Market Testing – The Price of Failure: $4.46

My most recent failure cost me $4.46. I couldn’t be happier. For the price of a Venti Latte at Starbucks I was able to market test a book idea and drop the project before investing major time or money in its development. There just wasn’t enough interest in the product to turn a profit – I discovered this BEFORE I had even written one word.

Market Testing Before Product Development

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Have you ever worked for a company that was trying to market solutions in search of a problem? These types of products are usually created by teams of people who brainstorm ideas, pick the one they like best and start creating it. They miss an important step: Finding out if anyone wants or needs their product! Welcome to the realm of market testing.

I’m full of ideas. A lot of them are brilliant – in my mind! Even if I can persuade a few people to agree with me, it’s still a shot in the dark trying to pick a project worth of investing time and money in without market testing.

I do not have a background in product development or marketing – I went to film school! My strengths are coming up with ideas and making stuff. But, I want to create successful projects. I want people to fund my film ideas. I want to be successful – not just busy. The big question, when assessing my book idea, was how to test the concept without going broke or earning a marketing degree first?

Market Testing With Google and a Little PHP

While scouring every book and website I could find on building online busnesses and making money online, I came across an e-book on making money building niche content websites with Adsense ads. It is not an earth shattering subject, the author explained a very practical process for identifying target niches and building sites to draw traffic. In the middle of explaining how the Google Adwords and Adsense programs work he mentioned, as an aside, that running and Adwords campaign would be an excellent and cost effective way to market test an idea! Bells started going off in my head. I made a note to use this idea.

Fast forward a few months and I found myself listening to a 2-part podcast by one of my favorite bloggers, Yaro Starak. The topic was developing and selling e-books for big profits. The guest, Daryl Grant, spoke in great detail about the system that she and her husband were using to develop and market profitable e-books. One of the steps was to conduct a market test using Google Adwords and what she called a ‘survey site.’ The familiar sound of bells started ringing!

I examined Daryl’s sample survey site and set about designing a template for testing my own ideas using a similar process.

The Adwords Market Testing Process – 8 Steps to Success

The process itself is very straight forward:

1. Pick a product concept to test
2. Create a survey page that promotes your proposed product and has feedback mechanisms
3. Write several ads for your product idea
4. Start a new Adwords campaign
5. Select relevant keywords and set prices
6. Upload your ads
7. Run a 3 day test of your ad campaign
8. Evaluate your results

Picking your product. This is where your personal genius comes in. You have to think of some product (e-books are my initial target) that you think others would want. This is a whole seperate discussion. As an independant filmmaker I thought it would be great to have access to interviews with 10 filmmakers, like me, who had created profitable movies. I’m always interested in these types of interviews in magazines and thought that a book focussed on this topic would interest others. 10 filmmakers spilling all their secrets.

Creating a survey page. The survey page is version 1.0 of what will later become your product’s sale page (if it is successful, that is!) Let people know that the product is not available yet, but sell them on it. Write copy designed to excite them and motivate them to purchase. If you are grammer challenged, get someone to edit your copy for you (if you don’t know any editors, consider a service like OnlineProofReaders.com.) Now, make sure there is a feedback form for them to send you comments and suggestions, and a way for them to join a mailing list to get updates.

The first part is just copywriting and basic web design. The feedback form and email sign-up will require a bit more work. I used a basic HTML form on the survey page with a little Javascript to validate the email address. I then created a second PHP page that processed the form data, sent an email to me with the users name, email, and comments and, if they requested updates, submitted their information to my email list management software.

Now that I’ve created this survey site, I can just tweak the copy for each product I want to test. I’m not much of a programmer, but I got it all setup in about 2 days.

Write ads for your product. Sell your product. Write your ads as though the product is available today. Don’t say you are conducting a test, sell! visitors will find out about the test once they click over to your survey page. You want at least 2 or 3 different ads with slightly different editorial approaches. Adwords will tell you which ads generated the most response, so this is a way to start testing your ad campaign while testing your product. Knowing what people respond to may also help you shape the editorial slant of your product. Here is a sample of two of my ads:

Produce Profitable Films 10 Indie filmmakers tell exactly how they made successful movies. www.asvaproductions.com

Make Movies Make Money 10 Indie filmmakers tell exactly how they produced profitable films. www.asvaproductions.com

Resist the temptation to just write something fast, but try not to over think things either. If the idea is viable, you will spend a lot of time later optimizing and testing your ads for maximum response rates. The goal here is only to get a fair assesment of the products viability.

Start a new Adwords campaign. If you don’t already have an Adwords account, now is the tie to sign up. It will cost a few dollars to get your account activated. Start a new campaign and follow the prompts to set all of the main parameters. Set the campaign to run for 3 days. This should be enough time to gauge performance. If your test is on the borderline of success, you might extend the test a few more days to get a larger sample of responses. But, remember, the goal is spend only as much as you need to to validate the concept.

Select keywords and prices for your campaign. There are several books on my free e-book page that discuss how to select and test lists of keywords. The Adsense Mint gives an excellent tutorial on the subject (it is focussed on finding high cost keywords for Adsense websites, but the techniques and tools discussed work for this purpose.) Coming up with a good list of keywords will improve your chances of success. You want to identify what topics your potential customers might be searching for and you do not always want to use the obvious approach. Sometimes a group tangential topics will connect with the right people, and cost you less money.

For my campaign I did not just try keywords focussed on things like “filmmaking book” or “interviews with successful filmmakers.” I looked for “film festival listings” and “independant film distribution.” Filmmakers trying to sell a film would be looking for those keywords and might be very interested to read how others found success.

Upload your ads. Enter your ads into your campaign. Google has hard limits to the number of characters per line, so you might have to make some adjustments if you have to much text. Once your ads are in the system, Google will take care of dividing up the visibility of each one.

Run your test. This step is the easiest. There is nothing to do but wait – and repeatedly check your campaign statistics every 5 seconds!!! Try to find something else to distract yourself (am I the only one with this problem?)

Evaluate your results. When your campaign ends, look at the number of clicks you got. Total up the number of email responses you received. Check them against your targets. If you are close, you might want to test a little longer (or wait a few days and conduct a second test.) If you exceeded your numbers, start creating that product now! If you missed, test the next idea and be grateful that you didn’t waste any time creating a product that isn’t profitable. Notice I didn’t say it was a bad idea – just not profitable. It might be the perfect hobby project to work on after you start raking in the money with your profitable projects.

What are good targets? Daryl Grant says that she looks for an overall response of 500 clicks per day. She also looks for 5% of the visitors to be motivated enough to leave feedback or sign up for more information. If you reach or exceed these numbers, you have a winner.

Pay careful attention to how much it costs you to get clicks. You should plan for 1% of your visitors to make a purchase. That means you have to pay for 100 visitors before you find 1 customer. If it costs more reach those 100 people that you expect to earn on each sale, you have a problem. Daryl recommends that your costs for each customer should not exceed 1/3 of the income from your sale. For an e-book selling for $34.95 that means the total marketing cost should not exceed $11.65. Divide that number by 100 clicks and your top cost-per-click comes to $0.11.

$0.11 is not a lot of money, so you need to check your keywords carefully and study the market to determine how much you can charge for your product. You may need to bundle in other items to increase the value of the package and get your income per sale high enough to make the numbers work. Throw in plenty of bonuses too so your customer feels they’ve truly gotten their money’s worth.

Bonus Tip Always try to capture the email address of the people who click through to your sales page. Give them a free taste of your product or offer them a special report in exchange for their email.

Every time you get permission to add someone’s name to your list, you reduce the cost to market to them again. Over time you will have a large collection of people who will grow to trust your advice and recommendations and who you will not have to buy access too.

My Test Results – A Hidden Bonus

My idea is a big dud! I got a dismal response of 25 clicks and 0 comments over the run of my ad. There does not seem to be much pent-up demand for my filmmaker interview book (and I really wanted to do this project!) But, the price of my failure reveals a hidden bonus in this product market testing strategy.

The beauty of the Adwords pay-per-click system is you only pay when people click on your ad – no clicks, no charge! I only had to pay $4.46 to find out that this idea wasn’t going to work. The worse your failure, the less money it costs you. (Conversely, if you spend a lot of money on the test you have got a moneymaking idea on your hands.)

Traditionally, if you took an ad out in a magazine or newspaper it would cost you the same regardless of your results. Joseph Sugerman, direct response genius and author of the book Triggers: 30 Sales Tools you can use to Control the Mind of your Prospect to Motivate, Influence and Persuade, writes about how he used to roll out his ads in regional publications first before buying space in more expensive ones. He would even run 2 or 3 different versions to test refinements in the ad copy. The concept explained here is exactly the same, but much faster and more affordable.

Even if you are planning to market products in the offline world, use this system to run preliminary tests to weed out the lowest performing ideas before you put big money behind them.

I might go back to do some keyword research and see if I can find another angle on this book idea that might test a little better – maybe I should just let it go!

Let me know how testing works for you,

Andrew Seltz
The Go-To Guy