Tuesday, February 19, 2008

Beware When Piggybacking

So you're a small startup looking for a competitive edge allowing you to make it in that big bad market out there. Why not hitch a ride on a passing behemoth? Makes sense and many a small business has been successfully launched using this strategy. Suggestion: have a backup plan for long-term viability outside the shadow of the big dog. Why? Elephants might not turn on a dime but no one is quite sure when a turn is coming and, after it happens, they trample everything in their path. Coattails are long but easily snap. The following is a cautionary tale for the piggybackers.

Brokering web page text links is a cottage industry spawned by Google. Its search engine algorithm is heavily dependent upon inbound links from other web pages. Not only the shear number of links but, also, the page rank value and content of the referring page effect your web site's score in Google search results. As with anything in the business world, once the competitors learn the rules, they immediately strategize on ways to game the system. The first strategy on this front was trading of links, "you scratch my back, I'll scratch yours", a strategy as old as the ox cart. But it's cumbersome to find link trading partners whose web site content matches up with yours and who have links of comparable value to trade. As with any barter transaction, the value of the thing each side offers is up to interpretation. This makes it harder to arrive at agreement on a swap. The inefficiencies of the link barter market led to a new market in the buying and selling of links managed by middlemen, i.e., link brokers. The advantage: much easier and quicker to close a transaction. Through the link sale market, a web site owner, if possessing the money to do so, could quickly build up links to specific pages within one's site. Furthermore, to defray the cost of the link purchases, the web site owner can turn around and sell outbound link from his web site through the same broker. As one can see, the broker makes money on both ends of the deal (links in and out of the same customer's web site). Nice!

And so the cottage link brokerage industry continued to prosper for several years ... until 2007. That's when Google dropped a thermal nuclear warhead on its head by banning the practice of buying and selling links. See Link and Link. The sole reason to purchase text links (i.e., to help increase pagerank for Google search results) evaporated in an instant. This entire cottage industry has gone down the toilet. Piggybackers beware.

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