MONETIZATIONUnderstanding the Value of the Digital Channel

3.2.2011

JASON BURBYCHIEF ANALYTICS &

OPTIMIZATION OFFICER

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ZAAZ ESSENTIALS

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ABOUT ZAAZ

HISTORY

ZAAZ was founded in 1998. In

2006, ZAAZ was acquired by

WPP (WPPGY), one of the

world’s most comprehensive

marketing communications

groups.

PUBLISHED WORKSGEOGRAPHY

ZAAZ is headquartered in

Seattle, with offices in New York,

London, Helsinki, San Francisco,

Portland, Chicago and Detroit.

“Actionable Web

Analytics”(available on

amazon.com). Weekly

ClickZ.com column

EMPLOYEES 185

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ZAAZ ESSENTIALS

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ABOUT ZAAZ

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COMMON TRAITS OF OUR MOST SUCCESSFUL CLIENTS

• Digital Channel Goals are imperative and must be clear, holistic, documented, shared, valued and understood.

• Analyze performance based on overall business goals

• Don’t analyze data in silos – integration is key and much more insightful

• Focus on opportunities and recommendations – not just reporting

• Consider what success means for your clients across B/E/O and their overall marketing funnel

• Monetize all key digital behaviors

• Prioritize opportunities based on greatest impact to the business

• Encourage your clients to get aggressive with an ongoing optimization program

• Understand customer experience online and offline

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COMMON DIGITAL PROBLEM

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WHERE DO YOU INVEST?

John Wanaker 1838-1922

“Half my advertising is wasted, I just don’t know which half.”

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COMMON SITUATION

As the Manager of your online operations, you have $100,000 tackle one of the six following projects.

Options:• Spend more money on media• Improve online customer support• Add Reviews/Ratings to your site• Redesign Home Page & Navigation • Tune Purchase Flow• Improve Landing Pages

Where do you invest your budget?

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FREQUENTLY DECISIONS ARE MADE BASED ON…

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DECISION SHOULD BE MADE BASED ON…

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SOLUTION

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A WAY OF THINKING

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HOLISTIC ANALYSIS

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COMMON SITUATION

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WHAT IS MONETIZATION

The objective of the digital channel is to create business value. Our jobs are to improve the channel's effectiveness in delivering value.

Monetization is the analysis of different behaviors in the digital channel and how they create business value.

The objective of monetization is to utilize analytical findings to design more effective web sites, media campaigns, and social media outreach.

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FOUR CORE BENEFITS OF MONETIZATION

1. Provide insight and recommendations to increase value

generated by the digital channel

2. Dynamic Prioritization™ -- prioritize investments and projects

3. Measure performance and analyze changes in value over time

4. Provide key inputs to media decisioning tools (guide strategy for

media investment)

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PURCHASE FUNNEL FRAMERWORKLeveraging Bought, Earned & Owned at Each Step

AWARENESS

CONSIDERATION

INTENT

PURCHASE

LOYALITY

Integration of data types:

Bought – Refers to media purchased to generate product & brand awareness such as online banner ads, paid search, sponsorships and affiliates.

• Display Media• Paid Search• Affiliate

Earned – Refers to favorable publicity/awareness gained through promotional efforts other than advertising, as opposed to paid media, which refers to publicity gained through advertising

• Facebook/Twitter/YouTube/Social• Reviews• Bloggers• SEO

Owned – Refers to digital entities created and controlled by the company such as web site, email opt-ins, campaign microsites, etc.

• Web properties• Email• Mobile Sites• Microsites

Maximize ROI:Understand the full landscape – optimize full landscape.

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WHAT IS MONETIZATION

Action Value

Photo gallery visits $2.50

Product demo video visits $1.25

Facebook Fan $3.75

Rating and reviews visits $4.50

What does $4.50 mean?

• When a visitor completes an activity it increases expected revenue for the company

• On average, for each completion of this behavior, we expect to generate $4.50 in value*. However,

many visitors who complete this action will never purchase or generate any value for the company

• The value generated will be realized in the future, but we cannot say exactly when

Monetization modeling describes the influence the digital channel has on a company’s revenue and profits.

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MONETIZATION LOOKS AT INCREMENTAL VALUE

Suppose 200,000 people watch a video on Nokia.com

Prior to watching Video Post watching Video

Visitors Avg likelihood of purchase 3.00% 3.25%

Number of people who will buy a phone 6,000 6,500

Incremental phones sold  500

Average value of a phone (revenue) $150 

Total incremental value generated $75,000 

Value per view of video (revenue) $0.38 

Our job is to understand this change. This requires analysis and research

The rest is just math…

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APPROACH TO MONETIZATION

Behavior Visits

Increase in Likelihood of Purchase*

Avg value of purchase Total Value

Average value of behavior

Rating and Review Site 25,000 x 2% x $400  = $200,000  $8 

Facebook Fan 23,000 x 5% x $400  = $460,000  $20 

Product Configurator 55,000 x 1% x $400  = $220,000  $4 

Basis of model is increase in

likelihood of purchase. This metric

inherently describes incremental

value and requires specific research

to quantify.

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APPROACH TO MONETIZATION

Summary

Total monthly value 33,485,000$ Total visit 5,000,000Value per visit $6.70

Value by ActivityFebruary-11

High Value Activities Value per

VisitMonthly

Completions Monthly ValueEst. Unit

SalesBehavior 1 $22 350,000 $7,700,000 1,200 Behavior 2 $33 250,000 $8,250,000 900 Behavior 3 $18 250,000 $4,500,000 500 Behavior 4 $63 35,000 $2,205,000 300 Behavior 5 $9 400,000 $3,600,000 250 Behavior 6 $34 25,000 $850,000 200 Behavior 7 $6 150,000 $900,000 200

Additional Activities Behavior 8 $79 15,000 $1,185,000 100 Behavior 9 $43 15,000 $645,000 80 Behavior 10 $12 50,000 $600,000 70 Behavior 11 $9 75,000 $675,000 60 Behavior 12 $12 50,000 $600,000 60 Behavior 13 $88 10,000 $880,000 50 Behavior 14 $15 20,000 $300,000 20 Behavior 15 $57 10,000 $570,000 20 Behavior 16 $0.12 200,000 $25,000 5

Total Value 33,485,000$ 4,015

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FOUR WAYS TO DETERMINE VALUE

Four Ways to Show Value:

1.Direct purchase

2.Indirect but identifiable

3.Likelihood to buy lift

4.Educated estimates

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PRIORITIZING OPPORTUNITIES

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DYNAMIC PRIORITIZATION

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FOCUS ON ACTION

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MONETIZATION CAN BRING B/E/O TOGETHER

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GETTING STARTED

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GETTING STARTED

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MONETIZATION

Why Monetization Works?

• Helps focus efforts on key areas rather than the entire digital ecosystem

• Helps translate ideas/opportunities into real dollar values

• Can be used when looking at all visitors as well as segmented visitors

• Once you put numbers in front of people in dollar terms, they don’t want to be the one to hold up or ignore a $2M opportunity

• Allows Dynamic Prioritization (reduce Big Dog Syndrome)

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COMMON ROADBLOCKS

Common Roadblocks to Monetizing Site Behaviours

• Uncertainty where to start

• Lack of Executive Support

• Getting Full Team Buy In

• Concern over being absolutely perfect

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WHERE TO BEGIN

Where to Begin

• Get the monetization calculator

• Share the concept with an executive sponsor

• Bull a cross functional team together

• Attempt to determine the value (agree on assumptions) of one or two behaviors on the site to prove the value.

• Forecast impact of existing projects against high level model

• Go deeper, formalize model, prove out assumptions

• Ask for help (if needed)

JASON BURBYCHIEF ANALYTICS AND

OPTIMIZATION OFFICERjason@zaaz.com

FREE MONETIZATION CALCULATOR

QUESTIONS

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