At $1.38 (up this morning to $1.50) I can't see a lot of downside. They are due for surprise on the upside at some point. There is nothing on the website about when they will be reporting the year end numbers. Lately, UBHI has made itself considerably more visible with a series of press release (including one about a Super Bowl "stunt"a that was released today). They are also starting to generate some interest in the main stream media.
Online firms taking a traditional strategy
With the cost of Internet advertising surging as it gains favor, companies like Chicago's uBid are trying TV and radio to get their messages across
By Ann Meyer
Special to the Tribune
January 15, 2007
As Chicago-based uBid.com gears up for a big month selling overstocks, watch for its growing presence on the tube.
While online advertising has been all the rage, uBid is turning to direct-response TV ads and other traditional forms of advertising, said Chief Executive Robert Tomlinson.
"We're looking at what are the upcoming and opportunistic channels" for spreading awareness of the online auction, he said.
Faced with the escalating costs of online pay-per-click advertising, many companies are looking for new tactics to boost response, experts said. For the first time, keywords priced at more than $1 made up more than half the overall search spending in the third quarter of 2006, according to Performics, a search and affiliate marketing division of New York-based DoubleClick.
The overall cost per click has climbed 30 percent to 50 percent per year during the past two years, reflecting advertisers' willingness to spend more so they don't miss out, said Cam Balzer, vice president of strategic planning at Performics in Chicago.
Among major companies with large marketing budgets, many are shifting dollars out of other channels to spend more online. But that is making it difficult for small firms to compete for keyword ads, experts say. While buying Internet keywords was an economical option a few years ago, many small companies with limited marketing budgets are finding they can't keep pace with the increases.
"The online medium has gotten so financially egregious from a cost perspective that many of us are pulling out of paid search and comparison shopping," Tomlinson said. "We were paying 30 cents a click" two years ago, he said. "Now we're paying over $1.20 a click."
While uBid.com still is buying the term "uBid" and related spellings, it has stopped buying keywords for branded products, such as Dell Computer, Tomlinson said.
"Our No. 1 goal is to get to profitability," he said, noting the company, with 2006 sales of about $120 million, is forecasting growth of 10 percent to 15 percent in 2007.
The goal of paid keyword advertising is to make it easier for consumers to find your site. But that can be accomplished in many ways, including TV ads, said Eric Obeck, president of SendTec, a St. Petersburg, Fla.-based direct-response agency with an office in Chicago. About 30 percent of his agency's business is in direct-response television, he said.
"Television is proving to be a key driver for search-engine marketing," he said.
Chicago-based Lobster Gram International Inc., which sells live lobsters and other gourmet foods direct to consumers through its Web site, catalogs and radio ads, first tried direct-response television in 2005 after the Food Network's feature on the company drew "an unbelievable response," said Dan Zawacki, founder and CEO.
With more than 25 personal appearances on QVC last year, Zawacki said, television now accounts for 25 percent of the company's business.
"It's been amazing. We sold 80,000 lobster tails in one day [on QVC]," Zawacki said. "We had to set up a whole department" to handle the orders.
Similarly, Tomlinson reports "exceptional" response to uBid's TV commercials, which began running on 15 cable networks in November. For example, he said, when ads ran on the Wednesday before Thanksgiving, "our online traffic popped. We saw a 40 percent lift in traffic instantaneously." In addition, consumer registrations to uBid have climbed 80 percent since the ads began, he said.
What's more, by using slightly different URLs, or Web addresses, for ads on different cable channels, the ads become easy to measure, Tomlinson said.
"We're looking for bursts in response, and we associate them with a particular spot that runs," said Obeck, whose company is handling uBid's TV commercials.
The commercials, which introduce uBid.com as an alternative to eBay by playing up the company's fraud-free guarantee with the tagline "Save Big. Save Safe," also lend credibility to the company, Tomlinson said.
"When someone sees a company on TV, it becomes validated," he said.
Still, interest in paid keywords continues to grow elsewhere.
"We're seeing more and more advertisers come into search marketing. There's lots of healthy competition to a wide range of keywords," Balzer said.
With more companies entering the space, however, consumers may check out several Web sites before making a purchase, reducing conversion rates. But marketers can eliminate wasted clicks by choosing more specific keywords, Balzer said.
"As you get more specific, you'll see improved performance as well as less competition," he said.
Tactics include adding modifiers to the core term, such as a specific brand name or geographic reference. For example, "auto repair Edgewater" will have a lower cost per click and may yield better prospects than the more general "auto repair," Balzer said.
Pay-per-call search marketing is another option, as marketers pay a fee for their listing only when a consumer places a call to the advertiser.
"We realized for small businesses, especially those in local markets serving local customers, buying clicks isn't necessarily the way to put yourself in front of customers," said Marc Barach, chief marketing officer at San Francisco-based Ingenio, which offers Pay Per Call on AOL Search, Microsoft Windows Live Search for Mobile and InfoSpace.
What's more, the conversion rate of Pay Per Call ads is three to eight times higher than for pay per click, Barach said.
"About one-third of people who call a business subsequently transact," he said, because they are further along in their shopping research and also because the salesperson on the other end of the call is trained to close the sale.
While Lobster Gram continues to use pay-per-click advertising online, it outsources the program to experts.
"With prices going up, you've got to be disciplined" about how much you spend, Zawacki said.
Even as he explores other alternatives, he regards paying more for keywords as a necessary evil.
"You've got to be there," he said.
Copyright © 2007, Chicago Tribune
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