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Orabrush Case Study

Jeff Harmon didnt know if he felt more elated or relieved when he saw the email from Wal-Mart. Jeff, the 27-year-old Chief Marketing Officer of Orabrush, had been working for two years to sell the Orabrush by any means possible, and nationwide distribution in Wal-Mart stores would guarantee sustained sales. He had just received an email from Wal-Mart headquarters ordering 700,000 Orabrushes to be carried in stores across the country. It was the conclusion to an improbable journey. Jeff considered all the factors that had contributed to the unexpected success of the Orabrush marketing campaigns, and wondered if hed been lucky, or if he had invented a new go-to-market strategy that could work for other new products.

Despite several variations in placement, including in the oral hygiene aisle, on end-cap displays, and near the checkout counter, the Orabrush did not sell well enough to warrant expansion into other stores in the retail chain. Meanwhile, Dr. Wagstaff hired a web designer to create a website for the Orabrush, on the appropriately chosen URL, orabrush.com. The website sold the first Orabrush for $4.95, and all additional Orabrushes for $3.95 each, plus shipping charges. Traffic on the site was minimal, and sales on the site were essentially nonexistent. In fall 2008, Dr. Wagstaff connected with a student at Brigham Young University who began marketing the Orabrush website. The student worked part time at a local web marketing agency that contracted with companies to provide web marketing services on a performance basis. The agency would earn 20% of profits that it helped the company generate beyond the current baseline level of sales. Because online sales of the Orabrush were zero, this would be an easy calculation. The students digital marketing efforts revolved around two areas. First, he performed search engine optimization on the website. Because no consumers were searching for the term, Orabrush, he knew he would need to optimize the website for terms that consumers were searching.

The term tongue scraper was relevant and had good search volume, so he optimized the site for this term. Second, the student began a Google AdWords campaign. The student knew that it would take a long time before orabrush.com showed up on the first page of organic search results for tongue scraper, so he bought positions in the paid search results around the same term and related terms. The AdWords campaign ran for three months. The average results were as follows. Average cost per click was $0.63. Conversion rate on the website was .5% (1 out of 200 visitors made an order). The average order size was $9. At the end of three months, the student realized that the AdWords campaign would never be profitable, and since his company only earned money based on the profitability of his actions, he abandoned the efforts. Class Project In winter 2009, Dr. Wagstaff engaged a small group of students from a marketing research course at Brigham Young University to perform some primary research into oral hygiene habits and online purchase propensity. The conclusions from the semester-long project were clearonly 8% of survey respondents indicated a positive propensity to shop for oral hygiene products online. Thus, success for the Orabrush would only be found through retail distribution at traditional brick and mortar stores. When the group presented these results to the class, along with their recommendations, one enterprising student named Jeff Harmon disagreed with the recommendation to forego online sales. Isnt the oral hygiene market a huge market? Isnt 8% of a huge market still big enough to go after? While this line of questioning received little more than shrugs of indifference from the research team, it impressed Dr. Wagstaff, who had come to the class for the presentation. After class, Jeff Harmon approached Dr. Wagstaff about marketing orabrush.com in his spare time.

Dr. Wagstaff readily agreed. Jeff Harmon Markets the Orabrush For several months, Jeffs marketing efforts had the same effect as the prior marketing efforts. In four months optimizing orabrush.com and advertising the site on Google and Facebook, Jeff had managed to incur a net loss of $5,000 on $10,000 in sales. The ratio of loss per sale had decreased over the four months, but profitable sales were still out of reach. Not one to give up easily, Jeff continued to think about ways to make orabrush.com profitable, often daydreaming about it while he worked his regular job as an online marketer at a genealogy website. One day at work, one of Jeffs work colleagues, Austin Craig, performed a spontaneous ten-minute rant about politics in front of the entire office. While Jeff laughed alongside his colleagues at Austins humorous delivery, he received an instant message from the guy in the cubicle next to his. I would pay money to watch this guy rant. Instantly, an idea formed in Jeffs head. Why not ask Austin to rant about bad breath? If it was funny enough, maybe it could generate some views on YT and generate some sales on orabrush.com. When asked if he would be willing to perform a rant on bad breath for $100, Austin responded as would most recent college graduates with a low-paying entry-level job: Sure. Soon thereafter, Jeff and Austin and a small film crew went to a local pool hall, where Jeff had rented the stage (meant for live bands to perform) for the evening. Austin had not rehearsed his rant, and in fact had not made any preparations for the content of his rant.

Instead, Jeff had prepared a list of phrases and facts about bad breath and the Orabrush that Austin would perform in segmented fashion. They would then cut and splice a coherent video together. While the resulting video would not have a very professional feel, it would fit the YT aesthetic. YT videos were typically made by amateurs, and as a result of their poor rehearsal, would create a coherent video through excessive cutting and splicing. The final video begins with Austin Craig explaining how to test for bad breath. It then explains that the Orabrush is the only proper way to clean ones tongue and thereby eliminate bad breath. At the end of the video, orabrush.com is promoted. Throughout the video, Austin includes humorous asides. The video can be found at Jeff posted the edited video to YT on September 10, 2009. He also purchased prominent video placements on YT for searches for terms related to bad breath, fresh breath, oral hygiene, and tongue cleaning. Within three days, the video had been viewed over 1,000 times, and the pace of viewing was increasing. Roughly half of those views had been promoted (views that came as a result of paid ads), while half were organic views.

Within two weeks, the video had garnered 20,000 views. This video viewing led to the first significant uptick in online sales on orabrush.com. About 15% of viewers clicked the link at the end of the video and arrived at orabrush.com. Even better, the conversion rate of this YT sourced traffic was 3% as opposed to 1% for traffic from Google and Facebook. The average order size of this traffic was also larger--$15 instead of $12 from Google and Facebook traffic. To determine whether this traffic was profitable, one would have to calculate the cost of the paid video views. Fortunately for Orabrush, because of a loophole in YT's payment system for this newly established method of YT advertising, Orabrush was able to get all of the paid video views for free. But knowing that this loophole would not last forever, Jeff had to make sure that all aspects of this conversion funnel were optimized to maximize profit potential. This optimization focused on several areas. First, Jeff examined behavior across the various keywords they had bid on. He noticed a dramatic difference in behavior from searches related to bad breath as opposed to the other keywords surrounding fresh breath and oral hygiene (searches related to tongue cleaning were negligible). Viewers who came to the video from bad breath terms visited the website at a rate of 20% as opposed to 10% for the other keywords. They also converted at a rate of 3.5% as opposed to 2.5% for the other keywords, but the average order size was the same between the two groups. As a result, Jeff focused his attention on bad breath keywords, and changed the messaging on the website to revolve around curing bad breath. When YT began allowing their users to create their own channels, Jeff called the channel curebadbreath. While 20% conversion from the video to the website was good, Jeff knew this number could be higher. They experimented with several different closing messages that played at the conclusions of the video to induce a click-through to orabrush.com.

After multiple iterations, they found that offering a free Orabrush increased click-throughs from the video to orabrush.com to 35%. Offering the free Orabrush had the complementary effect of increasing conversion rates (the percentage of website visitors who ordered an Orabrush). Eventually, the website achieved a 7% conversion, but this could not be attributed solely to the free Orabrush offer, as Jeff was simultaneously testing different header phrases, button placements, video placements, and landing page layouts on orabrush.com. The 7% conversion was the result of a long list of tested changes to the website. The free Orabrush offer actually decreased the average order size to $14 from $15. Customers got a free Orabrush but had to pay for shipping, and additional Orabrushes could be ordered along with the free Orabrush. Thus, the decrease in average order size from $15 to $14 was actually the net result of the discounted price for the first Orabrush along with a small uptick in the average number of Orabrushes per order. This small loss was more than made up for by the increased video-to-site click-through rate and the increased conversion rate on the website. Retail Distribution The YT campaign had made selling the Orabrush online profitable. Just as Jeff had predicted, the 8% of the oral hygiene market that was willing to purchase oral care products online was large enough to generate a profit. But the viral success of the YT video opened the opportunity to begin to capture the other 92% of the market. Three months after the YT video launched (and had received over 1 million views), a representative from Boots, a U.K. pharmacy, called about stocking their stores with the Orabrush, because several customers kept asking if they could buy it there. Another chain of stores from Australia also began stocking the Orabrush. Finally, all the Wal-Marts in Utah also began stocking the Orabrush. While Wal-Mart is known for its nationwide standardization of product offerings, it had recently begun a program allowing local and regional managers to stock new SKUs that were not available nationwide. Under this program, Orabrushes began being offered in Wal-Marts across Utah. Many of these Wal-Marts dedicated an entire end-cap display to the Orabrush, along with a video feed that played the YT video. Prominently displayed on these end-caps and on the product packaging was the message, As seen on YT, the first product to ever feature such a message. To further support the brick and mortar sales of the Orabrush, the Orabrush marketing team directed watchers of the YT video to physical stores where they could buy the Orabrush if the watcher lived within 10 miles of a store that stocked the Orabrush (instead of the orabrush.com home page). The results of this foray into brick and mortar retail stood in stark contrast to the Orabrushs first retail outings. Sales were brisk. Not only did the Orabrush outperform sales expectations across the board, analysis showed that Orabrush sales were category-expansionary. It was rare for a product to expand category sales in a category as mature as oral hygiene. With such obvious sales success, the Orabrush team was confident that they would soon secure nationwide Wal-Mart distribution, which would guarantee continued and long-lasting success. But no such call came from Wal-Mart headquarters. To grease the wheels, Jeff and his marketing team created another video, this time using higher production values, in which they examined the success of Orabrush sales and performed forecasts based on the sales data to show the benefits to Wal-Mart of stocking the Orabrush nationwide. The video featured Austin Craig as well as Morgan the Dirty Tongue, the main character of a YT video series they had created to drive additional traffic to orabrush.com. True to form, the video was humorous but informative. Once they sent this video to Wal-Mart headquarters, they further greased the wheels with Facebook advertisements. They sent targeted ads to Bentonville, Arkansas, Wal-Marts corporate home, stating that Wal-Mart employees have bad breath, and further emphasizing that Wal- Mart should stock the Orabrush. Within a month, Jeff had received both a phone call and an email from Wal-Mart headquarters. The phone call asked Jeff kindly to stop advertising that Wal-Mart employees had bad breath. The email, which came later, asked Orabrush to supply Wal-Mart with 700,000 Orabrushes for nationwide distribution.

1. In fall 2008, the BYU student realized that the AdWords campaign for Orabrush would not be profitable. Explain his reasoning by calculating how much revenue was generated per dollar spent on the campaign.

2. Jeff posted the video to YT on September 10, 2009 and within two weeks, the video had garnered 20,000 views. Based on these 20,000 views, calculate total revenue.

3. Jeff then optimized the orabrush.com site and the YT video messaging. Calculate the average value per viewer (be careful not to calculate the average value per visitor).

4. With his previous experience promoting the video on YT, Jeff knows that half of the views are a result of paid ads and the other half are organic. Based on this information and the average value per viewer, what is the most that Orabrush should spend on cost-per-click of the video?

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