Lesson 19
May I have Permission?
“The best marketing doesn’t feel like marketing.”
-Tom Fishburne
Content created by Darin Gerdes. Copyright Darin Gerdes and Great Business Networking.
Bad Marketing
Every Sunday, the local newspaper irritates me. They continue to throw a roll of advertisements on my driveway though I did not ask for it. I do not want it. I have called the paper and asked them to stop delivering their rolled up bundle of advertisements. I have asked the delivery-man to stop. I have asked my neighborhood association if they could intervene. So far, no luck.
I suppose this bothers me because I overthink it. I just feel used. I know how newspapers advertise. Their rates are based on circulation—the number of people that the newspaper advertisements reach. They can increase what they charge when they drop this advertisement roll on every driveway in my neighborhood.
Television works this way too. We happily watch our favorite TV shows in spite of the commercials because we get free entertainment from the show. But in this newspaper scenario, I didn’t even get the paper. I would not be upset if they gave me the Sunday paper for free in order to increase circulation; that would be giving me something of value. But their value proposition is like asking me to watch an hour long show consisting of nothing but commercials.
Good Marketing
The Wall Street Journal does a better job marketing. Every year I get numerous solicitations from the Wall Street Journal. This makes more sense. A business professor should be interested in their content, so they are targeting effectively. Moreover, many of us have required our students to read it for class assignments. The Wall Street Journal provides steep discounts to make this happen.
Ideally, you want to avoid deeply discounting your product because it cuts into your profit margin. However, the Wall Street Journal realizes that the discounted rate is like a gateway drug and professors are ideal dealers for what they have to sell. In addition, this short-term discount creates a long-term habit.
Great Marketing
There are some advertisements that I regularly look forward to. For example, I subscribe to BookBub (www.bookbub.com). BookBub sends me an email every day about discounted promotional Amazon eBooks. I almost always look at this email and it’s quite a contrast to my angst with the local paper.
First, I asked for it. This is called permission marketing. TV commercials and the local newspaper’s advertisement roll are interruptions. They are nuisances. But, when I go out of my way to ask for something, it is because I am interested in it. Seth Godin describes permission marketing like this:
Permission marketing is the privilege (not the right) of delivering anticipated, personal and relevant messages to people who actually want to get them.
It recognizes the new power of the best consumers to ignore marketing. It realizes that treating people with respect is the best way to earn their attention.
Pay attention is a key phrase here, because permission marketers understand that when someone chooses to pay attention they are actually paying you with something precious. And there’s no way they can get their attention back if they change their mind. Attention becomes an important asset, something to be valued, not wasted.
Real permission is different from presumed or legalistic permission. Just because you somehow get my email address doesn’t mean you have permission. Just because I don’t complain doesn’t mean you have permission. Just because it’s in the fine print of your privacy policy doesn’t mean it’s permission either.
Real permission works like this: if you stop showing up, people complain, they ask where you went.[1]
Second, a friend mentioned BookBub on Facebook, which as you know is the best kind of marketing an organization could have. Third, I like books, and when I signed up for BookBub, I picked the genres that I find most interesting—business, history, religion, and biography.
BookBub lets me segment myself and they only send me alerts about the specific books in the categories that I choose. BookBub owns nothing, but unlike the shotgun approach of the local newspaper advertisement roll, they provide me with real value, and for this they are paid a commission on every sale through affiliate marketing. Affiliate marketing is simple. Amazon is more than willing to pay 4-6 percent of the sale in exchange for finding the customer. The seller pays for it. Nevertheless, this is a win-win scenario. The eBook author makes 30 to 70 percent of the sale. BookBub earns 4-6 percent, and Amazon pockets the rest.
Here’s how the math breaks down. Because these are temporary promotional sales, I might purchase a fifteen-dollar book for $2.99. That is an 80 percent savings for me. It is profit that the authors otherwise would not have realized because their books were not even on my radar. BookBub earns $.18 for sending me an email, facilitating the transaction. The author earns $2.09 and Amazon earns $.71 for owning the platform. With fifty-two million subscribers across multiple categories, and daily welcomed email advertisements, you can see the power in BookBub’s business model.[2]
Originally, I thought that BookBub made its money through affiliate marketing, but that’s only half the story. When you pull back the curtain, much more is going on. Customers are attracted to BookBub because of the deals. Authors are attracted to BookBub because of the list. One drives the other. Let me explain.
If you were an independent author with an eBook on Amazon.com, and you wanted to generate lots of publicity quickly, BookBub will charge you a reasonable rate to be in one of their emails. They have developed a large list of book lovers over time, and they have their business down to a science. For example, if you write in the non-fiction business genre, and you price your book at $1.99, for $425, you should sell an average of 730 books according to Bookbub’s rate sheet.[3] So, if as an author, you spend $425 to advertise on BookBub, you should realize $1,014 or a return on investment (ROI) of 2.38:1. That is not spectacular, but it creates a positive return.
In Your marketing Sucks, Mark Stevens explained that the first rule of marketing is that every dollar you spend on marketing must return more than a dollar in results.[4] This is only common sense. The purpose of marketing is to generate new business. Any marketing effort that does not create a positive return should not be undertaken. While 2.38:1 is a positive return, it’s not great. Ideally, you want a return on investment of 5:1 or higher. If you can get 10:1, spend like a Kardashian. That is like spending a penny to pick up a dime.
I really like BookBub as a consumer. As a professor, I am impressed with the business model. They do things well. They know their audience, they gain permission to market to them, and they segment and target customers and clients effectively. What is not to like? BookBub may not be a valuable model for your particular business, but the principles still apply.
Actionable items:
Describe the difference between permission marketing and interruption marketing.
What is BookBub’s secret sauce? What makes their business model successful?
What have you learned about marketing that you can apply to your business?
End Notes
[1] Godin, S. (2008). Permission marketing. Seth’s Blog. Retrieved from http://sethgodin.typepad.com/seths_blog/2008/01/permission-mark.html
[2] Pricing and statistics. (n.d.). BookBub Partners. Retrieved from https://www.bookbub.com/partners/pricing
[3] Pricing and statistics. (n.d.). BookBub Partners. Retrieved from https://www.bookbub.com/partners/pricing
[4] Stevens, M. (2005). Your marketing sucks. New York: Three Rivers Press