Here’s My Business Model, Fund Me Maybe? The Startup is America’s Themesong

I have recently taken on some marketing consulting for a friend and her Internet startup. Sierra and husband Jeremy Penrod founded The Dress Spot, an online dress retail site, in January 2013. Their story is to the 21^st century American economy what Call Me Maybe was to the summer of 2012: the themesong, the one you heard countless times, in your car, over small radios on convenience store counters, at community gatherings being belted by throngs of tweeners. It is an anthem indelibly etched into the consciousness of an entire culture. Years from now, when we here Jepsen’s teen anthem it will take us right back to summer 2012, and when we hear the Penrod’s story we will be right back in the marketplace of the 2000’s and 2010’s. A story so American and so timely deserves telling.

First, the backstory. Sierra is from Littleton, Colorado. Jeremy is from Orange County, California. They met as undergrads at Brigham Young University in Provo, Utah, and as so many BYU undergrads do (myself included), they got married. But before they could get married, they needed a wedding. Sierra’s colors were peach and slate blue, which should have been simple enough. Long story short, searching for bridesmaid dresses in a color range so specific proved disastrously impossible. So difficult, in fact, that she was forced to dumb down her color pallet to simply pink and blue (Where was Martha Stewart in all of this? She hasn’t recommended a wedding color pallet with two readily identifiable color hues anytime in recent history. What does she expect brides to do when she sells them on a fuscia and taupe wedding?).

Well here’s where it gets good. Jeremy is studying Information Systems and Computer Science. What’s that you say? The Internet no good? “I can fix this,” was his response. And I imagine more or less those exact same words are spoken by every entrepreneur who dares to incorporate. The story of the 21^st century American economy is the story of the one who saw what was broken and said “I can fix this.” For the Penrod’s, “I can fix this,” meant building a retail website from the ground up, but doing it better than anyone else. It meant months of writing and rewriting code to create search tools powerful and precise enough to let brides, bridesmaids, and anyone else looking for a dress to search by more than 650 colors, be it peach, slate blue, fuscia or taupe.

The details of the Penrod’s story with The Dress Spot are unique, but the narrative is woven so tightly through our business landscape that we would hardly recognize our economy without it. Cheryl Conner is a PR consultant in South Jordan, Utah and regular contributor to Forbes Magazine. In July, 2012, Conners published a piece in Forbes titled Who's Starting America's New Businesses? And Why? The article sets out to profile America’s entrepreneur. The picture she paints sounds an awful lot like the team behind The Dress Spot. She is quick to point out that the number of people starting businesses in the U.S. is huge. According to the Kauffman Index of Entrepreneurial Activity, each month, 320 of every 100,000 adults in this country start a new business. Of all the new entrepreneurs in America, nearly 30 percent are age 20-34. The U.S. market in not only a great place to start a business if you are young, but according to a recent world wide study produced by Dell, it is also the best market in the world for female entrepreneurship. But the similarities to Jeremy and Sierra’s story don’t stop there.

 

Zooming in from a national to a regional profile of entrepreneurial behavior reveals even more similarities. Think it's any coincidence that The Dress Spot is a Utah based company? A 2010 report by The Association of University Technology Managers found that when it comes to University produced startups, BYU ranked 3^rd in the nation. The number one spot? The University of Utah, with only MIT separating the two. If there is a company breaking into the tech sector with university students behind it, the odds aren’t bad that it calls Utah home.

So it’s entrepreneurs who are the face of America’s economy in the 21^st century. Granted, the bulk of the economy is populated by players that are largely familiar and have been playing the game as long as anyone cares to remember. But these aren’t the charismatic megafauna. Who are the Great Pandas or the Emperor Penguins of the business world? Who are the American businesses that we want to drop down and cuddle with? The ones that we rally behind because they are symbolic of a movement or change that we want ot see in our business landscape? It’s the little guy that strikes out on his own. Today’s iteration of that story is Sierra and Jeremy Penrod and The Dress Spot. They are young, half of them are female, and they are a tech startup from a region and educational system that produces more tech startups than just about anywhere else. They are theme song of our economy. You’ve heard their story a lot lately. Well, you’re going to hear it a lot more. So here’s my number, call me maybe.

Crowd Sourced Marketing: The Internet is the World's Democracy

Democracy: Invented by Greece, Popularized by America, Perfected on the Web.

The internet is a virtual web of democracy that covers every nation and plagues even the most tight fisted administrations. It is the ultimate platform for equality. At the heart of its democratic fabric is crowd sourcing. Anyone, anywhere can contribute to or consume information, goods, or services from anyone else. This thinking is working its way into just about every industry there is. And advertising is no exception.

Websites like poptent.com  host a network of creative minds with willing video cameras, lighting equipment, storyboards, and computer savvy, all willing to make advertising content for your company. 

 All you have to do is submit your assignments and let the masses go to work. In return you will get polished, finished material that is web and broadcast ready. At last year's Crowd Conference in San Francisco, Photobucket VP of Marketing, David Toner, played a video spot that he had commissioned from Poptent. He said that he had purchased this, and four other video ads for 1/7th the price of a traditional advertising agency fee.


Crowd Conf 2012: Changing the Future of Work - David Toner (Photobucket) from CrowdsourcingDE on Vimeo.

This new model is cost effective and is beginning to be embraced by big name players. Poptent's first client was Nestle, but now that list includes the likes of General Mills, Coca-Cola, Procter and Gamble, American Express, LG, Vizio, FedEx, and many more. Crowd Sourcing may just be an integral part of the future of content creation. The question is, how will traditional agencies adapt?

Google Vs. Bing

Last year Google reported revenues from ad sales on the Google AdWord platform of over 43.6 billion dollars. Chicago based company AdGooroo released a study comparing the average Cost Per Click (CPC) spent in each of the six key online sectors that buy advertising. The amount these sectors are ponying up for a humble mouse click runs anywhere from $0.72 up to $3.51. Take a flat mathematical average of all these CPC’s ($1.83 per click) and divide them into the total amount spent on advertising last year (and pretending, for nicety’s sake, that all six industries buy equal amounts of advertising), and you get 23.8 billion mouse clicks that generated revenue for Google in 2012. Or in other words, every second Google sells 1,509 CPC advertisements to the tune of $2,765. Want to go one step further? Google tops the tech industry pay charts with a staggering mid-career median salary of $141,000, which means it takes Google ads just under one minute to pay their average employee’s yearly salary. Multiply that by 38,739 employees, and Google makes payroll for the entire company in just under 27 days. Even in February that doesn’t take all month. And all of this from CPC advertising.

Google has one major competitor for your CPC advertising dollars, Bing. So the question is, what does the competition have to offer?

To Bing, or not to Bing?

Is it better than Google? No. Not really. Consult the aforementioned AdGooroo study and you will see that Adwords trumps Bing in Click Through Rate (CTR) by anywhere form 2.4 to 5.2 times. The average ad impressions on Google’s platform is 22.5% more than on Bing. If you want your ad to end up on the First Search Engine Results Page (SERP), you’re better off with AdWords as well. Google gets 35.7% more of its advertisers on First SERP than Bing, and of advertisers who use both, only 6% reported they didn’t get First SERP with AdWords compared to 42% who did not land on the first results page with Bing. But these are secondary reasons Google outperforms Bing. The primary reason isn’t the quality of its advertising platform, it’s the simple fact that Google’s search engine commands 2/3 of the market share, while Bing only has 1/3. But look for a moment at the mobile marketplace. Google is the default search engine on all Apple mobile devices and Android devices. Where does that leave Bing?

So are there any good reasons to advertise with Bing? Sure, just run that question through an impartially selected web browser and you’ll get hits all over the web with long lists of reasons to Bing. For me, however, it all boils down to three simple reasons: cost, diversity, and early adoption.

1: Cost. Bing is cheaper, a lot cheaper. About 40% cheaper, in fact. So that’s obvious.

2: Diversity. Think of your advertising budget like a portfolio. You have to diversify. You don’t want all of your money in the stock market, so you buy bonds, annuities, gold and invest in great companies like AOL. That way, when things take a Ted Turner for the worse in one sector, you still afloat in all the others. Putting your entire ad spend in AdWords can be risky. Google plays it heavy handed when deciding which ads they like and which ads they don’t. And when they find an ad they don’t like, or, as was the case in December of ’09, 30,000 ads they don’t like, they simply delete them. How would your campaign fare if you woke up tomorrow and you no longer existed in Google? So spread the love.

3: Early Adoption. It’s not too late to be an early adopter of Bing’s Bing Ads platform. There aren’t nearly as many people advertising on Bing as on Google, which is why prices are so much lower. But all the data shows Bing on the rise. Bing is increasing spending on CPC 10% faster than Google and as a result it is growing much faster. Quarter-over-quarter Bing is stealing market share from Google. Which means what is cheap today because demand is low won’t be cheap tomorrow. Hearken back to the investment model. Want to buy Google stock? Good luck. It’ll cost you $893 per share. But if you’d been smart enough to buy Google stock in 2004 you could have practically stolen it at $85 per share. So don’t wait. Bing is growing and it’s getting better all the time. It’s also gaining traction in big places. For instance, Firefow recently switched its default search engine from Google to Bing. And in the smartphone/tablet market, Apple recently announced that when it releases iOS 7 this fall, it will use Bing to power Siri’s search functions. The trajectory is promising, the time is right.

So long for now, and happy Binging.

The Online Cookie Jar: The Cookies May Be Disappearing, But The Fingerprints Remain

Online privacy is a nasty question to dissect, mostly because it’s a term that is at odds with itself. We love going online, we hate being followed, but you can’t go online without someone knowing what you’re doing. Truth be told, for the average web surfer, the only ones who really care what you’re up to are people who want to sell you something. In fact, according to the Interactive Advertising Bureau, some 80% of marketing campaigns use online behavioral monitoring to pinpoint their target audience. So yes, someone out there is paying money to know what sites you visit, what you clicked on, what you bought, what you skipped over, and so on. Anyone with any experience in web marketing knows this data is indespensible and isn’t likely to go away anytime soon. What is potentially going away soon is the mechanism for collecting this data.

For years it’s all been about the cookie. You hit up my site, I give you a cookie, that cookie follows you around and reports back to me. I compile the data on your activity and sell it off to whoever is interested so they can follow you around the net with more ads for that revealing euro swimsuit you "accidentally" clicked on. But cookies can expire. Or they can be blocked by the user. And they are not supported on mobile devices. This is where the new tech comes into play.

You can shake the jar without taking a cookie, but you can’t help leaving behind fingerprints.

Your computer or smart phone is unique. Websites can read the individual characteristics of your device to determine your identity much like forensics experts can read the lines and bowls of a print to nail a perp. A recent article in Forbes by Adam Tanner explains that digital fingerprinting takes the, “characteristics of a computer such as what plugins and software you have installed, the size of the screen, the time zone, fonts and other features of any particular machine,” and uses it know exactly who is visiting a website. What’s that, you say? You run the most popular operating system on the most popular platform with a fixed screen size so you think you won’t stand out? According to the Electronic Frontier Foundation, if you use Flash or Java (and let’s face it, you do, everybody does), then there is a 94% chance that you are uniquely identifiable by your digital fingerprint.

And it goes deeper. Companies like AdStack sell a service that allows you to send out an email whose content upon opening can be changed in real time. What? Huh? So the initial email that lands in your inbox is essentially just a hollow frame, a place holder, without predetermined content. When you open the email, a host of behavior monitoring data is computed instantly to determine what you will see. A business could run different promotions based on availability of inventory. Or maybe there has been an important change in your web history from the time the email went out till the time you open it. No problem, the content is fluid.

This kind of tech is powerful, but try and read up on who is using it and you will soon find there aren’t many owning up to it. It bears quite a stigma, but is this justified? That’s a question worth asking. Let’s put it another way: You can’t have the web without being watched, and the watchers fuel the advertisers, who in turn keep much of the web free. The question, then, is do you prefer advertisements tailored to your behavior, or not? Here is a true story. I set my free Spotify account to “House on Pooh Corner” for my year old daughter. In less than an hour I heard an ad for provocative, hard core rap music, and two ads for Trojan condoms. I’ll take tailored content everytime.