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We are not in a bubble but the social networking space is getting more competitive.  Just on a side note I have noticed that many people who had very successful apps in the beginning are no longer building apps and have moved on to doing other things.

There are many ways to monetize an app: cpn, cpc, cpi, incetives, cpa, survey (like peanut labs), and cpe, transactions, gifts and subscriptions.  The banner model is broken and does not work.  So we need new and innovative ways to monetize the apps.

Videoegg just launched a new product called ad frames.  Basically there is a small preview on the page and when the mouse is placed over the ad a larger video frame comes up with the real video ad.  Advertisers only pay for actual views of the video. Lookery now has a guarenteed CPM of $1.25 for app developers.
Direct response is driving most of the money on social networks.  Branding dollars are starting to come as social networks grow.  The big brands don’t have a choice but to pay to get involved.  Most large brands need to do many things like sponsoring apps, buying ads and participating in anyway they can. Most brands spend 6x more on TV than on online spending.  This will shift to more online spending over the next few years.  We are monetizing new kinds of user experiences.  It doesnt matter knowing what a user buys if you know who the user actually is.  This is what most large companies are having trouble understanding.

How effective is the current monetization methods?  Many apps are making money with virtual currency.  Ads are not working as well.  VideoEgg obviously says that ads that are engaging user better and are making app developers more money.

From an advertiser perspective all the ad companies are very much about branding and selling CPMs and no one is talking about actual trackable performance.  The good think about AdWords is that it is based on results and tracking ROI.  It is conserning that the ad networks on social networks don’t speak to this.  I am sure this means that CPM is the only way to monetize social media. There is still a lot to figure out in this area.

At the snap chat last week 2 guys (I didn’t catch their names) from WidgetBox.com spoke.  I have never built a web widget before and am simply not that familiar with them so this was a great opportunity for me to understand them better. Widgetbox distributes apps, has 18k developers, 25 Million page views per month and has 30k apps/widgets.

The most common use of widgets is to install them on your blog.  Most are built for WordPress or Movable type.  Also lets not forget Google Gadgets and Yahoo widgets (confabulator).  Then there is the desktop widget. There is a huge audience here and possibility to get your app distributed to thousands of sites.  Widgets tend not to be quite as “Social” as a social network because they don’t have the data that the social networks do.  But I think that hooking a widget into an app in Facebook or an OpenSocial site will be big soon.  Many people on the social networks also have a blog.  There is opportunity in this space and will be for a long time.

Tips for building a widget:

1. Match your audience.  This means take into account who will use the widget and what they want to do.  The Beebo audience is much different than the Eons audience.
2. Focus.  There are many ways to get your widget installed like widgetbox, yourminis, spring widgets and clearspring.
3. Operations.  This is the APIs, the networks, hosting and all the rest of the details.  Make sure you do it right and have a plan that scales well.  If your widget takes off you want to be ready.
4. Marketing. There are several ways to do this.  The above sites all have galleries where users can find apps.  There are also many widget directories.  But don’t forget good old virality.  Have your users invite their friends, make the install easy, and keep it going.  There are many widgets out there but the good ones grow on their own. Use an installer that launches right from the widget and also provide a “Get code” feature so it is easy to embed in a website.

For a good example of a widget check out the Netvibes widget.  Use your widget to push data out and bring users in.

Yesterday I attended the Snap Summit conference in San Francisco. This was a conference on the Facebook developer platform and covered many different topics related to Facebook app development and marketing. Here are a few of my notes and thoughts on application monetization from the conference. You can check out our new Facebook ap at www.wererelated.com.
Notes from the facebook platform manager Ami Vora:
There are currently 5,400 apps with over 100 daily unique visitors. Facebook has issued over 88,000 developer keys. 85% of all facebook users have installed at least one app. So the users are liking the apps and there are many to choose from. Currently they have 49 Million active users. The new users are 25+ years old or in high school or are international. More non-collage users than collage users. 1/2 of all facebook users are out of US with many in Canada and UK. They have 60 Billion page views per month and average 50 page views per visitor per day.

Facebook loves to talk about the “social graph”. This is how everyone is connected in facebook. They define the Social Graph as network connections in the real world through which people communicate. Any app that understands and uses the social graph will do well. The reason that facebook has more photos than all the photo services out there is because those photos are tied to the social graph and have meaning to people.

Their advice is to provide content and focus on social interaction. This is what they build facebook around. They also said to pay attention to usability. Fresh content creation is also key.

Notes from the advertising panel:
All consumer software will soon be free (within 5-10 years). There was some debate on this but all agreed that most consumer software is moving in this direction and will be ad supported. Currently facebook apps are seeing a very low $.01-$.50 CPM. Google ads are not working because click through rates are very low. People do not want to click off when they are working in facebook. So this is a huge issue. Currently other developers are buying ads and this is about the extent of the current ad model.

They through out several examples. One of someone with 600M monthly page views making $20k per month. Another of someone with 100K daily active users making about the same. These are exceptions (most don’t make any). They stated that most facebook apps do not have a business plan and are just grabbing users in hopes of either selling their app or hoping something comes along to help them make ad dollars. But everyone on the panel was optimistic that facebook or a partner would figure out how to monitize facebook. The Microsoft investment gave everyone hope that they would help facebook figure it out.

They did speculate about the November announcement. And one panelist thought that facebook would be announcing that they will take the information they have on facebook users and use it to serve targeted ads outside of facebook. When the facebook users are visiting other sites. This seems very strange to me.

The president of Flixter was very sharp and really got it. His point was that they don’t need to sell ads but rather they are selling social interaction with their users to major movie studios. So they report back all the interactions their users have with the movie like page views, movie reviews, discussion boards, trailer views, ect. I thought this was a great approach and a new way to think about getting branding in facebook (for a fee!).

Additional thoughts:
I was very disapointed in the ad networks that were there. They all seemed about 8 years behind the times and are focused on banners and CPMs. It just seemed like they are trying to start over and have not learned from what Google has done in the ad space. I think facebook would be dumb not to add the ability to serve up tarted text ads to their users based on content on their pages or in their profiles. I think this will happen. Whether they provide a way for developers to take part in this or not is unclear. It was clear that most of the apps out here have no business plan and no real business behind it like ours. This will give us a huge advantage over others.

I was not impressed with the other developers at the conference. I think many have moved over from experience with myspace widgets. And most don’t think big. They are looking for the easy $. Even though there are thousands of apps most of them will die off. Ours is one of the first next generation of apps that really provide value. I think there is an amazing amount of opportunity here still for real businesses and real apps. Someone brought up the point that all the apps developed so far have taken less than 5 months to develop. So the real apps are yet to come.

I also think that the other social networks will have to follow facebooks open platform lead. This model will not be going away anytime soon. So we have to make sure we are ready to jump on the other platforms as they come along.

Keep coming back because I will be blogging more and more on Facebook development and application marketing.

One big theme of SES was getting user feedback on your site and doing usability studies. Before I get into optimizing landing pages I just want to note that it should actually be your site visitors that are designing your pages. The best page is not one the designer, marketing department or CEO likes best. It is the one that your site visitors like best. And they vote by becoming your customers.

First here are some mistakes to avoid when designing your landing pages.

1. Never ignore your baseline. You need to measure progress against something to know if you are making improvement. I have fallen into this trap before because I think I can remember when I make changes to the site and when I did it. But a week later I can’t remember where I started (or even what I am testing). So you need to keep some type of record. If you are using Google optimizer it will keep track of your baseline for you.
2. Not collecting enough data. Make sure you have a valid sample size to draw valid conclusions.
3. Forgetting about interactions. Interactions are how different elements of your page interact with each other. One headline may match up well with an image for example. And you need both to see the improvement. So don’t do multiple independent A/B tests on the same page. If you have more than one thing on a page to test do a multivariant test. This will test every combination and will tell you which is best taking into account all possible interactions.

Focus your optimization efforts above the fold. This is a mistake I often fall into because I love long sales pages. Long pages work well for single product-single page sites. But most commercial web sites have a much more complex decision making process. Conversions mirror eye tracking studies. So place your most important items where people’s eyes are naturally drawn.

You have to remember that most people on the web have a “blink of the eye” mentality. You only have a precious few seconds to convey your message and draw the user into taking the next step. Leave them a “scent” they cant resist. Before you can convert a user you must first get their attention.

Jamie Roche the president of Offermatica gave some great points on using personalization to improve your conversion rate. I touched on this in my previous post on personalization. But if you know what a user searched for in the search engine, then re-enforce that on your landing page when they get to your site. “You searched for X and we have it in stock!” Here are easiest and best ways that Mr. Roche suggests you use to get started with personalization:

• Give new visitors a different message than return visitors. This is easy to do with a site cookie.
• Affinity – If they enter your site in a specific category then show them information on that same topic the next time they visit.
• Time/Day targeting. Visitors to your site who come during business hours may be very different than visitors coming to your site during the evening or on weekends. Tweek your site experience to best capture these different users.
• Geo targeting. This can be an easy way of providing a personalized message. For example on World Vital Records we should highlight data that is close to where the user is from.
• Paid vs direct. If your user came from a paid source they may need different messaging than if they came from organic search listing.

Mr Roche really enforced that you just need to pick a starting point. Don’t let it overwhelm you. Start small and work into a fully personalized site experience later. But even though you may start small you need to still think big. Have a big personalization strategy and work toward it.

There are several approaches you can take to optimizing your landing pages and your site messaging in general. You can do it in a evolutionary manner where you start with what you have now and make small changes over time. Or you can take a revolutionary approach and test something very different. This method has the largest chance to greatly improve your conversion rates but also has more risk that your test may tank hard. He likes the revolutionary method.

The overall point is that you need to optimize your landing pages with the user in mind. An optimized page means that your site visitors find it more compelling and more useful. The user experience is better and thus the conversion rate goes up. So don’t get lost in the numbers and in individual tests. Think about the user and making improvements for them. Show them what they want and conversion rates will follow.

I had the opportunity to hear Bryan Eisenburg speak on web site conversion. It just so happens that I am currently reading his book “Call to action”. Paul gave me the book about a week ago and I am about half way through with it. It is taking forever because every page is packed with great info. I have highlighted it and have been writing notes on almost every page. Anyway, it was a great opportunity to attend his presentation. He is one of those guys that you can tell really knows his stuff.

Here are my notes and thoughts on improving your web site conversion rate. Eisenberg promotes the idea of “persuasive architecture”. That means you need to architect your site in such a way that it persuades users (he hates the word user) to go down the paths they need to convert. To do this you must take into account the different types of visitors you have on your site. Then have a way to persuade each user down a path tailored to their specific needs.

There are 4 types of personalities to take into consideration
1. Competitives
2. Methodicals
3. Humanistics
4. Spontaneus

Define each personality and how they will relate to your product. Define each as a profile. Then decide which action (or actions) you need them to take to get to a conversion. Then come up with specific information that each profile needs to feel confident in their decision. The persuasive architecture is centered around the idea of helping as many users as possible feel confident and conformable becoming your customer.

There are 7 formulas for success in having a great conversion rate:

1. Product images tell a story. Make sure you have the right images that connect with your users.
2. Test headlines and hyperlinks. Small things can make a big difference. For example test fractions against percentages (50% off or ½ off). Test asking questions. Also test self focused messaging against customer focused messaging (You can _____ or We will _________).
3. Test various call to actions. Get them to click by telling them what they get. Instead of “learn more” use “Help me choose” or “download now” for example. Also use shading on your buttons (he says it helps)!
4. Point of action assurances. Make sure your visitors know they are on the right path. Make them feel good all along the way.
5. Make it obvious and expected. As you look at your pages, ask yourself if it is clear to your visitors what they should do.
6. Don’t make them wait. Site latency can kill your site conversion rate. Check out the yahoo firefox plugin Yslow that tells you what the problems are with your site. http://developer.yahoo.com/yslow/
7. Does your site stink? You need to leave a relevant “scent” on your site. These are the hints that you place on your pages to lead users down the path they need to go. A scent is made up messages that convey motivation, persuasion and value. Keep them on the path using one of these techniques.

Much more to come on conversion rates. I will be running some A/B and multivariant tests on my site and will blog the results.

Web analytics is one of the most valuable tools for making business decisions available to an Internet business today. But all to often they get used only for reporting. Analytics is not reporting! Here are a few suggestions to make sure you are getting what you need from your web analytics:

1) Take a step back and look at the numbers as visitors. What are they thinking? What are they really doing? Often usability problems are not captured in the stats. And if they are it is often easy to come to the wrong conclusion. For example, say you have a product that is not getting any page views. You may conclude that people are not interested in that product. When in actuality it may be a problem with your search engine. If your visitors can’t find it, it is not there.

2) Only worry about looking at stats that have ACTIONABLE results. Meaning if you can’t come up with an action that can be made from monitoring a stat then it is not worth monitoring. Page views is once such action. It is interesting to watch overall site page views from day to day. But what can you really conclude if page views drop? What stats that are key performance indicators (KPIs) of your site.

3) Have specific goals and or questions in mind before you go digging through the numbers. It is very hard to find actionable site improvements by just “browsing” your numbers.

4) Companies have a tendency to group actions into large buckets. I want my uses to first take step 1, then 1, then 3 then they will buy. But in reality each user is different. Remember the saying “there is no average user”? So think of your site as being made up of many “micro-actions” that hopefully lead the user down a path to a purchase. Users can’t be pushed but must be lead. The real question is which micro-actions are most persuasive!
5) You must use segmentation in your stats. Segmentation is the idea of breaking users into groups. This may seem like I am contradicting my previous point but I am not. Here you are not trying to force users into taking a few specific actions. But you are breaking what they actually did into segments to better understand what they did in the process. This can be by referring source, by site feature, by user status, or by content. It is very important to track conversion rate by segment. (I don’t do this yet, but I will!)
6) One trick is to assign money to the various micro-actions on your site. This way you can see which ones are most important to your business.
7) Follow the 3 C’s of understanding analytics. Context, Comparison, and Contrast. Look at the numbers in context. Then compare them to something. This can be a comparison to itself over time or a comparison to itself in an A/B or multivariant test for example. You can also contrast it to other areas of your site to prioritize changes. When making changes to your site make sure you get at least a 10% change in your KPI. If you are doing an A/B test you need to beat the original version by at least 10% to declare a winner and a change that is worth making. This is just a general rule of thumb. But usually if it can not make a 10% change go back to the original.
9) You can’t automate marketing profitability! You just have to go through the numbers.
10) Track spider activity.
11) Track the latency of your site.
12) Track your competitors.
13) Understand your bounce rate. A bounce is when a visitor only hits one page and leaves. The updated google analytics shows bounce rate very well.

Just one more note. I visited the booth of a company called ClickTracks. They have a web analytics system that tries to display most results graphically. I really liked some of their reports. They have a funnel report that show many different pages and each is shaded with a different color. The darker ones are more “persuasive” than the lighter ones. It made it very easy to see which pages are working best.

I am running an analysis on the top ad banners from several genealogy companies. In case you don’t know, EPC stands for earnings per hundred clicks. This is a measure of their conversion rate and payout and gives affiliates a way to judge programs and ad creative.

Ancestry.co.uk is a 5 star CJ program (payouts of over 20k each month?) with a 3 month epc of $13.68 and a 7 day epc of $2.15. (They have had a huge dip in epc, ie conversion rate, in June for some reason). OneGreatFamily is just a 3 star CJ program (5k in payouts each month?) and has just a $2.74 3 month epc and a $3.77 7 day epc.

Here are Ancestry.co.uk top banners (highest 3 month EPC):

$38 3 month epc and $15 7 day epc. This seems like an ugly banner to me with too many words and not a good call to action. But it is there best performing banner. It could just be the size. It is the only 120×60 they offer.

This one has a $28 3 month epc and is pitching the 1891 census which was hot news. It has good branding and a good call to action.

This one is at $25 and is pitching free access to marriage and death records. Good branding but poor call to action. Good colors.

This is a simple banner targeted at people who know Tony Robinson. It has a $23 epc, is ugly and has a good button.
Here are OneGreatFamily top banners:

This is a strange sized little banner that simply pitches their free trial, shows their branding and has an ok call to action. This has a $16 epc.

This one has no animation, catchy photos, great branding and a great call to action. It has a $15 epc.

Again this one is pitching the free trial and millions of names in their tree. Good branding and poor call to action.

If any of you have input on these banners please let me know.

I was just listening to a review of the great new features that the Microsoft Zune will have in it’s next verision. Wireless access to buy songs from any wi-fi hotspot for example. Once they actually come out with the new features they may actually be an alternative to an ipod. I just think it is funny that time and time again Microsoft comes out with a new product as quickly as possible into a market that the need to catch up in. The initial product may be bad. The never versions may be bad. But eventually they come out with a world class product and win over the market. Look at IE when it came out. Everyone said “why would anyone use this instead of Netscape?”. But soon it was the standard.

I don’t really care how Microsoft does. But as an Internet Marketer who does a fair amount of product development we face this problem everyday. Quick to market with something less than ideal, or do it right the first time. I think especially with web development it is important to get into the market as quickly as possible and then refine the product as quickly as possible. This is what we are doing at World Vital Records and we are starting to see some real traction in the market.

Here are my notes from Paul Allen’s second class “A Crash Course in Internet Marketing”. Not that I need a crash course. But Paul asked me to attend and I have found it very interesting. Today’ class was on Paul’s favorite entrepreneurial tools and sites.

1) Check out Paul Grams Combinator, which is a successful incubator.
2) Best books to read – art of the start, emyths, Net entrepreneurs only, striking it rich.com, the game of work. I have not read any of these books. They are now on my list.
3) Find mentors who are successful in your niche and follow them. Top 500 retailers book to see who is succeeding. What did they do smart? Read their blogs, interviews in the paper or magazines. Find someone who has done it recently and well. Find a morpheus (from the matrix).
4) Best periodicals – business 2.0 by far the best. Industry standard (now out of business). Wired magazine, Popular science (I get this magazine and love it!).
5) Don’t waste time. Make the most of every single hour.
6) Checkout the 167 interviews for free npost.com. Great content!
7) Stanford educators corner. edcorner.stanford.edu/podcasts.html 94% of franchises are in business 5 years later. Good way to start a business if you have the money.
9) Use a blackberry. Scarcest resource is time. Portable email is a lifesaver. Saves 2 hours a day.
10) Mp3 player – fill with best stuff and listen to it. Paul’s brother listened to 200 audio books last year while building log beds.
11) Use linkedin to connect with people. Use it everyday, add to your network everyday. Make connections to help your business. In the last 2 weeks I have grown my network from from 50 to 75.
12) Do research on your competitors. Use the alexa.com toolbar. quantcast.com and compete.com, waybackmachine.com. www.sec.gov (Management discussion of business, earnings calls on yahoo), findarticles.com (looksmart), highbeam.com worth subscription, wall street journal, googe alerts.
13) Use Google tools, spreadsheets and docs and desktop widgets.
14) freeconferencecall.com, skype for small groups to communicate with employees.
15) vistaprint.com to get business cards. logoworks.com to get a logo. istockphoto.com. I use bigstockphoto.com as well.
16) aweber.com email list manager. We have used this on WorldVitalRecords.com for some time and it has work well. Just $20/month for up to 10,000 subscribers. 1shoppingcart.com ecommerce site with a bunch of stuff built in like commerce, email manager, and affiliate system. wikia.com, www.ning.com create your own social network. surveymonkey.com to add surveys to your site.
17) prweb, prleap.com. (strategytree.com pauls wiki on internet marketing.) We have been using prweb.com for our paid press releases. I know the my friend Janet (visit her site to learn more about press release strategies)also uses prleap.com to do her free press releases. We have used this service as well with good results.
18) Don’t forget that direct mailing still works. Especially for B2B. referenceusa.com (available at public libraries), infousa.com, melissadata, jigsaw.com
19) dnd.com credit reports on millions of small businesses. Financial reports.
20) How to find help? Guru.com, elance.com, rentacoder.com
21) Need money? prosper.com, zopa.com (UK only) get capital for a startup.
22) alibaba.com directory of all manufacturers.

Lately I have seen some great results from Google AdWords using their site-targeted feature. If you can get your ads on the right site or even a competitor site it can be a gold mine. I have seen mixed results using site targeting but if you can get the right audience it can really pay off.

Site targeting is not pay per click but instead it is a CPM model. You pay per 1000 impressions whether people click or not. The CPM starts at $.25 and I have found that usually you can get it for that. But you have to think about this from the site owner’s perspective. To want to do a CPM instead of a PPC you would have to have a really low click through rate to make it pay off. So expect your ads to have really low click through rates as well using this model. But there are some high volume sites out there that even if you get a .01% CTR you can still get a lot of clicks. You can also use image ads. I have not tried these yet.

Also if you are paying for ads on a CPM model you don’t want to use your PPC ad creative. Most PPC ads are written to get just the right visitor and to filter out unwanted customers. With CPM you want to get as many clicks as possible. After all it costs you the same. So feel free to paste all the “free” “download” “special offer” type messaging you can get in your ad. If you haven’t tried this for your target audience you need to. There could be low cost new customers just waiting for your ad.