The Million Dollar Tattoo

Learning how to turn ideas into action

Archive for 2010

Finding Advertisers for your Website

I’m currently in the process of compiling a list of potential advertisers for my website launch. With this project I’ve decided to manage all of the advertising in-house as I want complete control over the look-and-feel of the site. I’m doing this because I’m positioning my site as a premium option and nothing screams budget like irrelevant advertising or low-quality text-link ads. Of course, this means that there is a greater workload but it also means that advertising revenue doesn’t have to be split (it’s a workload / quality / revenue based equation, and there is no definitive answer for in-house vs 3rd party advertising models). Now, I’ve mentioned in the past that advertising is not a safe business model, and it isn’t, but that being said if you don’t maximize your ability to derive revenue from your business then you’re doing yourself an injustice.

While building up a list of potential advertisers I’ve come across a few great ways to find the best candidates:

  • Look at the advertising on your competitors sites. Ignore the generic ads if your competitors are a mid-to-low level offering, but keep an eye out for advertising from highly relevant brands. These are businesses that are looking to build awareness / click-through in your domain.
  • Google / Search engine results. Look at the sponsored links – these are businesses that are targeting keywords relevant to your domain. Some of these will be loosely related or geographically irrelevant, but keep an eye out for local companies or satellite industry advertisements.
  • Industry / Trade publications. Companies that advertise in print may already online or just dipping their toes into the online advertising world. Be the first to offer them a low-risk trial of online advertising with your site.
  • Research websites that have a target market overlap with your demographic. If you provide an online golf-training service for 55y.o.+ male retirees then look at insurance aggregation websites, retiree holiday websites, golf club manufacturers, etc. These sites will contain advertisements from brands that will likely be interested in reaching your audience.

As you build up your list of candidates you should be preparing an ‘advertise with us’ page on your website alongside a rate-card and advertising brochure (this does not have to be physical, .pdf will do). Compile the contact details of the candidates and then call or email with an offer. Marketers will want demographics, Google search ranks and traffic data, so make sure you have these numbers online. If you haven’t launched yet then you will most likely have to offer a discount or low-cost trial (look at offering a minimum of a month for this).

Remember – you have nothing to lose by approaching advertisers. If you don’t ask, you don’t get. If you absolutely can’t handle approaching advertisers yourself, then maybe 3rd-party is the way to go, just remember that you are giving up some control over your websites’ look and feel and will also reduce your potential advertising revenue.

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Learning How to Set Subscription Prices and Advertising Rates

Setting prices is a make or break decision for a start-up. Set the prices too high and you’ll go out of business in no time at all. Too-expensive? No thanks, you have a 100 competitors that do the same thing for less money. Set the prices too-low? Just as bad, except this time you’ll find yourself locked in a slow death-spiral as you and your competitors under-bid each other to get the customer, shaving percentages off your margin until the cost-of-goods-sold and customer acquisition render your business inoperable.

So how do you set prices accurately from the word go? This is something that I’m learning as I go – I have to, as I’m about to start selling to real customers.  You can’t go to a customer and ask them what they’d like to pay – the answer will be zero. You can do some market research and ask them to put a value on similar services, although in the times that I’ve done this the number has fluctuated greatly. I’ve done a lot of research on the net about this as well as combing numerous business books and blogs, and the best approach I have at the moment is this:

Research your competitors. (Don’t tell me you don’t have any competitors). This means going beyond just visiting their site. If you want to know how much your competitors are charging for advertising the best trick is to pose as a potential customer and actually ask them directly. I’ve done this numerous times and often you’ll receive in-depth brochures that give you valuable insight into standard pricing / service balance as well as learning how to write convincing sales copy (and sometimes you’ll learn what to avoid).

Look at the average pricing for products and services in your market. This will allow you to make an educated guess on positioning. Remember, in every market you’ll find budget, ‘vanilla’ and premium options. Often you’ll find two products / services that provide the same function yet charge vastly different prices. This is a result of product-positioning. Do you want your brand to represent the cheapest available option? The absolute best option? What do you do differently and how do you feel that affects the value of your product? These questions will help you to understand how you want to position your brand in the mind’s of consumers. A cheap Chinese car and a Bentley will both move you from A to B – but one costs 100 times more than the other. Yes, materials, cost of goods / manufacturing do play into this, but there is also the value of the brand itself. Are you the Bentley or the Great Wall of your market?

Are you managing Advertising in-house or via 3rd-party? There are benefits to both options yet they will have a large affect on the potential profit. Managing in-house provides far greater control but also requires more hands-on attention. Maybe you are happy to receive a smaller percentage in return for not having to worry about this area. Research the average CPM and CPC for the top 20 competitors in your market and price accordingly. (Of course for online business your traffic data will affect what you can actually charge).

Finally, when setting service subscription prices it’s important to understand how you present the total price to a customer. I could sell you a subscription for $520 per year, $43.50 per month or just $10 per week…

Notice that the same overall cost of the service appears to represent higher or lower value depending on how it’s presented. The absolute masters of price setting have to be restaurants and supermarkets. They’ve studied the science behind consumer behaviour and perception and boiled pricing down to some simple techniques. Here are a couple of great articles to get you going:

Tricks of the Trade

Menu Psychology

Researching your Startup’s Market

via The Founder’s Institute

Why Start a Business? – Taking the Plunge

This is a really great video from Darden’s Youtube channel.

Lazy is an Opportunity

I’m a lazy person. I always have been, and I probably always will be. It’s in my nature, so the only way that I get things done is by making an effort to push past the slothful veil of ‘I’ll do it later’. That’s something that I’ve been learning to do, and with training, dedication and willpower it can be done. I don’t try to pretend I’m not – I just make an effort to make it a non-issue. This reality got me thinking. It seems that laziness is an inherent trait of human-beings, and that’s actually a fantastic situation, for two main reasons.

1.) It forces us to work on methods to circumvent the urge to minimize our effort. It is character building to acknowledge such a flaw and to research and implement ways to push past it. A lot of the techniques I’ve researched to combat laziness, tardiness and procrastination have helped me in all areas of my life, both personal and professional.

2.) It means that there is an endless array of opportunities for entrepreneurs. Any process, product or service that can minimize effort or streamline a task is valuable to virtually every human-being on the planet. From washing machines to typewriters, chainsaws to microwaves and beyond, minimizing activity or making a tedious task easier is a sure-shot winner. Human-beings are inherently lazy and that is someone to be thankful for.

The Fear of Success – Knowing when to Fight the Instinct to Quit and Run

I just finished having a discussion with a friend about the fear that I’m feeling at the moment in regards to launching my business. To be perfectly honest I’m having doubts about my concept, the viability of my business and whether anyone will actually use my service.

I’ve experienced this before, and it’s something that everybody feels in one way or another during their life. One of the main reasons for this is what Seth Godin has referred to as ‘the lizard brain’. The fear generally rises the closer towards launch you are, and the logic behind it makes perfect sense. Your primitive brain is trying to protect you from failure. In times long ago this was amazingly useful behaviour, as failure could equate to injury, exile or death. The thing is that these days we don’t have the same consequences to worry about, yet the underlying sensation of fear is just as acute.

As I was saying to my friend, the sensation of fear can also be a fear of success. Success may mean changing your lifestyle, moving in different circles and almost certainly facing many unknown situations on an almost daily basis. As human beings we can crave certainty, so success can pose a similar threat to our primitive side – it is much safer to stick to the path most travelled than risk facing unknown routes through life.

The above is not to say that sometimes these fears aren’t justified. Sometimes the fear is of a concept or idea being torn apart or invalidated. Although in the short-term this may be painful, it can save you from much greater risks in the long-term. Some ways to face this fear and discover warning signs early on is through the process of customer development. As has been well-documented, no business plan survives first contact with the customer. Embracing this fact and acknowledging that a great many of your assumptions will prove to be incorrect is a necessary step towards eventual success.

Remember – failure is feedback and being wrong is a part of life. Entrepreneurship is not about taking risks – it’s about understanding the risks, making every attempt to minimize them and then making a final decision about whether to forge ahead or change paths.