Peter McCarthy

• Peter McCarthy is widely known as one of the most knowledgeable people in the digital marketing space for books.
• He is currently the director of digital products at Ingram Content Group.
• McCarthy is also the co-founder of OptiQly, which is a service and software company that provides insights specific to the factors that impact ranking, merchandising, and sales within e-commerce environments.

• https://www.benbellabooks.com/
• https://www.ingramcontent.com/
• https://optiq.ly/
• http://www.tworiversdistribution.com/

Glenn Yeffeth: Welcome to the Building Books Podcast. I'm Glenn Yeffeth, publisher of BenBella Books. On this podcast, we will talk about ideas, authors and how publishing really works.

Glenn Yeffeth: Hello. Welcome to Pete McCarthy. I'm truly delighted to be talking to Pete. He is one of the most knowledgeable people in the digital marketing space for books. He's been doing it for a very long time, a huge range of experiences, and I'm going to let him describe them himself, but, right now, he is the director of digital products at Ingram Content Group. Ingram purchased his company that he co-founded, OptiQly, and now he's rolled into it as part of Ingram. He came in as part of that change, but he's had a story, the history before that.

Glenn Yeffeth: So, anyway, welcome, Pete.

Peter McCarthy: Thanks so much for having me, a pleasure.

Glenn Yeffeth: I want to talk about OptiQly and all the stuff you've been doing but I just want to back up a little bit and talk about, what drew you to books in the first place? What got you into this business?

Peter McCarthy: Oh man, honest truth, my grandmother. She was an English teacher-

Glenn Yeffeth: Really.

Peter McCarthy: ...and she'd just introduced me to books at a young age and I fell in love.

Glenn Yeffeth: Now, what was your first job in publishing, when you got out of college?

Peter McCarthy: Editorial assistant.

Glenn Yeffeth: Oh wow.

Peter McCarthy: Working on a book called, 'The Reader's Catalog,' which was a whole earth guide to books.

Glenn Yeffeth: Oh wow. It's made of books. Yeah.

Peter McCarthy: A book about books.

Glenn Yeffeth: A book about books, and so tell me how your career evolved to, you wound up at Penguin and Random House. Give us the story.

Peter McCarthy: Yeah, so that book, 'The Readers Catalog,' it was being done as part of the family of publications, which included at the time, the New York Review of Books, Granta and the Reader's Catalog. This is 1996 or so.

Glenn Yeffeth: Okay.

Peter McCarthy: The Internet is a brand new shining object, especially the Visual Web. So this idea of actually being able to display a newspaper online or a book online was a very new thing.

Peter McCarthy: I was an editorial assistant. As I say to my wife sometimes, I'm a decent editor but I grew up with computers and so I was technical from an early age.

Peter McCarthy: My grandmother is reading me books. I'm playing with my computer and the two just happened to collide right at that moment and so, 'The

Readers Catalog,' this book about books, the 40,000 best books in print and we get a call from some folks in Seattle who are starting an online book store.

Glenn Yeffeth: Wow. That's an auspicious start.

Peter McCarthy: Well, it would have been, except we didn't know who they were and their business plan sounded a little ambitious.

Glenn Yeffeth: That turned out to be true.

Peter McCarthy: Barnes and Noble, they were friends down the road so to speak and so we wound up licensing that database to Barnes and Noble. That got me off and running on the idea of books online, marketing books online to consumers. I took it from there. I wound up at Penguin probably a year and a half or two years.

Peter McCarthy: At the time, if you were involved in the web you were involved in everything. From eBooks to Amazon, to everything else. That was really my job.

Glenn Yeffeth: Okay, so tell me about, once you got to Penguin, What was your role there?

Peter McCarthy: Oh man, I had some terrific title. It was like Vice President, in charge of all things online but basically I was like the senior most web person.

Glenn Yeffeth: How big a deal was online for Penguin at that point?

Peter McCarthy: It was an ever increasing big deal. I joined in '98, by the time I left in 2005, it was a pretty big deal. In '98, it was about to be a big deal and by, I'd say 2001-2002 it was very clearly a big deal. By 2005 it was a major deal.

Peter McCarthy: Two things really played into that, two major factors. The first was the growth of eBooks.

Glenn Yeffeth: Now, when was the Kindle launched?

Peter McCarthy: Later. Later than all of that but interestingly enough, we had a very thriving eBook program just with our romance list.

Glenn Yeffeth: Yeah, romance seemed to be on the cutting edge of the eBook explosion, wasn't it?

Peter McCarthy: Absolutely, I mean I had probably well over a million dollar business just doing some of our best selling romance into the formats that existed at the time.

Glenn Yeffeth: What was the platform at that time?

Peter McCarthy: Rocket eBook, Palm. So I mean, they sound like ancient artifacts, right?

Glenn Yeffeth: Right.

Peter McCarthy: Palm pilot actually had a fairly descent penetration at the time and so you could sell some Nora Roberts eBooks at the Palm.

Glenn Yeffeth: I remember the Palm, where you have to learn your own handwriting.

Peter McCarthy: Totally. So fantastic, and then obviously the rise of Amazon and all the interesting facets of Amazon that were both interesting for me. How it faces with consumers perspective, but also as a publisher, I'm just looking at return rates that were in the single digit percentages.

Glenn Yeffeth: Right.

Peter McCarthy: Things of that nature that we had just never seen before.

Glenn Yeffeth: You've been thinking about this for a long time. Back in those Penguin days, what did you fore see happening and how has it rolled out relative to that expectation?

Peter McCarthy: Yeah, let me think. So I got a lot of things right a lot of things wrong, and I was early on a few things. The first time I saw the visual web, I thought that it was going to be all about movies. That was my first-

Glenn Yeffeth: The first.

Peter McCarthy: That's where I lept to right away, was is going to be a video platform and of course the-

Glenn Yeffeth: At the time, the bandwidth was so low.

Peter McCarthy: Couldn't do it, so it took YouTube compression algorithms to get that done. I wasn't wrong, but I was really too early-

Glenn Yeffeth: Right.

Peter McCarthy: ... and it was text medium so fast. I didn't see search coming, at all but I did see algorithms coming. It became really clear to me. We digitized the whole archive of the New York Review and that's like 35 years of the newspaper. [inaudible 00:05:58] everything and it became obvious to me that you can't, sorry. You can of course, just surface things based on things like relevance, through crowdsourcing of popularity, so to speak or authoritativeness.

Peter McCarthy: These concepts were sort of ringing around in my head, and I was getting used to them.

Glenn Yeffeth: The things that Google wound up incorporating into their algorithm?

Peter McCarthy: They were sort of in the air, I guess. It was obvious that we needed some things like that.

Glenn Yeffeth: Right. Remember in the days of Yahoo, it was very much like a file cabinet.

Peter McCarthy: Yeah.

Glenn Yeffeth: It wasn't really intelligent search.

Peter McCarthy: Right. I mean, it was fun that way, but it was also just down the rabbit hole. I mean, it was basically gofer just visualized. It was cool, but it didn't quite work and when Yahoo search came along, that was pretty cool. I remember the first time that I bought a search ad on Yahoo. I think I bought Jane Austin and I advertised Penguin Classic next to it and I just thought that was the coolest thing.

Peter McCarthy: Like a relevant ad, somebody searched for Jane Austin and I was able to put it in front of them. Proud and Prejudice, and show it to them. I was so proud.

Glenn Yeffeth: Right. I mean that's been obviously a revolution advertising and maybe just to go on a site to have a perspective, we'll talk about Amazon paid ads a little later, but just in terms of Google ads, and pay per clicks across the board, how big an impact has that had on book publishing? It seems very hard to monetize those pay per clicks these days with the competitive rates.

Peter McCarthy: Yeah, I would say that to answer the question at the macro level, I would say it's had a massive impact-

Glenn Yeffeth: Okay.

Peter McCarthy: ... but the ads were bought by publishers. They are bought mostly by Amazon.

Glenn Yeffeth: Oh that's a good point.

Peter McCarthy: Amazon buying ads against like, say Dan Brown searches and using the sale of a Dan Brown book as lead gen, to basically do customer acquisition. When you look at Google Ad Words, top advertisers, this is, I'm going back maybe four or five years ago. Amazon was I think the number one advertiser.

Glenn Yeffeth: That's a really good point. In fact, I remember, I have seen a few of our big titles, like who is advertising our title? I saw it was Amazon. That's a good point.

Peter McCarthy: It's a tough one for a publisher, right. It's a harder play for the publisher because they don't get the lifetime customer value.

Glenn Yeffeth: Right.

Peter McCarthy: So the click is too expensive.

Glenn Yeffeth: So they are just selling a 25 dollar book. It's very challenging.

Peter McCarthy: Yeah.

Glenn Yeffeth: I have noticed that there are some books that have such a multiplier effect. That you can spend five or ten dollars selling that book, because you know it's going to be a word of mouth buzz from now.

Peter McCarthy: Absolutely. Yeah there's the word of mouth. There's the carry over. You can play with things like market share that, that author or that series has within that vertical.

Glenn Yeffeth: Right.

Peter McCarthy: If you're a travel publisher, let's say cost per click can be fairly high because if you can get someone into your series, the lifetime customer value is well worth, it on the ROI site, but yes selling a one off needless novel via a group of advertisers is a lot.

Glenn Yeffeth: As pointed out, there's so little branding in publishing, that there's very few abilities to exploit that, except the author's own branding.

Peter McCarthy: That's right.

Glenn Yeffeth: If you're advertising Lee Child, you've got quite a nice backlist that you could monetize for every sale.

Peter McCarthy: Yup.

Glenn Yeffeth: Tell me about your move to Random House.

Peter McCarthy: Right, yeah sure. So I joined Random House in, try to get the chronology right, 2005 I believe and first thing there was to focus on, I guess it was the transformation to a consumer focus. So we need to understand our consumers, the end readers much better than we do now, was the mission statement.

Glenn Yeffeth: Which is challenging in publishing, because you have no interaction with them.

Peter McCarthy: Really hard. Yes, you have to figure out ways to have interactions and so gradually over time, I was there for six years I believe, maybe seven. Along six or a short seven. One of the other.

Peter McCarthy: The challenge there was, to develop direct relationships with consumers, that would benefit a wide variety of publishing programs, right. So Random House sounds like one company, as you well know, but it's worth stating it was about 130 imprints when I was there.

Glenn Yeffeth: Right.

Peter McCarthy: My team sat in middle and what we were tasked with was, we were marketing innovation group, sort of an RND lab to explore different things that we could to develop these relationships.

Peter McCarthy: We explored everything from creating content sites which speak to fans of specific genre. Or fans of things even outside of books, where books happened to go along with them. So movies, for example.

Glenn Yeffeth: Right. So release basically what we call verticals now.

Peter McCarthy: These are the vertical sites. Yeah, absolutely. We were doing that and doing things like email collection. I mean, a lot of this stuff is like a playbook now, but at the time for a publisher to do it, we needed to do some fairly interesting things. For example, we needed to include other publishers books on our vertical sites.

Glenn Yeffeth: Oh that must've been controversial.

Peter McCarthy: It was a little tricky, yeah. It was very interesting. Some of our internal publishers totally understood it. I mean, we used to use the example of, so let's say we wanted to launch a horror vertical that was never put in any Stephen King books.

Glenn Yeffeth: Right.

Peter McCarthy: Is that credible at all?

Glenn Yeffeth: Right, but then, how do you get around the fact that you're basically funding your competitors sales?

Peter McCarthy: Well, so it goes back to that customer value calculation-
Glenn Yeffeth: Right.

Peter McCarthy: ... that I really have grown to love, which is that if I can develop a direct relationship consumer and know a bit about them. If they like horror, if I have that person's email. I know they like horror and I have enough horror that I can please them. So I've got Dean Koontz sitting in my backlist. I'll throw a Stephen King article out there, and collect a few hundred e-mail addresses and then three weeks later I'll put a Dean Koontz article out there and push it to those people.

Peter McCarthy: Got no problem doing that. It will work every time.

Glenn Yeffeth: That's really clever. What would you say you pioneered there that you're proud of and has most stood the test of time?

Peter McCarthy: Some of the things that probably were internal facing, actually. Some of the extra stuff was really cool. Some of the internal stuff was pretty nifty.

Peter McCarthy: We would use news aggregators, and trend aggregators. Think of something like Google News back in the day or think of it now as Google Trends. We would take Google Trends information, top stories that included words. Strip down to keywords and then use those keywords to do a search or a catalog to find titles that match the news and then facilitate the promotion of those titles via, lets say a platform like AdWords, so that we could capitalize on trends.

Glenn Yeffeth: Right, that makes a lot of sense. Yeah.

Peter McCarthy: Yeah it's some things like that, now I think they're they're fairly well understood and there's a lot of people who are doing them and there are people who are publishing into white spaces based on things like search find and search traffic. I think they were pretty clever.

Glenn Yeffeth: Now, when you look at the world of book publishing now. You know what the big publishers are doing, what the smaller publishers, that Ingram supports are doing. How much would you say the publishers are getting it right? How much you say, "Oh they're missing huge opportunities in marketing."

Peter McCarthy: That's a tricky one. I would say that there's a ton that publishers get right, of all sizes. The first thing is they get their lists right. They know what to publish and then they understand what it is that they're publishing and they understand their list well and they understand how to contextualize a book. That's no small feat.

Peter McCarthy: A lot of times when I talk about marketing, I tend to focus on the data.

Glenn Yeffeth: Right.

Peter McCarthy: The platforms. There's a whole bunch of it that comes before that, that is just editorial in nature. It's creative in nature. They get that very right. I don't think that publishers are yet adept enough at using data to inform their marketing. I still think there's a bit of a shotgun approach to marketing where it's we'll all sit around the table and we'll dream up a bunch of things that we hope will work and then we'll throw them out there and hopefully they work.

Glenn Yeffeth: Right. You say that publishers are better. I mean, it seems to me that most publishers and where some are guilty of this too, there's so much pressure to promote the frontlist, that the backlist gets neglected. When you look at the backlist, it's an enormous percentage of the total revenue. Do you think that's the biggest opportunity for publishers around the backlist?

Peter McCarthy: I definitely do and I actually have, I have for years, probably a decade and I really haven't changed my tune on this one. There's a bunch of different reasons. For the first thing, to a consumer a backlist book isn't necessarily a backlist book. It's a new book he or she has never seen before, right.

Glenn Yeffeth: Right.

Peter McCarthy: So they don't know.

Glenn Yeffeth: It's bigger now, there is less dependence of it being in the bookstores.

Peter McCarthy: Correct. There's a flattening of discovery, so to speak and it doesn't really matter if it's front of a store, back of the store because there's no ... It's not like there's no such thing. All respect to Barnes and Noble and the Indies, but for the most part when you look at Discovery, their front or back of the store don't really matter.

Peter McCarthy: One thing I love about backlist is, I'm a huge fan of the book Moneyball.

Glenn Yeffeth: I'm a huge fan of that book too.

Peter McCarthy: Okay. I look at backlists like a player who played high school ball and played college ball. I've got a lot of data on this player before try it.

Glenn Yeffeth: Right.

Peter McCarthy: Backlist is wonderful that way. You can see things like seasonality. When does it perform better, this title? You can focus your marketing on a couple months that matter. Whereas frontlist, ah, we're guessing. We think it's a big summer read but we don't know yet. Give it three years, now you know actually, it's not a summer read. It's actually cozy winter read.

Glenn Yeffeth: Right.

Peter McCarthy: Now you know how to focus. I mean, the more data the more accurate that can be in the marketing. Also selection becomes easier. So again the Moneyball analogy, which backlist to work on I think is often the most important thing. Tick the ones that are high opportunity.

Peter McCarthy: Sometimes backlist can feel really overwhelming. It's dozens, if not hundreds, if not tens of thousands-

Glenn Yeffeth: Right.

Peter McCarthy: ... but if you can window it down by a few criteria to the ones that seem to have opportunity right now, you can really realize that.

Glenn Yeffeth: What makes that opportunity?

Peter McCarthy: Uncaptured consumer interest. So consumer interest, let's say a topic, where this book is actually a good fit but the people who are interested in the topic are not yet aware that this book exists.

Glenn Yeffeth: Right, but to figure that out, you've got to have some content knowledge of your entire backlist and be relaying it against what's going on.

Peter McCarthy: Right.

Glenn Yeffeth: That's a big, you know for us we have 400 backlist.

Peter McCarthy: Or you've got the big data engine going in the background.

Glenn Yeffeth: Right.

Peter McCarthy: This is where you go full tech.

Glenn Yeffeth: Describe that a little bit.

Peter McCarthy: When I was at the Random House, the thing that we were working on there with, we called it newsroom, but basically the idea was grab the topics and do a search of our catalog, our backlist and surface the potential matches we have in the backlist.

Peter McCarthy: Institutional knowledge played a role in curating but there was a first responder algorithm that said, "Right, this is trending in the news. Hey, do we have anything that's even close?" It would come back with 24 titles, saying, "These seem kind of close," and then someone would say, "I know that that's our best book on this."

Glenn Yeffeth: Okay, so basically you would be surveying Google Trends or what's in a news, putting in keywords about, "Here's what the things that are going on," and then your big data would pop up. "Oh here's the 20 or 30 books that most fit that."

Peter McCarthy: That's right, yeah.

Glenn Yeffeth: That's smart and that's something that actually we should probably be doing.

Peter McCarthy: It's helpful because to your point, it's so difficult to know what's in the backlist. I mean, it's a wonderful moment when you remember like, click, I have this thing but it's really difficult to do and it's one of the things that we tried to do with OptiQly was go get enough data points.

Peter McCarthy: We collect 60 or so per book from across enough different sources on the web, that are reflective of consumer interest, to try to surface for people within backlist or their frontlist things that might matter right now to consumers, right.

Glenn Yeffeth: Right. So one thing that maybe publishers could do better at or invest more in is backlist. Is there another huge category that you think is maybe an opportunity?

Peter McCarthy: It's a catch all. It's a little bit of a catch all but I think testing. I think a lot of times just because of the way our PNL's are structured, we can be a little risk averse, when it comes to spending marketing dollars. One of the things that was great about having the opportunity to do marketing RND, was with fairly nominal, spends being able to figure out the kinds of things that worked.

Glenn Yeffeth: After all this testing that you did at Random House, were there lessons that have brought applicability that you can share now? Did you learn anything about any rules about covers?

Peter McCarthy: Yeah.

Glenn Yeffeth: Everyone's an expert on this but-

Peter McCarthy: Right, that one changed all the time. There were some things that applied specifically to the digital space and legibility online. Legibility at certain pixels sizes and on certain screens but not too much. I didn't learn too much there.

Glenn Yeffeth: The things that people were so eloquent about, white is a color. White is a terrible color.

Peter McCarthy: That's right.

Glenn Yeffeth: There's no really data to support it.

Peter McCarthy: I always say again and then I go back to my test which is sort of like well for that book. Throw two covers up there. Run a Facebook ad campaign targeting people who like that genre. Show them a yellow one. Show them a white one and you'll see.

Glenn Yeffeth: Sometimes I wonder whether the ... In the absence of data, bad data I get or weak data is better than no data-

Peter McCarthy: Right.

Glenn Yeffeth: ... but I sometimes think the context of this Facebook cover ads is so different that it's of limited insights.

Peter McCarthy: You know I don't disagree I think when one uses these things and for what purpose, it's really important. So for there would be for me like a tiebreaker.

Glenn Yeffeth: Right.

Peter McCarthy: Or helpful information directionally to say, "Maybe I should challenge my assumption here and go with the other one."

Glenn Yeffeth: Sometimes we'll have our authors go out to their platforms which are, that's the target market for the book, and let them do a contest when we're debating internally which is better. This way, at least we have some data to back it up.

Peter McCarthy: Yeah. No I think it's often important and the nice part is we can always ignore it and just say, "That's interesting but I'm going to treat it as noise not signal. It's not meaningful to me."

Glenn Yeffeth: Right. Even though there may not be a basis for that. It's more, are you going to let yourself be ruled by data? Or are you just going to go on and say, "As we've done it for a hundred years at this instance."

Peter McCarthy: Right.

Glenn Yeffeth: Well, I've come to believe and I'd be interested whether you agree that the title by which I include the subtitle, is a single most important thing.

Peter McCarthy: Right.

Glenn Yeffeth: Getting that title and subtitle right is more important than anything else on the cover and I deal with nonfiction so that's my advice. Do you have any data that supports that or opinion about that?

Peter McCarthy: Let me think about it. Data, yes I do especially in nonfiction. It's definitely important, particularly the subtitle-

Glenn Yeffeth: Right.

Peter McCarthy: ... and having it be fairly descriptive of what the book is. The title can be as nifty as it wants to be. Snatched from thin air, colon, but then it needs to say like, "Digital bookmark of being in the 21 century," after that.

Glenn Yeffeth: Right, but, "The Black Swan."

Peter McCarthy: Yes, 'Black Swan' is a perfect example. It must have a subtitle.

Glenn Yeffeth: I'm a huge fan of 'The Black Swan.' I think it's a lot of relevance to publishing.

Peter McCarthy: Yeah.

Glenn Yeffeth: 80% time I bring it up to none book people, even the book people, they think about the movie.

Peter McCarthy: Yeah, right. Exactly I once was out, this is not a name dropping thing. It's just some funny thing. I knew his editor, Nassim Taleb and Twitter-

Glenn Yeffeth: I'm sure his editor did not have it easy.

Peter McCarthy: No. So we went out and Twitter was just, I can't remember if Twitter was just breaking or whether he was just coming to Twitter but his take on Twitter was pretty amazing to listen to.

Glenn Yeffeth: Talk about having a strong voice.

Peter McCarthy: Exactly, yup.

Glenn Yeffeth: In our marketing, I've come to see, the analogy I like to use is, we're lighting a bonfire and everything we do and we do a lot at BenBella. From helping authors with speaking tours. Right now we've got a billboard in New York for Geraldo. Just all the things we do, I think of it all as kindling and the logs are word of mouth. If those logs are wet, it's very expensive to get a book going.

Glenn Yeffeth: I mean, some books have a lot of natural kindling. You can get the person on TV and so on but then they'll flame out very well but when those logs are dry. I mean, marketing is a beautiful experience.

Glenn Yeffeth: How do you fit that reality in, where some logs a way drier than others and they just have this huge word of mouth appeal? How do you fit that into that reality into the idea of data driven marketing?

Peter McCarthy: Right. That's a great question. That's a great observation and a great question. So I'll say two things. One, I love to identify a lot of closely trailing indicators of word of mouth to tell me whether the logs are wet or dry. I want to see something like Wikipedia page views for Geraldo, from your big billboard.

Glenn Yeffeth: Does that tell you about a book or it just tells you about whether the author is popular, which I feel like that's more kindling.

Peter McCarthy: Right. Well so this is why I love the triangulation. This is why I like to get 60 data point, because I want to put it next to Goodreads and I want to put it next to Amazon, sales rank and I want to put it next to other fast changing dynamic data environments and see if there's alignment or misaligned.

Peter McCarthy: That's going to help me figure out, A, whether the wood's dry. Whether it's going all the way through and I've got a fire that's going to keep running. Whether some of the wood is dry, which is often the case and for me that's where the data-

Glenn Yeffeth: Which probably more means which target market you need to go after.

Peter McCarthy: Totally and that's what I love, is to figure out there's this piece of it, that I can go after and if I did that one thing, I'll actually have a positive effect in my marketing.

Peter McCarthy: In the past, it was like let’s try to do all things and we did all things and we didn't do them very deeply and then we hope that one might take off.

Peter McCarthy: What I'd rather do is go after the one or two things that will actually, at least have a higher likelihood of making a difference and then hopefully they do.

Glenn Yeffeth: Right and that learning as you go, learning from experience.

Peter McCarthy: Yes.

Glenn Yeffeth: That idea about niche marketing is so key. For me, Fifty Shades of Grey is the one wet log-

Peter McCarthy: Right.

Glenn Yeffeth: ... but that doesn't mean a lot because, for a lot of people, it's very dry.

Peter McCarthy: Yeah.

Glenn Yeffeth: So figuring out for whom the log is dry is important as having a dry log. It's targeting it right.

Peter McCarthy: That's right.

Glenn Yeffeth: You talk about alignment and misalignment. I'm not sure everyone miss or got that. Explain that a little more.

Peter McCarthy: Let's take a marketing funnel because that's really the way I think of it. So you've got a billboard. Somebody sees a billboard, their interest is piqued. They do a search, they wind up on a Wikipedia page. Do they wind up on an Amazon page? Do they wind up in a B and N store binder book?

Peter McCarthy: That would be the funnel and where I would look for misalignment would be that chew out that three of those things are happening at the rate, at the level that I'd expect but one isn't and then I had to hone in on the one that isn't.

Peter McCarthy: Let's say, they are going into Barnes and Noble stores and they're buying the books. There is a nice causal effect between Wikipedia page views on an author's page and purchases of books and be in physical Barnes and Noble stores. Let's say that's happening but Amazon isn't happening. Well, why is that?

Peter McCarthy: Maybe there's a problem over there. Maybe discoverability isn't right. Maybe there's another Geraldo book that's in the way. Maybe they are buying that one-

Glenn Yeffeth: Right, instead.

Peter McCarthy: ... which are not doing at B and N because it's not even stocked anymore. Maybe there's a use copy that's in the way. Maybe the tray paperback has been discounted so low that it's actually the eBook that's selling and I can't, I don't have the optics to that.

Glenn Yeffeth: Right, so let's talk about your experience as an independent consultant.

Peter McCarthy: Sure.

Glenn Yeffeth: When you left Random House you did some independent consulting.

Peter McCarthy: Yup.

Glenn Yeffeth: Say a little bit about that.

Peter McCarthy: Yeah, sure. That was really fun but also a little scary to be honest with you because it is a hustle to be an independent consultant. I did a lot of training. The kinds of things that I had learned with my team at Random House.

Peter McCarthy: It was a mixture of training. It was a mixture of reports. What we were trying to do was bring a lot of, I would say, best practices from major big agencies. The WPP's-

Glenn Yeffeth: Right.

Peter McCarthy: ... and bring them into publishing. We were looking, we were doing these brand audits on bestselling authors. Like 125 page talks on audience segmentation and messaging that might resonate. Looking at all the things we're just talking about misalignment.

Glenn Yeffeth: Right. That's very cool.

Peter McCarthy: All that kind of stuff, trying to aim the marketing.

Glenn Yeffeth: When you've got those huge authors, with big brands, you can make that investment.

Peter McCarthy: Yes.

Glenn Yeffeth: It really makes sense.

Peter McCarthy: Yup.

Glenn Yeffeth: Did you work a lot with independent publishers and small publishers?

Peter McCarthy: We did.

Glenn Yeffeth: What did you find with contrasts in approach to marketing from the big publishers and the independent publishers?

Peter McCarthy: Big publishers, a lot of them are looking for training of a lot of people.

Glenn Yeffeth: Right.

Peter McCarthy: What they want to do is really get 30 to 50 marketing associates in a room and have them learn the best practices. Take them back to their desk and then do that for every book that comes down to.

Peter McCarthy: The Indie publishers, what I really loved about working with them was, a lot of times they had a couple very specific goals in mind and they were just trying to figure out, how do I do this? I know what I want to do, how do I do it? Whatever it was.

Glenn Yeffeth: Was that it, specific to their title?

Peter McCarthy: Usually we try to stay away from single title work. We would do it here and there but we were more looking for, cross list whole publisher things about it. That just happens to be more my strength, is doing it at scale as opposed to this book or that book.

Glenn Yeffeth: It does seem like the independent publishers are more likely to have big verticals that they're focused on.

Peter McCarthy: Totally. Yeah and so we did ... Some of those courses that I was describing, rather than do them for authors, what we would do for Indies was do them on niche. What we would do is go look at, making it up like romance and we would go look at the romance book prior and we would go aggregate information from a ton of different sources and talk about audience segmentation and what tactics would be most likely to work, not work. Then try to tie that back to their list and some best practices that they could use to better match their titles with that audience and get basically efficient marketing.

Peter McCarthy: Did a lot of work with Christian publishers too and audience segmentation in that space is really fascinating also because it's-

Glenn Yeffeth: I like that.

Peter McCarthy: ... not one big lump of Christians out there, right.

Glenn Yeffeth: Yup, and there's probably some ways to reach them-

Peter McCarthy: Yes.

Glenn Yeffeth: ... that your typical New York publishers don't know about.

Peter McCarthy: They don't know. Exactly.

Glenn Yeffeth: It's very interesting. Tell me how you got the idea for OptiQly.
Peter McCarthy: Basically consulting doesn't scale. I got tired.

Glenn Yeffeth: Right. I spent 15 years in medical consulting, so yeah

Peter McCarthy: You know. I always liked to build software to help folks market more titles, more efficiently. Always enjoyed that and I had had an idea for this. Can I visualize the funnel and identify points of misalignment in the funnel across an entire list and help publishers to move toward doing the things that are most likely to clear up the log jams?

Glenn Yeffeth: Right.

Peter McCarthy: I had that idea. I really lifted it, I mean, from a number of other marketing technology products that were out there. Some SEO tools do this. They look at funnels from search, so search engine optimization tools.

Peter McCarthy: I was using a lot of those tools at the time and so basically said, "What if we did that but we did it for books and we aimed it at the things, the places that matter for books," and aimed it at Amazon to start.

Glenn Yeffeth: So big picture is, if I understand it right, we're looking at all the social media that's out there. All the various public information and relating it to, you are relating it to the sales level and in the form of the Amazon ranking.

Peter McCarthy: Correct.

Glenn Yeffeth: You're also evaluating the metadata on the whole Amazon page, saying how good that is, where it could be approved. At the same time saying, how strong the author is and their brands and putting it all on one panel for people to evaluate and figure what they could do with that.

Peter McCarthy: Correct. Yeah that's exactly what it does and then yes, try to then issue the suggestions of, "You know, you might want to look at your categorization here." Or, "It seems like you might have an opportunity to do some targeted Facebook advertising to people who like the Shondra books or who like this author."

Glenn Yeffeth: Is it equally, I guess it is equal, well into backlist and frontlist but do you see it as being more valuable for one or the other?

Peter McCarthy: I think it's probably, I mean the feedback we've gotten is that it's more useful for backlist but super relevant for frontlist as well.

Glenn Yeffeth: I mean, I could see it making more sense for backlist or being more relevant backlist, as in frontlist. You're so focused on it. You're thinking about all this stuff but for backlist, some of that has been sitting since the dawn of time and it would be nice to have a score card to say, "Hey, here is some low hanging fruit on things you could improve.

Peter McCarthy: Totally. It's exactly right and it definitely was, when I was conceiving of it, it was full list. So definitely backlist was very much in it. I wanted to be able to bring in the full list and then begin to say, "Pay attention to this. Pay attention to that."

Peter McCarthy: The tool itself is actually agnostic. It doesn't really care if the thing is frontlist and backlist. If a backlist book happens to begin to behave in a manner that's potentially more indicative of an opportunity than a frontlist title, the tool is just going to come right out and saying it.

Glenn Yeffeth: One of the things I think I heard you say is that, one of things that OptiQly can do is help predict how many copies a book will sell.

Peter McCarthy: Right.

Glenn Yeffeth: I mean that sounds like a very valuable acquisitions tool.

Peter McCarthy: Yeah, so it can't predict how many copies exactly but it can put a title into it's weight class, so to speak.

Glenn Yeffeth: Right.

Peter McCarthy: It could say, it's more these over here, than like that one over there. So it's more like 10,000 copies, less like 1,000 copies. So directionally speaking, it can be very useful that way but it's not going to be able to understand something like, how would I say it? It works with probability, right. It knows that the likelihood today is that this book will do well, but what it doesn't know is that, that author might wind up in the news for some reason that the author shouldn't be winding up on news and tank the whole book.

Glenn Yeffeth: Right.

Peter McCarthy: It doesn't know things.

Glenn Yeffeth: Now, I guess, you probably, we talked about Nassim Taleb. Your conversant on 'The Black Swan,' I'm sure.

Peter McCarthy: Right.

Glenn Yeffeth: I've observed this in our own business, how much 'The Black Swan,' is a factor and for anyone who is not familiar with it. 'The Black Swan' says a complicated idea but maybe a simple way of putting it is that, a hand full of data points out of hundreds or even thousands, can be dominant in the whole effect.

Glenn Yeffeth: If you take out our ten biggest books, maybe even our five biggest books out of 450, we don't have a business.

Peter McCarthy: Right.

Glenn Yeffeth: It's scary but it's the reality and I think even for a billion dollar publisher, it will still say, "Oh yeah, we had a bad year. We didn't have a Harry Potter book coming out."

Peter McCarthy: Yes.

Glenn Yeffeth: It applies all the way up and down the chain but the nature, no. If you believe Nassim Taleb, the nature of those books is inherently unpredictable. You're never going to know.

Glenn Yeffeth: I've got books where I'm like, "This is going to sell 10,000," and I have maybe a certain amount of confidence and sometimes I'm wrong and it sells 3,000.

Peter McCarthy: Right.

Glenn Yeffeth: Sometimes I'm wrong and it sells 200,000 and those jumps, those unpredictable jumps are really what are going to build your business. That's what everyone is hoping for and you can't predict them but you need them. Does data help us with that at all or is that just always going to be a mystery in the book business?

Peter McCarthy: I think it's always going to be something of a mystery. I think there are some things that where we can de-risk it a little bit with data. I think that one thing that is true today that was not true even ten years ago, maybe even five years ago, is we can see that it's happening earlier.

Peter McCarthy: Before it used to be like, there had to be stock outs at every store. Not quite, I'm exaggerating but practically, right. You're going back to press for the third time and you don't have enough books in the warehouse. You're really chasing the book. It doesn't seem like with the data sets that we have today that we need to be that surprised.

Peter McCarthy: There's a certain curve that one would expect if a book is going to sell 10,000 and if within day two that curve looks materially different, then maybe it's going to perform somewhat differently.

Glenn Yeffeth: Okay. Well that's very interesting and it sounds like not only maybe is OptiQly potentially useful for acquisitions. It's potentially useful for quick runs and trying to get you out, trying to stay ahead of, because that's a battle we all have, is making sure we printed enough books but not too many books.

Peter McCarthy: Certainly. Certainly can be useful for that. Yup.

Glenn Yeffeth: That magic of when a book clicks and sometimes, at least in our experience, it isn't like, "What the heck is happening?" It's almost gradual, so we have a book called 'The China Study.' We printed I think 5,000 to start, sold in three, but by the end of the year, we had sold I think 15-20,000 copies. By the end of 10 years, we'd sold two million copies.

Peter McCarthy: Right.

Glenn Yeffeth: Those are the very probable books but also those are the books that, with that 'Black Swan,' truly was an unpredictable event.

Peter McCarthy: Yeah.

Glenn Yeffeth: That's what keeps publishing.

Peter McCarthy: It keeps it really exciting and I think the thing that, one of the things that I would offer is that, can you make them bigger? Rights. So you see something on which where doubling down would be a good idea. If you can see that early, you can make them bigger, faster potentially. The other thing is you can keep them alive.

Peter McCarthy: It startled me in my consulting how many publishers have gold in their backlists that they know it's gold, but they're not doing anything to keep it shiny.

Glenn Yeffeth: Right.

Peter McCarthy: That's risky.

Glenn Yeffeth: I think part of the thinking is, one, that backlists feels kind of magical. You're not really sure you can even impact it. It seems to be happening by itself and that blacklist is really funding the whole business. If all of a sudden you're applying your frontlist cost structure to your backlist, it seems like it's going to really be damaging.

Glenn Yeffeth: So the temptation is just to be minimalist or leave it alone.

Peter McCarthy: Totally. Yeah.

Glenn Yeffeth: That book, 'The China Study,' that I mentioned, we worked that for years but you can't do that, with that many titles.

Peter McCarthy: Exactly. No, I agree completely. Someone once said to me, "Backlist is our most profitable line of business because we don't spend the money on it." I said, "Okay, that's great. What if we could target the money and the time, so that we were spending only the most efficient amount of money and time that we possibly can?"

Glenn Yeffeth: With online, I mean, the crazy thing is, you can measure the impact. It's not like you have to guess, like you do with frontlist. You have to guess, but on backlists you have a rate of sales. You can see what's happening and so yeah, it's lunacy not to take your advice.

Peter McCarthy: Get in and get out.

Glenn Yeffeth: Yeah. Figure it out and if you've got a lot of titles, you've got a lot of opportunities to succeed.

Peter McCarthy: Yup. I think that's exactly right.

Glenn Yeffeth: OptiQly focuses on Amazon, very logically.

Peter McCarthy: Right.

Glenn Yeffeth: Not only is Amazon the biggest buyer of books now, or the biggest seller of books. Both, but it's growing every year. Where do you think we're going? Where is this headed?

Peter McCarthy: That's interesting. One thing also is just on Amazon, the reason we chose to focus on it first was it has a lot of data and the data is dynamic. If books sell very few copies, the likelihood is that those sales are actually occurring on Amazon. In order to be useful for the widest number of books, Amazon was a natural target and we're certainly going to support other retailers as we go forward. There is no question.

Peter McCarthy: Ah, men, where do I think we're going? I think it's an ever increasing, hopefully sophistication in terms of marketing by publishers. I mean, I think people are starting to figure out that these tools exist and that using them is helpful, not scary. I think that people are starting to understand that if you actually want a diverse, if you don't want every sale to go through Amazon then being good at marketing is incredibly important.

Peter McCarthy: Publishers who want to sell direct for example, it's one thing to have the capability to sell direct to consumer. It's another thing to actually make a good run. That requires marketing, like really solid marketing.

Glenn Yeffeth: Selling directly, it's very hard to have the margin selling directly that you have selling to Amazon.

Peter McCarthy: Totally. It's, yeah. I had those business units.

Glenn Yeffeth: We only have, we have one real vertical, that I would say has any substance. It's called BenBella Vegan. We're one of the top vegan publishers. We've got an email list of vegans and so on. We do sell directly but that's not our focus.

Glenn Yeffeth: It's really about me being able to sell a thousand more copies of vegan book than anybody who didn't have that asset.

Peter McCarthy: Right.

Glenn Yeffeth: It just gives me a little edge both in terms of the probability of those books but also my pitch to agents and authors, this is what we could do.

Peter McCarthy: Yeah, absolutely.

Glenn Yeffeth: You talk about the important of marketing. How it's shifting and publishers are recognizing it and I hope that's true. I think, to me it seems like it's essential. We all want a dynamic ecosystem of book sales.

Glenn Yeffeth: If we wind up with a 80% Amazon world, why do authors see publishers? You can make some arguments around funding and distribution is a lot less important. A lot of the other qualities that publishers give are purchasable out there.

Glenn Yeffeth: It all comes down to marketing and marketing skills and publishers are not seen as good marketers.

Peter McCarthy: No, they're not.

Glenn Yeffeth: I have so many authors telling me, "My publisher didn't do any marketing for my last book." This is some big name, even wealthy big name author. Do you agree with me that the future of publishing, it's not optional to get good marketing and do you agree with that and then if so, what needs to happen for that to transform how publishing is perceived and the reality of publishing?

Peter McCarthy: Number one, I couldn't agree more. Of course I'm biased being a marketer but 20 years ago or so someone very, very senior of Penguin said to me, "We're in the talent relations. That's our business and don't forget it," and I said, "Okay."

Peter McCarthy: I think I was gripping about having to build a website for an author I didn't feel deserved one. It was very much a youthful move on my part. I think that if you want to be in the talent relations game, you do a couple different things. You jettison logistics to the extent that you can to people who are experts in logistics.

Peter McCarthy: I always think of Nike and who works at Nike? People who understand branding. It's not people in product design.

Glenn Yeffeth: So it's focusing on core competencies.

Peter McCarthy: Yeah.

Glenn Yeffeth: For publishers, the core competency is traditionally been distribution.

Peter McCarthy: Yeah I think it's like talent management plus super version of that but yeah increasingly they're selling authors books. Front of store to me is a SEO website, with good campaign with an Amazon. Some merge maybe on B&N.com.

Peter McCarthy: If you can do that for an author, right. I mean, that's great but you need to be able to do then all the digital components that go along with that. So it's their SEO. It's also the social pieces. It's just running, it's connecting them with the maximum number of consumers who will like their book.

Glenn Yeffeth: It's not like authors don't have a lot of marketing capabilities that they bring to the table. So it's not just a matter of telling them, "Maybe if you write an enormous check," that you feel like you've paid them for the book and now they have to do the marketing and we're all good.

Glenn Yeffeth: If that's not the case, if they're expecting to make money off, beyond the advance, then it's not enough to say, "Okay, now do your marketing." You have to help them with that but you also have to bring more thing to the table that they don't have already.

Peter McCarthy: Exactly. You have to understand all the different levers that one can pull. So the question, the portion of the question around, what needs to change? Is that, it's really bringing in digital marketing best practices but then through the filter of, as they relate to books because I've watched a number of, there will be no disrespecting here because I think it would be brutal.

Peter McCarthy: I've watched a number of companies say, "And we want to hire someone from outside of publishing because we want a fresh digital perspective," and I'm like, "Man I wish that person luck." Because if you don't understand the PNL that lives behind it. If you don't understand things like agents and their cut and who they are and what other authors are represented by them, you're not going to make the decisions right. Or you're going to step in holes and all your digital marketing best practices will fly in the face of the realities of a very complicated business.

Glenn Yeffeth: That's right. I totally agree. I mean, there is so much particular to book publishing and there's no reason book publishing people can't learn those skills. I think there was a time when those skills seemed magical and you just wanted to hire somebody with that magic.

Peter McCarthy: Yeah.

Glenn Yeffeth: Or back when apps we're starting out or people wanted to just ... The urge to be part of that technological generation and we were living in terror that what happens at the music publishers are going to happen to us. To some extent it's a certain amount of luck that, that didn't happen.

Glenn Yeffeth: Obviously what happened to music is that the money drained out of business and for book publishers eBooks actually enhanced profitability, even if it decreased revenue a bit.

Peter McCarthy: Yeah. Everyone hates Mr Bezos. Well not everybody but many people do but his DRM and there's Whispersync on his Kindle device really saved the day.

Glenn Yeffeth: Amazon can be challenging to work with but they're my best customer and very profitable customer and they have a lot of innovation that this industry depends on. So, yeah I'm not in the hater camp.

Peter McCarthy: Yeah. The hater camp, is present company just not included.

Glenn Yeffeth: All right. Well just as our final question, where do you see the world of publishing going? Any predictions about where we're headed?

Peter McCarthy: Predictions are always so risky. I mean, obviously there's a consolidation. I would say the merge toward continuing consolidation for economies to scale, of the big players. It was the big six. Now it's big five. I suspect it'll be the big four at some point. I don't have any facts on which, well, I don't have any news. Just based on financial realities.

Peter McCarthy: I do think that the idea that we will see more and more of this jettisoning of the things that are core to managing the talent. I mean, I think and I don't mean this in any way to be self-serving but that the kinds of things that Ingram can do for publishers which is like, frankly running some of the unsexy stuff.

Glenn Yeffeth: Right.

Peter McCarthy: Ship the books. Get the books there. Get the eBooks out there to everywhere they need to go. Reconcile the accounts. Look at compliance. Even things like what we do with OptiQly, which feels kind of sexy to me but actually really it's a lot of big data grabbing and pulling together and a lot of math stuff. It's like, "Don't worry about that. Worry about your acquisitions, proving your value and your creativity and becoming great at using that data to reach consumers."

Peter McCarthy: I think increasingly publishers are going to be focusing on that.

Glenn Yeffeth: I mean one of the reasons that, well I came to Ingram through Two Rivers to distribute our books.

Peter McCarthy: Yes.

Glenn Yeffeth: I came to them for a lot of reasons, but since seeing about the app OptiQly, I found that just very encouraging because it shows that Ingram is looking for ways to bring economies to scale, to independent publishers, across the board. Which is so valuable. I think independent publisher do have a big advantage in some ways, over the big houses and the level of intimacy they can create with their authors, but the downside is, we don't have that huge scale.

Glenn Yeffeth: Anything Ingram can do to make us big five level, is very valuable and I'm really glad that you're part of that. Part of the family.

Peter McCarthy: Yeah, I'm excited for it and I do believe it's the future. I mean, part of the reasons this was such, I think an attractive match for me, was that idea of scale. I mean some of this unsexy stuff, move it down the ladder. Scale it out and try to drive the cost down on it, so that everyone can have access to it.

Peter McCarthy: I love the idea that being a good marketer is not whether or not you have access to the data, but how you use it.

Glenn Yeffeth: Right. Now if you are going to start up an independent publishing house. Pete McCarthy books, from all you've learned, what would you bring to that?

Peter McCarthy: I would use a lot of probably, seemingly odd data sources to go after acquisitions. Probably need a stable of writers because not everyone I would want to have, have a book would be a natural born author. Still, a lot of ghost writing might be occurring. Targeted very much online. I just frankly don't understand. The physical channels are not my long suit. No my longer suit is online so I'd be focused very much on the digital channels and based on consumer behaviors.

Peter McCarthy: I'd be trying to publish to match consumer behavior, not based on my gut, because my editorial gut is ... What I like to read is of interest to me, but doesn't seem necessarily of interest to anyone else.

Glenn Yeffeth: All of us in publishing who are making these decisions have to try to balance that out. What do we like versus what do we think how many people like us are out there?

Peter McCarthy: Yeah.

Glenn Yeffeth: All right, well Pete, this has been an absolute pleasure. I really appreciate your time.

Peter McCarthy: Great, likewise. I really appreciate it.

Glenn Yeffeth: Thanks so much and have a great day.

Peter McCarthy: Thanks you too.

Glenn Yeffeth: Thank you for listening to the Building Books podcast. If you enjoyed it, please leave a review on iTunes. We'll be happy to listen to it or share it on social media.

Glenn Yeffeth: If you're an author who wants to submit a proposal or pitch to Benbella Books, please go to benbellabooks. Com. Click on the "For prospective authors" button and it will lead you through a little form that makes it real easy to submit to us. Thank you.