Hi everyone,

I’m currently on vacation in Cuba.  A lot of people have expressed interest in hearing about this trip - but I wasn’t expecting to have any access to the outside world while I am here. Well things have changed and now I even have my treo cellphone activated with text messaging!

Internet access is difficult, so I’m going to send updates from Cuba to Twitter via my cellphone.  For those that haven’t used Twitter before, it basically works like a chat room, but for cellphone text messaging and IM.   I’ll be in Cuba until Thursday 10th of May.
 
This is fascinating to me to use one of the most accessible communication tools in the world (Twitter) from one of the least accessible countries in the world (Cuba).

The updates will just be things I am thinking and feeling as I backpack around.  You may find my perspective unique because:

- I am a huge fan of Ayn Rand and objectivism
- I am a strong supporter of the free software foundation, and follow all forms of community software, including the open source movement.
- I have lived in the Dominican Republic for 5 years and understand Caribbean culture
- I speak very fluent Spanish
- I am staying with normal Cuban families, spending 100% of my time with real Cubans and zero government intervention
- I truly want to learn about the Cuban system and what makes it work.
 
Already I have found this trip to be very profound.

You can get my Cuba twitter updates in several ways:

1.  Sign up for an account at twitter and add me as a friend.  Twitter: adrianbye.  You will get updates to your cellphone or via IM.  This is the best way.
2.  Get updates via RSS: http://twitter.com/statuses/user_timeline/1235671.rss
3.  Read them on the twitter website here: http://twitter.com/adrianbye

The twitter postings will just be short (due to cellphone text message limitations), but when I get back I’ll post more in depth (with photos) on my blog:  http://AdrianBye.com

Unfortunately it doesn’t seem I can receive text messages to my phone from the outside, so I probably will not receive updates sent to me via twitter.  Also, internet access is a hassle, so I will probably not check email until I return home.  But, if you want to reach me while I’m in Cuba, feel free to call my cuban cell: 011-53-5-295-9122.  Timezone is EST, same as New York.
 
Why am I in Cuba?

1.  I am a big fan of Ayn Rand, and I decided to come to Cuba to understand the Cuban perspective.  I noticed from reading Atlas Shrugged that the world portrayed really resembles Cuba today.  I also find it fascinating that Atlas Shrugged was published in 1957 but Cuba was turned to socialism in 1959.  I have a list of questions I’m going to ask people here.  Yesterday I met a lady who is a professor of marxist philosophy, so I plan on spending some time with her.

2.  Since I have lived in the Dominican Republic for 5 years, I want to compare and contrast the two countries.  Both countries come from a similar background, but went in dramatically different directions in the 50’s and 60’s.

3.  I have a theory that free software is similar to socialism in some ways, and works on the internet because there is no physical property involved.  This is a controversial statement to make, obviously. 

4.  I really like a song called “Ella y el” by Ricardo Arjona. Its about Cuba (in spanish).  I want to see what the cubans think of it.. :-)  Here’s the song: 

http://youtube.com/watch?v=R2BJfO74qB0
 
So, is what I’m doing legal?
As an Australian citizen residing in the Dominican Republic, I am not subject to the US restrictions for Cuba.  Will the Cuban government be happy I’m using twitter?  I don’t know, but hopefully it will be ok.   Life’s about taking some risks, right? 

Communication here is incredibly restricted.  Cubans cannot even get a cellphone let alone internet access.  I doubt many people have used twitter from Cuba before, so this is all rather new.

Its been funny hanging out with the Cubans - because I so obviously look foreign, they assume I’m another clueless foreigner.  But when I start talking with them, they think I am latino!

And, yes, I am taking lots of photos, but I can’t post them from here.  I’ll put them on my blog when I get home.

So far I have been impressed with many things about Cuba.  The streets are cleaner than the Dominican Republic, and the people are VERY well educated.  I have been shocked at the level of education of people I’ve come into contact with so far - from what I have seen so far, Cubans far surpass the educational level of Dominicans.

Obviously the country is in total disrepair.  A lady I met this morning who works in a store (government owned, of course) earns $23/month.  She has 2 years of college.  She didn’t quite know what to make of my treo cellphone.

Anyways, check out my postings on Twitter through May 10: http://twitter.com/adrianbye

Cheers,

Adrian

John D Rockefeller knew a lot about how his business operated

Back in the late 1800’s John D Rockefeller knew a lot about how Standard Oil operated.  Rockefeller was trained as a bookkeeper, so monitoring numbers came easily to him.  One of the more famous stories from Rockefeller is about how he once asked the guys who put solder to seal barrels of oil, to try to use a couple less drops, and see if the barrels still stayed closed.   They got the quantity of drops required down from 40 to 39, making a nice cost savings while still maintaining quality.  (They found that 38 drops caused the barrels to leak, but 39 worked perfectly).  Rockefeller was able to do this because he monitored his numbers very closely.

The CPA crowd are measureres – but are you truly measuring everything you need to in your business?  The standard CPA network signs up for a license to direct track and automatically everything is tracked.  This has worked very well for many networks as they got started.  But moving forward, as the space gets even more competitive, may require even more numbers to be tracked.

So what else should you measure, and how should you measure it?

The right term is KRA”s, or “Key Result Areas”.  You should take a look at your business from a distance and think about what your key result areas are.  What are the areas of your business which truly matter?  If you run a [commodity] business like a CPA network, maybe most of your numbers are managed within your affiliate network system.  But this probably also means you don’t have any competitive advantage.  So as your business grows, you should think about what the areas are which truly reflect the running of your business.

Then once you have all these numbers collected, look for ratios.  The accounting guys are great at this, they always express critical numbers as a ratio.  An example ratio might be dollars earned/clicks.   Then, if you look at this number every day, you have a clear handle on a key number for your business.  If this ratio changes dramatically, you can easily investigate further.

Let me be clear – you don’t want to over measure.  This is not about spending 5 hours per day looking at numbers.  You should be spending 5 minutes in the morning taking a look at the previous day’s numbers.  But it must be done each and every day. If the numbers need to come from a lot of different sources you can assign the collection of the data to one of your staff.  Perhaps a lot of it can be automated by one of your techs.  But those stats need to be on your desk every morning so you can see how your business is doing.

One of my clients is a call center.  They had found their business was starting to drift, and were unclear as to why.  When I started encouraging them to cmonitor their stats daily, rather than monthly, they quickly found a couple of holes, which were easily fixed.  This has since opened up all kinds of avenues into new numbers that should be tracked, giving far more insight into the operation of their business.

As they’ve continued digging into their numbers on a daily basis, they’ve identified a couple of other key holes. Yesterday I was talking with my client and they’ve just had their best week, ever.  They are now able to bring on 15 additional people with no additional cost.  This kind of monitoring may sound simple and obvious – but are you monitoring all the key numbers for your business on a daily basis?

Another client does a pretty good job at monitoring stats.  As they were testing a viral signup process for their site, they found that they could get some dramatic improvements by monitoring their stats.  In the beginning the signup process was wildly inefficient, and a mess.  After 2 months of monitoring stats each day and improving the process based on the results, dramatic improvements have been made and it became the most efficient signup process I had ever seen – making the site capable of generating more viral traffic than most others.

So monitor your stats.. don’t go overboard, find the key measurements for your business, and monitor them every day.  Over time, the dividends will be huge.

Credits:  Inspiration for this article came from Bob Parson, the CEO of Godaddy’s blog, and Dick Costolo, the CEO of Feedburner blog.

If you’d like to know more about measurement, sign up for my list at http://tastips.com

We’ve all heard for years about behavioral targeting for the web and how its going to work.. but never quite does..  Well, some of the techniques being used in this kind of targeting for web inventory can also be used for email – and they work quite a bit better.

How it works

Basically we need to look to track actions by users and manage those users differently.

In the case of email, the most common action to track is clicks.  So if we mail to a large list and receive a certain segment of the list clicking on the creative, those users have indicated a certain level of interest in that particular topic.  Some people do this with opens, but via clicks is a far more accurate indicator.

Once you have smaller targeted lists that have responded via clicks, you can focus on sending targeted offers to those segments only, or broker that data separately.

Most ESP’s don’t support tracking clicks by category unfortunately.   And if you don’t track this, you’re losing a whole level of valuable data.  Lets say you’re mailing to an email list, but you also have full postal data on your users.  If you are tracking category clicks as you mail to your list, suddenly that postal data has a whole new level of information about it, which can be rebrokered offline at far higher CPM’s.  I’ve talked to a couple of direct mail brokers and they love this kind of data, since users have clearly indicated their preferences.

Who is doing it?

Larry Organ is a real pioneer in this space, with his company ConsumerBase.  I first read about Larry in Forbes magazine (http://members.forbes.com/forbes/2006/0327/052.html).  They had a rather scary article about how he was invading everyone’s privacy.  And while this kind of data definitely has some serious privacy implications, its not going to be as bad as Forbes made out.

Basically, Larry likes to add value to data.  Therefore he takes existing data, and adds a behavioral level in on top of it, by tracking clicks.  He’s systematized this so well that he’s even filed for a patent on this – which if he gets it, I think will be very valuable one day.

He’s been doing this for quite a long time, segmenting his data by different interest categories.  You can even buy data from him very easily through his site http://responderinfo.com.  Try his data out and see if it works for you – and let me know if it works well.  They have 20 million names all broken down by interest categories with full email and full postal.

Another company that is starting to apply behavioral analysis to email is Q Interactive.  They recently released an email service which does behavioral email follow-up.  Over time they build profiles on what users like depending on a number of different variables.  According to their press release, they use “more than 1600 unique segments, including self-reported demographic, geographic, behavioral and transactional data and category interests”.  So over time, Q Interactive is learning what users like, build profiles for them, and therefore do a better job marketing to them.  You can read more about their product here:   http://www.qinteractive.com/news/releaseDetails.asp?ID=227

Behavioral email marketing can open up a whole host of ethical issues, as raised by Larry Organ’s Forbes article.  But over time these will be worked out.   And so, at some point we can expect Google to get into behavioral marketing – however it’s not going to be so easy for them.  They are extremely concerned about the affect privacy issues will have on their brand.  Therefore the door is currently open for many companies to enter the behavioral space.  Long term, we can expect Google to become involved since behavioral targeting is likely to become the way Google can complete with traditional TV – the ads for video will only really become effective when behavioral data is added, improving the targeting.

TV Behavioural targeting

How would TV behavioural targeting work in practice?  Well, you might be mailing to your list, tracking clicks by category, building up profiles of your users.  You then become part of a behavioral targeting network, feeding this data into the network.  As TV shows are being broadcast online, users will be shown ads during the shows.  The targeting for the ads will be done based on your email click data.  You’ll get paid extra for your data, and the TV shows will able to earn higher ECPM’s because the audiences being targeted will be far more relevant.  Today’s version of this will be for feeding data into the banner networks.

If you’re interested in learning more about how to do this kind of targeting to your list, a great book about it is called “Drilling Down”, I’ve written a review about it here:

http://www.adrianbye.com/favourite-books/

You’re also welcome to join my list at http://tastips.com, where I talk more about this topic.

So remember, track your clicks!  They’re worth a lot!

One of the most competitive markets on the Internet for a low cost, general interest product is the government grants information market. It’s filled with people looking for free money from the government, and the level of marketing is limited only by the FTC. This is an offer that performs incredibly well and generates very high ECPM’s across a large amount of Internet traffic. “Free money from the government” is a strong pitch, and since most people are aware that the government does give a lot of money away in grants, basing the sale in an element of realism, its even more compelling.

I don’t like this market, since selling into it generally does much more harm than good – but it can be instructive for how other markets develop. Since the grant market has such a high ECPM the most competitive marketing methods are used to make the offers work. If your market is not using some of these techniques currently, they will be in the future, so this is your chance to implement them first and profit!

Stage 1: $19.99 ebook, 50% rev share for affiliates.

In the beginning there was little competition and the Internet had not seen an offer like this, so it performed extremely well. Publishers were happy making $10/sale, and everyone made good money.

Stage 2: $19.99 ebook, $19 monthly continuity program.

As the market became more competitive, the payouts were forced to increase to continue to drive traffic. A monthly continuity program was implemented, which was “forced” continuity, meaning the customers were signed up when they purchased the ebook. This allowed payouts of $25 - $30/sale. Obviously the level of risk in this model is much higher, since the model has now gone negative at the point of sale. The typical retention for this program was 3-4 months.

Stage 3: $2.95 trial offer?

Notice how we don’t have a low price trial to low price continuity program (eg $19/month). This is because the ECPM payout to publishers will not support it, and will force the advertiser to lose money too early.

Stage 3: $2.95 trial, $199 one time billing.

This was an extremely aggressive offer put where users were charged a cheap trial, then sent a package they were billed $199 for. This offer didn’t last long since the market was not able to afford a $199 package for grants information, causing a high level of charge backs and refunds. However while it worked, it was extremely competitive.

Stage 4: $2.95 trial (free + shipping for a CD), plus multiple continuity programs.

This is where the market is today. The user pays for a free+shipping program and then is enrolled in several ongoing continuity programs. The consumer is excited because they are receiving a CD perceived to have a very high value. Then one continuity program will start initially, and another one, or more, start several weeks later, without the consumer realizing they are being billed, sometimes using different credit card descriptors.

Lead generation

In the grants market, people generally have not been successfully reselling the leads to phonerooms. This may be partially due to legal regulations, but also because the market simply cannot afford to pay for high priced coaching programs. Most leads from a grant offer don’t command a very high resale value.

What are the lessons from this?

1. If your market is undeveloped you can gain a huge advantage over others by adopting these techniques.

2. If your market is relatively poor, a high price won’t work no matter how you do it.

3. In direct response marketing, we are always going to see extremely aggressive offers implemented. So someone in your market may try to implement aggressive multiple continuity programs. This type of advertising is unfortunate because it makes it extremely difficult for everyone else to compete since the competitor can purchase more advertising. But it may well happen, enabling your competitor to buy more media than you.

Many successful offers today receiving a lot of volume don’t follow all the points above. Making some fairly simple changes will see your ECPM’s increase dramatically. Watch and learn from the most sophisticated markets!

In the mid 1800’s John D Rockefeller founded Standard Oil, which later became the foundation for almost the entire oil industry.  He created the first real national corporation, and later, the first international corporation.  There were no laws for setting this up back then, so they had to deal with a lot of complexity and resistance.  Before Standard Oil was created in the 1800’s, all business was local small business.   There was no real nationwide business.

Since that time we have become used to large corporations in every part of our lives, for example, Microsoft, Citicorp, Hewlett Packard, Disney and Wal-Mart. 

Is it changing?

The internet is changing some of this, and is flattening how we work.  Instead of requiring hugely human intensive businesses, online, we’re now working with small, highly leveraged teams.  And instead of large corporations, on the internet the teams are relatively small.  Look at what Markus Frind has done with PlentyOfFish.com, or the HotOrNot.com guys, or Drew Curtis with Fark.  All these guys control as much traffic as a television station with few to no employees.  Even Google, one of the very largest online corporations only has 11,000 employees, compared to Wal-Mart, which has 1,800,000.

The ease of working remotely and connecting with and working with people in new ways is driving this on the internet, and some of the freelancer sites are leading the way.  For example, Odesk, with its outsourcing model, is a company that can allow individuals to organize themselves into teams and work remotely together as an entire company.  This model doesn’t scale particularly well – it is hard to have people working from different locations and have them collaborate as effectively as a team based in a single office.

The few cases where this works is when the collaboration is very simple.  A prime example is a company named LiveOps.  LiveOps provides phone support for large companies.  So if you’re Dominos, and you want to shorten the time it takes to answer the phones, you route all your calls to LiveOps.  LiveOps in turn recruits work from home people to answer the phones.  Their workers like this because they can work on a flexible schedule. Because LiveOps has so many people, and the concept is simple, the model works incredibly well for both sides and can scale.  LiveOps ends up with a huge team of work from home phone operators based around the country and can shift volume according to demand, and companies needing phone support can easily route it all via LiveOps.

So while LiveOps can work as a mega corporation because it has a very simple model, I think we’re going to see more growth of small businesses interfacing with each other in the future not less, where fewer people control more of the information that is passed around the world.  A successful website is incredibly high leverage and that doesn’t require a lot of people. 

So my question to you is, for the internet, are we heading back to the early 1800’s where small business ruled?

I recently did an interview on Santiago radio station Alcatraz FM, 90.9.  The interview is 30 minutes long, in spanish.

Learn about how the internet is perceived in the Caribbean, its quite different to the rest of the world. 

You can listen to it here:
http://adrianbye.com/moreinfo/alcatraz.mp3

I recently did an interview on Clear Channel syndicated radio in the US with Craig Peterson.

This was broadcast in 3 US markets on the east coast.
You can listen to it here:
http://adrianbye.com/moreinfo/clearchannel.mp3

For more on Craig Peterson’s radio show, visit here:
http://www.tech-talk-with-craig-peterson.com