Every Brand is an Ad Network

TechCrunch recently highlighted how most of Glam's growth has come from the combination of shallow pure SEO play to pump pageview stats and syndicating their ads on other related sites to further pump the success story, all while the network is projected to lose over $20 million this year. But VentureBeat also noted that the growth is significant enough that Google wants to do a custom ad deal with them.

Marchex recently had a brutal quarter which drove their stock price down to $9 a share. Their site development process was far too broad and far too shallow. They need to start developing their top domains or sell them off to someone who will leverage them for their full value. In response to Marchex's down quarter Sahar Sarid asked what they should do and got this brilliant comment:

What is the business model here… we got out sites indexed by Google but the users had a shit experience and BTW our indexed sites make nothing compared to if we just parked them. Come on - it not really very hard to figure it out- take the top 30 golden domains and build them into authority sites NOT openlist scrape sites but bankrate.com’s

Keep in mind that when you create one Bankrate.com you get the leverage to charge advertisers more, which allows you to spend more on marketing. As you increase that spend search engines are willing to look the other way if you create a bottomless pit of near identical white-labeled search spam.

As markets consolidate, 2 of the biggest determiners of who will win a market are going to be
brand perception and AdWords ad budget.

  • Brand perception: Google gives brands a discount on AdWords ad prices while price gouging smaller competitors, which subsidizes the value of building a brand. If BMW spams, Google is afraid to remove BMW from their index for very long. If a smaller site does something that is borderline gray and comes under scrutiny Google may penalize the domain and pay an AdSense spammer for stealing that content and keeping it in the Google index. It all feels a bit like the mafia, but this is Google's way to extort you and kill smaller market players without being branded as a corporate criminal.

  • AdWords ad budget: if you are blowing millions a month on Google AdWords then Google will be more likely to white list your sites and less likely to penalize you for white-label clone sites, robotic content, subdomain spam, or bought links.

Even if you lose money on the main brand, it still allows you to backfill with high margin garbage with limited risk from Google. What are the odds of Google doing anything about this BizJournals spam? If you want to monetize garbage you have to put one star brand at the center of it to mitigate you risk profile.

Published: August 13, 2007

Comments

Alexander
August 13, 2007 - 10:55am

My bet that Marchex along with every other domain owner is actually finding it a lot harder to create good content for their sites than they (or everyone else told them) first thought.

At the moment most of their sites are smoke and mirrors which might mean money today but it's no way (IMHO) to build an empire for the future.

August 14, 2007 - 7:57pm

I was very surprised to hear what Marchex was doing with all their domains. I mean c'mon, how much more profitable would it be to develop those golden domains. It seems that don't have a shortage of cash flow.

CVOS
August 15, 2007 - 2:33am

I have another take on the reason Google plays favorites to huge companies such as BMW and VW.

It is very easy to contact VW's webmaster and know that it will be fixed within 24 hours. Once notified of a penalty, a huge online company will instantly become a white beacon of trust for others to follow.

High profile sites cannot afford to scrap a project and start anew, like small blackhats do every day. If a small company needs to start fresh its not the end of the world. Could you imagine if VW.com ceased to exist in search results? People would complain Google was broken.

Will Scott
August 16, 2007 - 1:05am

It's interesting to me that in light of this Marchex turns around and buys VoiceStar.

http://gesterling.wordpress.com/2007/08/09/marchex-buys-voicestar-for-28...

It's either an attempt to morph into a real business model (PPCall) or another attempt to monetize thin content.

If the latter, shareholders better hope it's more monetize-able than their previous attempts.

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