Adlucent will be competing for the gold, if you’re in Austin this Saturday come on out and cheer us on!

Let the Games Begin:  First-Ever ‘Austin Startup Olympics’ Held Jan. 21

 Eight Premier Austin Start-ups Square Off for Pride and Charity, Host After-Party Benefit;

Challenge Posed to Silicon Valley Startups to ‘Man-up’ and Bring Their Best to SXSW in March

 AUSTIN, Texas – Jan. 16, 2012 – The Olympic Games have borne many legends – Jesse Owens, Mary Lou Retton, Michael Phelps, Eddie the Eagle, and the Jamaican Bobsled team, to name a few – all world-class athletic innovators in their respective sports.

 On Saturday, Jan. 21, a new league of innovative legends will emerge during the inaugural Austin Startup Olympics, a grueling 10-event competition featuring eight of Austin’s elite startups – Adlucent, Boundless Network, Build-a-Sign, Mass Relevance, SpareFoot, Spredfast, uShip, and Whale Shark Media.

The Austin Startup Olympics start at 2 pm CST at uShip World Headquarters, 205 Brazos Street in downtown Austin (map). Media are welcome at this private event. The public is invited to an after-party for charity (see below).

The Games We Play

The five-hour event will determine Austin’s gold, silver and bronze winners in quintessential startup “sports,” including Ping Pong, Foosball, Beer Pong, Obstacle Course, Flip Cup, Pop-a-Shot, Darts, Shuffleboard, Connect Four and Trivia by Geeks Who Drink.   Events resulting in ties will be settled with Rock-Paper-Scissors, in accordance with Austin Startup rules and bylaws. For more information on the competing companies and events, visit StartupOlympics.org.  Follow the Startup Olympics on Twitter at Twitter.com/StartupOlympic.

Playing for Charity

Competing companies are not only playing for pride but also for charity.  Each has identified an organization to which winning money will be awarded. Charities chosen include Austin Pets Alive, Austin Pro Bono, Capital Area Food Bank, Communities in Schools of Central Texas, the Entrepreneurs Foundation of Central Texas, Kure It, and Livestrong/Lance Armstrong Foundation. Sponsors for the event include Tito’s Handmade Vodka and Cedar Door.

After-Party at Club De Ville

Starting at 8 pm, participants invite the public to the Startup Olympics After-Party and Award Ceremony at Club De Ville (map). Bands performing at the after-party include Burgess Meredith and The Lemurs. All proceeds from the $10 cover charge will benefit local charities.

Silicon Valley Challenge

In addition to throwing a post-Games party, Startup Olympics organizers are tossing out a challenge to other startups, particularly those in Silicon Valley, of which many will converge on Austin for the SXSW Interactive conference beginning March 9.  Out-of-area startups are encouraged to bring their best to SXSWi for a friendly bout of competition at uShip.  Interested companies should visit StartupOlympics.org for contact information.

“Guys like Eddie the Eagle and the Jamaican Bobsled team were true innovators, giving their particular sports a new twist, a new look that made them legendary,” said Shawn Bose of uShip and co-Chair of the Austin Startup Olympics.

“You’ll find that same innovation among Austin’s startups – not only among those competing in the event, but citywide,” said Bose.  “We’ve brought new ideas to existing industries and businesses. Many of these ideas came about during fierce games of ping pong, beer pong or even Connect Four while squatting at ‘innovative work spaces’ like Crown and Anchor Pub and Mozart’s Coffee Roasters.”

Last week, Offers.com released a survey conducted by Ipsos Public Affairs that had an interesting implication for retailers and paid search, especially during the holiday shopping season. One survey question asked consumers, “How much time do you spend researching the best prices for each of your holiday purchases?” 38 percent of respondents indicated they spend one to three hours, while 14 percent spend over three hours.

These long spans of shopping highlight the importance of timing your campaigns to support when your customers are beginning to shop instead of when they are making their purchase. Most advertisers that use dayparting promote their products around the most frequent times of purchase, when most analytics solutions will indicate the CVR is highest. But if the time lapse between when a customer starts shopping (the first click) and ultimately purchases an item is several hours, having the highest CPCs close to the purchase time could represent wasted ad spend. You want your ads to be prominent when your customers are browsing—which can be well in advance of their purchase—to lock-in their interest in buying the product from you.

We have seen some significant time gaps between the first click and time of purchase. The size of this gap, or latency, typically hinges on the degree of consideration involved in the purchase. In general, consumers spend more shopping for expensive items than for inexpensive ones.

We create heat maps that analyze CVR and AOV by hour based on first click or the time of purchase, which helps our Account Managers hone in on the ideal time to advertise each product,. We also build heat maps that distribute revenue based on different attribution models. We see dramatically different results when applying these alternate models. It’s extra work, but worth doing.

You can see all of the survey results here:
http://dl.us.offerscdn.net/fall-shopping-poll.pdf

With the holiday shopping season fast approaching, it’s important to allocate your resources to the paid search programs that will deliver the most benefit. The key is to identify the categories, sub-categories and specific products that will “pop” this year, and dedicate the majority of your time building out accounts in those areas.

Which Categories and Sub-Categories to Promote

In general, the categories and sub-categories that performed well for you last year will do so again this year. Look at your year-over-year historical data to determine which categories usually peak, and when, and build out your accounts accordingly.

Of course, it takes time to build out accounts, and time is money. It helps to have a metric to prioritize what to build out. At Adlucent, we look at profit per keyword. In some categories, the profit generated per keyword can double or even triple during the holiday season. The impact to your top line can be substantial; even if the marginal profit per keyword increases just 20 cents, in a category with 500,000 keywords, that’s an additional $100,000 in revenue. We usually see much higher changes. Calculating your profit per keyword across categories and sub-categories can help you pinpoint where to allocate your efforts for the highest return.

Which Products to Promote

It’s also important to dig deeper into each sub-category and try to identify the specific products that will be break-out sellers for you—meaning that their conversion rates are higher than similar products within the category. In this case, the specific products that were hot last year will rarely be the hot items this year. However, the same types of products will generally do well.

These break-out products might surprise you. They are not always the obvious products like the Kindle. Instead, they might be something like the FURminator, which was an incredibly hot item for Amazon around 2008.

Note that the definition of a “hot” or “break out” product depends on your business goals. It might be revenue or margin contribution. Or it could be some other business goal entirely. For instance, industry analysts widely believe that Amazon will do extraordinarily well from a gross revenue perspective with their new Kindle Fire this season. But the Kindle Fire is probably a loss leader for Amazon, meaning it has negative margins. Amazon will still aggressively promote it, however, because they understand the lifetime value the Kindle Fire—essentially a consumption device for Amazon’s vast library of digital books, music and videos—will deliver.

Customer interest in products today can provide early indications of which products will convert well during the holiday season. Look at the products customers frequently flag as gifts on your website during the year versus the ones they flag during the holidays. This helps delineate purchases that are not seasonal from those that are. You might even want to offer customers extended returns into January in exchange for some basic survey information about the occasion for the gift (e.g., Christmas vs. a birthday). Also look at what products customers are starting to add to their wish lists or otherwise saving as a purchase reminder—these could also indicate potentially hot products.

Also, make sure you’re promoting products around the right historic average order value (AOV) within categories and sub-categories. For instance, if the electronics category outperformed for you during the previous holiday season but the AOV was $75, your customers were buying lower-end products as gifts, not flat-panel televisions. This would suggest that you focus your efforts on promoting all electronics products in a range of, say, $50-$100.

As a final note, I’d like to emphasize the importance of retail intuition and hand-crafted ad copy. Obviously, no one knows the best keywords for the next hot product yet—because they’re new, there’s no historical data to rely upon. Only retail SEM experts can predict the right keywords and write compelling, relevant ad copy to capitalize on the sales opportunity. We see time and time again that an investment in quality, in the right areas, goes further than any fully automated “spray and pray” approach.

Ultimately, I’m simply advocating you implement some kind of scoring-based evaluation process to help you determine how to allocate your limited time and budget most efficiently. How you implement such a system is up to you, but with the holiday season before us, it’s important to get started today.

Over the past two years, we’ve observed an important trend during the holiday seasons: a bimodal distribution in shopping patterns. Some customers are shopping earlier while others are holding out longer to complete their shopping. In both cases, the root cause is the same: the challenging economy is motivating consumers to look for the best deals. Retailers can capitalize on this if they act now.

The Early Shoppers

Consumers are shopping earlier to find deep discounts before or on Black Friday and Cyber Monday. I expect this trend to continue this year given the current economic climate. To capitalize on this, the key is to give customers the perception that buying early provides value to them—and to do so in a way that does not penalize your business financially. A few ideas to consider:

• Run promotions that increase your conversion rate (CVR) but maintain or increase your typical average order value (AOV). For instance, promoting two-for-one deals or reduced (or free) shipping offers can be effective at increasing CVRs, but you should not lower your free shipping thresholds beyond a financially profitable level, as this would reduce your AOV. For example, Target offers free shipping, but only on items that are priced above $50.
• Extend Black Friday and Cyber Monday from single-day events to week-long events.
• Instill urgency and scarcity in your website copy. Make it clear that these promotions have a limited window of opportunity.
• Allow customers to return products into January. This removes a key objection to buying early.
• Offer some loss leaders to pull in more traffic.

The Late Shoppers

Another group of customers are increasingly delaying their purchases. According to a study released by Google just before Christmas 2009, by December 22nd, 38 percent of consumers had not completed their shopping and 17 percent had not purchased a single gift. This group of shoppers may be holding out for late sales or clearance sales after the season winds down. The obvious problem: once the shipping deadlines have passed, these customers can no longer shop online. Some suggestions:

Countdown timer created by Adlucent for Amazon.com

• Continuously remind shoppers about shipping deadlines. A countdown clock can be an effective visual tool to convey this.
• After the ground shipping deadlines have passed, price the 2-day and overnight options as low as possible. The rule of shipping costing less than 10 percent of the price of the cart goes out the window when urgency is critically important.
• Use expedited free shipping promotions over a high AOV threshold once free ground shipping deadlines are reached. We have seen the revenue from days between the ground shipping deadline and the 2-day shipping deadline be some of the best for retailers.
• If you’re an online retailer, once all shipping deadlines have passed, promote electronic gift cards that can be emailed. These should be promoted on your homepage, in emails to customers, and during the checkout process. You can also run paid search campaigns on gift card terms.

  

  This graph from Google Insights shows searches for the term “gift cards” in December, 2010. Notice that it builds until December 24th, after which it drops off dramatically.

• If you’re a multichannel retailer, make it easy for customers to pick up the product at your store. While you might want customers to come into your store in the hopes of an up- or cross-sell, many customers loathe having to park and come into a store when it’s packed with last-minute shoppers. This may result in you losing the sale altogether. You instead might want to consider offering curbside pickup of items purchased online, and use your website to up- or cross-sell the customer.

Finally, keep in mind that shopping doesn’t end on Christmas day. In fact, it starts right back up Christmas afternoon as people search for accessories or gifts they didn’t receive. According to a survey by Google, 64 percent of consumers planned to shop post-holiday sales. Run promotions after the holidays, too.

We were excited to have attended the Shop.org Annual Summit last week in Boston. Some of our impressions:

• This was the biggest and best Annual Summit yet, with more attendees (especially first-time attendees), more vendors, and more excitement than ever about the opportunities in retailing online.
• Some of the most talked-about topics included multi-channel selling, revenue attribution, mobile, QR codes, website personalization, and the importance of product ratings and reviews.

Some of the companies whose offerings we found particularly compelling for retailers were:

• Conductor, which makes a platform for enterprise-level Search Engine Optimization (SEO).
• Certona, which enables online retailers to personalize their customer experience with product and content recommendations.
• Monetate, which offers an easy way to test, target and personalize website content.
• Bazaarvoice, which provides software and services to capture, analyze and share customers’ product reviews.

Retailers are increasingly embracing that search is strategic to their businesses. They’re finding that the data generated from paid search campaigns provides valuable, real-time insights into consumer demand—insights that are immediately actionable and can help boost retailers’ overall business performance.

Were you at Shop? If so, please let us know what you thought of the conference in the Comments section.