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A Promotional Strategy That Wont Break the Bank

  |  June 23, 2000   |  Comments

Richard is eleven weeks into his series on building an effective, profitable e-commerce site for $6,500. He thought he might actually miss the mark, but it turns out we have $2,360 dollars left to spend on promotion. More than enough if you know how to spend it. The goals of our promotional efforts are, in order of importance: a sale, a prospect's email address, and a link. Here's how to do it for a total out-of-pocket cost of $2,153.

I can't believe that is has been eleven weeks since I introduced this series and the hypothesis that you could build an effective, profitable e-commerce site for $6,500.

My premise was (and still is) that you can build such sites with off-the-shelf components and not have to shell out big dollars for development until your sales can fund your growth.

Honestly, after I was well into this series, I thought I might actually miss my mark. But, by my accounting, it turns out we have $2,360 dollars left to spend on promotion more than enough if you know how to spend it. All we need to do is keep these three guiding principles in mind when preparing our promotional plan:

  1. Standard online advertising (banners, email or sponsorships) is out. It is way too expensive. We want only performance-based advertising (with one exception that I'll talk about in a minute).

  2. The goals of our promotional efforts are, in order of importance: a sale, a prospect's email address, and a link.

  3. We need to be sure to measure the results of the efforts in some comparable way. With the limited tracking resources we have available, the metrics are going to be cost per sale and cost per prospect. You want to put more money into the promotional efforts that are yielding the lowest cost per sale and cost per prospect. (Sounds obvious, right? But I guarantee there are guys making six figures in the Internet business who don't follow this simple rule.)

The Tactics

So let's categorize our promotional tactics based on our campaign goals of a sale, a prospect's email address, or a link.

Promotions Aimed at Driving Sales

  • Affiliate Program

    One of the most cost-effective ways to drive sales is through an affiliate program. Now there are plenty of PERL scripts out there to let you create and manage your own affiliate program, but they won't write the checks or recruit new affiliates which can be huge drains on your resources. You should probably pay to have someone handle it all for you. And that someone should be Commission Junction. Its terms are incredibly favorable. Pay a $795 setup fee and a $250 minimum deposit upfront to fund the commissions, and Commission Junction handles everything for you. The deal can fund itself if you make sure your profit margin can accommodate the commissions you want to pay out.

  • Branch Stores

    I have to admit, this next idea isn't originally mine. I got it from Danny Sullivan and Eric Ward, two well-known Internet marketers, while chatting with them at a conference in Las Vegas a few months ago. Their idea is basically to take advantage of these turnkey storefront services that sites like Yahoo Store and Amazon.com's ZShops offer small businesses. Open a "branch store" at those locations, and put a selection of your best-selling items in those stores. The major benefits are you get listed in shopping directories and become part of special promotions those sites run, enabling you to leverage the traffic those names generate. With Yahoo Store, the commitment is a minimum of three months at the rate of $100 per month. With Amazon.com's ZShops, it's a combination of a per-item listing fee (10 cents) plus a percentage of sales (5 percent for items up to $25, less as the price of the item goes up).

Promotions Aimed at Getting a Prospect's Email Address

  • Email Newsletters

    The next best thing to closing a sale is getting a prospect's email address so that you can talk to the prospect later. Building an in-house mailing list is hands down the most cost-effective email marketing you can do. It takes time to build a list, but we have one of 34,000 people on one of our sites, and I can testify regular mailings to it generate the sales. We usually see double the sales on our site after a mailing. And the beauty of it all is frequency with this list is free. But before you do it, spend $24 for "Poor Richard's E-Mail Publishing," the best book in the world on email newsletter publishing. It is written by Chris Pirillo, a true pioneer in that field.

Promotions Aimed at Getting Links to Your Site

Links you pay for...

  • bCentral

    Spend $500 for a year's membership in bCentral Microsoft's e-commerce/marketing service for small online businesses. You get a host of fairly useful tools, but the big plus is you get 10,000 banner-ad impressions a month on its banner-advertising network (formerly the LinkExchange Network, if any Internet old-timers are out there reading). You can manage a banner campaign by yourself, which is what I really like about the offering. In fact, it is the only affordable banner-campaign solution for small businesses that I have yet found. It could be a whole lot slicker (hint, hint: you other ad networks), but bCentral serves its purpose, and the CPM comes out to just more than $4, which isn't too bad.


  • Get a RealName

    For $100 you should register with RealNames. The original idea behind RealNames was to enable anyone to enter a company name, instead of the company's URL, into a web browser. The RealNames service would "translate" the company's name into the correct URL, provided the company had registered with RealNames. If the company hadn't yet registered, RealNames provided approximate matches from those companies that had registered. Well, the web-browser idea didn't gain as much traction as RealNames' partnership with AltaVista (and, recently, other search engines). Now when you do a search on AltaVista, matches from RealNames are first. There are ways to exploit this fact that go beyond this article. But for $79 you can read all about it if you become a subscriber to the Search Engine Watch site.

  • Pay-For-Placement Search Engine

    Spend $100 (4 x $25) to open accounts on four pay-for-placement search engines Goto.com, FindWhat.com, hitsgalore.com, and Kanoodle.com. These sites let you bid on keywords in increments of a penny. If you buy the word "art" for 10 cents, and another company pays 9 cents, you are listed first and they are listed second when someone searches on that term. And you pay the 10 cents only if the person clicks through to your site. Dump the remaining portion of your budget into whichever of the above four search engines worked best for you.

Links for free...

  • Registration Campaigns

    If you take my advice above and get a subscription to Search Engine Watch, you'll have everything you need to know about the proper way to register with the major search engines and directories. What's left after that is hunting out the industry-specific directories appropriate to whatever your site content is. There are also resource-specific directories places to list audio content, video content, even newsletters! It's not hard to find these places, just time-consuming. Two good places to start are InvisibleWeb and Yahoo's Directory of Web Directories

  • Viral Marketing

    More "tired" than "wired" at this point, viral marketing is the term for giving your site visitors the tools to tell their friends all about you. A common incarnation is the "Send-This-Page-To-a-Friend" button which allows you to easily notify a friend via email when you come across a page he or she may like. There is a totally free PERL script that will let you do this at: http://bignosebird.com/carchive/birdcast.shtml. It is called BirdCast. It even logs each referral so you can measure how often it is used.

So let's total up our out-of-pocket cost:

Affiliate Program through Commission Junction $795 + $250 = $1,045
Branch Stores at Yahoo and Amazon (50 of your best-selling items) $305
Copy of "Poor Richard's E-Mail Publishing" $24
Year's Subscription to bCentral $500
One RealNames $100
Year's Subscription to Search Engine Watch $79
Testing on Four Pay-For-Placement Search Engines $100
Registration Campaign elbow grease
Viral Marketing a little more elbow grease
Total out-of-pocket cost: $2,153

That leaves us a surplus of $207!

Oh my God. An Internet start-up that DIDN'T burn though all its funding before turning a profit? What in the heck is this industry coming to?

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ABOUT THE AUTHOR

Richard Hoy

After five years of telling others about how to spend their marketing budget online, Richard Hoy recently left the employ of this influential publication to see if what he's been blabbing with his big fat mouth all these years really works. He is President and Co-founder of Booklocker.com Inc., an alternative to traditional publishing that helps authors realize profits of up to 70 percent of sales by combining electronic publishing with Internet marketing.

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