“So as you walk around in your daily life, it’s going to become more and more like “Minority Report,” so that we will no longer consider digital marketing separate from non-digital marketing…

Mike: Hey everyone, this is Mike Sullivan. Thanks for joining me today on MO.com. With me today is Russ Mann of Covario. Covario is a search marketing agency in San Diego. Russ is here to talk to us today about the evolution of Internet marketing. Russ, thanks for joining me today. Can you tell us a little bit about Covario before we get started?

Russ: Sure. So, Covario is six years old. We are the premier provider of search engine marketing and search engine optimization software and services to global 2000 companies. We provide both SCO and SCM to help large companies like Intel, Procter & Gamble, Lenovo and many others, bring qualified consumers to their websites, and to increase their e-commerce, their lead generation and their brand awareness, on Google, Bing, Yahoo as well as on Facebook, Twitter and on the global search engines like Baidu, Yandex in Russia and Naver in Korea and others.

Mike: We’re going to be talking about Internet marketing and I think that in order to do that it’s important to define what Internet marketing is. Can you do that for us?

Russ: Internet marketing or digital marketing has really evolved over the past 12 to 14 years. I, kind of, put the origination of some of the original Internet marketing around 1996 or ’97, which is, coincidentally, when I was coming out of business school. But I recall, right then, Yahoo was going public, Amazon was still a year away from going public, we were all still using AOL, CompuServe, Netscape Navigator, etc.. That was in the ’96 to ’97 timeframe that I remember quite well.

Back then, there was really the idea that people wanted a website. They were just starting to think about banner ads and they were doing a lot of pop-up ads and there was a lot of e-mail that was going on, a lot of e-mail marketing. If you were a customer of someone they would send you a bunch of e-mails or they were trying to spam you to get you to become a customer. That’s where digital marketing evolved.

Then, after that, we started seeing Yahoo providing a directory and folks like AltaVista and others, and Excite, back in the day, and LookSmart providing search engines to find things, but it was really Go To which was acquired by Overture which was then acquired by Yahoo who created the original pay-per-click model and paid search, and Google followed quickly thereafter.

So that was probably around the 2000 time frame. It was really around the time of the bubble and post-bubble. Post the first bubble, we saw the emergence of the paid search engines. And then it was around 2005, 2006 time frame that we saw the emergence of the first social media publishers like Myspace, originally. And a variety of folks have come up since then, for example, Facebook, of course and Twitter.

So when you talk about digital marketing or Internet marketing, you could be talking about building a website, you could be talking about SEO, the art of ranking on the search engines or SCM the paid search ads. You could be talking about display ads or what people call banner ads, display ads. You can be talking about e-mail marketing. And now, of course, there are social media and there is video and mobile, as well. Some of these categories get a little blurred.

I wrote a little blog about a month ago talking about how you’ll see banner ads or search ads on a mobile device. Is that a mobile ad or a banner ad, or is that a search ad? It’s actually both. So one of the things we’ve been talking about is that there are different ad units types that appear on different publisher types, that appear on different viewing devices. So you might see a banner ad unit on a search engine publisher, on a mobile device, on a smart phone. Or you might see a video ad unit where the video is the ad. You might see that over or in a social publisher like Facebook or Twitter and you might see that on your tablet device.

So it’s very important to consider what is the ad unit you’re focused on, what is the publisher type that you’re displaying that ad on and what viewing device is the consumer consuming it through? And if you look at it through that multifaceted prism, that’s where you can start thinking about digital marketing across all its various facets. Which ad unit types, which publisher types and which viewing devices are best for you, your company, whether you’re a small business or a large global enterprise.

Mike: You’ve mentioned several different facets of Internet marketing. Is anyone more productive than another?

Russ: I don’t think you can claim that any one is more productive than any other. It really depends on your company’s strategy, your marketing strategy. All of the different media types need to be used together as part a cross-media optimization.

It’s not a coincidence that the word CMO, which, generally, most people think of as Chief Marketing Officer, we use as Cross Media Optimizer because what does a CMO do? A Chief Marketing Officer wants to optimize their media across all media types. So we think CMOs are CMOing and that’s why we provide a CMO dashboard that’s a cross media optimization dashboard.

But what we have found is that certain media types and certain ad units seem to be more top-of-the-funnel or more for branding and awareness and certain media types tend to be more for bottom-of-the-funnel, or actual customer acquisition. So you might say that TV ads or video ads or display ads, banner ads, tend to be more top-of-the-funnel, therefore driving awareness of your products or your services, whereas, when you start getting into paid search or SEO or e-mail, those tend to be more bottom of the funnel, where people are about ready to make a transaction, whether it’s buy a laptop or buy a contract for a plumbing service or whatever your product or service might be.

But again, they need to be used in conjunction. Even within paid search alone or and SEO alone, we often say that there are top-of-the-funnel words or bottom-of-the-funnel words. For example, if someone is searching for a laptop, they are, kind of, at the beginning stage of research. That’s a more generic type of phrase, versus, if someone was searching for Lenovo PC with an Intel microprocessor from certain retailer, then they’re probably much more at the buying part of the funnel. So we work with our clients to create global campaigns that are across media, that are focused on different personas and that have awareness of the marketing funnel, to help them achieve their end goals within certain ROI thresholds.

Mike: Which elements, would you say, and stood the test of time while others have not?

Russ: I think most of them have passed the test of time. They’ve all evolved, shall we say. I think banner ads or display ads have certainly evolved from just buying premium ads on Yahoo or on Martha Stewart or on ESPN, to now, where there is a full range of publishers, from the premium publishers to the long tail publishers. There’s new ways of buying display, for example, that include DSPs and RTBs, which enable advertisers to better target, to different consumer demographics or psychographics. In search, for example, there’s been a lot of evolution of hyper-local targeting of persona-based targeting of new bid rules and algorithms were you’ll include search retargeting or search with paid social for example. So it’s all evolved.

I guess if there’s any one that maybe he hasn’t stood the test of time, you might say that certain 3-D virtual reality world’s, that were popular a couple of years ago. They seem to have had a very short life. Maybe they need a second life, if I’m going to have a bad pun. But I do know that some of those are actually being reborn and there are some new initiatives around the virtual world’s and avatars, etc. So I think what we see is none of these ad types or mediums die, they just evolve to where they become more highly productive for advertisers.

Mike: For small businesses looking to maximize Internet marketing, what steps are there, or what areas should we focus on, keeping a small budget in mind.

Russ: I think what we’ve seen, whether it’s for a large company, or for a small company, is you really need to focus on what you’re strategic objectives are, your strategy of differentiation with your company’s products or services. And if you start from there, that starts to dictate which media types, which ad units, which viewing devices are going to work best for your company. I think we see, sometimes, certain companies, and it tends to be the smaller companies, which is interesting, they get a little amped up around, “Oh we’ve got to have a Facebook page,” or, “We’ve got to have a Twitter stream.” “You’ve got to have a Google Plus page.” “You’ve got to be trying this new media type.” “We’ve got to have a zinger game.” And you can really disburse your efforts and you can really waste a lot of time, effort and money if you try to do everything and you try to be all things to all people, as opposed to really focusing on what’s going to work best for you. And you want to be the absolute best of breed.

That’s why Covario is really focused on search as the core of our business, paid search and SEO. And while, for example, display ads or social, or some of the other things, are outgrowths, for example, we are getting more and more active around social media because there are really direct linkages between SEO and social and paid search and paid social. We’re not doing game development, for example, and were really not doing a whole lot of banner ad stuff. We are growing our business as an agency and as a technology provider with search and being the absolute best of breed at search. There are other companies that are best of breed at display. And as an advertiser or a small business it’s better to dominate one or two categories and be best at those, I believe, and know what drives your business than to try to do everything just because it’s cool or interesting or it’s new.

Actually, one thing I would suggest for a small business, if that’s the audience here, for small businesses and local businesses, one thing we didn’t discuss, is the role of user-generated content and getting your customers to review and write about that. That helps with your SEO, by the way, which we’re very focused on, but it also helps with your conversions. If people are reading about you and your business on Yelp on Angie’s List, on other local ratings and reviews, depending on what kind of service you’re offering and what kind of products you’re offering, maybe it’s on City Search or Zagat if you’re a restaurant or an entertainment type venue, versus a service provider, which is what I was talking about, for those other websites. All of those can be great publishers, again, those are publishers.

So you have to figure out what is the ad unit on those publishers and are those publishers being primarily accessed via a PC desktop, mobile or tablet? And, again, maximizing that digital marketing prism or cube, as it were, for your business. So I wanted to make sure to throw that in. You reminded me that that might be an important digital marketing element for your user base and, in particular, your audience here.

Mike: You touched a little bit on this out what role does social media play, like Twitter or Facebook. Where does that fit into Internet marketing?

Russ: Social media is great. We often say that social media both the channel and a panel. It’s a channel for acquisition and a channel for retention but it’s also a panel for analyzing and engaging your active and engaged customer base. So I think the one misconception that people have is that, a lot of advertisers are trying to focus on social media as an acquisition channel. And it can be done, and we have certainly done it for a variety of our clients. We’ve helped one of our clients from going from a quarter-million fans to over 4 million fans in less than nine months on Facebook.

So that was a significant increase in fans that they can now engage with. That’s fan acquisition, but what we’ve actually found is that social media is even better for current customer engagement, servicing, up-selling, cross-selling and then promoting, where they then bring their friends in as new customers. But the primary thing that we try to help clients with is engaging those fans and retaining those fans or customers or followers depending on which medium you’re talking about.

Of course, again, and paid search and SEO, the general thrust tends to be around acquisition and so we’ve become sociable media acquisition experts as well. But I would suggest that for most businesses out there, start off with retention and engagement for social media and then graduate up to new acquisition, new customer acquisition through social media.

Mike: In your opinion, where are we trending with Internet marketing, where we headed and where are we going to go?

Russ: I think where we’re trending is that in three years or less we won’t call it Internet marketing anymore. It will basically be marketing, because digital marketing has become and is becoming ubiquitous. We talked today, primarily, about ads that the consumer is accessing or being exposed to while on a PC or a tablet or a mobile phone. I can tell you, that it was just about two weeks ago, I was going through Chicago airport and in the restrooms there was a mirror. The mirror over the wash basin was actually a digital LCD that went between having an ad and having a mirror where you could check out how you were looking. One could only imagine that, shortly, those mirrors will be enabled with a geo-locating device that will enable that mirror to recognize the cell phone in my pocket and better targeted me with ads that are relevant to me.

Then also, we know that Captivate network is a great network that focuses on digital out of home in, for example, captive LCD screens like the ones you see in building elevators or in Starbucks or in other public places. And once again, one could imagine that those will have tagging, tracking, and targeting opportunities there

So as you walk around in your daily life, it’s going to become more and more like “Minority Report,” so that we will no longer consider digital marketing separate from non-digital marketing, whether it’s your IP-enabled TV or the billboard on the side of the road or the device you’re looking at in your hand or the screen in the elevator. Wherever there is a glowing screen there will be an ad and those ads will be more and more targeted and were not going to differentiate anymore between digital or non-digital.