Monday, April 27, 2009

Evaluating Advertising Effectiveness: How to Avoid False Positives (and Negatives)

One of the great things about Internet advertising is how fast you can get feedback on the effectiveness of your advertising campaigns, make changes and adapt. I'm a huge advocate of this approach. I believe that locking yourself into 1 or 2 year agreements that cannot be modified (if they need adjustment) or cancelled (if modification cannot make them work) is not in your best interests. It's also not in the best interests of the advertising partner as they need healthy advertisers for their consumers to be served and for their business to be successful long term.

However, in a case of "be careful what you ask for," I've noticed that some lawyers that I've been working with are pulling the cancellation trigger a little too fast, not having put enough thought into whether or not the advertising source can be effective. Or, in some cases, they are not giving a trial period enough time to be yield results.

When I first started buying a lot of internet media, I became addicted to the instant feedback. I would launch a campaign and check the stats (impressions, clicks, leads, etc) every hour at first, and then every day. If something looked good, I would immediately try to do more of it. I'd develop theories for what the successful ingredient was and then integrate that into my other campaigns. And if it didn't look good, I would immediately start tinkering with it, trying to find the answer. After a few months of driving everybody that worked for me crazy, I began to notice a trend: the things that were good didn't stay as good as they looked initially and the things that were bad rarely stayed as bad. In my haste to move faster than the competition, I had forgotten some core virtues of good business: time and patience (and oh yeah, a statistical phenomenon known as regression to the mean).

So, I developed a few rules for evaluating all of the new online campaigns I was launching. These rules apply to all internet advertising, and are especially true for lawyers that are looking to generate new clients online.

Rule #1: Evaluate the source of the traffic

The first thing I've learned is to find the source and replicate the consumer experience. Visit the websites that are generating your leads. Go through the consumer experience. Look at the emails, messages or leads that come from that source. If over 90% of the inquiries are real people, you've got a good source. You cannot stop the spammers and automated submissions from sending in messages, but if the overwhelming majority are real people with real legal issues, then it doesn't matter that the first 10 aren't great cases because the next 10 might be.

Rule #2: Keep statistics in mind

If the conversion rate from lead to case is 15% and the standard deviation is 10%, then there is a 1 in 4 chance that none of your first 10 leads will result in a case (even though you would expect 1.5). There is also a 1 in 8 chance that none of your first 20 leads will result in a case. The numbers work the other way too. You have a 1 in 8 chance that you'll get 5 clients in the next 20 leads. If you are so lucky, don't freak out when the next 20 don't have the same yield. (Remember the regression to the mean rule).

Rule #3: Give conversion enough time to happen

Not every client will make a purchase decision within the first week after intial contact. A high quality divorce lead might take 2-3 months to choose a lawyer as the prospect weighs his or her options. If you pull the plug too fast, you won't give this dynamic time to work. I've spoken to a few attorneys recently who have said, "The leads look good, but I was not able to land any clients." To this I reply, "Yet. Give it some time."

Rule #4: Don't ignore the lifetime value of a satisfied customer

Almost every attorney believes that the best source of clients is through referrals. Makes sense . . . if a client is happy, they may need your services again the future, or may recommend you to a friend. So, even if your profitability from an advertising source is not as high as you would like, you may find that it is much better when you factor in the legal fees generated from repeat business or referrals.

As you are experimenting with using the Internet to generate new business, keep these rules in mind. Testing and tweaking are huge benefits of online marketing. But, in the case of legal advertising, where one client can be the difference between losing money on advertising and getting a 5x return, you are best served to give your advertising campaigns the benefit of the doubt.

Tuesday, April 14, 2009

Online Legal Directories: A Fantastic Source for Distribution

Since I entered the legal directory space over a year ago, I've come across a handful of "online legal marketing consultants" (many claiming to be experts at turning attorneys into "rainmakers" - I can't believe that term is still used . . ) that love to disparage online legal directories as a source for attorneys to get cases online. Always interested in understanding what the market is saying, I pay careful attention to their arguments against directories. After all, if there truly are issues with the product, then we should get to work on innovating the product to address those issues.

In general, the argument I hear against the legal directory goes something like this. "You don't want to limit yourself to being found through the online directories because, if you do, then they will control your internet presence. You should focus on building your own website and optimizing it to be found in Google. That's the best way to ensure that your will control your own destiny. And oh yeah, your existing clients are a better source for referrals anyway, so come to my seminar so I can teach you how to be a rainmaker."

Here are two problems with that assertion:
  1. Traditional media doesn't work that way.
  2. Online media is different, but it still doesn't work that way.
Out of all of the TV and movie entertainment you consumed last year, what % do you think was created by independent studios and distributed direct to consumers (that is without a major distribution company)? My guess is that it is less than 1%. Distribution rules. Always has, always will. Media business basics are: 1) create something (TV show, magazine, etc) that aggregates an audience. Then 2) monetize the audience by selling advertising against it. Here's a better question: how many informercials did you watch last year and what % of your total purchases came from the products sold via infomercial?

Now to online media . . . the primary reason why the Internet created such a stir in the 90's was because it seemed to change the dynamic. No longer would every artist, publisher or individual that wanted to get their message out be limited by their ability to "pitch the suits" to fund their idea (and watch the suits take 95% of the net profit). All they needed was knowledge of html and a url and then they could take their message direct to the public. And while, relatively speaking, this is true, distribution is still the #1 problem to solve for any website. The difference lies in the options the publisher has for distribution. The publisher has many more tools available to them . . . we've evolved from the portal deals of the late 90's to SEO, social media, viral distribution, etc. etc.

Back to lawyers and legal directories . . . the problem with the argument that the rainmaker consultants espouse is that it discounts distribution when it should be putting a premium on it. Any law firm that wants to connect with clients should be looking for as many sources for quality online distribution as possible. You want people to find you. In the legal space, the #1 source for distribution is through legal directories, not facebook, linkedin or digg. Instead of picking one or two, you should follow the golden rules of online media and try as many as possible. I'm not suggesting that you should buy a placement on every directory blindly . . . rather you should test, tweak and measure ROI.

Like all media, the best way for a law firm to connect with potential clients is to go where the audience is. And increasingly, they happen to be on online directories rich with informative content.

Wednesday, April 8, 2009

The 3 Golden Rules of Internet Media

Pop Quiz: Of all of the different formats of online media, which one is best?

I'm asked this question quite frequently, followed by a stream of anxiety-ridden follow up questions . . . is display advertising dead? Does paid search work? Should I send out email blasts? Do directories work? Social media? Blogging?

Throughout my career, I've been fortunate to experiment with practically every type of internet advertising. Yes, its true, I've bought pop-ups from spyware companies, sent out 300 million emails a weeek, owned domains some might call typosquatting (and the list goes on and on).

And so the quick answer to the pop quiz is "All of them" . . . followed by a "but it depends who you are and what you are trying to accomplish." Clearly typosquatting and buying spyware pop-ups is a terrible way to build a sustainable brand. But, if you are smart college student running a 1 person affiliate company, why not arbitrage some media? It's very legal and you can make good money. But, leaving that aside for a minute, there are 3 Golden Rules I've developed for buying Internet Media. I believe they are especially relevant for lawyers because, well, I haven't come across many that follow them.

Rule #1: Never Lock Yourself Into a Long Term Deal (as in 1 year)
Testing and tweaking is key all direct response advertising and the Internet has made that easier to do than ever. I ran a series of direct response ads in monthly magazines earlier in my career . . . the testing cycle for an offer and the ad creative was 6 months. That test would have taken 6 days online and I would have received in an initial indication of how I was doing in 6 hours. So, it rarely makes sense to lock yourself into a long term deal. Things change too fast online for that to be effective.

Rule #2: Monitor Performance and Refine Your Approach
Testing and optimization is the heart of online advertising. Just because something doesn't work for you the first time you try it doesn't mean that it doesn't work. I've often had to ask myself, "why can [insert company name] buy this media profitably and not me?" Unless you think your competition likes to lose money, they have found an approach that works. You haven't. More often that not, studying the competition and tweaking your campaign can have dramatic impacts on performance.

Rule #3: Set Your Expectations Appropriately
Too often I see inexperienced online marketers fail because they set their expectations too high. If you spend $1000 on advertising and one client earns you revenue of $2000, then you should expect to get 2 or 3 clients (or 4 - 6X), on average. If you do a lot better than that, good for you. Realize that it probably won't last because the market will eventually become more efficient.

So, before you begin your search for the Internet marketing holy grail, keep these 3 rules handy . . . no matter what you do (blog, directory, SEM, SEO) these rules will always ring true.

Wednesday, April 1, 2009

SEO: Free Traffic That Isn't Really Free

Most of the online legal marketing consultants that I read in the blogosphere seem to believe that Twitter, Social Media, Blogs and SEO are worthwhile endeavors and that SEM and online directories are a waste of money. The argument makes sense: invest in "free" marketing, like PR (who wouldn't want a puff piece in the NY Times?) rather than investing in paid advertising where they'll bleed you out at every opportunity.

Yes, the $400/hr's marketing consultants advice makes complete sense - save one tiny inconvenience: it's not true. PR isn't free (can't count how many times I've seen someone pay a PR firm's $10-20K/month retainer and receive practically nothing). And neither is Twitter, social media or SEO. Most people hire consultants or specialists to do these things. Even if you are a do-it-yourself'er, your time is valuable (as in, you could be billing someone $350/hr instead of downloading the latest twitter plug-in, right?).

I was trying to explain this concept to a law firm that we had done a lot of work for in the past. No matter what I said, they held a firm belief that 1) they had to maintain their first page organic search rankings no matter what and 2) if you weren't in the top spot on Google's paid listings, then it didn't make sense to do SEM at all. And oh yeah, he also thought I should give him a discount on the directory listing he had. So I produced the following chart for him:


  1. SEO is pretty expensive on a cost/lead basis. Also, it doesn't generate very many leads. Sure, the leads are pretty high quality, but since most firms get most of their organic search traffic from consumers searching for them by name, its hard to get a large volume of leads

  2. The only thing more expensive than SEO is Paid Search. While its possible that this law firm could do better through better bidding strategies and landing page optimization, they also need to add in the costs of paying someone to do this (which is not included in the astronomical $462 cost/lead.

  3. Directories can be an incredible deal (and when done right, will make your SEO much more effective). For this client, they received almost 80% of their leads from a directory purchase that accounted for 34% of their marketing budget.

Before you draw any conclusions about what work and what doesn't work, I highly recommend that you test various platforms and do the analysis for yourself. I've found that, in most cases, reality is far from perception - and those that follow the data do very well with online media.