Russ: This is the BusinsessMakers Show, heard on the radio and seen online at http://www.TheBusinessMakers.com. It's guest time on the show and our topic today is online marketing from what I think is a fairly unique perspective because we're talking about online marketing from a graduate level marketing school, the Bauer College out at the University of Houston because my guest is Stephen Koch, executive professor and director of the Business Consulting Lab. Stephen, welcome to the BusinessMakers Show.

Steven: Thank you, Russ. It's a pleasure to be here.

Russ: You bet. Now, you got on my radar from a unique perspective. I mean, your title probably by itself could warrant a guest appearance, but my goodness, the Google Online Marketing Challenge played a role in your class. Help our audience understand that.

Steven: Well, sure. The Google Online Marketing Challenge, Russ, is a competition sponsored by Google. They've been doing it now for four years. It's an interscholastic competition. It's an international competition. And it's a competition that focuses on internet marketing. And so what they do is they invite student teams from universities all around the world. And this last year actually they had roughly 4,500 teams from around the world, representing 68 different countries.

Russ: Okay. And you had a team in the contest.

Steven: We did.

Russ: And how did your team do?

Steven: They did very well. They were actually the global winners overall, across the whole world.

Russ: My goodness. And that's 4,500 teams. Now, all of them were graduate level marketing students?

Steven: There was a mix. They all compete together, so you've got a lot of graduate teams and you have a lot of undergraduate teams, and ours was a graduate team.

Russ: Okay. How in the world did they do it? I mean, you know, winning anything with Google can be kind of interesting and a challenge by itself, but against 4,500 other teams, woo.

Steven: It's a pretty incredible accomplishment, I have to agree. How did they do it? They did it with a lot of great things. A great client because you have to have an actual client, and they did it with a lot of hard work, a lot of planning, excellent analysis, a lot of attention to detail and great writing skills, great communication skills. All of that came into play.

Russ: Okay. So who was their client?

Steven: Their client was the Houston Symphony here in Houston.

Russ: Okay. So the way this works is that your students went to the client and said, "We're going to enter this contest, and we want to do it with you." Of course, the client has to agree. I assume that Houston Symphony didn't have any problem with that at all.

Steven: No, they didn't. They were very, very gracious to cooperate. The whole process is - actually, one of the first things the students have to do in this competition is select a client, and that in and of itself is a project. So the students put together a spreadsheet. They put together the criteria for which they felt would make a good client, and the Houston Symphony came out on top. And we were very fortunate to work with them.

Russ: All right. So tell us about your team.

Steven: Well, the team is made up of four graduate students, all of them ladies. One - I can name them for you. One is Erin Blatzer. Erin works here in Houston as the online director of media for the Houston Natural Science Museum. We also had a young lady by the name of Jeffrei Clifton. Jeffrei is a marketing coordinator for Fenner. We also had a young lady, Carolina Thomas. Carolina is now social media analyst in Austin. And then, lastly, Lauren Davis is a paid search manager over at TopSpot.

Russ: Ah, TopSpot. We had those people on the show. So did they have all of those positions while they were doing the contest, or is that subsequent to the contest?

Steven: Great question. At the University of Houston we have a mix of part-time and full-time students. One of them was employed. Erin was already employed. And the other three got jobs just after graduation.

Russ: Okay, wow. And so was this the only team that you had coming out of the internet marketing class?

Steven: That was the only one. We only did one. We were trying to get our bearings on the competition.

Russ: Okay. Well, that's good. It seems like you did. Were there indications that your team was doing well along the way?

Steven: We knew they were doing well, just take a look inside the campaign and watch them grow. It's a phenomenal experience as a professor to watch them grow and understand every day, understanding something more about online marketing, and then executing it. So we knew they were going to do well.

Russ: Okay. How long did the contest period last?

Steven: The whole contest, for them, lasted about three months. The actual campaign that they managed, which is the core part of the competition, was three weeks.

Russ: Okay. And what did they do unique, in your opinion, during the campaign?

Steven: Uniquely, they really took a lot of time to understand the client, to understand how the client converts customers on their website, which is important if you're going to do online marketing. And then understand how to successfully run an efficient campaign that has a good ROI for conversions.

Russ: Okay. Well, wow. So were there indications? Like was there a scoreboard during the contest indicating how well they were doing?

Steven: Yeah, if you were to talk to the team, they actually took turns monitoring the account, and they monitored it 24/7. They were watching every click, every conversion, and it's all inside the AdWords software. And they were optimizing in real time, nonstop.

Russ: So they knew that they were doing well for the Houston Symphony, but did they know how well they were doing compared to other teams in the contest?

Steven: Yeah, no idea. As a matter of fact, they don't even know exactly who the other teams are. Google does not publish the list of the universities that compete. So you have to go online, if you're curious about who your competitors are, you have to go online to start Googling the competition to see who is blogging, who is posting to their university website about it, and then you get an idea of who the other schools are.

Russ: So were there any indications, at least during the campaign period, that they were in the final 1,000 or did they know they were being included further, deeper into the contest at all?

Steven: Yeah, officially no, but we know that the way the competition works is that Google monitors all of the metrics in the background. They have their algorithms for 30 different key metrics. And they filter to the top 100 out of the 4,500 teams. And were pretty confident actually we'd get into the top 100. After the filter of the top 100, Google will take the top five from each of the four regions around the world. And that we weren't exactly sure we would because it's always a mystery. We weren't quite sure whether or not we would be there. And of course they were, and not only were they in the top five for the Americas, but they were first in the world.

Russ: But were they told, "Yeah, you're in the top five or the Americas," or just one day, "Nope, you're first place"?

Steven: One day there was an e-mail from Google. It's actually - it's a really funny story. The e-mail came and everybody on the team actually thought they were being - I'll use the word punked. Everybody thought it was -

Russ: A joke.

Steven: It looked like an unofficial e-mail. And it came from the AdWords team at Google. And there was an awful lot official silence on e-mail amongst the team. And then some of them exhibited quite a bit of emotion, and some of them were still a little bit reserved thinking this might be a practical joke because there was not a lot of fanfare. There was no official posting on the website. And sure enough it was true.

Russ: Wow. Now, you talk about AdWords, so was a whole lot of this about SEM?

Steven: All of it was SEM related. And when you think about it, AdWords is such a huge part of SEM. And then a lot of skills that they use translate across all areas of search marketing, whether it's organic or if it's paid.

Russ: Sure. Now, so you mentioned they needed to do this or needed to do it efficiently, at least that's what you were telling your students to do. So were they using their own money? Were they actually buying AdWords?

Steven: Yeah, so Google gives you a budget, and it's a relative modest budget. So for three weeks the team had $200.00 to spend. The account was populated with $200.00, and they had to manage that very, very carefully. So that - you can imagine the detail with which you're monitoring that because you don't want to overspend it. You want every penny to count, literally every penny to count.

Russ: Right. So they couldn't spend - they couldn't even take money out of their pocket and put it - there was no way to do that in the contest. You had $200.00. Show us what you're going to do in this internet marketing campaign.

Steven: Yes, that's correct. And it's - it turns out to be - this is the second time we've done it. It turns out to be that it was a very good lesson in how to be very, very efficient with your dollars and make every penny count.

Russ: That's impressive. This is Stephen Koch, executive professor at the Bauer College of Business at the University of Houston. We're going to be back with more with Stephen after this. This is the BusinessMakers Show heard on and the radio and seen online at http://www.thebusinessmakers.com.

Russ: This is the BusinessMakers Show heard on and the radio and seen online at http://www.thebusinessmakers.com. And continuing on with Stephen Koch, executive professor at the University of Houston, focused on internet marketing, right.

Steven: Yes, sir. Yes, sir.

Russ: All right. Now, you just mentioned this is the second time that your students had entered this Google contest. Does that mean the prior year you had a team as well?

Steven: In 2010 we also fielded a team.

Russ: Okay. And how did they do?

Steven: They did very well too. It was the first year. We weren't quite sure what to expect. And they also finished in the top 100 across the world. Google doesn't tell you exactly where you finish unless you're one of the top five in your region. So we're - they were very fortunate to have placed in the top 100.

Russ: Very cool. And so are you restricted each year to just one team?

Steven: No, we're not. As a matter of fact, we're going to be fielding several more teams this coming spring. So we're going to expand it a little bit at the Bauer College.

Russ: Okay, cool. Well, it's just real interesting to hear this from the academic level. So your class, the actual class that these four ladies were in is called Internet Marketing?

Steven: That's correct.

Russ: Okay. What all do you teach in that class?

Steven: Well, we divide the class into three different segments. The very first segment we focus on e-commerce, and we use Volusion Software, which is a shopping cart, and everybody in the class actually develops a strategy, a plan for an e-commerce site, and then actually develops a site using the Volusion platform.

Russ: Oh, wow. And are they real sites? Do they actually sell goods and take in money?

Steven: They're just test sites. They don't get pushed up. They're actually - you could find them on the internet if you really, really tried, but they are not live, so they're not taking -

Russ: Is that something Volusion does just for academia or something?

Steven: We've chatted with Volusion over the years, and they've allowed us to go in and use their software.

Russ: Well, they must like it. Probably after school is over, many of these people go on and launch an e-commerce site I would think.

Steven: Yes, absolutely. And they can actually take the one that they developed and launch it if they so desire.

Russ: Okay. And you as the executive professor, I mean, you're watching the sites that they build, the plan, the business plan, and then you give them a grade based on how well you think they executed, right?

Steven: That's correct. That's correct.

Russ: Have you seen some extraordinary things come through that?

Steven: I've seen a lot of very creative ideas. You know, it's a combination of the product, the value proposition, and then the execution. And I've seen some very, very creative ideas. And they get a lot of - put a lot of energy behind it. They enjoy it.

Russ: Well, I've seen very creative ones in the real world, and then some really unusual ones. I always think of the big grocery thing called - I think it was called Web Van, a few years ago, that failed miserably. But then this Christmas I was seeing where people were buying Christmas trees online too, so not sure about that.

Steven: Haven't seen that, but I'm sure it works.

Russ: Well, if - which brings me to a question, in your e-commerce lesson do you grade them also in the buyability and the back-end portion of the business as well?

Steven: Yeah. You know, honestly I try to stay away from that because I don't want to try to teach too much in one course because that is really just one-third of the semester. So I'm really looking for the strategy behind it, and in particular the merchandising strategy, the pricing strategy, the competitive analysis. I'm looking for those things and not so much grading the idea itself.

Russ: Okay. So that's one-third. Keep going. What are the other two-thirds?

Steven: The second third is internet marketing. So we're studying SEO. We're studying e-mail. We're studying banner ads. We're studying pay-per-click advertising. And then the third section of the semester is focused on web analytics. So after they've had a chance to understand e-commerce, after they've had a chance to understand the marketing juice that goes behind the website, then we're analyzing it. So we use as a platform there the Omniture SiteCatalyst software.

Russ: Oh, yeah. Real interesting. It seems to me that graduates of this course would come out being fairly valuable to the business community.

Steven: Yeah, it gives them great, great background, and they can engage on internet marketing at a very deep level when they're talking with prospective employers.

Russ: Right. I mean, most of the people that I know that are experts and very successful in the field kind of taught themselves from the ground up based on what was going on at street level. So now out of the university, very interesting. How long have you been teaching this course?

Steven: I've been teaching this course I think for about three years now.

Russ: Okay. All right. And is it just graduate level, or is it also offered at the undergraduate level?

Steven: So we offer it at both levels, undergraduate and graduate level. Of course, the courses are just a little bit different. They're structured a little bit different. The problem sets are a little more complex at the graduate level.

Russ: Do you teach it also at the undergrad level?

Steven: Yes, I do.

Russ: Well, I'm curious, before I let you go, Stephen, tell me about your background. I mean, to know what you're talking about in this field is something that's present day, period, end of sentence. How long have you been teaching?

Steven: I've been teaching for eight years now.

Russ: And what did you do before that?

Steven: I was in industry. I was in corporate America, working for just a few small companies like Mattel Toys and Coca-Cola Foods and Pennzoil, Quaker State. Always with some level of marketing in my role and ending up in general management.

Russ: Okay. And marketing when you were there was quite a bit different than the way marketing is today, right?

Steven: Yeah, I'm old school.

Russ: Okay. But you're new school at the school.

Steven: You got it. It's funny. You do something like this - this is a second career for me. You do something like this, in part, because you want to keep learning. You value it and so that's what I've been doing. I keep learning. I kind of reinvented myself, if you will, over the last few years, and starting to feel pretty comfortable in internet marketing.

Russ: Wow. That's pretty cool. Before I let you go, tell us the names again of the four participants on your team that won the global championship for Google Online Marketing in 2011.

Steven: Glad to. Carolina Thomas, Jeffrei Clifton, Lauren Davis and Erin Blatzer.

Russ: Okay. Stephen, thank you so much for coming in and thank you for doing such a great job out there at the University of Houston.

Steven: Thank you for having us.

Russ: You bet. That's Stephen Koch, executive professor at the Bauer College of Business at the University of Houston. And this is the BusinessMakers Show heard on the radio and seen online at http://www.thebusinessmakers.com.