Google Adwords, Marketing Tool To Nowhere

Competition in the world of pay-per-click keyword advertising is over. Google completely owns it. Microsoft had a shot at becoming a player by purchasing Yahoo to combine it with MSN.com but Monkeyboy Balmer punted that opportunity in frustration that his initial offer was not lapped up like mother's milk by Jerry Yang. Upon receiving the universal Sicilian sign of greeting from Balmer, Yang ran into the arms of Google as part of a quixotic attempt to keep Yahoo an independent company. Best of luck Yangster. Yahoo is toast.

But what about all of us small business owners who market on the internet? My suggestion is NOT to plan on Adwords being a long-term marketing tool for small business. Why? In an efficient auction market for ads dominated by one player, it's clear what will happen (if we are not already there): i.e., competing ad buyers will bid up the price of the keywords until there is zero profit margin left to the seller. Translation: only Google wins. The sellers / marketers get sucked dry of profit margin. Why keep advertising on Google if there is zero profit margin in Adwords? For many businesses, acquiring a new customer at zero profit margin helps given the potential for repeat business and to cross sell other products. For instances, say you are an online seller of womens leather goods. You bring in a customer through Google Adwords for a purse sold at zero profit margin. However, if you can sell this customer a clutch or other leather goods item, then you have profit. Further, this customer now is aware of your web site and may come back as a repeat customer without going through the medium of paid advertisement. Still, what percentage of customers will be repeat or cross buyers? 25% is a good repeat / cross sell percentage for any business. A seller who only generates gross profit on 25% of its sales is not one I expect to be in business long term.

In the days of multiple pay-per-click competitors, a regular cottage industry revolved around sifting through the various keyword sellers searching for cheap keywords. With just one keyword seller dominating the market, it's nearly impossible to find cheap keywords. Oh, it's not just that more eyes are now focused on the Google Adwords market. The "do no evil" boys have pretty much declared the cheap keyword to be illegal under Google law. How? Their system searches for popular keywords and slaps high minimum bids on said keywords. This means, should you be lucky enough to find a valuable keyword that your competitors have overlooked (and therefore underbid), it's impossible to scoop up the overlooked keyword cheap. The Adwords minimums on popular keywords are now stiff. Further, Adwords does not allow advertisers to differentiate in price between keywords within an ad campaign as was the initial standard set by goto.com (later Overture, later purchased by Yahoo). One bid price is set for all keywords in a campaign making it very difficult to cherry pick undervalued keywords for a low ball bid.

The Upshot. Google Adwords cannot be the central marketing strategy for any business. This is a problem for online businesses. How else does one market online? Well, I submit the SEO game is your main option. And that makes me uneasy. Google has a built-in incentive to frequently shuffle rankings and its search algorithm in order to insert uncertainty into the search optimization game. Why? It pushes sellers to Adwords. I wish Monkeyboy had swallowed his pride and stayed after the Yahoo deal. The Yahoo shareholders would have eventually put a gun to Yang's head giving us a true pay-per-click competitor for Google.

Borders Books, Death By Amazon

Borders recently announced it has severed its relationship with Amazon. Dah!?!?! It's like a guy feeding a monster down in his basement until it grows large enough to demolish the house and eat his family in the process. So Borders has now taken borders.com back from Amazon. And what???? Business as usual won't cut it for Borders. The brick and mortar model isn't nimble enough in its current incarnation to survive long term in the world of the web.

Bloggers criticize or congratulate. Let's take a shot at constructive suggestions for the evolution of Borders. It has to be outside the box because this company is on life support. Here's a thought: get into the used book market. How? Give buyers store credit for 1/2 the selling price of a user book on Amazon when they return book after reading it. Then resell the book on Amazon for cash. Why? You build a deeper relationship with the Borders buyer. I have sold used books on Amazon but it is a pain. If Borders would do it for me and save the hassle, I'd be glad to give them 50% of the revenue for the trouble. You could do the same thing with CDs. Why would a person return a CD? Once a listener has copied the tracks onto their MP3 player, a fair percentage of the buyers have little use for the CD. It may help stimulate CD sales if buyers know they can get a return on the investment.

Next thought, become a book publisher and music recording label for unknown artists. How can Borders push up its profit margin? By cutting out the publishing companies and music labels. If a writer or artist takes off, then Borders is the only outlet for their work. How to discover new artists? Let the customers tell you. Start off placing samples of new artists online. The users vote online ala digg.com. The artists with the most diggs move up into more prominent placement within the web site. The cream of the crop go to test market in selected brick and mortar Borders stores as well as on borders.com. Those that show well in limited release get placement in all borders.com stores coast to coast. I'm thinking contests and press releases. This could be big.

Borders, are you listening? Or are you just going to fold up your tent and die? Feel free to add you own ideas for the survival of Borders.

Schooltube, Carving Up A Tasty Market Pie

Youtube innovated and came to dominate the emerging market for online video sharing. Google thought so much of this new market that they purchased Youtube for $1.65 billion. How does a startup compete with the Godzilla of a target market space?

I really only see two ways to go about it: (a) build a better mousetrap or (b) fragment the youtube user base concentrating on a small segment with special needs. Perhaps there is technology out there better than the youtube video interface that I am unaware of but option A looks to be dead in the water. Even if a competitor came up with a technology innovation in the area of video sharing, patent protection would be necessary to avoid adoption of the innovation by youtube. And patent protection is a thin veil for an underfunded startup to rely upon.

St. Louis startup Schooltube took a crack at option B. Every startup should have an unmet market need it aims to address. In this case, it was schools who block student access to youtube given that this service contains vast amounts of content inappropriate for viewing by school children. Schooltube's solution? Limit posting of video clips to those approved by teachers. Schooltube verifies with the school a teacher's status. The teachers then authorize the posting of individual videos by their students. If teachers vet the clips, it stands to reason that schools will not block the site. Thus, Schooltube provides a kid safe web site where students can share video clips they've created as school projects. See St. Louis Post-Dispatch story. I love the business concept!

Microsoft Plan D, just buy the friggin users

Monkey Boy and the brain surgeons up in Redmond have now moved on to internet strategy Plan D. A quick recap of the history of Microsoft internet game plans--

Plan A = pretend the internet doesn't exist (failed).
Plan B = build our own search engine / web portal (failed).
Plan C = buy a successful search engine / web portal, Yahoo (failed).

That brings us to Plan D. As luck would have it, we have our hot little hands on an uber-secrete transcript of the meeting held deep in the bowels of Microsoft world headquarters where Plan D was hashed out.

Balmer, "OK, Yang told us to take our $47.5 billion and shove it where the sun doesn't shine. Get a load of the nerve of this guy!"

Corporate Lackey #1, "Are you sure he got the right number of zeros? Maybe Yang thought the offer was $47.5 million? Let's go back and talk to the guy to see where he's coming from."

Balmer, "No damnit! No! I told Yang to go Cheney himself. F' Ying Yang. He's friggin jumping in bed with Google. F' Yahoo."

Corporate Lackey #2, "Um boss, if you burned the bridge to Yahoo ... what the F' are we supposed to do now?"

Balmer, "You're asking me? You mean I pay you two jokers oodles in cash and stock options and god knows what other benefit goodies but all you can do is stand on the corner with your dicks swinging in the wind saying, 'What do we do now Steve?' That's just dandy! We got $47 billion to invest so you two assholes better come up with something."

Corporate Lackey #1, "Hey, this might sound crazy but I had a wild brain fart. Why don't we just buy the users? Politicians buy votes. Let's buy the users."

Corporate Lackey #2 starts to crawl under table to avoid the fallout from the volcano eruption sure to come from Monkey Boy in response to this suggestion. But, to his amazement, Balmer calmly considers the idea.

Balmer, "Hum, you might just be on to something there Jonesie. Get some accountants in here to calculate how many users we can purchase with $47 billion. How will it work? Like how do we decide who gets the money?"

Corporate Lackey #1, "We could run it like the Discover card, cash back on purchases through our web site."

Balmer, "Brilliant! Jonesie draft up a proposal for my new internet strategy and ship it up to the board for approval. Then get somebody on a press release pronto."

See beta of Microsoft's new products search site with cash back feature and Yahoo news story on the Microsoft cash back strategy. Hey, here's an idea--why not just build a better search engine? One users willingly engage with rather than are bribed to use. Oh, never mind.
(Satire)

Promoting Your Business With Blogs

Blogs are a great tool of business. You blab away about a topic connected to your business hopefully highlighting yourself (and your business) as an expert in the field. This particularly important in the service industry. This applies strongly to professional services (i.e., doctors, lawyers, accountants, IT professionals) but I also include here any service where skill, training, or artistic talent have importance. What to promote your restaurant or catering business? A blog is a great tool. If your business web site is an important element in generating sales for your business, then a blog (or multiple blogs) should be an integral part of your online marketing strategy. Why? Because each blog post generates a link back into your business web site. Search engines value links in ranking web sites. Ergo, inbound links are a business asset.

Blogs plural? Yeah, as many target markets you have or differentiation of service can be bifurcated into separate blogs. For example, you have a small, one-attorney law office that derives the bulk of it's revenue from divorces and criminal defense representation. Then create two blogs, one for each of the separate practice areas.

Blogs are free to set up and easy to create posts. There are many free places that will host your blog but I use blogger.com. Why? They are owned by Google and it appears to me that blogs from blogger get ranked and indexed faster than my other blogs. I have nothings but anecdotal evidence on this point, however.

Promoting Your Blog
What is the use of taking the time to create a blog if no one reads it? If the blog generates it's own inbound links thus accruing Google pagerank value, then the blog has value merely as an organ for passing links on to your business blog apart from any readership it may have. But by building inbound links, traffic to your blog usually increases as well.

That said, blogs have several advantages in promotion over business sites. One is social news aggregators: i.e., digg, mixx, propeller, reddit. Post your articles on these social news network sites to generate links to your blog. Then, encourage your co-workers, family, friends vote for your article on the social news network site. For digg.com, the vernacular is that you "digg" the post. I also encourage you make comments on posts within these news network sites. Why? Your comments link back to your profile page with the site and your profile page has a link to your blog. Also, you can tuck links to articles in your blog within comments. Each of the four sites listed above has a slightly different audience and user level. Digg is the biggest. For political articles I write for my blogs, reddit generates the most traffic (in my experience). This is probably due to the fact that the content of my works meshes best with the audience on that site.

But for generating links, the smallest of the four sites is the leader for me--propeller. Here is a link to my profile page on propeller. Notice it has a google pagerank value of 4. My commercial site that generates the income I live on only has a pagerank value of 5. Every article I post to propeller automatically gets posted to my propeller profile thereby generating a valuable link. Secondly, if you give your article popular tags when posting it propeller, the article will also be posted to pages for each tag given. For instance, here is a propeller group page for John McCain.

Do you read news and blogs on the web? Do you occasionally post comments? Many blogs and news sites allow persons leaving comments to backlink from the comment to their blog or web site. This is a free link. Take advantage of it. Posting a comment can literally take seconds and generates a link. Encourage your employees and co-workers to use the same practice backlinking to your business web site or business related blogs.

Lastly, there is del.icio.us, a mega-site where users store bookmarks. But it can be used to generate links as well. Your bookmarks stored at del.icio.us are public. The tags you give to the bookmarked pages get cross-referenced with tags given by other del.icio.us users. When a particular page is bookmarked with the same tag by many people, del.ico.us posts the page to an aggregate page. Thus, links are generated. This is a quick and easy way to build links but, to be effective, it requires the participation of co-workers, family, friends.

One final thought, link your blogs to each other. It's a mutual assistance treaty as each blog helps promote its sisters.