Episode 11: Niching Down Your Audience
Today’s podcast focuses on niching down your audience, but first a listener question. Tyler asks, “If you can share experience with MAP pricing?” If you would like to ask Ecom Crew a question head over to our contact form or hit us up on Twitter or Facebook.
Grant says MAP pricing was used on Treadmill.com. MAP pricing is the minimum advertised price, and it is an agreement between vendors and sellers stipulating the lowest price the item can be advertised at. Some even argue whether MAP pricing is legal or not. Our experience was that we abided by it. The decision to use MAP really comes down to the vendor and seller relationship. If you aren’t making any money, you may want to reconsider your strategy. Mike says that MAP pricing can make things really tough if you are selling on MAP, but others aren’t. There are some ways to work around it such as free shipping or coupons, but we prefer not to have to deal with MAP pricing if we don’t have to.
Niching down ad campaigns is a topic that came up in Mike’s mastermind group. Ecom Crew has really been ramping up our advertising campaigns. Mike was sharing advertising campaigns with the group, and the advice is to niche down to a smaller audience. Campaigns can be targeted by state, sex, age, and income this really focuses on who the customer is. Likewise, Grant feels that finding a profitable sector in any paid advertising is the way to go. It’s common for people to shop in the mornings between 8 am and 10 am. Monday is a good shopping day as opposed to Friday. People from states with higher incomes often buy higher priced items. It pays to modify the spending budget to focus on profitable sectors and lower the budget on unprofitable sectors. Negative keyword lists are a great way to avoid wasting money and not paying for tire-kickers.
- IOS users seem to perform better than Android users.
- IE users may be older and less sophisticated on Internet, may not comparison shop.
- Earlier in the day performs better with returns on ad spend.
- Geographic sectors and states with more money or most populous states can perform better.
- States like Oregon and Washington do better with coloring books.
- Campaigns on Facebook are broken down by sex, 10 year age blocks, and $50,000 income blocks.
- Niche down to a smaller audience, look at performance, and find small profitable niche.
- Niching by job titles can find movers and shakers in certain sectors.
Next week we’ll be talking about how to build your own brand. This should be a multi-part series that can help avoid issues like MAP pricing.
Mentioned on this podcast:
If you have any questions or anything you’d like us to discuss on the podcast please go to ecomcrew.com and fill out the contact form. Also we would really appreciate if you would leave us a review on iTunes.
Full Audio Transcript
Mike: Hey, everyone. This is Mike Jackness.
Grant: And this is Grant Yuan.
Mike: And welcome to this week’s episode of the Ecom Crew podcast. Happy New Year, everybody. We’re recording this the first week of January in 2016. Pretty crazy to think about. We’re in about year already and 2015 kind of flew right by. If you read my recap post of 2015 and goals of 2016, you’ll know that 2015 was quite a wild year and laid out a lot of my goals for 2016. So definitely check that out and, everyone, I hope you have a wonderful, prosperous 2016.
So this week we’re going to be talking about niching down your audience, specifically with Facebook, but it applies really to everything. So we’ll get into that in just a second, but this week we have another listener question that Grant and I want to answer and get into real quick and just take a couple of minutes to answer that and then we’ll hop into our main topic of niching down. So we had the question come in through Twitter. @TylerWisman asked if you can share experience with [MAP? 01:49] pricing in an upcoming episode. So we’ll be happy to answer that here real quick, and just as a reminder, if you head over to Ecom Crew on our contact form or tweet at us or hit us up on Facebook, you’ll have a chance to get your question answered. So @TylerWisman, I’ll let Grant handle that first, then I’ll ping you with my thoughts on MAP pricing.
Grant: Okay. So our experience with MAP pricing pretty much goes to Treadmill.com as really our first true experience with how the MAP pricing world works. And there is an argument of whether or not MAP is even legal or not and the reality is it doesn’t matter. If your vendors want you to stick to MAP, then you have to stick to MAP because otherwise they could just upselling to you. So there’s going to be a lot of people that kind of debate the legal aspect. Don’t even worry about it; you just have to deal about the fact that if the vendors want it, then you have to abide by it. Now, that kind of gives this game theory of essentially should you abide by MAP? If you don’t, you can probably undercut everybody else and you can do a lot of sales until you get caught. Then you get dropped. If you do abide by it, then you’re pretty much playing prisoner’s dilemma where the other guy is constantly beating on MAP and undercutting you and, you know, around goes the Ferris wheel or the circus or whatever fits your fancy.
And that’s really what it comes down to. Our experience with MAP is that we have normally been the ones that usually abide by it. We find that there’s always another guy that’s willing to cut. And it really comes down to how much your vendor is willing to enforce MAP. If they don’t enforce it and you’re the only one that’s playing by the rules, you get punished, and if you have a vendor that actually does enforce it, then, you know, you can generally make a fairly decent margin on it. And it really comes down to a vendor relationship at the end of the day. There’s not really a good overall business strategy as in, you know, follow MAP or don’t follow MAP. I think it really comes down to enforcement. If your vendor is letting everybody play by the rules and they are actually monitoring, then you should abide by MAP . But if they aren’t, I’m not saying that you should, you know, purposely break if but if you’re essentially not making any money because you’re obeying MAP and no one’s doing anything about it, then maybe, you know, you should reconsider either working with that vendor or your strategy.
I pretty much am a left lane driver. I drive 70 to 80 miles an hour. You know, that’s just the flow of traffic going in the left lane. I’m not advocating speeding, I’m not advocating breaking the law, but I am saying that I’m a guy that just goes with the flow. So if I get pulled over, I pay my fine and I, you know, do whatever it takes, but at the end of the day I get to where I’m going faster. So that’s kind of my nutshell view on the topic.
Mike: Yeah, and I mean I obviously had very similar experiences. I mean Treadmill.com is exactly where we got our start and, you know, it was all MAP pricing in that space with the exception of one manufacturer. And it’s tough when you’re selling at MAP price and everyone around you isn’t. That was definitely the case with Treadmill.com. I mean not to name a specific manufacturer, but there were manufacturers that were selling on their own website that they were also selling to companies like a Walmart or Sports Authority or a Dick’s or somebody like that and really had no control over whether or not someone stuck to MAP pricing. Walmart and those guys would break MAP pricing all the time and if we switched our price to meet a Walmart price or another price, within hours we would get an email. They had, you know, scrapers that were scrubbing through the internet and it seemed like it was hours. Maybe it was a day or two, but it was pretty quick after we changed our price that we would get an email and I’d be like, “Okay, wait a second. Walmart is selling it for XYZ,” or ever the manufacturer themselves would be selling it for below MAP pricing, which was even more infuriating. And we were basically always told, “Well, if you don’t like it, too bad.” And that’s a pretty awful spot to be in.
There are some tricks you can play. I mean, you know, obviously free shipping, you can email and email list with a coupon, you can do sales funnels and buy traffic to, you know, hidden pages and stuff and get people on an email list and get around that way but I would advocate just getting away from this model completely. I mean if you’re in a position to build your own branded products and not have to deal with this at all anymore, that’s really where the sweet spot is in my opinion and that’s actually going to be next week’s episode, interestingly enough. We’re going to be talking about branded products and building your own brand. But, you know, MAP pricing is very tricky. You know, it’s especially tricky when a manufacturer’s stilling directly against you, breaking MAP pricing, and telling you that you can’t do the same. That’s really tough.
You know, we run IceWraps.com, we’re selling 10 to 11 different manufacturers on there that aren’t our branded products, and the ones that we continue to work with are manufacturers that either A, do not have MAP pricing at all, which in some ways I prefer because then we don’t have to deal with being told what we can sell it for, or B, if a manufacturer is strict about the MAP pricing and they enforce all the other people in the space to stick to MAP pricing, which is really the ideal thing honestly because, you know, then it comes down to who provides the best service and value, which we always fall under that category, and I’d rather be in that bucket than, you know, in a situation where we’re being told we have to sell at MAP pricing and then we can’t sell anything. And we have that situation right now with some products that were still left of Amazon.
You know, I mentioned we’re not sending in any more branded products into Amazon, but we have some stuff left there and it’s a situation where the manufacturer themselves like cut their pricing to below our cost, you know, breaking MAP. They were actually sending us emails from their “legal department” telling us that we were breaking MAP even though that we weren’t, which is really funny to be getting an email from their company telling us that we’re not in compliance in our pricing while they’re saying they’re selling on Amazon below MAP pricing and below our cost.
So, you know, it’s a tough situation to be in and the reason you probably asked this question, Tyler, is because you’re probably in the same type of a bind where it’s an uncomfortable position where you’re kind of darned if you do, darned if you don’t, and that’s just really the reality. You know, if you’re selling another manufacturer’s product that has MAP pricing and they’re not helping you, as a partner, enforce that MAP pricing, then it’s a very difficult spot.
So, that’s kind of my thoughts on that and with that we’ll move off to our main topic for the day which is niching down on your ad campaigns. And this is actually something that came out of a mastermind group. I’m in a couple ecommerce mastermind groups, which if you’re not in one, I highly recommend joining one. I mean it’s been a great experience for me in 2015 and I look forward to continuing it in 2016. And, you know, one of the things that we’ve been doing as a company is just more and more advertising, paid advertising, really trying to ramp up paid advertising, become an expert in paid advertising in 2016.
And, you know, as I’ve been talking to my group about this, sharing numbers because we’re very analytical and we’ve been sharing data of exactly how the campaigns are performing, you know, a couple of them were just like, “You’ve got to niche down. You’ve got to make smaller audiences. You can’t just make a broad audience of all the people in the United States that like coloring books. You need to niche down to, you know, by the state level, by income level, by age, by sex, you know, male or female and build out these five or six analytical layers, deep audiences.” And it’s been incredible. I mean we’re just really scratching the surface of this data that is coming in now for the first time, but what Grant and I want to talk about today because, you know, it’s really turned what would’ve been not profitable campaigns into profitable ones, into very profitable ones. So, you know, Grant, you want to maybe share a little bit of some stuff that you’ve done and your experiences with some of this niching down stuff with paid advertising?
Grant: Yeah, I’d be glad to. And I actually wrote an article on Ecom Crew on PPC and you guys are welcome to go check that out and it really talks about how to find a profitable sector in PPC, whereas you wouldn’t have found one before, and really it’s like what Mike says. It’s about understanding how to not pay money into black holes and there is really a few different sweet spots in every industry where you can really make a lot of your profit and there’s other parts that you’re just burning money. And I’ll repeat some things I said on the article, but for example, on Google AdWords, which is going to be your largest, you know, PPC campaign in the world. Everybody goes on Google, everyone knows, you know, that people click on ads over there. If you’re running ads on Google, for example, and you just go and let’s just say you’re selling Belgian chocolates. And, you know, I’m sure it’s competitive and you’re a mom and dad shop selling Belgian chocolates and you go, “Oh, well, you know, anybody typing in ‘Belgian chocolates,’ hopefully they buy from me,” so you bid on that and then you lose to house.
Like you end up sending 100 people to your website. Out of that, nobody even ends up buying any Belgian chocolates from you and you’re like, “What the hell? People are like, you know, typing that in. Why aren’t they buying anything?” and you’ll find out that the internet is just like real life: it’s full of tire kickers. And one of the things that you really need to do is figure out like when are people not buying and when are people actually buying? The paid PPC and places like Facebook, they’re not your ally. They provide a means for you to reach the people, but they are not going to help you be optimized in how you do it. So, for example, if you start a PPC campaign, you’re paying for, you know, a search for Belgian chocolate all times of the day, every day, all during the night. Is a guy shopping at your website at 2:00AM really going to buy from you? Probably not. You know, there’s a reason that they have all those like Girl Gone Wild commercials at, you know, 2:00AM on the comedy channel or something like that or Comedy Central and all those infomercials. Because they’re cheap because nobody even cares about, you know, actually doing anything at that time.
In most industries, you’ll find that most people actually do their shopping early in the day, especially high value items. The people that are shopping do it early because they have a job, they’re doing it, you know, either in the morning or right when they get to work. 8:00AM to 10:00AM’s kind of like a sweet money spot in all the industries I’ve been in. There are certain days out of the week that are actually generally pretty good too. Mondays are usually a pretty good day. Some days, like Fridays, are generally a bad day. People are at the office and they’re ready to leave, they’re just, you know, dicking around reading ESPN or something. They’re not really looking to shop. But these are kind of general statements. They don’t apply to every industry, but you’ll find that there is a certain pattern that people have when they shop.
Other things, for example – just in cutting boards, for example, some states are a lot better than others. I sell $100 cutting board and that’s a very unique item. Not a lot of people can afford to pay for $100 cutting board or are interested. So while I might have a huge amount of traffic for the website and if I paid PPC for “cutting board” as a term, I could literally spend, you know, $5,000 to $10,000 a week if I really wanted to buying up all that traffic because there’s so much out there. But most people aren’t looking for $100 boards. So the states that I’m looking at are people that have high income. We’re talking, you know, New York, Florida, Arizona, Colorado, California, you know, certain pockets. And there are certain areas that do pretty well, some others that don’t. And you can modify your campaigns, especially on the PPC side, so that you increase your budget on certain areas and you can reduce it on others.
For example, mobile’s a huge one. Everyone talks about, you know, everyone’s going to go toward mobile and buy. Well, if you actually look at your conversions on mobile, you’ll probably notice that they’re pretty awful depending on what you’re selling. If I’m selling T-shirts, they’re probably going to be higher, if not normal or maybe even slightly lower because it’s a very emotional item. If you’re selling something like laptops or electronics, your conversions on mobile are probably pretty low and so, for me, my conversions on mobile are pretty darn low. So do I still target mobile? I do, but I drop the amount that I’m willing to pay for it. And that’s just like a very high overview on niching down, but if you want to get into like a really, really like really deep level where you’re operating at, you know, way above your competition – because your competition, most likely, they’re just buying keywords and they might know to go do something like, “Well, maybe I should like use negative keywords or something like that or whatnot.”
I mean what I do – on Ecom Crew, we even published a negative keyword list that’s massive. Like I mean I’ve spent hours and hours on this. When I’m selling a cutting board, I don’t want somebody that’s looking for a term like “how do I fix a cutting board” or “what –”
Mike: “Cheap cutting board.”
Grant: Yeah, exactly. Or, you know, “what wood should I use to build my cutting board” because those guys are going to end up clicking on your links and there’s going to be a lot of like long-term stuff that just gouges your budget and just blows holes into the money that otherwise you could be getting somebody that’s actually looking for buy from you. So negative keywords are one. You want to eliminate everybody that’s not looking to actually buy anything. I actually found out that a lot of people will type in something like “Amazon cutting boards” and then they’ll end up clicking on my site, so Amazon’s a negative keyword for me. I have a huge list of brands that are all negative keywords like Wayfair, Macy’s, Bed Bath & Beyond, Amazon, a whole bunch of others.
And I guarantee that’s going to be in every industry. People are going to be doing the same thing. And you’ll find that a lot of people are just, you know, tire kickers and they’re wasting your time. Other ways to niche down? We can go, you know, very deep. You’ve got your geography. On Bing, you can even go for like iOS versus Android, and I find that iOS people tend to buy a little bit better than Android. In fact, I find Internet Explorer traffic works wonders on chopping blocks. Chopping blocks, you know, they are really expensive countertops, kitchen islands. Who are buying that? People in their 40s to their 60s. So I target people in their 40s to their 60s using Internet Explorer. They’re probably not the most internet savvy people around. I target my advertising to them because I know these are people that have money. I target different areas, like geographic, that I know is going to do well.
I’ve got a competitor in that space that is just buying up, you know, advertising like mad and I know that their budget is likely in the neighborhood of $20,000 to $30,000 a month and they just pay out the ear for it. And I don’t have that budget to compete against them but I can cherry pick so I can win against them where I need to and I let them just win on the garbage and I’m very happy to let them do that because they’re just wasting money. So that’s kind of my way of niching down on the AdWords side. So I’ll hand it over to Mike because I know he’s got some experience on the social media side as well.
Mike: Yup, yup, thank you and I’ve actually been taking some notes as you were talking, Grant. I just want to kind of reaffirm a couple things that you mentioned that I’ve seen the same exact thing, and this has been both on AdWords and on Facebook. First off, iOS versus Android, we’ve actually completely eliminated all the Android traffic at this point just because iOS performs way better. So if we’re going to get on mobile stuff, it’s going to be on iOS, period. We’ve also noticed the same thing with IE and I have a theory with this. I feel like someone who’s using Internet Explorer is just less sophisticated, which means they probably don’t know how to use the internet as well, they don’t probably know about comparison shopping. They might not even be an Amazon.com customer, which is kind of crazy to think, you know, because I think that Amazon has 10% of the United States now as a Prime customer but that leaves a bunch of people out there that that still aren’t. And I think that if you were to break that out in theory, most of those people are going to be Internet Explorer type customers so they seem to do better for us. They’re also older by nature, that we find a lot of them have AOL email addresses as well. Even that’s not something we can specifically target, but those people seem to be better customers for us just because, again, they’re a little bit less sophisticated, they’re not shopping as much.
The other thing is the time of day Grant mentioned. This is a huge one for us. This took us from having a bunch of non-profitable Google AdWords campaigns to a bunch of profitable ones. We narrow down to very specific hours and days of the week. We actually only run AdWords on the hours that we’re open, which is 7:00AM to 4:00PM Pacific Time because we find that, while we have Live Chat on and our phone number that’s active that we’re much more likely to convert. We even got rid of some not so badly performing times, which was like 4:00PM to 11:00PM Pacific Time. We just eliminated it just again because we want a very high return on ad spend and we’ve actually been able to, over 2015, take out return on ad spend from 2005 to 600% by niching this stuff down. And we still spend plenty of money and we still get plenty of sales. You know, we’re basically just taking out the low performing stuff where it was just breaking even or we were only making a little bit of money.
And, you know, you’ve got to look at not just things are one-dimensional, you know, what are you making on a particular sale, but what is your lifetime customer value and on something like IceWraps it’s not very high because we don’t have a huge repeat business but other things like what is the cost to actually fulfill the order and other things of that nature. So once we started looking at a bunch of other metrics, we really realized that we need to be more in the 500% to 600% return on ad spend minimum and we just axed out all this other crap and the time of day was a very big one.
And another one that Grant mentioned is geographic. This has been especially true with the ColorIt stuff as we’ve been looking into this, really just getting started with that. But there are definitely states that are very underperforming the others. We haven’t noticed it as much with IceWraps just because I think no matter where you are in the country, if you’re injured or if you have something that’s hurting, it doesn’t really matter how much it costs or whatever, but for a discretionary purchase for something like a coloring book, we’ve definitely found that there are very strong-performing states and typically, they’re the most populated states so, you know, California, New York, Illinois, you know, things of that nature seem to do way better. We also find that the one thing that’s a little bit out of the ordinary there is some of the hippie states, you know, something like an Oregon or a Washington state seem to do well – I know they’re not the largest states – because coloring’s kind of like a Zen, a meditative type thing and it seems to do really well in those states. So just wanted to kind of reaffirm some of the stuff that Grant talked about there, and these are all things that you can be looking at immediately. If you’re already doing paid advertising, you know, spend a couple minutes and look at these different areas. I bet that you can see huge performance gains.
Now, just talking about social again real quick with Facebook. They make it, you know, way easier than Google AdWords does. I mean you can really, really niche down. You can add negative – you know, you can see that people like such and such and they like such and such but they don’t like such and such and they’re not part of this list but they are part of this list. I mean you can really, really break things down. So I mean we run campaigns where, you know, is it a man or a woman? Their age range. We do 10-year age blocks, we do income levels and, you know, Facebook keeps track of income levels. So we do $50,000 income blocks and eventually we hit, you know, $1 million plus or something and we just do plus, but we break things down really granular and we’re going to be doing it even more granular.
It’s actually something that we really just started getting into based off that mastermind meeting. But we, you know, had already been doing some of that but now it’s just like on overdrive because what it’s come down to and, you know, what my friend in the mastermind group said is, “You know, if you’re doing anything more than a 20,000- to 50,000-person audience, that’s too big. You can niche it down. You can break that in half somehow. Find some other thing to niche down and look at the performance of those ads to that niche and I bet you one will outperform the other one.” So that’s really the gist of it for today for niching down. I mean, like I said, if you’re already running ad campaigns, which I’m sure most people listening to this are, this is a way to, you know, make a bunch of money basically. I mean if you think about, right now, if you’re spending $10 to get $100 worth of business, if you could spend $10 to get $200 worth of business, this would be the most effective thing that you can do all year is to go, you know, niche down on your ad buy. So unless Grant has anything else to add to this, I think we covered niching down ads for this week.
Grant: Yeah, I was just going to add a little bit, something to Facebook. Facebook, like Mike says, you’ve got an entire world as your oyster over there because you can really break down everything. I mean you can break down actual terms that people are searching for. I thought one thing though would be kind of fun to share with your guys. I mean I did some random campaigns during the holidays, like targeting people that really like Japanese knives, for example, because I sell [Onoki? 22:47] cutting boards, which is very popular with that crowd, and that ending up doing, you know, quite well. People that were looking for gifts especially, you can kind of – if you kind of get into the head of your buyer, you can really, really focus down on who they are.
One thing that was pretty interesting that I’ve been exploring that I’m going to do a little bit more, and I feel like I’m giving away a little bit of a trade secret, but I don’t mind: I was actually niching by job titles, and what I was doing was I was targeting all bloggers, people in the PR industry, advertising, execs, and everybody that essentially is a mover and shaker and really going after those people for like a certain marketing campaign that I was trying to run. And you’re not really paying a huge amount because mostly when people try to get a marketing campaign out, you know, you just blast it with the biggest shop end you can find, but if you’re targeting the people that can essentially retweet or repost or reblog whatever you have to say and then you’re only paying, you know, $25 per CPM per 1,000 impressions to reach these people and there’s only, you know, maybe 100,000, your audience of people that you really are interested in reaching, it ends up kind of being a pretty good ad spend.
So you’re kind of really targeting the people are the ones that are in the marketing industry to begin with and if you kind of think along those lines, you can actually do some really, really fun stuff when you target by job title. So that should give you guys some ideas out there. I don’t really want to give away too much more than that. That’s kind of getting into trade secret territory but, I mean you just think about it long enough and you can get some pretty interesting ideas.
Mike: Definitely, yeah. Really good ideas there, Grant, for sure. Appreciate you adding that and, until next week, which we’ll be talking about how to build your own brand, I think that’s going to be like a multi-part series, so stay tuned for that if you ever were interested in starting your own brand and not being attached to MAP pricing or having to hold to MAP pricing and all these different other problems that not having a brand has, stay tuned for that because I think it’ll be a really great show. So until then, like I said, happy 2016. So glad you guys are sticking with us here on Ecom Crew podcast. Please tell your friends about it. You know, share it on social media. Please leave us a review on iTunes. That really, really helps. We’d really appreciate that. So until next week, everybody, have a good week.
Grant: Okay. Take care.
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