competitors" could be likened to a club rugby team who only ever plays against school under-14 teams -- and gets to change the rules depending on the run of play. But out in the real world, there are All Blacks and Lions and more or less level playing fields. With luck, the experience will enlighten senior management at Telkom, and teach them something about customer service.

Perhaps they might even pick up on the economics of abundance -- imagine the impact on Telkom revenues of providing really low-cost web access in South Africa. Imagine the impact on the economy and education...

Business Day article

Neotel gears up for corporate launch

Only five years behind schedule, South Africa's official second fixed-line telecommunications provider Neotel will be launching phone and internet services for business customers from mid-March. Apparently Tata-managed company has already acquired more than a dozen large corporate customers.

They are currently putting together a cable/fibre network and a Wimax/CDMA infrastructure that has the ability to bypass Telkom's stranglehold on home phone lines. Neotel are promising to undercut Telkom's prices (how hard can it be to undercut the highest prices on the planet?) and to beat them on service (again, how hard can this be?).

IOL Technology Article