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Mar 11, 2003
Case Study

Cut Online Ad Costs by 90% & Raise Sales - 5 Tips for Search Marketing

SUMMARY: This Case Study will be fascinating to everyone involved in paid
search marketing. The folks at reveal the 5
lessons they learned (including how to cope with fraud and
trademark abuse) when they switched from buying banners to buying
search text ads.

Plus, you will also hear how they revamped their email newsletter.
Before it produced almost no direct sales. Now 1% of recipients
buy within 30 days.

The traditional late-summer sales slump due to
vacations extended far beyond its regular Labor Day boundary last
year due to the anniversary of Sept 11th.

Normally when everyone gets back to work first week in Sept.,
companies see a sudden upsurge in sales. This time the upsurge
felt; muted. Sales the following week, when the
anniversary fell, were definitely off. (In fact we predict this
pattern may hold to a lesser extent in 2003 as well.)

After this business slow-down of more than a month, Phillip Akalp
President of was definitely feeling the pinch.

"My co-founder said, 'Phil we need $150,000 more in 60 days or
we're in trouble.'"

Akalp immediately reviewed his biggest monthly line item: marketing costs. An early proponent of placing banners for his
site against relevant search engine results (see link below to
our Dec 2000 Case Study on his tactics), his search banner
marketing budget was $120,000-$150,000 a month.

The conundrum: If he cut the search marketing budget enough to
save that much-needed cash, how would he be able to replace the
sales expected from it?


Akalp had been increasingly disappointed in banner
results at search engines, so he was ready for a change anyway.
"We used to receive a 2-8% click rate depending on keyword, and
all of the sudden it dropped to .5% or less for keyword-based

He blames the search sites for this. Akalp thinks banners would
still work if it were not for increased competition from other ad
units on the page. "We used to own the 468x60 banner on AOL for
our keywords. Then they added a 120x60, and a second one, then
they added featured site links, then they added different
featured site links. These guys oversaturated their results
pages with competing links.

"MSN search used to have a wonderful click rate (it was
something like 17%) but they started selling more and more
listings above it, below it, incorporated Google or Overture
listings, we were down to 2% clicks. It was no good for us
paying on CPM."

He took a big risk and bailed on the relationships, cutting
paid banners almost by 100%.

Instead he gave himself a budget that was just 10% of his former
paid banner budget, and dedicated it to two tactics he hoped
would bring the same amount of sales in despite marketing cuts.

-> Tactic #1: Testing PPC Text Ads on Search Engines

Akalp decided to test the one tactic every B2B marketer on this
planet is trying right now: PPC (pay per click) text ads on
search engines. He tested Google and Overture.

He also tested LookSmart's paid inclusion service at the same
time (you pay per click for search engines to notice your site,
but you are not guaranteed specific placement in results. For
more info see link to our quick tutorial below).

Five keys were critical to his success:

a. Tracking conversion rates

Prior to investing in any paid ads, Akalp had an internal
metrics system set up so he could track the click-to-buyer
conversion rates by service and by keyword.

Also, although it is not possible to tell precisely what you
paid for each individual click with Overture and Google, Akalp
closely reviewed the general cost data they provided to make
sure his costs were in line with expected conversions so he
would not lose money.

b. Upgrading landing pages

Akalp already had pretty good landing pages (the web page
clicks end up at) and had created specific pages for heavily
used search terms so that visitors were presented with exactly
what they were looking for.

Now he took the next step beyond watching conversion metrics,
and hired a research company to run focus groups on the

"We found reliability is very important, and the fact that we
were going to be there for them after we incorporated them.
So what we did was focus on reliability, 'We'll be there for
you' on our landing pages," says Akalp.

He adds laughing, "Of course immediately after we did it, our
competitors did too."

c. Testing copywriting changes on PPC ads

Akalp changed the copy on his PPC ads, "all the way to the
point of changing the company name" every two-three weeks.

"Clicks come through very heavily at the beginning and quickly
fade off. I don't know why exactly. After we change listings
we start seeing increases again. Maybe people are getting
sick of staring at the same old stuff. It's the old rule,
change it after they've seen it three times."

d. Watching out for fraud

"At Overture we were paying $13 a click to get in one keyword.
We were pumping in $1500-$2000 per day, and we were getting
zero sales."

It did not make sense, so Akalp ran a detailed log analysis to
trace the IP addresses clicks were coming from. "Overture has
anti-fraud clicking technology, but I was getting all these
clicks from China, Thailand and Italy. They started occurring
daily at different times from the same IP addresses, it was
pretty heavy."

First Akalp contacted Overture to try to get help. However,
their suspected fraud procedures, which are understandably
strict, were just too time and resource intensive for Akalp to
handle with his current staff and systems. He cancelled
the account completely.

"I tried maybe $15-17,000 with Overture, but when I realized
we only had maybe $2000 in sales in total over a 10-day
period, I stopped it."

e. Protect your trademark

Akalp was walking past one of his employee's desks one day
when he happened to notice two things that stopped in his

His staffer was trying to get to's home
page, but instead of typing the address in her browser, she
typed it into the Google toolbar search box that is displayed
immediately below it. "I realized that must be really
increasing, people typing URLs into the Google toolbox
instead of their address bar."

Which means many people who are trying to get directly to your
site without searching, are being presented with search
results instead.

Worse, Akalp noticed that paid ads for many of his competitors
showed up in those search results, potentially diverting
traffic that should have gone directly to his site. He
immediately contacted Google and let them know that his URL
was a registered trademark.

"They were so friendly. They removed all the competitor
listings within 24 hours."

Akalp also contacted Overture about the same thing, and they
too responded fairly quickly, removing competitors' ads within
about a week.

-> Tactic #2: Testing Relationship Marketing

Like many marketers, Akalp had been so busy driving new business
with advertising that he had neglected to spend much time on
relationship marketing afterwards. In Sept 2002, he began three
campaigns to rectify this:

a. Formal follow-up campaign to all new buyers

Akalp asked his call center to phone every single buyer just
after the customer got their package in the postal mail. This
was *not* a sales or marketing call. It was very clearly a
service call.

"It might sound a little corny," he says, "but, a good service
call after delivery is everything. We ask, 'Is everything ok?
Did you understand what you received? Do you have all the
materials you need?'"

All packages sent include a Roldex(tm) card with the service
phone number and reps reference this when they call, "Keep us
in your files, we're here for you anytime, just call us."

b. Revamping the email newsletter for added value

About 100,000 customers and prospects had
signed up for the Company's email newsletter over the years,
but Akalp did not see many sales results from it.

Last fall he looked over past issues trying to figure out how
to improve them. The previous newsletters had followed
classic email marketing rules, they were short, punchy and
contained lots of links to various offers.

Akalp decided to test the opposite approach. Instead of quick
and salesly, he made the newsletter longer and more valuable.

Each issue now features an in-depth article on a particular
topic. There are links included, but they are related
hotlinks so the reader can learn more about that topic. Akalp
tries to make them as useful as possible. For example you would
get "deep" links to the exact page you need on the IRS site's
versus a general link to

Each issue also includes a poll asking readers what sorts of
topics they would like advice on in future issues.

Akalp had been selling sponsorships to his newsletter in the
past, but now he removed them. The only overt ad is section
of the right vertical navigation bar that looks like a clip
out coupon.

He also began posting the newsletters on the site. Instead of
listing them merely by date, he listed each newsletter by the
topic of the article it contained, which was much more
valuable for visitors.

c. Deepening affiliate relations also had an affiliate program since the days
of yore, but it too had been on auto-pilot. Akalp decided to
invest in hiring a business development staffer to focus on
revving up affiliate revenues.

Along with approaching new potential affiliates, the staffer
spent a great deal of time working one on one with current top
affiliates. "One guy was so frustrating. He had this lame
pink and green site. It was built in FrontPage and he didn't
even know how to get hotlinks to work." Nevertheless, Akalp's
staff went the extra mile, being persistently helpful with the


"We cut our ad budget to $10,000 a month, and have
seen an increase in sales volume over that time that's
shocking," says Akalp. "I was surprised when I saw the drastic

The Company is back in solid financial health again. Akalp says
his lesson learned was, "Don't be afraid of change when things
are looking bad."

Results details:

- is continuing with Google AdWords, while
watching costs and conversions closely, because it has been
profitable so far.

The Company is also continuing its LookSmart relationship,
although Akalp is slightly frustrated by the fact that by its
very nature a paid inclusion service can not promise exact rankings
or listings. He says, "It's worth spending the time to write
your URLs titles and descriptions carefully so you'll rank well
for your keywords."

- Akalp can not point to specific metrics for the follow-up phone
campaign, but notes, "I can stick my thumb out in the wind and
feel it's working. Now we notice the same customers putting in
multiple orders. We asked them, 'Why are you forming two
corporations?' They say, 'I'm doing this one for my friend.'"

- The average newsletter produces about 90 direct sales (almost
a 1% response) when first sent, many from clicks on coupon.
However, Akalp notes he continues to see sales in dribs and drabs
months later from visitors surfing old issues on the site. It is worth posting them, and worth making sure all old promo
links continue to work.

- Akalp was stunned by the response to his first reader poll in
the newsletter. More than 3,500 recipients responded, a 3.5%
response rate which is outstanding considering the age of
the list and the fact that prior issues had been less "valuable."
"I was shocked," he says.

- Approximately 2.6% of unique daily visitors sign up for the
newsletter at the site. This includes buyers who click on the
box to get the newsletter and non-buyers. It is worth noting the
site does not have a pop-up to encourage sign-ups.

- The affiliate relations program is a solid success. Akalp's
team have learned to judge affiliates by results, not by how great
a site looks, that lame-looking pink and green site
referenced above for example pulls in tens of thousands of sales
every quarter.


1. Quick Tutorial: Search Marketing Metrics & Tactics (no cost
for the next two weeks):

2. Our first Case Study on MyCorporation (no-cost access for the
next 7 days):

See Also:

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