Online advertising metrics basics

You may be saying “Mr. Direct to Donor, why would I read this?  My online advertising budget is limited to whatever I can find between the couch cushions.”

First, please call me Nick.  Mister Direct to Donor is my dad (actually, Dr. Direct to Donor, DDS, but that’s another thing).

Second, knowledge of the basic online advertising metrics, along with a deep knowledge of what you are willing to pay for each type of constituent or click, can help you bootstrap an online marketing budget by making investments that will pay off in shorter timeframes that you can get offline (usually).

So, first things first.  Online advertising is dominated by CP_s.  The CP stands for “cost per” and the _ can be filled in by C for click, A for acquisition, or M for thousand.

(Yes, I know.  It should be “T is for a thousand.”  However, youmille-feuille_franc3a7ais_1 can do that most American of things — blame the French — for this one.  M technically stands for mille, which is French for one thousand.  You may have encountered this in the dessert mille-feuille, which is French for a cake of a thousand sheets, or in the card game Mille Bourne, which is based on being chased by a thousand angry Matt Damons.)

The big question for advertising is “one thousand what?”.  In this case of CPM, it’s impressions.  You are paying whatever amount (the average is $3-4 right now) for one thousand people to see your ads.  It’s basically like every other advertisement you’ve ever seen (pre-Internet) where you buy a magazine ad from a rate card or TV ads based on how many people are watching.

With this new thing called the Internet, however, you don’t need to pay this way in almost any case.  You can measure at a greater level of interaction, so most advertisers will allow you to pay per click, especially in the areas of greatest interest to we nonprofit marketers like search engine listings, remarketing, and co-targeting.

But even that is not enough control for some, who wish to pay to acquire a donor (or constituent) and that’s where cost-per-acquisition comes in.  This is not as popular as CPC, as the publisher of the ad is dependent on you to convert the donation or registration, but has maximum advantage for you as an advertiser.

What you are buying in each successive step closer to the act that you want to achieve (usually donation) is certainty.  With CPA (also CTA or cost to acquire), you know exactly how much you are going to pay for a constituent; with CPC, you know how much you are going to pay, assuming this batch of people converts like the last batch; with CPM, you are spraying and praying other than your front-end targeting model.

The beauty of this level of control is that it can be used to justify your budget.  There are vendors who will run CPA campaigns where they get all of the initial donations from a donor.  Assuming they are reputable, these can be of great value for you, because you then get to keep the second and subsequent donations (that you will get because of your excellent onboarding and stewardship process).  Others will charge a flat CPA; if your average gift is usually over that CPA, you can pull in even these first donations at a profit.  Some are even doing this for monthly donors, where you can calculate a payout and logical lifetime value.

Once you have those running, you now have the budget (because of your additional net revenue) to look at CPC ads.  If you have your donation forms running and effectively tested, you should be able to net money on these as well, by targeting well and testing various ad copy/designs and offers.

So use your knowledge of ads to help bring in some extra money that can be used for… more ads (if profitable)!

Online advertising metrics basics

Learning from political fundraising: dance with the one that brung you

There’s a saying in politics to dance with the one who brung ya codified in Chris Matthews’ classic book of political wisdom called Hardball; “Dance with the One that Brung Ya” is the title of the fourth chapter.  In it, he talks about how Ronald Reagan went to speak at CPAC and gave interviews to conservative papers as a way of remembering from whence he came (and Matthews notices that he got into trouble during Iran-Contra in part because he was dancing with Iran rather than his supporters).

This came to mind for me when I saw a study from Fluent about the makeup of political email lists.

It turns out that while AOL.com email address make up only 4% of political email subscribers, they make up 22% of online political donations.  They are literally over five times more profitable than the average email address.  Gmail addresses are the reverse: they make up 48% of political email addresses, but make up 13% of online political donations.

political donations

You’ve probably seen the jokes about AOL.com email addresses.  If you haven’t, here’s one from the great online cartoonist The Oatmeal.

The addresses have the reputation for representing those who are very out of date or stuck in their ways or (gasp) older.  In fact, the first audience that AOL lists on its advertising list is 50+.  They are the very definition of online uncool and looked down upon by your Web designer who, to stereotype a bit, is likely much younger.

But older donors are the ones that brung ya, and continue to bring ya.  In this extreme case, the 4% of political email addresses that are from AOL are worth (in donations, at least) significantly more than the 48% of political email subscribers that are from Gmail.  For more evidence of this, take a look at why focusing on Millennials at the expense of those who got you where you are is a recipe for disaster

This is even true online.  Those over 60 are just as likely to donor online as those under 40, according to Dunham + Company, and their average gifts tend to be higher.

So how do you cater to the people who are most profitable online?

Test fonts: With an older demographic, font size and clarity are key indicators of success.   While your younger Web designer may be able to read at nine points, your audience may not be able to.  This has a secondary benefit of helping people access and read your sites on mobile devices.  Different sizes work better for different audiences, so test out your site. 

Targeted messaging: Don’t want to pay for a data append to your file, but still want to talk to people about planned giving opportunities?  You could probably do worse than target AOL.com email addresses with this messaging.

Targeted advertising: Often, you only know the basics about a person.  But as long as you have their zip code, you can customize their ask string based on this information.  Just like you could, in theory, target increased asks to AOL addresses because of higher-than-average gifts, there’s also no reason to treat 90210 as the same as 48208 in Detroit.  Yet we persist in having a site with one ask on it at a time.

Offline/online integration: Chances are that you already have these older high-value donors on your file — just not on your email file yet. That’s why it’s important to e-append your offline donor file, as well as asking your offline donors to join your email list. How better to dance with the ones who brung ya than focusing on your longest term donors?

Learning from political fundraising: dance with the one that brung you

Understanding and using Facebook’s algorithm

Facebook is the nexus of a lot of debate as to how best to incorporate social media into other marketing efforts.  My argument will be there is a twofold Facebook strategy: 1) using organic content to engage your superfans and 2) using addressable media to reach everyone else.

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500 million users.  How quaint.

Like Google, the base of the Facebook algorithm (EdgeRank) is fairly easy:

  • Affinity: How close the person creating the content is to the person receiving it.
  • Weight: How much the post has been interacted with it, with deeper interactions counting more
  • Time decay: How long it has been since it has been posted.

These interactions are multiplied together and summed, roughly.

Like Google, however, it has been altered over time significantly.  There are now significant machine learning components baked in that help with spam detection and bias toward quality content.  Additionally, now users can prioritize their News Feeds themselves.  Finally, because of the sheer amount of content available, the organic reach of an average post is single digit percentages or below, meaning that if you have 100,000 likes, maybe 2,000 people will see your average post.

The implications of this base algorithms are stark:

 

  • Organic reach on Facebook is for the people who really love you.  Many people think of Facebook as a new constituent acquisition system.  However, people who come in dry will almost never see your posts.
  • Consequently, only things that connect with your core will have any broader distribution.  Think of who is in the top two percent of your constituents: employees, top volunteers, board members, and that may be about it.  If those people don’t give the post weight, no one outside of this group will see it.
  • What you have done for them lately has outsized weight.  Research into Facebook interactions shows that Facebook gives outsized weight to what a person as interacted with in their last 50 interactions.
  • Facebook is not for logorrhea like Twitter.  Think of your posts as a currency you spend each time.  If your post gets above average interactions, you will move your average up and interact with more people; if not, your reach will lose.  Posting too many times (which varies from organization to organization) will diminish your audience as average reach will decline).  Additionally, all of the things you have to post for organizational reasons (e.g., sponsor thank yous) are spending your audience and you have to assess how much you are willing to spend to fulfill those objectives.
  • This all adds up to the uber-rule: Facebook is for things your core supporters will interact with quickly.  If they don’t, it won’t reach your more distant supporters and it will lessen the likelihood that your next post will reach them as well.
  • It also relates to the second uber-rule: because Facebook can change its algorithm as it wishes, you should not build your house on rented land.  The best thing you can do with your interactions is to direct them to your site, to engage your content and sign up for your list.

This all sounds a bit dire, so I should also highlight how to reach the other 98%(ish) of your Facebook audience as well as some of your non-Facebook audience on Facebook: addressable media.

Facebook allows you to upload a list of your supporters and target advertising to them specifically whether or not they are current Facebook likers of you.  You can learn more about this on my CPC ads post here.  This also goes into lookalike audiences, a way of getting people who aren’t who you talk to currently, but look a lot like them, a nifty acquisition trick.  Since organic reach won’t get you to these loosely and non-affiliated people, this is the only way to achieve that reach.  And, since it is cost-per-click, you can control your investment and your results.

But like discussed above, these campaigns should be to build your relationship to people outside of Facebook.  For the same reason companies advertising on CBS don’t work to build a greater relationship to CBS, but rather to the advertising companies, your advertising on Facebook shouldn’t be aimed at getting Mark Zuckerberg et al more friends — they have over a billion of them already.

Understanding and using Facebook’s algorithm

Targeting people online (along with a sneaky trick for low-cost CPC ads)

If you are a privacy advocate who doesn’t believe the Internet should be following you around, this is not the post for you.

In fact, if you don’t think the Internet should be following you around, the Internet may not be for you and you’d probably do well to shut it off now.

There is a famous New Yorker cartoon from the early days of the Internet when you could call it cyberspace or the information superhighway non-ironically.

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That simply isn’t the case anymore.  With cookies and tracking technology, the Internet not only knows you are a dog, but it knows what butts you have recently been sniffing.

OK, that analogy went somewhere unpleasant but suffice it to say that ads follow you around the Internet and learn your behavior.  Read about the uncanny valley-esque level of personalization that can result here.

Additionally, sites with log-in functionality – Google, Amazon, social networks, and so on – not only know where you’ve been going, but who you actually are IRL (in real life, which used to be a cool acronym, but isn’t anymore because I just used it).

As consumers, we can blanch in horror and retire to our fainting couches.  As marketers, there is a significant advantage to be had here.  So here are four tactics that work with the new new media.

Remarketing.  This is what happens when you go to a site, then leave, then ads follow you around the Internet saying “would you like those shoes you were looking at now?  How about now? Maybe now?” until you want to go back to abacuses. While you were on that site, they put a cookie on your computer, which lets that site and other sites know where you were.  They then spread the word to the ad network that so-and-so was this close to buying shoes.

I make this sound sinister, but which would you rather see: an ad for something you are interested in or a random ad?  Personally, I like that advertising is at least trying to be relevant.

What works for shoes can work for your nonprofit.  With a few simple tools provided to you by remarketer (there are a number of them, including AdRoll, Bing, Chango, Google, Google properties like YouTube, Retargeter, Perfect Audience, Wiland, etc.; if you want a review of some of these sites, try this Kissmetrics blog), you can put a cookie on your site and begin asking the people who have come to your site if they’d like to take the next step.

Cotargeting.  Google, Facebook, Twitter, and some outside firms like Wiland will now allow you to upload your list of donors, newsletter subscribers, volunteers, or whatever other group you want to target, with their email addresses.  The match rates for Google and Facebook are really quite impressive (hat tip to Wordstream)

Then, these services will market your message to those specific people.

It’s like we are living in the future.

The next step (and it’s started pilot testing, as I understand it) is for your TV box (whether cable or satellite or cord cut or whatever) to customize as well.  I applaud this development.  I’m a semi-avid football fan who does not drink beer and will never own a truck.  Eighty percent of football advertising is wasted on me.  It would be lovely to say to those companies “you save your money; I’ll save my time” and we part as friends.

You’ve heard me preach multichannel/omnichannel-ness on this blog; now you have a way to replicate and reinforce the messages you are giving out through other media through advertising.  Your broadcast messaging just became a direct marketing one.  Huzzah.

Lookalike audiences.  Remarketing and cotargeting can help you get the people who have already sought you out.  Lookalike audiences are people who are very much like these people, according to the model of whatever ad networks you are using.  This way, you can try to acquire donations from the people who look like your donors and Web traffic from people who look like they would like your site.

The supporter cards that Wagner was processing in Des Moines were feeding into the computers at Strategic Telemetry’s Capitol Hill office.  Those commitments, along with some traditional polling, had already helped to refine Obama’s back-of-the-envelope vote goals in Iowa.  But the real power of Strasma’s black box, like all microtargeting models, was extrapolatory: the names of whose had signed supporter cards went in, and out came the names of other Iowans who looked like them.  These algorithms were matched to 800 consumer variables and the results of a survey of 10,000 Iowans.

– Sasha Issenberg, The Victory Lab: The Secret Science of Winning Campaigns.

Low-budget advertising.  I promised you a trick on Tuesday and earlier in this very piece.  The trick is a two-step process:

  1. Use an ad network that uses cost-per-click advertising rates and places ads by the amount you are willing to bid, rather than on the amount of gross revenue they are going to make (that is, don’t use Google or systems with Google-like quality scores).
  2. Create bad ads. That is, create ads that get your message out, but without the call to action.  Let’s say you target people who are getting your matching gift mail piece, email, and telemarketing with an ad about your organization and the good work that it is doing (think of the ads that run during the Sunday morning news shows that have slogans like “BP: We barely even have oil anymore”), but doesn’t mention clicking, a matching gift, a donation, or anything else that would encourage a click.  This way, you can put up your online billboard and get the awareness and good feelings from it, but not be charged to have it up.

This is certainly a short-term strategy, but can be used to boost a campaign in a pinch.

Hope you enjoyed online acquisition week.  In honor of it, I’d create ads to follow you wherever you go, but since I don’t really have a revenue model yet, that would be kind of counterproductive (“I’m advertising to try to get people to come to a site that I don’t make money on.” “How do you hope to get money from that strategy?” “Volume!”).

Please let me know at nick@directtodonor.com or in the comments what topic(s) you’d like to see in the future.  Thanks!

Targeting people online (along with a sneaky trick for low-cost CPC ads)