The California Energy Commission (CEC) through the Public Interest Energy Research Program (PIER) commissioned a report from Navigant Consulting that has quite a bit of useful data (as of September 2007) for solar market sizing. The report is titled "California Rooftop Photovoltaic (PV) Resource Assessment and Growth Potential by County, and can be downloaded here.
The report focuses on the potential for PV installations by county for the state of California, and takes into account such factors as roof tilt, shading, declining installations costs, tax credits, etc. in order to arrive at a total possible installed generating capacity.
One thing that really jumps out is that Navigant estimates a max of 500MW in installed panels by 2016 without subsidies, but that the use of subsidies will increase the total installed base to 800MW.
Then Navigant makes another assumption that "new business models" such as power purchase agreements (PPA's) come into play. Using PPA's plus all available subsidies, the total installed market jumps to 1,700 MW by 2016. So in effect the PPA's could have more impact than the subsidy.
Finally, the goal expressed by the state of California is to reach 3,000 MW. The report states that only way to reach this goal is to assume that technological breakthroughs (like thin film or advanced crystalline silicon) lead to a large price reductions in installed cost.
Sunday, December 02, 2007
Thursday, November 15, 2007
Solar Power in California - Disruptive Opportunity?
For the last couple months I have spent some time learning about the solar power opportunities here in California. The market is being fed by two financial engines - (1) The California Solar Initiative (CSI) which is a subsidy program from the state of California and (2) the Federal tax credit (30% for commercial installations) which is scheduled to expire at year end 2008, but many are working to extend this in Congress.
There are currently a number of companies that are taking advantage of these programs by offering the consumer what amounts to a fully financed installation by using a power purchase agreement (PPA). The customer pays the vendor (instead of or in addition to to the local utility) and gets a solar power array in return.
The interesting dynamic here is that installation and materials costs are widely expected to fall, in a fashion similar to the semiconductor industry. With tech companies like Google jumping into the fray with funding and the stated intention of driving the cost of solar below that of coal, there is almost an incentive for many consumers to wait and see rather than jump in with a commitment to a PPA that could last many years. Maybe a new type of PPA will have to be crafted that takes into account the falling costs (of course, once the array is installed it is a fixed sunk cost, but what if pricing and installation costs fall so quickly and sharply that it is worth removing and replacing the array? What about "upgradeable" arrays? Will companies that can offer this type of technology or agreement have a competitive advantage?).
I also wonder if there is an analogy to the PC industry of a few years ago, when prices were falling rapidly and power was increasing rapidly. There the hardware makers had the friendly software makers who were able to give consumers a reason to upgrade to faster machines to run more complex software. Is there an analogy in the PV industry? Rising power costs could be one motivator, I suppose.
There are currently a number of companies that are taking advantage of these programs by offering the consumer what amounts to a fully financed installation by using a power purchase agreement (PPA). The customer pays the vendor (instead of or in addition to to the local utility) and gets a solar power array in return.
The interesting dynamic here is that installation and materials costs are widely expected to fall, in a fashion similar to the semiconductor industry. With tech companies like Google jumping into the fray with funding and the stated intention of driving the cost of solar below that of coal, there is almost an incentive for many consumers to wait and see rather than jump in with a commitment to a PPA that could last many years. Maybe a new type of PPA will have to be crafted that takes into account the falling costs (of course, once the array is installed it is a fixed sunk cost, but what if pricing and installation costs fall so quickly and sharply that it is worth removing and replacing the array? What about "upgradeable" arrays? Will companies that can offer this type of technology or agreement have a competitive advantage?).
I also wonder if there is an analogy to the PC industry of a few years ago, when prices were falling rapidly and power was increasing rapidly. There the hardware makers had the friendly software makers who were able to give consumers a reason to upgrade to faster machines to run more complex software. Is there an analogy in the PV industry? Rising power costs could be one motivator, I suppose.
Friday, November 02, 2007
Private Equity for Real Estate
For the last year or so I have been working in the world of raising money for investment funds focused on real estate. Primarily we are building a database and calling on university endowments, state and other public pension funds as well as private pension funds (like corporate pension plans). The fund managers that we are raising capital for are all first time managers.
The process is an interesting one. There are literally billions of dollars in investment capital available but the pension fund reps are so overwhelmed with inquiries seeking capital that it is very tough to break in a new manager.
The system seems very "broken" when you start to learn about it. There are undoubtedly many, many new managers that could produce excellent returns for these pension funds (and given the increasing demands for returns by the funds, they need high returns), but because of the information asymmetry problem (no time to vet new managers or manage the risk inherent in a new manager), few new managers are given a chance.
Shouldn't there be some kind of "farm system" for new managers? Something where an investment club of save 5-10 similarly situated endowments or funds like Harvard, Yale, MIT, UC or Calstrs, Calprs, NYSTRS could invest relatively small amounts (say $5M each) and fund a new manager or group of managers? Then as the manager are vetted they can "graduate" to the next level where they have their own fund with larger amounts from each investor? And the investors, for their hard work and risk get the opportunity (and right) to invest in future funds?
Seems like technology could also enable this. By having a simple web based management/governance system that goes from gathering initial submissions to monitoring investment performance, you could somewhat automate the process of managing this small program and make it functional for the large funds to try this.
There are a couple firms with allocations from Calstrs doing this now - but they are really creating their own fund in cooperation with the emerging manager and taking a piece of the promote -which is not as attractive for the manager, obviously.
The process is an interesting one. There are literally billions of dollars in investment capital available but the pension fund reps are so overwhelmed with inquiries seeking capital that it is very tough to break in a new manager.
The system seems very "broken" when you start to learn about it. There are undoubtedly many, many new managers that could produce excellent returns for these pension funds (and given the increasing demands for returns by the funds, they need high returns), but because of the information asymmetry problem (no time to vet new managers or manage the risk inherent in a new manager), few new managers are given a chance.
Shouldn't there be some kind of "farm system" for new managers? Something where an investment club of save 5-10 similarly situated endowments or funds like Harvard, Yale, MIT, UC or Calstrs, Calprs, NYSTRS could invest relatively small amounts (say $5M each) and fund a new manager or group of managers? Then as the manager are vetted they can "graduate" to the next level where they have their own fund with larger amounts from each investor? And the investors, for their hard work and risk get the opportunity (and right) to invest in future funds?
Seems like technology could also enable this. By having a simple web based management/governance system that goes from gathering initial submissions to monitoring investment performance, you could somewhat automate the process of managing this small program and make it functional for the large funds to try this.
There are a couple firms with allocations from Calstrs doing this now - but they are really creating their own fund in cooperation with the emerging manager and taking a piece of the promote -which is not as attractive for the manager, obviously.
Tuesday, August 07, 2007
Community Reinvestment Act (CRA)
Most financial institutions that makes loans to consumers are required to meet a set of federal laws collectively known as the Community Reinvestment Act (CRA).
"The CRA was enacted in 1977 to prevent redlining and to encourage banks and thrifts to help meet the credit needs of all segments of their communities, including low- and moderate-income neighborhoods." (from the Office of the Comptroller of the Currency - one of the chief enforcement bodies of the CRA)
Most financial institutions satisfy their CRA requirements in two ways: (1) lending to lower income customers or in lower income communities and (2) buying tax credits wherein the proceeds of the tax credit sale go to fund affordable housing.
A few (mostly larger) institutions will directly invest in affordable housing and other initiatives that support low and moderate income communities (venture capital targeted at businesses in low income communities is one example).
The interesting disconnect in this market comes from the fact that most of the tax credit deals only go to larger institutions because it is just easier to sell the deals (and more deals) to these larger customers. Often the smaller financial institutions get shut out and have a lack of CRA qualifying deals to pick from.
The other interesting issue is that the institutions have to meet geographic requirements (invest/lend in their service areas). There can often be an asymmetrical information problem because the institution is not made aware of all the deals in their service area and the entity raising capital doesn't know of all the potential investors/financial institutions who can "get credit" for investing in their deals.
To date, there is no central clearing house for this information, nor is there anyway for smaller institutions to band together to go after the "bigger" opportunities, or to directly invest in affordable housing and earn CRA credit (without making a direct loan on a property, which they may consider too risky).
"The CRA was enacted in 1977 to prevent redlining and to encourage banks and thrifts to help meet the credit needs of all segments of their communities, including low- and moderate-income neighborhoods." (from the Office of the Comptroller of the Currency - one of the chief enforcement bodies of the CRA)
Most financial institutions satisfy their CRA requirements in two ways: (1) lending to lower income customers or in lower income communities and (2) buying tax credits wherein the proceeds of the tax credit sale go to fund affordable housing.
A few (mostly larger) institutions will directly invest in affordable housing and other initiatives that support low and moderate income communities (venture capital targeted at businesses in low income communities is one example).
The interesting disconnect in this market comes from the fact that most of the tax credit deals only go to larger institutions because it is just easier to sell the deals (and more deals) to these larger customers. Often the smaller financial institutions get shut out and have a lack of CRA qualifying deals to pick from.
The other interesting issue is that the institutions have to meet geographic requirements (invest/lend in their service areas). There can often be an asymmetrical information problem because the institution is not made aware of all the deals in their service area and the entity raising capital doesn't know of all the potential investors/financial institutions who can "get credit" for investing in their deals.
To date, there is no central clearing house for this information, nor is there anyway for smaller institutions to band together to go after the "bigger" opportunities, or to directly invest in affordable housing and earn CRA credit (without making a direct loan on a property, which they may consider too risky).
Friday, June 08, 2007
It's been a long time
Decided to start blogging again. Sold my interest in BetterPPC to my co-founder in October 0f 2006. It was a hard decision for me, but it was the right decision and I think Ben will be very successful with BetterPPC (and he has been doing well since the sale). I wish Ben and the BetterPPC team all the best.
Why did I sell my interest? I guess it all comes down to choices and stages of life. I didn't have the passion for running a very small startup with limited resources anymore. I guess to be honest I was "burned out". 2+ years of my life went into BetterPPC and I didn't feel like I had the passion that it would take to push it to the next level. My co-founder did and wanted to do it on his own steam, so the deal made sense and provided me with some reward for all the hard work I had put in.
Since then I have been working in real estate finance, mostly because of an opportunity to work with a great team that just happened to come up. I had met the founder and president of the company several years previously and when he found out I was free, he asked me if I would like to give his industry a try. It made sense to me because for a change I would be responsible only for myself and making deals happen, rather than making all the decisions and having all the responsibility inherenet in running a company. So far the experience has been great, I have a background in real estate (I was a commercial broker at the beginning of my career, I developed an industrial park in 1998 before moving into technology and I practiced real estate law as a lawyer), and I have been learning a lot.
We work in the areas of structured/secured financing and equity fundraising for institutional investment funds. It has been a kick to work with some of these managers and in some ways the process is very similar to raising VC money for a startup company. You have to have a great idea in a great market, a great team and convince investors that you can execute.
I wouldn't be true to my own business theory (and title of this blog) if I didnt' also say that there may be opportunities to disrupt many of the current process in this "tradition rich" industry. Hopefully more on that in more frequent postings in the next year.
I still have a passion for technology as well, keeping up with the online ad world, video, social networking, widgets, etc. and can't help myself from looking for opportunities there as well.
Finally, I have become completely engrossed by the sport of kite surfing and have gone from a complete beginner to being able to have fun in some pretty heavy conditions. Down right now with a knee injury but that is also a sign to work harder until I heal!
Why did I sell my interest? I guess it all comes down to choices and stages of life. I didn't have the passion for running a very small startup with limited resources anymore. I guess to be honest I was "burned out". 2+ years of my life went into BetterPPC and I didn't feel like I had the passion that it would take to push it to the next level. My co-founder did and wanted to do it on his own steam, so the deal made sense and provided me with some reward for all the hard work I had put in.
Since then I have been working in real estate finance, mostly because of an opportunity to work with a great team that just happened to come up. I had met the founder and president of the company several years previously and when he found out I was free, he asked me if I would like to give his industry a try. It made sense to me because for a change I would be responsible only for myself and making deals happen, rather than making all the decisions and having all the responsibility inherenet in running a company. So far the experience has been great, I have a background in real estate (I was a commercial broker at the beginning of my career, I developed an industrial park in 1998 before moving into technology and I practiced real estate law as a lawyer), and I have been learning a lot.
We work in the areas of structured/secured financing and equity fundraising for institutional investment funds. It has been a kick to work with some of these managers and in some ways the process is very similar to raising VC money for a startup company. You have to have a great idea in a great market, a great team and convince investors that you can execute.
I wouldn't be true to my own business theory (and title of this blog) if I didnt' also say that there may be opportunities to disrupt many of the current process in this "tradition rich" industry. Hopefully more on that in more frequent postings in the next year.
I still have a passion for technology as well, keeping up with the online ad world, video, social networking, widgets, etc. and can't help myself from looking for opportunities there as well.
Finally, I have become completely engrossed by the sport of kite surfing and have gone from a complete beginner to being able to have fun in some pretty heavy conditions. Down right now with a knee injury but that is also a sign to work harder until I heal!
Thursday, June 22, 2006
Google AdSense to add Affiliate Marketing Option - CPA
Saw this post today that some AdSense advertisers have received information about a new alternative to AdSense that is based on cost per action (CPA). This essentially turns AdSense into an affiliate program, where the publisher gets paid on a per lead basis. Some observations:
1. This has to be a response to the major click fraud problems that advertisers experience in AdSense and contextual advertising in general;
2. Google should do affiliate programs MUCH BETTER than CJ, etc. in terms of payments, reporting, policing the network, etc. so I would agree with the original poster that this is big trouble foor CJ and the other affiliate program providers;
3. We always think in terms of optimization, and given that an advertiser can eventually pay for ads through CPM, CPC or CPA, there are that many more opportunities for testing to find the optimal ad, bid and method, so analytics tools will be that much more important.
Of course if Google expands the lead generation market even more with this, lead quality measurement will become that much more important, because all the click fraud guys will move to "lead fraud"....
1. This has to be a response to the major click fraud problems that advertisers experience in AdSense and contextual advertising in general;
2. Google should do affiliate programs MUCH BETTER than CJ, etc. in terms of payments, reporting, policing the network, etc. so I would agree with the original poster that this is big trouble foor CJ and the other affiliate program providers;
3. We always think in terms of optimization, and given that an advertiser can eventually pay for ads through CPM, CPC or CPA, there are that many more opportunities for testing to find the optimal ad, bid and method, so analytics tools will be that much more important.
Of course if Google expands the lead generation market even more with this, lead quality measurement will become that much more important, because all the click fraud guys will move to "lead fraud"....
Tuesday, June 20, 2006
Update: Help-U-Sell and Yahoo! Panama
Long time since my last post, reflecting many changes at BetterPPC. The highlights:
We are now managing over $2.5M in monthly spend, some of the largest PPC advertisers have become customers!
We have developed a "packaged click" product that allows small businesses and franchise organization to programatically buy PPC advertising and create coordinated campaigns between the parent company and individual offices. Our first customer in this business is Help-U-Sell(R), a national real estate franchisee with over 800 offices across the country.
Yahoo! is now testing their new platform, code name "Panama" and will finally allow multiple ads to be run automatically. We intend to take full advantage of this new functionality and bring the power of BetterPPC to Yahoo!
We are now managing over $2.5M in monthly spend, some of the largest PPC advertisers have become customers!
We have developed a "packaged click" product that allows small businesses and franchise organization to programatically buy PPC advertising and create coordinated campaigns between the parent company and individual offices. Our first customer in this business is Help-U-Sell(R), a national real estate franchisee with over 800 offices across the country.
Yahoo! is now testing their new platform, code name "Panama" and will finally allow multiple ads to be run automatically. We intend to take full advantage of this new functionality and bring the power of BetterPPC to Yahoo!
Saturday, January 28, 2006
Google AdWords Desktop Manager
The new desktop manager Google has released (beta) is pretty amazing. Combines many of the features of the web interface with the bulk change/uploading features of the API (without having to program to work with the API).
If your company is doing basic keyword bid management - this is going to be a serious alternative for the customer.
If your company is doing basic keyword bid management - this is going to be a serious alternative for the customer.
Wednesday, November 30, 2005
Google "Beginning of the Backlash?"
John Battelle and Fred Wilson both post today on the beginnings of a percieved backlash against Google.
The timing of these types of opinions coming forth and the new AdWords Terms of Service are interesting, and my previous post regarding the new "no 3rd party apps" terms of service generated a lot of comments both here and at the BetterPPC Blog. Many, many small companies have been working on applications for AdWords that use the API since it was released in January and now are worried that the effort will be for naught.
Is Google going to be the next Microsoft, a giant predatory that wants anything and everything for itself and exacts a toll on all connected with it?
Or do they intend the more modern (and moderate) approach of encouraging many 3rd party apps to flourish around the search engine and ad platform (and gmail and maps and base and ...). Seems like this would be a more "enlightened" and also more profitable long term approach.
As a follow up to this story, the "AdWords Evangelist", Google Employee Patrick Chanezon has posted a response (warning: not very enlightening). Meanwhile the "Commercial API" appears slated for release on January 1, 2006.
Seems ironic now, but we are actually now eagerly awaiting the release of MSN AdCenter and revamping of Yahoo SEM! - let the market forces begin!
The timing of these types of opinions coming forth and the new AdWords Terms of Service are interesting, and my previous post regarding the new "no 3rd party apps" terms of service generated a lot of comments both here and at the BetterPPC Blog. Many, many small companies have been working on applications for AdWords that use the API since it was released in January and now are worried that the effort will be for naught.
Is Google going to be the next Microsoft, a giant predatory that wants anything and everything for itself and exacts a toll on all connected with it?
Or do they intend the more modern (and moderate) approach of encouraging many 3rd party apps to flourish around the search engine and ad platform (and gmail and maps and base and ...). Seems like this would be a more "enlightened" and also more profitable long term approach.
As a follow up to this story, the "AdWords Evangelist", Google Employee Patrick Chanezon has posted a response (warning: not very enlightening). Meanwhile the "Commercial API" appears slated for release on January 1, 2006.
Seems ironic now, but we are actually now eagerly awaiting the release of MSN AdCenter and revamping of Yahoo SEM! - let the market forces begin!
Sunday, November 20, 2005
Google's New API Terms of Service - A "Google Economy" or Not?
I spent quite a few hours this weekend reviewing the new Google AdWords API terms of service. All I can say is "wow". As pointed out on the Google AdWords API Developers forum, Google either Google wants to prohibit virtually EVERYONE from using the API (and if so, then why bother developing and releasing it in the first place?) or they have the world's worst lawyers.
When you read the agreement, the gist of it is basically this:
AdWords advertisers can't use any applications that use the API that have been developed for them by third parties. Advertisers can only use those that are developed for them in house or "custom" built for them. If your app can be sold to more than one customer or is hosted and made available for more than one customer, apparently that is against the TOS.
(See Section II, paragraph 2 - "2) Non-Compliant AdWords API Clients. You shall not use an AdWords API Client that violates this AdWords API Agreement. For example, you may not use your Developer Token with an AdWords API Client developed or hosted by a Third Party (excluding an Internal-Use Only AdWords API Client developed for you)."
That's it. End of story.
Another important part of the backstory on this is that Google has a "My Client Center" Account structure. The MCC is like a master account and the API calls are made through the MCC account, via the MCC Developer token for each account. The cited language above now prohibits this. The problem with putting all customers in the software provider's MCC account is that it then limits the client to using only that provider's software. Currently many advertisers use different software for different functions and this will be impossible under the new terms and conditions.
I found this hard to believe so I called Google and asked if, for instance, AtlasOnePoint would no longer be available to advertisers, and was told no, absolutely not, and that there was no special deal for them or anyone else. The intent of Google is not to prohibit these types of services. The rep I spoke with said someone from the API team would get back to me (but no one has as of yet).
Other issues for a later post include the fact that Google is going to require extensive Google branding on any app that uses the API, security measures for the data extracted, prohibitions against sharing the data and a paragraph previewing service charges for access to the API. This is especially hard to believe since presumably, any service that uses the API, in order to be commercially viable, would have to help advertisers be better/more efficient at what they do, which would presumably result in more revenue to Google, so why would Google charge for that and by doing so, discourage use of the API. Surely, Google, with all the billions of dollars in the bank, can't be worried about the expense of supporting an API, can they?
We'll see.
When you read the agreement, the gist of it is basically this:
AdWords advertisers can't use any applications that use the API that have been developed for them by third parties. Advertisers can only use those that are developed for them in house or "custom" built for them. If your app can be sold to more than one customer or is hosted and made available for more than one customer, apparently that is against the TOS.
(See Section II, paragraph 2 - "2) Non-Compliant AdWords API Clients. You shall not use an AdWords API Client that violates this AdWords API Agreement. For example, you may not use your Developer Token with an AdWords API Client developed or hosted by a Third Party (excluding an Internal-Use Only AdWords API Client developed for you)."
That's it. End of story.
Another important part of the backstory on this is that Google has a "My Client Center" Account structure. The MCC is like a master account and the API calls are made through the MCC account, via the MCC Developer token for each account. The cited language above now prohibits this. The problem with putting all customers in the software provider's MCC account is that it then limits the client to using only that provider's software. Currently many advertisers use different software for different functions and this will be impossible under the new terms and conditions.
I found this hard to believe so I called Google and asked if, for instance, AtlasOnePoint would no longer be available to advertisers, and was told no, absolutely not, and that there was no special deal for them or anyone else. The intent of Google is not to prohibit these types of services. The rep I spoke with said someone from the API team would get back to me (but no one has as of yet).
Other issues for a later post include the fact that Google is going to require extensive Google branding on any app that uses the API, security measures for the data extracted, prohibitions against sharing the data and a paragraph previewing service charges for access to the API. This is especially hard to believe since presumably, any service that uses the API, in order to be commercially viable, would have to help advertisers be better/more efficient at what they do, which would presumably result in more revenue to Google, so why would Google charge for that and by doing so, discourage use of the API. Surely, Google, with all the billions of dollars in the bank, can't be worried about the expense of supporting an API, can they?
We'll see.
Blog Spam
Wow, I guess Google really needs to do some work on blog spam. Nice examples of it in all the comments to my entries.
Monday, August 29, 2005
Pay 4X Per Click or Optimize Your Ad Copy
That's right, over the last few weeks, Google has implemented a minimum (that's right minimum) bid per click policy for AdWords (and AdSense as well).
Now if Google's algorithms determine that the ad you are running on a particular keyword is not generating enough revenue for Google, you have two choices:
1. Agree to a proposed minimum bid (which I have personally seen to be 4X or more the amount of the recent average CPC for keyword/ad combo).
or
2. Change (optimize) your ad copy.
Yes, that's right, you have the opportunity to avoid a potential 4X increase in your CPC cost if you create the right optimal ad.
It will be interesting to see if even Google (the 800lb Gorilla of all Gorillas) can make this stick, especially with MSN Search launching in a few months.
Now if Google's algorithms determine that the ad you are running on a particular keyword is not generating enough revenue for Google, you have two choices:
1. Agree to a proposed minimum bid (which I have personally seen to be 4X or more the amount of the recent average CPC for keyword/ad combo).
or
2. Change (optimize) your ad copy.
Yes, that's right, you have the opportunity to avoid a potential 4X increase in your CPC cost if you create the right optimal ad.
It will be interesting to see if even Google (the 800lb Gorilla of all Gorillas) can make this stick, especially with MSN Search launching in a few months.
Thursday, August 04, 2005
More Detail on Longer AdWords Test
Google is apparently going to start allowing testing of text ads of up to 200 words in length in the next few weeks. The headline and display URL formats will remain the same. Google will alternate the new format ads automatically with the original ads and compare them to see which ad performs better. CPC charges will be the same, and during the test period, the longer format ads will not be used for calculating Quality Scores during the test period. More info at Search Engine Journal (including link to original report).
Big Changes coming to Search Engine Marketing
Some big changes that were long rumored being reported this week:
1. Google is testing longer format text ads
2. AskJeeves will sell ads directly to advertisers, rather than being solely a syndicator for Google.
3. MSN is in late stage testing on their own version of AdWords.
These changes are great for advertisers. There will be more opportunities to find the best messaging with longer text ads on Google; more chances to precisely target your ads by buying direct on AskJeeves if that works for you, and obviously more opportunities to do the same on MSN by buying directly from MSN. The fact that MSN is going to mimic Google's auction system also probably means a more competitive market for keywords as well.
Great summary at Search Engine Journal
1. Google is testing longer format text ads
2. AskJeeves will sell ads directly to advertisers, rather than being solely a syndicator for Google.
3. MSN is in late stage testing on their own version of AdWords.
These changes are great for advertisers. There will be more opportunities to find the best messaging with longer text ads on Google; more chances to precisely target your ads by buying direct on AskJeeves if that works for you, and obviously more opportunities to do the same on MSN by buying directly from MSN. The fact that MSN is going to mimic Google's auction system also probably means a more competitive market for keywords as well.
Great summary at Search Engine Journal
Tuesday, July 19, 2005
Small Etailers can make it on their own!
Great article by David Kesmodel in the WSJ (subscription).
For those of you without subscription access, the article talks about the increasing number of online retailers who are looking for alternatives to eBay. Many are going out and building (or having others build) their own website. As we all know, websites and shopping carts have dropped dramatically in price and complexity over the last few years and are now accessible to virtually anyone who wants to open an online storefront.
The big problem with severing ties to eBay is getting traffic. One customer mentioned in the article, OldDogNoNewTrick.com (love the name), puts business cards in with every product sold through eBay referring the customer to the stand-alone site! Great idea.
You can probably make more money outside eBay IF you get your visitors cheaply enough (it is all about customer acquistion cost, after all!).
Search engines are probably the most cost effective way to get new customers, and that's where BetterPPC comes in.
In addition to making sure your site is easy for the search engines to "crawl" - meaning use a lot of plain text, not images, and always have a "site map" - meaning a directory of your site on one page where each section is noted by a hyperlink that the spider can crawl, you also want to take advantage of pay per click advertising on the search engine (and partners') pages as well.
You need to do three things to get up and running after you setup an account:
1. Choose keywords that relate to your products.
2. Decide how much you want to pay per click.
3. Write your ad copy
After a week or so, you should have a good idea of whether your advertising is profitable. The easiest way is to just compare ad costs to profits and make sure it is a positive number! Another easy way to track profitability is to use either Google or Yahoo!'s built in free tracking.
The next step is to start to refine your ad copy by creating and testing more ads, and the results will be amazing. Use BetterPPC to test a variety of different ideas in your copy, and our patent pending process will have you on your way to higher profits in one week. You can start here - www.betterppc.com
So if you are trying to "break away" from eBay (or at least open a new sales channel), read David's article, get your own website, start advertising, and use BetterPPC!
Joe Agliozzo
For those of you without subscription access, the article talks about the increasing number of online retailers who are looking for alternatives to eBay. Many are going out and building (or having others build) their own website. As we all know, websites and shopping carts have dropped dramatically in price and complexity over the last few years and are now accessible to virtually anyone who wants to open an online storefront.
The big problem with severing ties to eBay is getting traffic. One customer mentioned in the article, OldDogNoNewTrick.com (love the name), puts business cards in with every product sold through eBay referring the customer to the stand-alone site! Great idea.
You can probably make more money outside eBay IF you get your visitors cheaply enough (it is all about customer acquistion cost, after all!).
Search engines are probably the most cost effective way to get new customers, and that's where BetterPPC comes in.
In addition to making sure your site is easy for the search engines to "crawl" - meaning use a lot of plain text, not images, and always have a "site map" - meaning a directory of your site on one page where each section is noted by a hyperlink that the spider can crawl, you also want to take advantage of pay per click advertising on the search engine (and partners') pages as well.
You need to do three things to get up and running after you setup an account:
1. Choose keywords that relate to your products.
2. Decide how much you want to pay per click.
3. Write your ad copy
After a week or so, you should have a good idea of whether your advertising is profitable. The easiest way is to just compare ad costs to profits and make sure it is a positive number! Another easy way to track profitability is to use either Google or Yahoo!'s built in free tracking.
The next step is to start to refine your ad copy by creating and testing more ads, and the results will be amazing. Use BetterPPC to test a variety of different ideas in your copy, and our patent pending process will have you on your way to higher profits in one week. You can start here - www.betterppc.com
So if you are trying to "break away" from eBay (or at least open a new sales channel), read David's article, get your own website, start advertising, and use BetterPPC!
Joe Agliozzo
Sunday, July 17, 2005
New Google AdWords Policy Emphasizes Creative
Like most of you, we received the Google email on Friday that discussed the changes in the Keyword Evaluation policy. In addition to going back to the simple, active/disabled nomenclature (rather than in trial, etc.), the email discusses Google's continuing policy of really stressing the relevance (and quality) of the AD COPY. That's right, the same problem/issue that we created BetterPPC to solve!
The importance of testing to find the most relevant copy:
1. You have a new chance to show ads on previously disabled keywords. In the past, we've found that if a customer account contained keywords that had previously been disabled, often Google would not permit ANY new ads to run on these keywords. In conversations with customer service at Google, we would often complain about this and ask how customers could ever find relevant ads if Google would not even allow any new ads to run! Apparently Google heard our complaints (and similar compaints from many others) and now they are allowing customers "another chance". Of course, we urge you to make the most of this chance by using BetterPPC, which will give you the BEST chance of finding that relevant "magic" ad that will keep your campaign alive and profitable.
2. NO MINIMUM BID. This is huge. It has always been an advantage to find the most relevant ad (the one with the highest CTR) because Google will show a more relevant ad with a lower Max CPC over a less relevant ad with a higher Max CPC. The reason is the famous G profit= CTR x CPC. If you remember basic algebra, a higher CTR or CPC means a higher "G profit". Now Google has taken this one step further and ELIMINATED the minimum bid. Now if your ad is high performing on CTR (meaning relevant) you can avoid even a $.1o minimum bid. Talk about crushing your competition! If you test for the most relevant ad copy (with BetterPPC hopefully), and find an optimal ad, you can lower your max CPC even more!
We will also be discussing this change at Search Engine Strategies, San Jose, on our panel "Creating Compelling Ads". See us at the panel or at our Booth in the exhibit hall. We will be doing live optimizations on site at no charge, so come by our booth and bring your Google AdWords username and password!
Obviously we are excited about these developments, because they highlight the importance of testing and finding the best ad creatives - so get cracking and give BetterPPC a try today.
Joe Agliozzo
Here's a link to another great article discussing the change - Search Engine Watch
The importance of testing to find the most relevant copy:
1. You have a new chance to show ads on previously disabled keywords. In the past, we've found that if a customer account contained keywords that had previously been disabled, often Google would not permit ANY new ads to run on these keywords. In conversations with customer service at Google, we would often complain about this and ask how customers could ever find relevant ads if Google would not even allow any new ads to run! Apparently Google heard our complaints (and similar compaints from many others) and now they are allowing customers "another chance". Of course, we urge you to make the most of this chance by using BetterPPC, which will give you the BEST chance of finding that relevant "magic" ad that will keep your campaign alive and profitable.
2. NO MINIMUM BID. This is huge. It has always been an advantage to find the most relevant ad (the one with the highest CTR) because Google will show a more relevant ad with a lower Max CPC over a less relevant ad with a higher Max CPC. The reason is the famous G profit= CTR x CPC. If you remember basic algebra, a higher CTR or CPC means a higher "G profit". Now Google has taken this one step further and ELIMINATED the minimum bid. Now if your ad is high performing on CTR (meaning relevant) you can avoid even a $.1o minimum bid. Talk about crushing your competition! If you test for the most relevant ad copy (with BetterPPC hopefully), and find an optimal ad, you can lower your max CPC even more!
We will also be discussing this change at Search Engine Strategies, San Jose, on our panel "Creating Compelling Ads". See us at the panel or at our Booth in the exhibit hall. We will be doing live optimizations on site at no charge, so come by our booth and bring your Google AdWords username and password!
Obviously we are excited about these developments, because they highlight the importance of testing and finding the best ad creatives - so get cracking and give BetterPPC a try today.
Joe Agliozzo
Here's a link to another great article discussing the change - Search Engine Watch
Friday, June 24, 2005
Trade Show Exhibiting
The first trade show for BetterPPC was a great success. We met a LOT of great people and received great feedback on the BetterPPC service. Many advertisers we talked with knew that they could get better results by testing their ad copy, but the difficulty and tediousness of doing that kind of testing was holding them back. Seeing a test platform like BetterPPC, including the analytical test design/analysis program we provide, they instantly saw the value of testing. We were also located next to the Google booth, staffed by Google AdWords support folks, and they immediately saw the value in what we were doing and wished a tool like that was available to them when they are assisting AdWords customers. Of course, we told them we would love to make that happen - are you listening Google?
We are exhibiting at AdTech: Chicago next and will be unveiling a completely new User interface (using some cutting edge AJAX to help the customer navigate the system), along with an enterprise version of our product geared to agencies with multiple clients.
A couple of other things I learned about tradeshow exhibiting:
1. You can never have too many extension cords.
2. “Collateral” is important. As an attendee, I always feel like it is a waste and doesn’t get read, and as an exhibitor I wanted to skip it and do live optimizations for customers. But this wasn’t practical, you just have trouble getting (or often giving) that much time to people. Visitors come in waves and your booth (and everyone else’s) is either “slammed” or empty - very little in between. People expect to get something to take with them and you have to provide it.
3. If you can possibly squeeze it into your 10x10 booth, it is great to have a place to sit with visitors because you can really focus on them, and you also get a BREAK from being on your feet 9 hours a day, which is tough. This way you are still working and giving off the right impression, but you also get to take a rest!
Tuesday, May 31, 2005
Cross Posting
Most of my new posting related to AdCopy optimization will now be over at the Betterppc website.
http://www.betterppc.com/blog/
I will continue to post here on other issues.
http://www.betterppc.com/blog/
I will continue to post here on other issues.
Thursday, April 07, 2005
Authority Improves Performance
We always stress in our presentations at events like Search Engine Strategies the importance of conveying reliability, trust and quality in advertising. Our analysis has shown that these concepts can have a huge effect on ad performance, lifting CTR's as much as 20-30% if used properly.
An excellent article by Todd Mintz in Search Engine Guide makes the same point - Give Your PPC Ad “Authority” and your CTR will skyrocket.
An excellent article by Todd Mintz in Search Engine Guide makes the same point - Give Your PPC Ad “Authority” and your CTR will skyrocket.
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