You can scroll the shelf using ← and → keys
You can scroll the shelf using ← and → keys
Google commands tens of millions of dollars each year (probably hundreds) through knowingly selling brand terms through AdWords (such as “cudo” for our business). Yet, users are increasingly using Google for everyday web navigation, so they knew where they wanted to go, they just wanted Google to help them get there.
This is a lot like punching a restaurant’s address into your satnav, but being taken to the highest bidding restaurant instead!
And as businesses grow their sophistication in SEO and they establish their listing at the top of the Organic pile for free. Allowing competitors to purchase a business’s brand term means the target business also has to buy their own
brand term else there is a fair chance an unsuspecting user will click on the competitor’s link, commanding unnecessary dollars from at least two businesses! This has lead to a Mexican Standoff between Group Buying sites, including the seven or so competitors currently spending their dollars on the term “Cudo” today.
In itself this is not necessarily evil of Google, it is opportunistic though.
However, once a business has been granted a trade mark they can then protect their brand from being bought on Google by law, yet Google seems to be oddly slow at applying any kind of block to AdWords, milking yet more dollars from a potentially struggling business over the 3 to 6 months it takes to limit the term in AdWords (Google may not block the term altogether!).
Why is it so hard to protect my mark on the world’s most sophisticated Search platform? Yahoo! and Bing seem to behave much less like a Corrupt SatNav with a clear policy on Trade Marks.
At Cudo we are spending over $50k each month buying our brand term on Google, that’s one expensive Mexican Standoff!
See below for an excerpt from a Trademark Case Study, found here
“Trademark Case Study
A Google Adwords client, who is a leader in the very competitive Network Marketing field, recently noticed a surge of infringements against their trademark which was being used in competitor ad copy on the Google Network. Competition within the Network Marketing industry is extremely competitive and aggressive. The client became aware that their competitors were bidding on their trademarked search terms. This caused the cost to secure top positions for their ads to skyrocket from an initial $2.00 per click to $15.00 per click. Monthly expenditures increased from $1,200 to nearly $30,000. The estimated budget increased to $500,000+ for the year. Control of the top ad space in Google was their primary objective in order to dominate the ad-space for their branded trademarked term.
Given the level of aggression by the competitors and the extortionate cost been borne by the client, there was only one solution and that was to stop all advertisers from bidding on the terms. Is it right that a business owner has to spend $500,000+ to buy their own branded name – a name that has already cost them millions of dollars to build? This is $500,000+ the trademark owner has to spend because of a policy that disavows elementary business ethics. Yahoo and MSN have recognized the injustice of such a slippery-slope policy and have taken steps to change it. We filed trademark infringements with all three search egnines. Yahoo and MSN results were clear within days.”
Group Buying works for a reason, regardless of the service woes plaguing the industry (which have been driven by a combination of greed and inexperience, not the model itself) the principles behind Group Buying are sound. Over the next few posts, I will explain the key mechanics and position them in a series of non-Group Buying contexts.
This is the first of six posts I will write that describe those mechanics.
FOCUS ATTENTION ON ONLY A FEW OFFERS
Limiting promotional efforts to only 1 – 3 featured offers enhances the perception of those offers and likely uptake, minimising “noise” around those offers will further spotlight the chosen few. Featuring multiple offers on the other hand dilutes the “WOW” and runs the risk of Paradox of Choice effects.
Most email platforms will support controlled tests, such as sending one control group an EDM with multiple offers, one with the three best offers and one EDM with only a single “hero” offer.
Assuming the control conditions are sound, the likely outcome is that the Hero and “three best offers” EDMs will each provide a click through rate that is greater than the “multiple offers” EDM even though the multiple offers email included the featured offers from the other tests.
A large part of Cudo’s operation is focused on ensuring that the offers we provide are 100% genuine, not just because we advertise on TV and are subject to rigorous standards, but because we believe the long term success of Cudo is hinged upon trust.
Our Merchant partners have to trust that Cudo will do the right thing by them by providing a great audience of new customers, broad brand promotion as described and payment in full within five days. And our members have to trust that Cudo is all about genuine no-brainer offers!
GroupOn must also have a whole team of people focused on ensuring that offers are “as stated”, hence why I jumped to their defence. However after seeing the following “all you can eat” ad, I am no longer sure!
Clicking on the ad for $8 all you can eat Macaroons takes you to a sign-up page, no such offer exists.
Deceptive. Yes. Bait and Switch. I think so.
Unless I am missing something, this type of Bait and Switch advertising is way out of line and threatens to damage the market as a whole. One thing is for sure, Cudo will never resort to these desperate tactics.
At Cudo we made a decision to do things differently.
Until Cudo came along, Group Buying business were based on the following core principles:
Long term this approach is seriously flawed.
Database-driven Group Buying is a race to zero. Competing primarily on database size means a group buying company is vulnerable to being undercut on commission (revenue share) by competitors with similarly sized or smaller bases. We are already seeing a significant reduction in share from 4 of the top 5 Group Buying business in Australia (Scoopon as little of 10%, Spreets <30%, Jumponit <40%, ourdeal <30%) . Only Cudo is holding share at 50% on each and every offer (averaging 49.6% revenue share to date).
Another key flaw in the database-driven approach and a common complaint from Merchants around the world is that the average voucher buyer looks more like a bargain hunter than the Merchant’s target customer, meaning less strategic value for the merchant, making the overall category less attractive to Merchants over time.
Cudo is not database-driven. By promoting the Merchant and their Offer on TV and through ninemsn – Australia’s largest portal – Cudo provides a fresh new audience to each offer, resulting in around 30% or more of the vouchers being sold to new Cudo customers who came to Cudo specifically to trial that Merchant’s offer.
That said, Cudo has a market leading audience too, both in terms of its member base (more than 500,000 members)and it’s regular visitors, ranked number 1 with 788k visitors in December by Nielsen NetView. We also lead the market when Net Revenue is measured, a critical, long term measure of a businesses’ sustainability. And lastly, and most importantly, we lead the market in Merchant satisfaction, driving the best outcomes for Merchants every day!
At Cudo we have created a new approach to Group Buying, at least two of our key competitors have recognised this and have begun adjusting their model, let’s hope it’s not too late for them, it’s hard to pull-up from a race to zero!
A Targeted Voucher Program (like Group Buying) does more than simply increase brand awareness and consumer demand, it smooths demand to make best use of the available Supply, combine this will upsell opportunities and future loyalty and the returns will continue to flow well beyond the life of the promotion.
Running an above the line Brand promotion will make the target business top of mind for a new set of potential customers, hopefully creating lots of new Demand albeit the profile of that demand is likely to look a lot like existing demand, just more of it! For restaurants, that means what little availability there is on a Friday or Saturday will go first, and once they are gone, customers will be unlikely to settle for a midweek or Sunday slot instead, squandering the marketing investment and the opportunity to introduce your business to a new audience.
A Targeted Voucher Program is fundamentally different. Why? Typically, when a someone calls a restaurant to book a table they are planning an evening out, they have an evening in mind and are looking for a suitable restaurant to meet their needs, if their preferred night is full, they’ll call the next restaurant on their list; however when they call with a Voucher, they already have a restaurant in mind, they just need to find a suitable evening to redeem it, they have already made a commitment to your business after all (and paid upfront too!)! Voucher holders are willing to book well in advance to redeem their voucher, something an average patron is unlikely to do and upselling your Voucher holder to a weeknight at this point is the first step toward smoothing Demand.
At Cudo, we hear often from business owners that occupancy is significantly improved on Thursdays and Sundays as a direct result of running a promotion on cudo.com.au. The more popular the offer, the greater the impact is on weekday trade, yielding a significant gain in efficiency for the business overall.
Making the most of this type of promotion is the role of the featured business, they have to embrace the promotion and the new interest generated, train their staff to upsell and make the most of customer loyalty.
But irrespective of how small the gap is between supply and demand, combine a Targeted Voucher Program with a booking system and you have a very powerful way to improve short to medium term occupancy – make the most of the Program and it will have a lasting impact on your business.