98% of business coming from 22 words (1 Viewer)

[Linda]

The CEO of Restoration Hardware asked the marketing group to explain what words yielded the greatest return in the internet advertising budget, and they could not answer. A week later, they had the info - 98% of their business comes from 22 words. What were the words - Restoration Hardware and various misspellings of the name. The CEO explains his thinking on the subject.

Immediately the next day, we cancelled all the words, including our own name. By the way, we are paying for the little shaded box above our words and said, oh no, we have to hang on to that because Pottery Barn might squat on top of us. I said, excuse me? I said, if someone goes to a mall or a shopping center and they're going to Restoration Hardware and there's a Pottery Barn there, they're already squatting, okay? It doesn't mean they're going to go into their store. If somebody wanted to buy a diamond from Tiffany and just because Zale's is sitting on top of them in a shaded box doesn't mean they're going to go to Zale's and buy a diamond.

I mean, I can't believe how many companies buy their own name and they're paying Google millions of dollars a year for their own name, like maybe if this is webcast, right, a lot of people are going to go, holy crap. They're going to look at their investments. They'd go, maybe we don't need to buy our own name.

http://www.zerohedge.com/news/2017-09-11/startling-anecdote-about-online-advertising-restoration-hardware

I've continued my quest to find someone who actually clicks on internet ads and have come up empty. Some surmise that maybe kids do, but I doubt they are shopping at Restoration Hardware.

I believe stories like this one and the other about Proctor and Gamble point to a change in the status quo in the business world. Suddenly, people are looking up and asking questions, which is what many of us have been saying all along on a variety of subjects. Slick presentations are just not going to cut it anymore - show us the data and let us decide. Oh my, more people thinking for themselves.

 

[Lila]

Oh my, more people thinking for themselves.

That is an idea I can get behind!
My husband finds himself bringing up this point daily, I think... in the form of 'Can we get something beyond a slide show?' meaning 'Show us the data/work, not just how you are going to get the data/work done.'
As a long time proponent of 'show me the beef' (dating myself, I know) I am all smiles when I hear this kind of talk!

 

[Kevin C]

The SEO concept only works for small, mid-size businesses who do not have the ability to market their brands, so they focus on functional words that apply to their products. ex. someone who makes handmade baskets from home, buys the keywords "handmade baskets", "basket gifts", etc. But these words are not popular, so they are "cheap" = less profits for Google.
A P&G and Restoration Hardware do not need "words" to catch orders - their names are already well-known. This is the "dirty" little secret in the online marketing data in Silicon Valley for almost 2 decades (oh, they know - were hoping "you" wouldn't figure it out yourselves).
With data mining/machine learning systems becoming mainstream, the P&Gs, Home Depots, Krogers, etc. - are catching up technology-wise and starting to figure it out. This is also why you are seeing a lot of companies creating their own marketing streams through YouTube, Snap, Twitter, etc. Part of it is the Trump effect as well - companies are seeing how powerful (and FREE!) a catchy "tweet" account can be as a marketing tool.
The online advertising industry will eventually collapse, as 60-80% of their revenues come from ~20% of the Fortune 500 companies. Once these marketing companies catch up technology-wise with big data-mining, machine learning (IBM Watson) departments - Google, FB, Snap, Twitter (even some parts of Apple), Baidu, etc. will see a major collapse in revenue as well as profits (easier to collect $80M from 1 corporate account than to collect $80M from 10M small-biz/mid-size accounts). It is just a matter of timing.
This is why Google/FB/Apple have been frantically trying to diversify their businesses into self-driving cars, home electronics, home security, business automation, AI apps, banking, etc. for the past several years. They know their "search advertising" businesses have become polluted with fake data/bots/fake clicks, and will collapse once their customers load up on the same data-mining technologies and figure out the farce. P&G and RH are the first ones to publicly say so (I am aware they have been saying so internally for at least 10 years, but didn't want to upset their brands because of politics - now that Trump has opened the cage and let out the "demons" against Political Correctness, companies are willing to go against Google/FB after seeing the Trump marketing machine succeed with a barebones budget).
Another reason (unfortunately this is where privacy issues practically useless) is that marketing departments are using other avenues to get data to mine through their own "Big Data" departments. This is where credit cards, banks, credit bureaus - come in. Also, when we apply for store cards (Target, HD, Kohls), same thing applies. The data that comes from our personal spending is being used to segment markets. This has been done for eons, but with "Big Data", it has been juiced with steroids. I see it in my junk mail everyday - it is incredible how targeted they are now (specific coupons, even timing for holidays, events, etc.), as opposed to the random coupon-junk we got 10+ years ago.

 

[Snowmelt]

random coupon-junk

For sure, Kevin C. Random coupon-junk sounds like the one-armed bandit - pot luck, with mostly misses in between. But now, with the collected, segmented data, marketers are daring to think they exclusively know the market due to individual IP address data. How inconvenient for them that black is white, and white is black, in some quarters.

 

[Lila]

This is also why you are seeing a lot of companies creating their own marketing streams through YouTube, Snap, Twitter, etc. Part of it is the Trump effect as well - companies are seeing how powerful (and FREE!) a catchy "tweet" account can be as a marketing tool.
...
This is why Google/FB/Apple have been frantically trying to diversify their businesses into self-driving cars, home electronics, home security, business automation, AI apps, banking, etc. for the past several years. They know their "search advertising" businesses have become polluted with fake data/bots/fake clicks

So, what will be the next technology/system/way of doing things that folks come up with after the YouTube, Snap, Twitter method becomes polluted?

It seems a cycle is chasing its tail here: a technology comes up (e.g. Facebook initially for the purpose of socializing on campus), gets popular, spreads, and once it becomes popular enough it catches the attention of the big companies who use them, thus 'polluting' them for the purposes of social networking, or at least diluting them so that it's too much work to use them much or at all for socializing (or for small, personalized businesses)... then on to the next technology/system/way of doing things...

I'm personally in favour of a system that involves the personal touch. It still has its flaws, but as Alan Watts points out so succinctly in this video: , a system without trust (yup, I'd say we're in the midst of that) doesn't actually function. In our case, we have bureaucracy running our lives in such a way that even those high up in the running of things have their hands strapped if they 'use their own good sense' to decide to do something that makes sense for an individual that 'goes against' the way the system is built. Too much paperwork involved to justify it all
In this video, he had me interested as soon as he said his essential principle of business "Figure out a way to get paid for playing"... and I loved it even more when he talked about how impossible it is to keep track of the paperwork of life!!!

Fascinating post about the nitty gritty of something I'd not known such details about, even having heard some general concepts, Kevin C Thanks!

 

[Lila]

. But now, with the collected, segmented data, marketers are daring to think they exclusively know the market due to individual IP address data.

I know, let's all randomly decide to buy the same useless item at once, then drop it like a hot potatoe!