My lawyer is probably the best that money can buy when it comes to Internet issues. This was brought to my attention recently…

ROSETTA STONE LTD. v. ROCKET LANGUAGES LTD.
CENTRAL DISTRICT OF CALIFORNIA (LOS ANGELES)
2:08-cv-00402
FILED: 7/02/2008

This is one of the first lawsuits I have seen filed against “comparison shopping” websites that are selling competing products but allegedly using the trademark to drive traffic to the “comparison reviews” site. This is a tactic that is being used more often by affiliate marketers. The use of the trademark in the ad appears to be very creative and it appears that the Defendants have set up a “commercial free speech” defense, although such a claim is very unlikely to succeed given the commercial nature of the use of the trademark.

Plaintiff is a leading developer of computer software for teaching and learning foreign languages. This lawsuit alleges that the Defendants used the term “Rosetta Stone”, which is a registered trademark of the Plaintiff, to trigger ads as a keyword in the Google AdWords program and Yahoo’s Marketing Solutions program. Defendants are also allegedly using the “Rosetta Stone” trademark in the title and description of the ads and then leading consumers to “comparison reviews” which are allegedly illegitimate and fabricated solely for purposes of selling competing products.

This lawsuit alleges trademark infringement, trademark dilution, unfair competition, false advertising, contributory trademark infringement, and vicarious trademark infringement. Preliminary injunctive relief is requested as well as an award of damages, attorney’s fees, court costs and interest.

Obviously as state above, the use of trademarks in adcopy that ultimately push competing products (e.g. “netflix is better than blockbuster”) may open you to legal action.

But it also brings into question the use of comparison sites in general. Even if you legitimately send traffic to all products you review, #2 may sue you simply because you didn’t list them as #1.

John Chow has made an outstanding post about what the Dot Com Lifestyle is all about. I know I wouldn’t trade it for anything!

This holiday season has seen a phenomenal increase in people looking to buy a Nintendo Wii. Like any popular niche, it brings hordes of people trying to make a buck. Because it is so highly competitive (can we say “ringtones”?), it weeds out the newbies, until finally the battle is waged between those who don’t need to make a profit (e.g. places like Best Buy and eBay who don’t need to profit on every single transaction) and the really smart internet marketer.

So a little history of what I’m doing:

• I setup a Build-A-Niche-Store based around the Nintendo Wii. BANS is a very simple eBay affiliate script: throw in your Commission Junction ID, the eBay category number and/or search phrase, and viola you’ve got a website selling whatever product you want.
• The eBay affiliate program gives you 50-55% of eBay’s fees for the sale (which averages to $2.50 per Wii system sold).
• Unlike big stores or people who have real inventory, I’m not making $100+ per sale (which is the markup everyone seems to be charging this Christmas). I’m making ~$2.50 per sale, and because eBay uses the auction model (so even if my users bid on a product, there is no guarantee that they’d win the auction… and I need them to win in order to get my commission). Hopefully you now get the idea: with such a small profit margin and going against big companies with a marketing budget not tied directly to sales, I need to run an incredibly efficient campaign to succeed.

At $100+ per sale, you might think that I should have just stocked up on Wii’s and sold them for massive profit. But how many could I buy (even if I could get my hands on some)? 10? So I’d invest $2490 (assume $249 per Wii) to make $1000. 40% profit is not bad for an online store, but I’m looking for something better. And sooner or later (when Nintendo brings in more stock) the price will drop, and I would be stuck with Wii’s (that I might have bought at a higher price) that I can’t offload profitably.

Now onto the Adword details. This post isn’t about all the details for setting up an Adwords campaign. It specifically focuses on adcopy (creating ads for an Adwords campaign). There are so many posts out there telling you to do A-B testing of your ads, but hardly anyone explains what that means, and the few that do never give real-life examples. So I thought fellow Internet Marketers out there might benefit from the chronological history of my ad testing: what ads I created (and why!), what I learnt from the results, and how small changes can have a big impact.

Before I start, some background:

• What I will show you below are the real ads I had/have for one keyword in my Wii campaign. I have hundreds of keywords, each with their own ad.
• This campaign has been running since October 2007. Right now, I spend about $150 per day for a revenue of $300-400. So I get a daily profit of between $150-250, or an ROI (return on investment) greater than 100%. Better than stocking up on Wiis don’t you think?
• Different ads work for different keywords. For example, I found that adding “www.” to the Display URL increased the CTR for one Wii keyword, but decreased CTR for another Wii keyword. Both Wii-related keywords, but both reacted differently. The point here is, don’t be a newbie and apply the changes I’ve listed below to your campaigns… learn the technique of A-B testing, and run your own tests!
• In order to do A-B ad testing, I always have 2 ads per keyword (actually 2 ads per adgroup, but I only put 1 keyword we adgroup) and the Ad display set for rotation (not optimized display).

Before I write any ads, I search with that keyword, to see what adcopy my competitors are using, and then create a better selling proposition. When I did this research for this particular keyword, I found that:

• Adcopies were generally poor. They were mostly from large companies (eg. Best Buy & eBay) who don’t have very good Internet marketers, which result in generic ads without any real call to action.
• There was 1 affiliate marketer (with an Amazon shop) on the first page, but it didn’t seem like his ads were very targeted. I did a few different Google searches, and his (same) ad came up a few time. It seemed like he just threw keywords into one adgroup with one ad. Without an ad targeted to the search keyword, I would slaughter him in CTR and easily out rank him.

So I start my campaign with these 2 ads:

Nintendo Wii ™ - In Stock
Nintendo Wii Systems, Games & More
In Stock & Ready To Ship Today!

Nintendo Wii ™ In Stock
Nintendo Wii Systems, Games & More
In Stock & Ready To Ship Today!

I decided to use ™ in my adcopy, because Wii is a legitimate trademark and I’ve learnt from past campaigns that it is a good differentiator (it makes my ads stand out, so an automatic CTR boost). I also used “In Stock & Ready To Ship” because this was the big problem currently (stores like Best Buy advertising Wii, but not actually having it in stock).

In this initial test, the only difference is the “-” in the heading. The trick to A-B testing is to only have one difference, so that you can easily identify what works or not. The other (more important) trick to any testing is to wait to get enough impressions/clicks to form a valid decision (what I call a “statistically significant” sample). After obtaining at least 30 clicks for BOTH ads, I found that the first ad had a CTR of 1.77% and the second ad had a CTR of 1.98%.

When I start a new A-B test, I don’t over-analyze about why one ad worked or not. I don’t want my campaign to suffer from low CTR for too long, so over-thinking is not a good idea. After all the A-B testing I’ve done, I’ve come to the conclusion that there is mostly no logic to what works or not. Just kill the one that doesn’t work, and try the next trick on your list.

So I had to replace the first ad, with a version that was based-on but better than the second ad. This is what I came up with:

Nintendo Wii ™ In Stock
Buy Wii Systems, Games & More
In Stock & Ready To Ship Today!

Here I changed the 1st line. Because the keyword I was writing this ad for had “buy” in it, I tried to put that keyword in the ad so that I’d get more of my ad highlighted. I had avoided using this on the initial adcopies because all my competitors had “buy” in their ad, and the objective is to make my ad stand out (sometimes not getting highlighted is a better technique). As I had suspected, getting “buy” highlighted was not useful. This new ad had a CTR of 1.63% (worse than both the original ads) so this had to be replaced urgently with the next version:

Nintendo Wii ™ In Stock
Nintendo Wii Systems, Games & More
In Stock & Ready To Ship Now!

Here I replaced the “Today” with “Now”. With a huge CTR jump to 2.23% (and now my #1 perfoming ad), this was clearly a good move. Once a CTR exceeds 2%, I try to slow down and think more about why things work or don’t work. I guess in the urgency of the holidays, “Now” resonated better. Might be only something here…

At this time, I still had some keywords/ads that were <2% so I turned my attention to them. I have found that a CTR >2% is good: over time my aCPC drop and/or my ad position increase (by itself).

In case you didn’t notice the really good piece of Adwords advice here: CTR of 2% or better is what you need to aim for to naturally lower your cost over time. The magic number actually varies (usually around 1.5%) but I’ve haven’t yet found a keyword that needed more than 2%.

Anyway, in the span of 3 days that I was focused elsewhere, I found my CTR for this good ad had dropped slowly until it was <2%. My ad position had stayed constant, so something must have been up. I did another Google search and noticed that my competitors had changed! That’s one thing about a popular niche… you have to stay on top of things every day or even a successful and profitable campaign can get buried overnight. What I discovered was that >50% of the ads on the first page were now affiliate sites (other BANS and Amazon stores). And nearly 75% of the ads (all the new competitors and some of the original ones) had copied my “In Stock” and “Ships Now” adcopy! I’m not too worried about these new competitors because:

• They were affiliates like me, so we were all limited (by our commissions) as far how much we could bid. As they haven’t been advertising as long as I have (so my aCPC would be naturally lower than theirs), my profit would still be better than theirs.
• Their ads were pretty much copies of mine, so all it did was level the playing field for me. They weren’t getting a better CTR than me… just lowering mine. If everyone did that, and I had the longer running campaign (with a better CTR history), I’d still maintain my leadership position.

But I didn’t like it because:

• I never like it when I’m not crushing my competitors
• Some of the original advertisers (who were there before I started my campaign, and thus may have had a better campaign history) might be pulling ahead of me again, now that I’ve lost the CTR advantage of my better adcopy.

So once I had gotten my other ads up to 2%, I returned my attention to improving the CTR. Just to be clear, I always work on improving my ads (because ads will lose their freshness over time, it’s really the easiest/simplest way to get more clicks, and the more above-average my CTR is the faster that Google will decrease my aCPC). So I came up with another version to compete with my #1 ad:

1000s of Wii In Stock Now
Buy Nintendo Wii Before Sold Out
In Stock & Ready To Ship Now!

I came up with this adcopy to specifically combat the fact that everyone had copied my previous ad style:

• As everyone was saying “In Stock”, I threw in the “1000s” to highlight that I had lots. At this stage, the buying frenzy for Wii’s had reached fever pitched and people will over-paying the MSRP by crazy amounts. By specifying a number, I hoped that people would see the number as something more specific than a generic “In Stock” and perhaps people might see my site as a source of lots of Wii’s (and thus they may be able to find a cheaper price).
• I re-introduced the “Buy” word into the adcopy. Because most of the ads had copied my style, most of the ads no longer had the “buy” word in it. The first time I tried the “buy” word in my ad, it failed because everyone else had it (so my ad didn’t stand out). But now that no one had “buy” in it, my ad would stand out more.

This ad paid off big time, the CTR surging from 2%, to 3.14%. With little effort (it took me less than one minute of thinking), I increased my click-thru’s by 50%! Not content, I wanted to put more distance between myself and the copy-cats ads… I came up with this:

1000s of Wii In Stock Now
Buy A Nintendo Wii Before Sold Out
In Stock & Ready To Ship Now!

The only difference is that I added a “A” before “Nintendo”. I decided to do this after reviewing Google’s Search Query Report (which shows what people are searching for when your ad is displayed). When I first started my campaign, people were searching for “find wii online”. Whereas now, there were more searches like “find a wii online”. I figured that throwing an “A” in the ad was worth trying. This further increased my CTR to 3.31%.

Coming back to my original thought that “Now” resonated with the searchers, I thought I’d try moving the word around:

1000s of Wii Now In Stock
Buy A Nintendo Wii Before Sold Out
In Stock & Ready To Ship Now!

Wham! By moving the “Now” (in the heading) before “In Stock”, my CTR shot up to 4.18%. With a simple repositioning, I increased my CTR nearly 1%. I’m a firm believer of “peripheral vision” for adcopy. When people see “Wii” bolded in the heading, they’re also sometimes seeing the word(s) next to it (which would be “Now” instead of “In”). As a result, people who see the “Wii” also absorb the “Now”, resulting in a greater urgency to click on my ad. Is this pop-psychology true? I don’t know, but I’ve found this “peripheral vision” works in most of my ads. But I recommend you don’t use the “peripheral vision” technique until you’ve locked down a high performing ad (because it doesn’t normally give such a big improvement, and while you you waste time tweaking a bad ad, you should be focusing on getting past the 2% CTR target).

And that’s where this story will end for now… My campaign is still rocking along, so we’ll see how it goes into 2008. I’m sure the search popularity for Wii’s will drop when there is more availability, but hopefully by then, my aCPC will be so low that I can continue making a tidy profit in this niche.

iMoron tries to corner the iPhone market on eBay… goes horribly wrong!

For those that haven’t heard of Shoemoney yet, this picture that will explain more than words ever will (Hint: Adsense pays monthly).

Anyway, Shoemoney founded an ad network which is is a realistic rival to Google’s Adsense. AuctionAds is basically a dynamic banner which lists relevant auctions on eBay! I’m using it as the top banner of the home page. This blog doesn’t get that much traffic, but I’ve got it placed on a few other sites, so we’ll see how that pans out!