The conventional SEO strategy goes like this:

• Research keywords
• Optimize site for those keywords
• Link internal pages using keyword loaded terms
• Get links from other sites with keywords in the link

These days, this strategy isn't working as well as it used to.

If a site isn't genuinely interesting and isn't worth remarking upon, it can be difficult to get links, attention and rankings.

These are essentially marketing problems.

By basing our SEO strategy on fundamental marketing principles, we stand a much better chance of dominating the rankings, no matter what niche we choose to target.

Audience

This document is intended for those who know basic SEO principles, but are new to marketing concepts and theory.

If you're new to SEO, there are helpful tips throughout the document, and links to further instruction on SEOBook.com.

Principles That Form The Foundation Of This Strategy

• 1. Market Analysis
• 2. Competitive Review
• 3. Positioning
• 4. SEO
• 5. Economics

Market Analysis

In the past, marketing was a last-minute ad on.

A company knocked out a product, then it was handed over the wall to marketing, whose job it was to get the product out into the market. Marketing put a colorful picture on the box, commissioned a jingle, and bought up millions of dollars worth of media time.

These days, marketing is more integrated. A product or service is designed with a clear audience in mind, although many SEOs might disagree, especially when asked to bolt an SEO strategy onto a Flash site consisting entirely of animation!

The internet offers us the opportunity to design with a clear audience in mind, but with a lot less risk than brick-n-mortar companies.

We can figure out if there is a market, and what that market demands, test that market, and then build a site to cater to that market. We can do this quickly and cheaply, using the power of search marketing.

Find Clear Space & Consumer Demand

Like SEO, marketing is part art, part science. Even if you cover the technical aspects of SEO, there is no guarantee you will rank well. Likewise, if you follow a marketing strategy, there is no guarantee of making money.

The trick is to find a place in the market that has two key aspects: clear space and consumer demand.

How do we find these places in the market?

Let's start with a basic marketing analysis.

Perform Market Analysis

Ask yourself three questions:

• What does the consumer need?
• How many consumer need this product/service?
• What is the buying process?

You must fill a genuine need in the market.

Is there demand? It's no good trying to sell something, be it a good, service or opinion, if there is no demand for it. For example, do you know why most blogs don't get read? It is because there is a very limited demand for opinions from unknown writers. Demand is spread very thinly across the opinion/news space, and supply is virtually infinite.

How do you find out if there is a demand for your idea?

The SEO has a valuable tool at his/her disposal for determining demand. Keyword research involves mining databases of previously searched for keyword terms to see if there are existing traffic streams (demand) they can tap into. Any volume of keyword searches indicates demand. Generally speaking, the higher the search volume, the greater the demand, although there are traps, which we'll get to shortly.

For those new to keyword research, here's a step-by-step, using the SEOBook Keyword Tool

Example Of An SEO Marketing Analysis - Gone Wrong

The SEO aims to build a revenue generating site.

The SEO undertakes keyword research and finds there are a lot of searches for Britney Spears pictures.

It turns out that there are approximately 135,000 searches for Britney Spears pictures each month.

Our first two questions - "What does the consumer need? (Britney pictures)" and "How many consumer need this product/service? (lots!)" - appear to be answered. So the SEO licenses a collection of Britney pictures, sets up a site that charges a small membership fee, and ranks well for Britney related keyword terms.

And fails to make any money.

Why?

There are various reasons, but the main reason is that the SEO failed to ask "what is the buy process?" Conventional SEO-led strategies often fail to include this step, however it is crucial if your site is to succeed.

The buy process is, as the name suggests, the steps a person takes when they are interested in buying something. Had the SEO examined the buy process, she would have realized people don't pay for Britney pictures online. Granted, this example is a little silly, but this problem occurs often, especially when search traffic is viewed in isolation.

Offline, people may buy gossip and celebrity magazines, but when online, they expect to look at Britney pictures for free. Online, the buy process for Britney Spears images simply doesn't exist, except in a very narrow B2B market between photographers and publishers.

So what happens next?

Choose Niches With A Commercial Imperative

The SEO, discouraged that his first idea didn't work, chooses to run ads instead. Where there is traffic there is money, right?

Again, this approach is likely to meet with limited success, especially when compared to other niches she could have targeted.

People looking for Britney pictures don't tend to be in a buying mode, and so advertising, especially action based advertising such as Adsense, is likely to go unclicked. The activity "looking at Britney pictures" doesn't have a strong commercial imperative, whereas an activity such as "buying toys", does. Such sites need a very high number of page views to make much money.

One way to determine if a commercial imperative exists is to examine the bid prices for Adwords. Almost always, the higher the bid price on the keyword, the more transactional the niche.

Think Of It From The Advertisers Perspective

The SEO also needs to understand the buy process in order to choose the areas which will be most effective for advertisers. The most effective Adsense sites, for example, are sites where visitors are looking to buy something. That's the only reason advertisers use Adwords - they need to sell visitors something*.

In reality, it's a little more complex than this.

Non-commercial searches can and do result in sales, however searches directly related to commercial activity - such as transactional searches - are most likely to result in higher income for your site and make for more profitable niches. See my article on the three types of searches, navigational, informational, and transactional for more information.

Ask yourself:

What makes someone buy something? Will they buy it online, or offline? Are they even capable of buying something over the internet? If visitors are in a buying mode, then what stage of the buy process are they at? Are they ready to buy right now, or are they looking for information?

Look at demographic details for competing sites and keywords to get inside the mind of the searcher. Don't just look at search volume, but also consider the intent behind the keyword, how you would monetize that demand, and the visitor value.

*The one caveat is to drive brand awareness, but this also has limited effectiveness. When was the last time you clicked on an adwords ad that focused entirely on building brand? And if people don't click, you, as the publisher, don't make money.

I hope I've impressed on you the need to evaluate keyword terms within a marketing and business framework.

Competitive Review - Strengths & Weaknesses

• Query the search engine results pages under the keywords you want to rank for
• Pick out the top ten sites in your niche. The top ten sites will usually appear under a mix of keyword terms relating to your niche
• Determine the strengths and weaknesses of the competition
• Determine the strengths and weaknesses of your own site, relative to the competition

Once you've decided on a niche to target, you then need to determine the level of competition within that niche.

A SWOT analysis can help you determine how your site compares to those already in the niche. SWOT stands for Strengths, Weaknesses, Opportunities and Threats. You perform this analysis on your own site, and the sites of your competitors.

You can can go into incredible detail with a SWOT analysis, but it doesn't need to be complicated. You simply need to determine what you're good at relative to the competition. Draw up a chart like this, and complete:

If you can't find any areas where you are better than the competition, either refine the niche, choose another niche altogether, or figure out a plan that will make you better than the competition. Ranking well doesn't really help, because a searcher will not stop at the first site they find.

Keep in mind that it is easier to be successful if you already know a lot about a market. Any experience you have lowers the investment needed to research the market and ensures you can write at a higher and more compelling level than people who do not know the market.

By doing a SWOT exercise, you'll also get a feel for any opportunities your competitors might be missing.

Positioning

• Undertake keyword research
• Look for a niche that is "worth remarking upon" and is new, or doesn't have a lot of existing competition
• Select a brand name and domain name the describes the niche ie. SEOBook.com. It is useful to include a keyword term
• Build a site that focuses exclusively on this niche, and no others.
• Conduct SEO campaign
• Monitor results.

What do you think of when someone mentions the name "Google"?

Search, right.

How about IBM? Computers. Hewlett Packard? Printers.

If you aim to be the first in the customers mind when they think of a keyword term, you can easily win the ranking game.

Be First

Who was the first president of the United state.George Washington. Who was second? Who was the first man on the moon? Neil Armstrong. Who was the fourth. It is important to be first. Being first is memorable.

But wait a minute! Google wasn't the first search engine!

Correct. However, they've overcome this by being first in people's mind when it comes to search. Yahoo was the first search service, and whilst it's star has faded of late, it is still a very wealthy company. It is no good being the tenth anything. Aim to be first. And if you can't be first....

If You Can't Be First, Be First In A New Niche

You'll face the problem of not being first whenever you enter an existing niche. And on the internet, that's "most of the time"

Look at the top sites in your chosen niche. If they got in early enough, chances are they enjoy the linking benefit that comes with being first. Typically, Google's linking algorithm favors long established sites, as opposed to newcomers. To find out why this occurs, check out Mike Grehan's "Filthy Linking Rich". Those who are first to occupy a niche have a much easier job of getting links because they are remarkable, simply by virtue of being unique.

So what to do if you arrive late to a niche?

Invent a new niche, and be first in that.

Say you sell holiday rental accommodation in Palm Springs. Unfortunately, there are a lot of holiday rental accommodation services in Palm Springs. So to differentiate yourself, you might decide to focus on "the cheapest rental accommodation services in Palm Springs". Or "the most upmarket rental accommodation services in Palm Springs". Or "the best rental accommodation guide for solo travelers in Palm Springs".

Focus on a new angle that your competitors aren't targeting. This is called market segmentation.

Make Sure The New Niche Is Worthwhile

One of the traps of market segmentation is that you might segment too finely i.e. there are not enough customers in your newly segmented niche to be worthwhile.

When you do your keyword research, look at the keyword volume for niche keyword terms. Are there any keywords that have good volumes AND cover an angle that you competitors aren't already targeting? Find a suitable keyword term, and make that your niche. Also, look at demographic details for competing sites and keywords to get inside the mind of the searcher. Remember, there needs to be a commercial intent.

Take Your New Niche For A Test Drive

This strategy has been used in PPC for a while, however it's outlined really well in the book The Four Hour WorkWeek by Tim Ferris.

Once you've decided on a new niche that you can be first in, you need to test the niche to see if it delivers enough revenue to make the effort worthwhile. You can test a niche quickly and easily by using PPC, like Google Adwords.

A lot of SEOs don't use PPC, but they're missing out on a tool that can save them a lot of time and effort.

For those new to PPC, check out Aaron's Guide to PPC.

Run a short Adwords campaign targeting the keyword terms that relate to your new niche. You may only need to run it for a week or two, and it shouldn't cost you more that a few hundred dollars. The aim is to answer the question: "do people who search on the keywords want to buy what I'm selling?".

Ensure your site has a clear call to action that will help you measure actual buyer interest. For example, a sign-up form offering more information, a sales inquiry, or an actual purchase. You don't need to have your site finished to do this. A basic three page site will do.

Monitor the campaign and do split/run testing on the ad-copy. This means you compare one set of wording against another. Helpfully, Google Adwords has this functionality built in, and they provide a free product called Google Optimizer if you want to test you page copy. Check out my article "Tested Advertising Strategies Respun For SEO".

Again, this exercise can be as simple or complex as you want to make it.

Start off simple, and change the wording to make the offer sound more appealing, and make a note of the wording that works best. You can use this wording in your title tags during your SEO campaign. The wording that receives a click in Adwords is also likely to receive a click in the organic listings.

If visitors are searching for your keyword, clicking on your ad, and moving to desired action, then you've found a great niche. Remember, most people will click the organic results rather than Adwords listings, so the fact you're getting click-through further demonstrates that there is little competition in your chosen niche in the organic results.

If you aren't getting click thru and/or sign-up/purchase, try the same strategy, but with different keyword terms. Keep going until you find a winner.

It is a lot cheaper in terms of time, effort and money to test keywords at this point, rather than commit to a brand and an SEO strategy that targets the wrong keyword terms, and the wrong niche.

Marketing Within The Niche

Choose a trading name, and domain name, that can be used generically, and, if possible, aligned with your keyword term.

One approach is to take a simple keyword phrase people are familiar with, and will search for, and combine it with something else. For example, SEOBook, AfterMail, FaceBook, HotelFind, etc. This approach works well if you don't have a large budget for brand building.

Non-descriptive brand names, such as Kellogs, or Mooch, don't work so well for SEO, especially for low profile companies, because people need to know your name before they search for you.

Become Synonymous With Your Niche

Consider SEOBook.com.

It's hard for anyone else to sell a book on SEO without people also stumbling across Aaron's site. Aaron has selected a keyword-loaded brand name that is aligned with the niche. He has also worked hard to dominate this tightly defined niche within the broader SEO market. Whenever someone promotes any book on SEO, Aaron is likely to benefit, because he is #1 in that niche.

If you dominate your niche, and the niche is relatively new, then any promotion of that niche will also benefit you. If you're a leader in your niche, and become synonymous with that niche, then latecomers and generic copycats will have a very difficult time competing with you. Any promotion of the beverage "Cola" benefits the market leader Coke, because they dominate their niche. Likewise, promotion of PCs will benefit Dell, promotion of smartphones will benefit Apple, and so on.

Position Against The Leader

Let's assume you're competing against an entrenched leader. What can you do?

Position yourself against the leader. For example, if the leader is offering "cheap SEO services", you might position by offering "valuable SEO services". You could warn people against using cheap SEO services by highlighting the problems and risks, and showing how your price is linked to achieving better value. Figure out what they're doing, and define yourself against them.

Avis did this against Hertz. They acknowledged they weren't the top of the rental car niche, but made a virtue out of it. They adopted the phrase "we try harder". The market dominance of Hertz became a weakness.

Barriers To Entry Are Your Friend

On the web, there are few barriers to entry. Anyone can start a website and copy your idea.

However, not everyone can start a Google. Or an Amazon. Or a Facebook. Those companies have barriers to entry in their markets, mostly to do with the scale of operations. It's very expensive to do what they do.

Look for areas where there is some difficulty in starting up. Does your idea require capital? Do you have valuable information that no-one else has? Do you have a pre-established reputation or brand? Does you idea require specialist software? Is the service or product unique, or difficult to obtain elsewhere? Such barriers will dissuade a lot of people from entering the niche, which means you'll face less competitive threat.

The lowest barrier to entry is the affiliate site where the supplier provides a template site. They might even set it up for their affiliates. For free!

See the problem?

If it's that easy, then there is no barrier to entry, meaning anyone can do it. Even with the best SEO in the world, it would be very difficult to defend such a site from the hundreds of webmasters who arrive tomorrow, the day after that, and so on.

So when you evaluate the competitors in your niche, also consider how difficult it will be for followers to compete with you.

SEO

• Build content. Get a list of 50 keywords and write a page on each. Include how-to's, generalist information, news (use Blog software), video, photos and maps. Tag all graphical content with keyword terms
• Write naturally, stay on a single topic per page. Forget keyword density, it is overrated
• Layout site. Place most important (money) pages at the top of the hierarchy, one step away from the home page
• Create a Google Site Map to ensure crawlability
• Once the site is complete, submit to the top directories. We recommend Yahoo!, BOTW, and Business.com
• Issue a press release. Ensure you include a link back to your site.
• Open Twitter and Facebook accounts, and update each time you add a page of content
• Add one new page of quality content to the site per day
• After 30 days, examine your stats. Look for long tail keyword terms, choose the most popular term, and write a page about it. Use this list of long tail keywords as article starter ideas
• Every 15 days, do the same thing again
• Remember to write a new page of quality content every day
• Find the top ten sites in closely related niches, and offer to write articles for them. Include a link back to your site

After six months, you should be ranking well, and your traffic should be climbing.

Need more detail? Join our team :)

*Hat-Tip to Brett Tabke's "Successful Site in 12 Months with Google Alone"

Economics & Risk/Reward

Are SEO visitors really free?

They're only free if you value your time at zero dollars.

Of course, you time is worth money, and this must be factored in. One of the great things about SEO is that unlike conventional adverting, your visitors don't stop arriving when you stop paying. The downside is that you must spend a lot of time up front, and with no guarantee of success. The search engines could also drop your site, at any time, and without reason.

So it's a good idea to ask yourself the following questions:

• What are my costs?
• What is the break even point?
• How long before I get payback?

A lot of SEOs will persist with sites that enjoy high rankings, even when the economics of the site don't make any sense. If this happens to you, bite the bullet and drop these sites, or convert them to another use. There is no value in ranking highly if the visitors aren't doing what you want them to, and/or they aren't spending money.

Once your put a value on your SEO efforts, you'll clearly be able to see how much your site is actually making you.

If the site is making money, that's great. If not, then try to determine if the problem is to do with marketing. Have you identified the niche correctly? Are you dominate within that niche? Is there sufficient demand?

Summary

SEO works best when it is integrated into your business and marketing strategy. There is no point ranking well for terms that don't advance your business goals. Find a profitable niche you can make your own, and dominate it.

Follow this strategy and lucrative search traffic will flow you way.

Yahoo Had No Leverage...

In case you didn't look at the stock market today, Bloomberg highlighted what investors think of the Yahoo! / Microsoft deal

“This deal was a big disappointment,” said Moran, an analyst in Boca Raton, Florida. “They needed this deal, and it shows in terms of how the negotiations were concluded.”

...Because Their CEO Did Not Grasp the Importance of Search

In the same article Yahoo!'s CEO justified the Yahoo!/Microsoft search deal as something that clears fog:

“The priority was not to do the deal,” Bartz, 60, said in an interview. “The priority was to get the fog away from the company. Yahoo got pegged as a search company and we’re not a search company. Search is only one aspect of what our customers do.”

To look at the highest margin and highest income piece of a business and call it fog is absurd.

How Search Sets a Baseline

Search is the most direct way to target ads at consumers. It is easy to establish a baseline values and measure change. It allows you to implement (and advertise) new product ideas at no cost.

The other important baseline evolving search sets is the difference between spam and value added content. If you have ever read any of Google's leaked remote quality rater documents you would see that the search result itself is a lower threshold to force the evolution of media.

Web Search Holds Everything Together

A lot of Yahoo!'s properties are somewhat average, but not remarkable. Some of them succeed ONLY because they are a part of the Yahoo! family of websites. Web search is the glue that holds the pieces together.

Search is the most profitable online ad market and having a big stake of that market allows them to promote their other business interests in a cheap & targeted way. Selling off the search assets does not suddenly put them in a strong competitive position.

It does not suddenly make their thin content sites thicker and more valuable. If anything it will make it harder for their other sites to compete as it will require them to be thicker to stay competitive when they lose the subsidy they were getting from search.

And Microsoft bought Yahoo! Search for $0:

Besides better exposure for its Bing search engine by placement throughout Yahoo!, Ballmer said, Microsoft hopes to improve the quality of its searches by analyzing over a decade of data Yahoo! has on how people search. The data improves search quality for everything from correcting misspelled words to likely patterns of search behavior.

Danny highlighted how much worse this deal is for Yahoo! than the deal offered last year in a side by side comparison and wrote a search eulogy. Yahoo! spent a couple billion dollars acquiring Overture/AltaVista, Inktomi, and AllTheWeb. And they sold it for $0!

Deal Terms

From Microsoft's press release:

• The term of the agreement is 10 years;
• Microsoft will acquire an exclusive 10 year license to Yahoo!’s core search technologies, and Microsoft will have the ability to integrate Yahoo! search technologies into its existing web search platforms;
• Microsoft’s Bing will be the exclusive algorithmic search and paid search platform for Yahoo! sites. Yahoo! will continue to use its technology and data in other areas of its business such as enhancing display advertising technology.
• Yahoo! will become the exclusive worldwide relationship sales force for both companies’ premium search advertisers. Self-serve advertising for both companies will be fulfilled by Microsoft’s AdCenter platform, and prices for all search ads will continue to be set by AdCenter’s automated auction process.
• Each company will maintain its own separate display advertising business and sales force.
• Yahoo! will innovate and “own” the user experience on Yahoo! properties, including the user experience for search, even though it will be powered by Microsoft technology.
• Microsoft will compensate Yahoo! through a revenue sharing agreement on traffic generated on Yahoo!’s network of both owned and operated (O&O) and affiliate sites.
• Microsoft will pay traffic acquisition costs (TAC) to Yahoo! at an initial rate of 88% of search revenue generated on Yahoo!’s O&O sites during the first 5 years of the agreement.
• Yahoo! will continue to syndicate its existing search affiliate partnerships.
• Microsoft will guarantee Yahoo!’s O&O revenue per search (RPS) in each country for the first 18 months following initial implementation in that country.
• At full implementation (expected to occur within 24 months following regulatory approval), Yahoo! estimates, based on current levels of revenue and current operating expenses, that this agreement will provide a benefit to annual GAAP operating income of approximately $500 million and capital expenditure savings of approximately $200 million. Yahoo! also estimates that this agreement will provide a benefit to annual operating cash flow of approximately $275 million.
• The agreement protects consumer privacy by limiting the data shared between the companies to the minimum necessary to operate and improve the combined search platform, and restricts the use of search data shared between the companies. The agreement maintains the industry-leading privacy practices that each company follows today.

What is not in the deal terms is that Yahoo! will slowly erode search market share to Bing. By the end of the 10 year period Yahoo! could become AOL.

SEO Stuff Up in the Air

As far as SEO goes, a lot of stuff is still up in the air. If this deal goes through, what happens to...

• the Yahoo! Directory (a wonderful link source)
• Yahoo! link data (they are the best free public source)
• Yahoo! SearchMonkey & BOSS
• Yahoo!'s paid inclusion

There is a good chance all 4 of them go away.

Increased SEO Costs & Increased Barrier to Entry

For established marketers there would be some major upsides as well...

• anyone with a well established website has a bigger advantage over new sites, and
• with less public link data link buying might become less risky as reporting paid links might decline, and
• it would be harder for competitors to clone your link strategy

Bing SEO Tips

If you have not yet read Bing's SEO Guide for Wembasters [PDF] then now would be a good time to get up to speed on it. When Bing launched we created a thread with a bunch of Bing SEO tips.

by Jonah Stein and Jonathan Hochman

The FTC recently announced guidelines for bloggers that requires that they disclose financial interests, freebies and paid reviews.  This decision is seen as a shot across the bow of pay per post networks and bloggers who are monetizing through affiliate programs.    The FTC has decided that compensation is the reason bloggers choose to write about a particular topic and that readers deserve to be informed about the financial relationship.    The FTC logic is simple, “As much as those bloggers who receive these gifts would like to claim this isn't the case, freebies like free laptops, trips, or gift cards are likely to influence a writer's opinion of a product.”  

On its face, the policy is defensible.   As crusaders against Virtual Blight, we applaud the intent of this decision.  Anything that raises the barrier to online scams, fraud and abuse even a little bit is a good thing. The FTC provides guidelines for responsible bloggers and theoretically eliminates a couple of the perks for bloggers, but it does virtually nothing to protect against fraud. 

Going after bloggers’ compensation to fight online fraud is reminiscent of the RIAA attacks on individual file sharers and is just as likely to succeed. The absurdity of the power and inertia of a government bureaucracy combating individual bloggers is only matched by the ludicrous assumption the government could ever move fast enough to keep up with professional scammers who jump from domain to domain, host to host and country to country with a few mouse clicks.  Prosecution could only be effective against mainstream bloggers with an established brand that are stationary targets, but these bloggers are not the right target.

Getting a proverbial free lunch in exchange for a presumably positive review may create the appearance that some bloggers are shills who lend their prestige and celebrity to their sponsors.  That perception is not unreasonable, but the same charge could be made against almost every athlete, actor, musician or American Idol runner-up who profits from our celebrity culture. 

Giving items to celebrities or other tastemakers in return for public exposure is a practice older than the printing press.   If the FTC really wants to send a message about compensated endorsements and freebies, the answer is not to go after the mommy bloggers who get a free 42-pack of diapers.  If the FTC were serious, they would begin arresting every actress wearing a designer gown to the Academy Awards and then round up the studio and network executives who rake in cash for product placements in movies and television shows.

Focus On Fraud

The statistics for online fraud are both staggering and predictable.  Instead of being distracted by the sizzling, sensational charges of payola that re-appear every generation, the industry needs to focus on the billions of dollars of online fraud committed each year.  According to the Center for American Progress, Internet-related consumer complaints are among the top ten in consumer complaints in 2008 and the number one complaint in four states.  These complaints run from auction fraud and non-delivery of ecommerce items to reverse billing scams.

By any definition, the perpetrators of online fraud are not bloggers.  If a review constitutes fraud because the reviewer was provided a free product or had some undisclosed relationship with the company who produced the product, then every journalist with a 401k full of mutual funds needs to hire a good lawyer.  Indeed, if bloggers are guilty of anything it is tabloid journalism -- writing low quality content with sensational headlines designed to attract visitors to their site in order to collect advertising revenue.  This may not live up to the highest journalistic standards, but the only crimes are against facts and the English language.

Criminals are the people and companies who create pyramid schemes, networks of spam blogs to sell diet products like Hoodia and Acai Berry cleanse, Google money trees and the myriad so called “free” offers that create recurring charges on your cell phone or credit card.

Criminals are the people who target kids’ sites to distribute Trojans, spyware and adware that infects our computers and tricks people into buying phony anti-virus products.  Most of us have either experienced malware nightmares ourselves or heard a friend’s sad story.  When online fraud is so prevalent, predatory and destructive, why are government resources being committed to pursue advertorial content?

Ad Networks Are the Key

The biggest thing these criminals have in common is that they perpetrate their scams by buying advertising through ad networks.  These networks have achieved the scale that makes it efficient for legitimate advertisers to reach millions of consumers and that makes them an ideal vector for scams, abuse and deception. 

In an unregulated auction-based advertising market place, fraudulent offers can often pay the highest bids for keywords. In FTC Going After Bloggers – Epic Fail, Aaron observes that ad networks that syndicate ads based on “maximizing yield efficiency“ are well suited to syndicate fraud. Advertisers of scams can afford to pay top dollar for ads because their profit margins are nearly 100%.

Ad networks are morally responsible as collaborators in interstate and international frauds perpetrated upon hundreds of thousands of victims each year.  Google, Yahoo, AOL, Microsoft and many others are far more culpable in consumers being defrauded than any blogger or network of bloggers.

In False and Deceptive Pay-Per-Click Ads, Harvard’s Ben Edelman estimated that as much as 70% of the revenue generated by some online scams actually wind up in the hands of the search engines.   He estimated in 2006 that Google and Yahoo were making over $200,000 a month from advertisements for screensaver software which contained spyware.  As of July 15, 2009, the top paid search results on Google for “screensaver” contain “add-on features” which include spyware, change your default browser settings, ad toolbars and otherwise aim to monetize by deceiving users.  Adding insult to injury, Edelman observes that many of these adware tools monetize by sending traffic through AdSense and DoubleClick, making Google a silent partner for adware companies like WhenU and Smiley Central.

Fight the Problems that Be

Scams and fraud not only harm the consumer, they foster the perception that the internet is not a safe place, hindering the growth of online business and delaying the transfer of marketing dollars from old media.  Instead of waiting for government agencies to step in and create regulations aimed at yesterday’s scams, as an industry we need to become proactive and develop a cooperative framework for mutual self-defense, a neighborhood watch designed to keep consumers safer while helping law enforcement focus resources on the most serious trouble makers.

The war on online fraud is going to be a huge struggle and one we are unlikely to ever declare victory.  The issues are complex, but the industry could significantly reduce the problem by creating a transparent mechanism to collect user feedback about advertisers.  Search engines and ad networks are quick to endorse behavioral targeting and social recommendations to boost earning per exposure.   For some mysterious reason, they have not applied these innovations to getting user feedback about advertisers.  

If the Internet is the cesspool that Eric Schmidt, CEO of Google says it is, one way to start cleaning it up would be to create a public reputation system for advertisers.  This would simultaneously reward honest companies while helping consumers protect themselves against the bad guys.   eBay created public reputations for buyers and sellers many years ago.  Why are advertisers free to operate without scrutiny? 

It seems straightforward to build an advertiser rating system to share relevant statistics and user feedback.  Why not provide the tenure of the advertiser, normalized click volume, the percentage of users giving feedback and a ratio of clicks to complaints along with a link to detailed reviews that could surface fraud, misleading advertising and scams?  If comparison shopping engines can do it, why can’t ad networks?

We don’t claim to have all the answers, but we see the problem and its sources. Government agencies need to ask the ad networks why they accept money for promoting fraud.  Ad networks need to grow up and behave like responsible businesses. 

One of the common questions we get is how to build links for a new site. In our training site we offer our 12 week link building roadmap and a list of directories to submit to, but I also thought I should discuss link building in general. A good basic rule of thumb (though a bit conservative of one) is to build links in a manner where every month you build as many or more links than you built the prior month.

Graph of 3 Different Link Profiles

3 Common Link Building Strategies

1. spiky. if the spikes are associated with news and viral marketing then that is not a big problem, but if they are sorta bought links, low quality links, etc. then this is sorta the worst way to do it.
2. linear. not as bad as spiky...but not as good as geometric. this is where a webmaster tries to build the same number of links each month.
3. geometric. this is where link building starts off slow, but then keeps getting better each month.
• If a website is a real website that is generally a useful utility and did not do any viral marketing this would be the most natural profile of how to build links
• The reason links keep building faster is that exposure breeds more exposure and if the site is genuinely useful and original some people will link to it even without you asking. This phenomenon can be described through understanding cumulative advantage and self-reinforcing authority.
• Plus as you build a useful site and do some social networking it builds social capital that can be leveraged when doing future promotions of featured content.

Some Caveats...

• While I try to do geometric when I can, sometimes we build links a bit spike because sometimes we do things in a rushed series or sometimes we do viral marketing.
• The viral stuff is not harmful...if you do quality viral stuff you want big spikes of links from it because those will be very hard links for competitors to try to clone. But odds are that some of our links might only count partially when we build them in spikes and there is no viral story associated with it.
• If we know we are going to be somewhat spiky then we try to spread it out and pace it a bit with a month to a month and a half in between each build effort (rather than do it all in the first week).
• When launching linkbaits you can't guarantee which ones will work and which ones will not. But the key is to launch them regularly. You wouldn't want to do a couple of them that go viral in the first month, and then follow up by doing none for the next 6 months.
• Brand new sites only get partial credit for links until their own site ages a bit and gets trusted more.
• Older sites that are pretty well trusted with a strong foundation of links can be quite spiky with no problem at all.
• BUT older sites that only have a few links and suddenly build a ton of links real fast can end up with ranking issues.
• After sites are established enough they may not need to work on doing too much link building (especially if they are pulling in many organic links due to the exposure from their current rankings and/or other distribution channels like email and blogging). BUT if they do nothing and the competition keeps investing in link building then eventually they will catch up.

Link Anchor Text

It is also worth noting that you don't want to use the exact same anchor text on every link. Using a variety of related phrases (seo blog, seo blogs, search engine optimization blog, etc.) would be far better than just using the exact same anchor text over and over again.

Many Types of Links

You can be successful by primarily building 1 type of link from a class of websites, but if you can get links from a variety of types of link sources that will make your site strong and rankings stable even if one class of links gets deweighted. Todd Malicoat's Balancing the Link Equation is the canonical resource on that topic. And the more diverse your link profile is the harder it will be for a competitor to clone your work.

Following on from our posts on SEO business planning, let's take a look at allocating capital. We'll also take a close look at one of the most important areas for SEO consultancy start-ups: advertising and marketing.

Allocate Budget

Never a truer phrase was said than "you need to spend money to make money". Thankfully, in the SEO game, you don't need to spend a lot, like brick-n-mortar companies need to do in order to get going.

How do you decide where to spend your money? Do you go by gut feel? Do you quantify and measure results? Whatever approach you use, the end result is that any spend you make should ultimately grow revenue.

Common Areas Of Capital Allocation For SEO Companies

Let's take a look at three areas in which a start-up SEO company will likely spend money. Equipment, staff, and sales and marketing.

Equipment

The SEO business isn't capital intensive. Many SEO consultants need little more than a computer with an internet connection. If you hire staff, then obviously you'll need somewhere for them to work, but besides that, capital investment is minimal.

Staff

If you're a sole operator, obviously you have no fixed staffing costs, other than the wage you choose to pay yourself.

You'll likely need to budget spend for outside contractors for doing work you can't do yourself, or work that it isn't worth your time. For example, if you're a sole operator, you'll want to spend as little time as possible on non-core activities. Non-core activities are activities that don't lead to revenue generation, such as administration and accounting.

By the way, a good accountant is worth their weight in gold. By ensuring that you claim all the deductions you're entitled to, you have more money to invest in your business. You can write off a part use of your home, your computers, your internet connection, travel and more. Accountants are relatively cheap, and their fees are more than covered by the tax savings they produce.

If employing people, figure out the total cost of an employee and their likely return in terms of revenue. Costs can include office space, equipment, training, travel, insurance, employment agencies, management overhead, and payroll tax. Employees obviously need to generate more revenue than they cost to employ, but so long as this calculation runs in your favor, you can keep adding employees, which will keep adding to revenue.

Advertising & Marketing

So how do you get new business in through the door? Do you employ sales staff? Rely on word of mouth? Advertise in trade papers? Speak at conferences? Buy PPC? Undertake SEO?

Any new SEO business should allocate sufficient resources to advertising and promotion. Without awareness, there are no customers. And without customers, there is no business. On the flip side, spending a lot of money on marketing and advertising that doesn't lead to increased revenue results in no business either.

Methods of Establishing An Advertising Budget

"Half the money I spend on advertising is wasted; the trouble is I don't know which half." - John Wanamaker, US department store merchant

No method is ever perfect. If we knew our spend would always result in profit, business would be very easy. Here's the most common method of determining the appropriate level of advertising spend.

Calculation Based On Percentage of Sales

Advertising is a cost, just like staff and equipment. It's also an investment in your future. How do we know how much to spend on advertising?

Typically, businesses allocate advertising on a percentage of sales basis. They take their total sales figure for a given period, and ear-mark a percentage of those figures for advertising in the next period. Advertising spend should move in tandem with sales.

Here is a more detailed calculation, aimed at retail, but also appropriate for SEO:

Take 10 percent and 12 percent of your projected annual, gross sales and multiply each by the markup made on your average transaction.Deduct your annual cost of occupancy (rent) from the adjusted 10 percent of sales number and the adjusted 12 percent number. The remaining balances represent your minimum and maximum allowable ad budgets for the year.

So what percentage do you use?

This will vary, but as a guide, look at what other SEO companies are spending on advertising. Join trade organizations to get hold of these figures.

Be careful not to duplicate these percentages exactly, because your business situation is unique. There might be times when you spend a lot more on advertising than others, especially if you are aggressively targeting new markets, or looking to out-compete your rivals. There will also be times when you spend a lot less. For example, you might have more work than you can handle, and advertising would just exacerbate the problem! SEO consultancy can be a difficult business to scale up easily due to skill shortages.

The important take-away point is that advertising should move in tandem with sales, most of the time. If advertising spend is not related to sales, then it is easy to spend far too much, and have little to show for it. Spend and measure, spend and measure. Repeat.

What if you have no sales figures?

If you're a new SEO business, you won't have any past sales data to go on. This is why it's important to be aware of what other SEO companies are spending. If you've been going a while, you'll have some past data to work with, but keep in mind that past earnings might not be indicative of future earnings. There will be a fair bit of estimation and forecasting either way.

Always Set Objectives

Set clear, specific objectives when allocating capital.

An objective such as "boost profits" is too broad. Go for something specific, such as "sign up 30% more customers than the month before".

Next, figure out which channel will reach your target market. Conferences? Trade publications? PPC? SEO? Web? TV? Radio? A mix?

Whatever channel you choose, be sure to measure performance against your stated objective.

Unless you're trying to build a significant brand to spin off to someone else, such as YouTube, that objective should be grounded in increased revenue. Few, if any, SEO companies can operate at a loss for long, so base your key objectives, and your spending, around increasing revenue, and ultimately - profits.

What were the reasons you started your SEO-related business?

Perhaps you're thinking of starting one up.

A survey published in New Business UK found the following:

• 41% went into business because they were passionate about their idea
• 39% wanted the freedom that came with being their own boss
• Only 7% cited money as being the reason

It's interesting to note that the biggest obstacle people faced with starting their own business was a lack of money. 44% cited lack of money as being the biggest obstacle.

Whatever your reason for starting, it's clear that money is important. The one thing that is guaranteed to kill any business dead, no matter how good the idea or how many customers a business signs up, are bad numbers.

How Are You Going To Make Money?

In a previous post, we looked at SEO business planning.

In short, a business plan doesn't need to be complicated, it's just a plan of where you're aiming, and how you intend to get there.

Here are a few further important points to consider.

Obviously, the most important thing to do in business is earn more than you spend. Fail to do so, and the business fails. That means flash offices, expensive chairs, flying business class, etc all must wait until profits allow such expenditure.

So it's a good idea to model oneself on Scrooge McDuck, at least in the early days!

The one thing you'll have the most control over is costs. Keep these as low as possible. Pay yourself the bare minimum you need to live. If you're hiring staff, offer them low salaries and revenue share. You may have noticed there is a start-up culture where fun, hip-ness and enthusiastic participation is emphasized. This is almost always because the owners are trying to keep their costs down. The benefit to the employees is seldom coming from wages, so the job has to be made attractive in other ways.

Keep a look out for hidden costs. What is the true cost of attending that conference? What does it really cost to hire and keep employees? What is the cost of scaling up? Does your office equipment need regular servicing? What are the costs of maintaining a lot of customers? Hidden costs are, of course, hard to spot, and hard to generalize. Be aware that any new variable you introduce to your business will incur costs of some description.

Economic rent, or making a profit over and above the cost of the inputs, is the key target you should aim to be above in your forecasts. If you make $100,000 a year from your business, and take it all in salary, that means that your business makes nothing. Your salary is a cost.

Do your projections allow you to make a profit over and above the salary you pay yourself, after all other expenses are deducted? If so, you've got a business that is likely to thrive, and you you may one day be able to sell.

It's surprising how many business owners don't include their salary as cost.

Break Even Analysis

Here's the meaty bit.

How can you determine, very quickly, if your idea will fail?

You need a break-even analysis. A break-even analysis shows you the amount of revenue you'll need to bring in to cover your expenses, before you make a profit.

Knocking up a break-even analysis is a great way to trial an idea before you put it into practice. After mapping out a simple, back-of-the-envelope business plan, it's the first thing you should do. If you can make these numbers work, then the rest of your detailed business plan can flow from there. If you can't get past a break-even analysis, then the rest of your plan will likely fail.

Here are the components of a break-even analysis:

• What are your fixed costs? i.e rent, insurance,power and other set expenses and overheads.
• What is your sales revenue?
• What is the gross profit on each sale? i.e. the money left over after the selling costs are taken out
• What is your average gross profit percentage? Divide your average gross profit figure by the average selling price.

You should now be able to easily calculate your break even point. Divide your annual fixed costs by your gross profit percentage to determine the amount of sales revenue you'll need to bring in to break even.

Is your break-even point higher than expected revenues? You'll need to change your cost structure (make cuts), or increase the profit potential of your sales.

Can you do without employees? Work from home? Sell your product for a higher price? Target a more lucrative market?

If you can make the numbers work at this point, move on and create a fully fleshed-out business plan. If you can't make the numbers work after a few tries, then dump the idea and try another. Pat yourself on the back for being smart enough to run a few numbers, before wasting a lot of time and effort executing a bad idea.

Most people jump straight to the latter.

TechCrunch published an anonymous attack piece on search engines...both the organic and paid side. Lets deconstruct some of it, shall we?
techcrunch.com/2009/07/13/the-time-has-come-to-regulate-search-engine-marketing-and-seo/

"It’s now conventional wisdom that search engine optimization, representing the organic result sets on any search query, is more voodoo than science."

And it was conventional wisdom that you needed to own tech stocks because "this time it is different". And it was conventional wisdom that housing goes up forever. We didn't care when fraud was looting trillions of dollars, but now you need to be compensated for your own intellectual sloth & laziness? Please.

Most of the market is willfully ignorant and mislead. Just like in most big money markets. Nothing new there.

What about public relations and branding and other forms of marketing? Most people are ignorant of the influence, so should we just ban marketing? Without marketing do consumers get more or less choice in the marketplace?

If strong search rankings are an unfair advantage then are good domain names and memorable 800 phone numbers also worth regulating out of the marketplace?

To most people rocket science and evolutionary biology and even basic economic literacy are more voodoo than science...does that mean we should shut them down? Shall we run society based on the will of the handicapper general?

"In addition, consumer behavior dictates the top three results on any search page are all that matter. "

They may be most important, but you can still build a real business by ranking a bit lower on the search results. Also people search for billions of unique search queries each month, so its not hard to rank in the top 3 for something.

Keep a lean business if you want to use search as your primary distribution channel. Invest in slow sustainable growth as opportunities present themselves.

The line "all of your eggs in 1 basket" also comes to mind. If search bounces around then try to offset that risk by building other distribution channels including offline, word of mouth marketing, repeat customer sales, affiliate marketing, building a strong brand, etc.

"And at any one time, the controller of these borders (that is, the search engine itself) can change and manipulate those rules – and that can substantially decrease or destroy all organic traffic coming to your website, without notice and without your knowledge."

Use analytics to track your search traffic. If your site has its rankings destroyed and you do not notice then you either didn't have much of a business, or are not investing properly in knowing your market. Either way you would deserve failure if you were reliant on a traffic stream and were not actively measuring it.

"Because the rules of organic and paid search change frequently – and remain undefined — agencies and other traffic brokers can win big; through their experience, they’re capable of reverse-engineering these rules. This means that, as this market matures, individual businesses have a diminishing chance to actually compete and gain search market share. That, in turn, puts them in a position of not only needing to hire an agency in order to find any traffic, but also making it more expensive overall to build businesses on the web."

The same analogy could be stated for businesses buying up key real estate locations and building efficiencies into their supply chain model - like a Wal Mart or a McDonalds. The same analogy can be made for huge online networks that cross promote new sites. The same can be said for banks that are too big to fail while smaller ones are slaughtered off and sold to the big ones.

If business owners are too lazy or cheap or ignorant to invest in one of the highest ROI business functions of the last 100 years then how can anyone have sympathy for them? There are millions of dollars worth of tips on this site shared freely. And people can get direct help with their site for as low as $100. If they can't afford that, then they should not be on the COMMERCIAL web.

"The only real solution is disclosure. Transparency. Those traffic generators that use rule-based algorithms to determine result sets must publicly disclose their methodologies. That is the means by which all businesses can compete freely in the organic and paid search marketplaces."

Except this is not true. For numerous reasons

• as the algorithms grow more complex, the transparency of them would still only benefit a few key players while setting a high barrier to entry for small businesses. all this would actually do is drive small businesses out of the marketplace faster. we outrank corporations worth $10s of billions of dollars for keywords that are important enough that they target them on their homepage titles. make the algorithm transparent and there is no way we could compete at that level.
• if algorithms were transparent automation and testing would be abused by larger established trusted websites. some news companies already use robots to write content. give them a high PageRank, offline distribution, algorithmic immunity, and the source code to the algorithm and I can't imagine how I would be able to compete against them.
• media and marketing are rarely if ever transparent. and when they are it often backfires because people feel they were influenced and/or used. manipulation in the traditional media world goes on all the time. I suppose it is time to write another post about media transparency

Obama has been known to use domain names to go after emotionally charged empty words that are easy to support (like change), but now the government is going after commercial keywords like cars.

Cars.gov was launched on June 30th and is already ranking #3 in Google for cars!

What does it do to the value of cars.com when cars.gov is a co-opted business deal between the government and select auto companies (which the government may have confiscated some of your money to prop up and is now propping them up again via rebates and direct marketing to compete directly against you once more)?

Who has a link network large enough to compete with the United States government when they are at the core of what Google considers to be the clean & trustworthy parts of the web? In 2007 Matt Cutts stated:

But, certainly, all of the things that have good qualities of a link from a .edu or a .gov site, as well as the fact that we hard-code and say: .edu or .gov links are good - and when there are good links, .edu links tend to be a little better on average; they tend to have a little higher PageRank, and they do have this sort of characteristic that we would trust a little more.

(Update: Google's Matt Cutts stated there was no hard coding of .edu and .gov links & stated the above quote sorta came out of a mis-interpretation or transcription error on a run on sentence.)

Imagine launching a 1 word domain name late into 2009 in a multi-billion dollar field and ranking it above the fold in less than 2 weeks. The government just did that. And they can do it at will. Over and over again. For free :)

Now if you invest in a big keyword rich domain name you not only need to worry about Google and the market, but now you have to worry about how the government might start competing against you.

What might happen to the value of mortgage.com or credit.com or health.com when the government launches the equivalent government portals co-sponsored by whatever relevant multi-billion dollar corporations pitch the idea to a congressman from their district?

If the equivalent .com sites are thin arbitrage sites they will gain value as misdirected visitors stop by. But longterm the trend has to corrode value of domain names. If they are real sites they may lose out by finding themselves below the fold for their own brand if the government pushes hard enough.

Once politicians realize the value of domain names how long will it be before there are .gov domain names for every aspect of life? Diet.gov anyone? Are you ready for love.gov?

I have been a longtime fan of Sugarrae's blog (and some of her old posts back in the day on WebmasterWorld). She has been on the to interview list for a few years and we just recently finally did one. :)

How did you get into publishing and affiliate marketing?

In 1997 I had my first child and a few weeks later he suffered a massive bilateral stroke (he had a stroke on both sides of the brain at once, instead of on only one side as with usual strokes). My dad sent me an old office computer to research treatments and I built a small webpage on Homestead that told his story. I started to get emails from other parents who were searching for information on pediatric stroke (at the time, there was little information out there). Long story short, I founded the first international support group for parents and families of pediatric stroke survivors. I was spending a lot of time on the site and started to investigate the possibility of making some side money with it and stumbled into affiliate marketing. I built my first site and everything clicked from there. I loved the whole process of creating and marketing (via organic SEO) an affiliate site – and luckily for me, it seemed I was pretty good at it. I’ve got zero formal training... but I’ve got a decade of experience behind me now.

You have been pushing hard for people to evolve the affiliate model and add value. What are some of the easiest ways affiliates can do that? What are some of the most creative and intensive things you have done to increase the quality and value of your sites?

I’m a big believer in longevity. It’s no secret that I’ve dabbled in the blacker side of things in the past, but as the engines got smarter, it became clear to me that building a site that ranks because it should (meaning it is the best resource on the topic) and not because I’ve manipulated that weeks algorithm was the key to being successful long-term in the organic listings. That said, I still focus a lot on SEO and the algorithm, but the core of what we do is build good sites. It is a lot easier to get links when you deserve them. Campy? Yes. Supports myself and my entire company? Yes.

I wish I could say there were “easy ways” to add value to an affiliate site. But, that ability to create a POD is what separates the few from the many, in my eyes. Scour the sites you’ll be competing with and see what they are offering and then decide how you can make it better. See what they’re missing and create it. Maybe you’ve found a site with great information, but no way for the community to become involved with it. Re-create that good information, add even more to it and then add a community aspect. Every site is different and sometimes it takes us a long time to find our POD for them.

For instance, I’ve been in the telecom market for a long time. It was my first commercial industry. When we decided to build a site about prepaid wireless, we looked around at the competition. CNet had short reviews of only the major companies and no user reviews (at the time), About.com’s info was a bit of a mess and hard to understand. So we built a site that offered editorial reviews of twice the number of providers CNet did, with information broken down into layman’s terms and that were three times as detailed as the information of either fore-mentioned big brands. We also added the ability for users to leave reviews of every provider. Today we have editorial reviews of 25+ companies, we have over 3000 user generated reviews (more than any other site with prepaid information to our knowledge), we have a comparison tool, we run a blog focused on the prepaid industry and we even moderate panels at the Prepaid Press Expo. We have the best and most complete site on prepaid cell phones in existence. We rank because we should.

With BB Geeks, we focused on the “newbie user” while all the other sites focused on providing BlackBerry news or information to BlackBerry pros. It allowed us to find a crack in a competitive market and build ourselves a very loyal following and a very strong brand in the space. We also made early use of Twitter and targeted the same segment of folks – people looking for help using their BlackBerry.

Going Cellular was a bit trickier. I was stumped for a while. So many cell phone sites... How do you take on Engadget Mobile and Howard Forums? I admittedly shelved that project for a long time – I couldn’t find our POD. Then one day, something a friend said to me earlier about a project he was working on sparked an idea. We have a TON of reviews between all of our telecom sites – 4000+ in total. And everyone always focuses on the reviews by provider. But, we all know that sometimes, T-Mobile may have great coverage in one area and crap coverage in another. So, I got the idea to take our large database of reviews and make them searchable by geographic location. It is a hard thing to replicate if you don’t have the review volume to pull from. But we did (and get more daily). So it works. We just released the tool so let’s hope it works well.

I’ve always maintained that Google doesn’t hate affiliate sites. They hate thin affiliate sites. We’ve done our best to create the type of value add Google, and consumers, are looking for.

Do affiliates need a lot of money to compete in the market? Or can they win with little investment provided they are willing to put in a lot of effort?

I don’t think you need a lot of money to compete. Granted, it was easier to say that five years ago (if only I’d worked even harder then), but the opportunities are still there. But, if the less money you have to invest, the more time you’re going to need to put in. People sometimes wrongly think that I had all this money laying around when I started. I hear “Well, I’d love to do that, but I don’t have the money to build those kind of sites.” I didn’t either in the beginning. I was the designer (in spite of being what I like to call artistically impaired), programmer (even if I barely scraped by – and nowadays, with WordPress, it is much much easier to “get by” in that department), content writer (I knew crap about telecom when I started – I learned, learned, learned the field) and marketer (please sir, can I have a link?). I was a one man band in the beginning. I still like to think people can claw their way into any market they choose with the right plan and right dedication. I have employees now, but that was because I couldn’t scale without them.

Do you see offline networking as being a key component of affiliate marketing strategies? Do you do it to promote any of your brands?

We network offline all the time. We run ads in targeted offline publications for our very niche sites (the ad prices tend to be lower and the return higher). For our telecom sites, we attend the major conferences like CTIA, WES, the Prepaid Press Expo, etc. It makes it a lot easier to develop contacts in the industry. Just like SEO’s go to SMX, PubCon, etc. You have to network face to face sometimes for better results. There is a cost associated with it, but we usually get a good ROI on attending. And if we don’t, we don’t return.

Google's Eric Schmidt made a public comments about "brands being how you sort out the cesspool" ... does this statement concern you? Has Google done anything over the past couple years that made you view them differently from a competitive standpoint?

I didn’t really get too concerned about it. As I mentioned, we build our sites to BE affiliate brands. If we’re doing things right, we should come out okay. As for Google and competitiveness, they’ve made it a lot harder on the smaller guys and the up and comers. But, that was to be expected. They haven’t made it impossible by any means. But they have made it harder.

Given Google's 2-tier justice system (penalizing smaller webmasters while giving big brands a pass), why do you think some well known SEOs still publicly out websites?

My number one answer would be “fame”. Too many people in this industry play the fame game. I personally have never outed a site, publicly or privately for doing anything against search engine guidelines and never will. The other reasons people tend to “out” sites is for competitive sabotage (my opinion is that if you’re being beaten by someone, fight harder... In the end, you’re site will be better and stronger for it) or because they think they’ll impress engine reps and make connections. The engines are not our friends (though I truly like a lot of the engine reps themselves). I’m a strong believer in Omerta in this industry [waves to Matt].

What makes you decide to start a new site? Do you have to love the topic, or can you make a profitable site around a topic where there is $ even if you do not care for the topic?

I always say you don’t need to love the topic, you need to learn TO love the topic. To make the best site, you have to be willing to either immerse yourself or pay to immerse someone ELSE in a topic. I find industries where I see opportunity.

Do you try to make money off every site you build? Or do you invest more in the sites that really take off, while spending less capital and effort on the lower end sites?

If the industry is small and the site will only make 3 or 5K per month, then we build a site that will only take a day or two or three a month to maintain after the initial build to keep the ROI in position. For sites with much higher revenues, we put in a lot more time – but for a much higher return. I personally like the smaller niches. It takes more sites to hit bigger numbers, but the competition and upkeep is relatively low.

Do you ever view sites as self-sustaining and stop investing into them? If so, how do you decide when?

It depends on the industry. We don’t have any “active” site that we don’t at least spend a few days a month on. We do have some sites we deem “inactive”... Meaning they didn’t do what we hoped so we shelved the site. We might come back to it later or we might let it earn whatever it does until it dies a slow death. I don’t ever want to get complacent with a site we consider a “winner”. That’s when you give the competition the opportunity to do what we’ve done to our competitors in various sectors. Donald Trump talked about that in Think Big and Kick Ass. He got comfortable and lost his A-game. You can’t do that. We never stop trying to make “active sites” even better. We have to do it before our competition does.

You dub AdSense as "webmaster welfare" and seem to much prefer affiliate revenues to AdSense revenues. Do you have any sites in illiquid affiliate markets? How do you monetize them?

I try my damndest to keep AdSense at less than 20% of our revenue. I don’t like being dependent on one company, who doesn’t even tell us what rev-share we’re getting. It makes me nervous. I also don’t like to be dependent on one affiliate program either. Diversity is a good thing. We have a few in illiquid affiliate markets. Some are “future plays” meaning that they don’t have affiliate programs now, but we think the topic will eventually get big and the monetization opportunities will come. But we don’t spend heavy time on those. We usually research before we dive in to make sure affiliate programs are available.

Some of your tweets, blog posts, and past interviews have showed a bit of a distaste for all in one webmaster solutions. What tools (cms, ads, design, seo, etc.) do you consider to be key to your successful fast growing publishing enterprise?

Our CMS was built in house, as our most of our internal reporting tools. I’m actually pretty simple. I like to look at a lot of things by hand. It probably isn’t the most valuable spend of time, but, it works for me. I’m a big evangelist of the Thesis Theme and we use that on several sites (and hybrid it with the CMS) and the folks who we hire to skin them do sexy work. I think we use Open Ads for the CPM based advertising. I use some of your tools too. I also use Compete (for competitive intelligence) and Basecamp (to organize everything). Like I said, I’m pretty simple on the tool front.

It seems a lot of the SEO discourse at the public level has dropped off sharply in quality (but not in quantity) over the past couple years. Some people (like me) have created private sites, but a lot of the old timers that I consider mentors have sorta disappeared from the public discourse. Do you think this is a temporary shift, or a trend that is likely to continue? Are many of these other people moving on to other private communities?

A lot of the old timers have a distaste for the fame game. If I wasn’t now also running an Internet marketing company, I’d probably be underground too. It’s easier to just do your thing and make your money. They work on pushing their sites and not themselves. I still meet with a lot of the folks you probably consider old timers, but at non-conference gatherings and small meet-ups. With so many people willing to out someone to get their blog to the Sphinn homepage, you become very careful with who you trust. Just like the engines have made it harder for small brands, fame-seekers have made it harder for people to make it into many folks “inner circles”. SEO Bloggers are like reality TV stars... Most don’t have the talent, they just have the platform to pretend they do.

Do some of the cultish behaviors in the SEO industry surprise you? What can the industry do to clean up such behavior, or is it just a fixture?

I don’t read many blogs or belong to many communities, so I tend to shield myself from a good portion of it. The rest, I’ve learned to mainly ignore. Every once in a while, someone will really get under my skin. I don’t think we will ever be rid of the behavior to be honest. We just have to learn not to react from it or be distracted by it.

A lot of new webmasters have a remarkable sense of entitlement while being exceptionally lazy. Do you think this new breed of webmaster has been led astray by get-rich-quick scammers, or do you think the game getting harder and more expensive is causing more people to beg for short cuts?

I think it’s a combination of both. Sometimes I wonder if people realize the amount of time and effort it took for the “bigger guys” to get where they are. Get rich quick schemes are like “amazing weight loss pills”. You know they don’t really work or everyone would be rich and skinny. But, you like to believe it, because it means you can ignore the fact that the real answer for achieving anything you want in life is actually hard work. Not everyone deserves a trophy.

What books, blog posts, forum threads, offline events, etc. were key to you becoming so successful with your online business?

Wow. Well, Steve Krug’s “Don’t Make Me Think” was instrumental for me early on. It really helped me learn to monetize. The “game changer” for my career was probably “E-Myth Revisited”. That book was what made me decide to scale from my kitchen to an office in downtown Guelph with a staff. WebmasterWorld was also a big source of training for me in the early days, along with a private forum I belonged to back then. My first PubCon also was a game changer, because it made me see that I really did have a career and was good at what I did. It gave me a lot more confidence.

Recently you moved back into the consulting model a bit, which sorta surprised me because I always saw you as the super-affiliate type who would avoid client work because you loved doing stuff your way. What brought you back to the client model?

It surprised me too LOL. I’ve taken on occasional consulting clients over the years... It was interesting to see mistakes and issues I don’t deal with day to day in my own sites. It also helped keep me sharp with working on site types Sugarrae and MFE doesn’t build. I don’t have a lot of patience, so dealing with a lot of client work has never been my style.

Back in January, Lisa Barone and Rhea Drysdale decided to head out on their own and create a consulting firm. They contacted me because while Lisa is an expert in blogging, branding and social media strategies and Rhea specializes in ORM and social media with a very strong SEO base, they both felt they lacked the business experience of running their own company. They were both becoming first time entrepreneurs and felt my experience with running companies, in addition to my expertise and “brand” in affiliate marketing, monetization and SEO, was something they needed/wanted in addition to their own skill-sets. Being able to leverage my talents to create a consulting firm and create strategies for client sites, without having to be the person managing clients on a day to day basis, was what made me decide to give it a go. We’ve been very successful thus far, especially considering everyone said we were nuts to launch in the middle of a recession. I expect pretty big things for the company.

Given how well you do with affiliate stuff, I would imagine you are quite selective with client work. What type of client is ideal for Outspoken Media?

It’s funny you mention that. When we first launched the company, we immediately started getting leads from potential clients. I’d decide to turn down half of the leads (one of my responsibilities with Outspoken is business development – AKA, deciding who we work with) without ever even speaking to the potential clients. Of the 50 percent with did speak with, we’d usually end up referring half of those out. I think Rhea thought I was insane at first. One of the first lessons (based on my own feelings) in entrepreneurship I gave her was that we didn’t want to take any client willing to shell out cash. We want to work with good sites, where we think we can make a big impact and with good people. I didn’t want to fill up our roster with “anyone willing” and not have room to take on the clients that would keep us challenged and be awesome to work with down the road. Of course, it was likely easier for me to be calm with taking that route since Outspoken isn’t my sole source of income. But I think Rhea and Lisa have seen that the leads haven’t slowed and our client roster keeps filling and trust that strategy now. So yeah, we’re pretty picky.

That said, it doesn’t mean anyone we’ve turned down or referred out was a “bad client”. Sometimes we turn down clients due to conflict of interest (either with current clients or sites that are direct competition to any sites owned by Sugarrae and MFE Interactive), ROI reasons or for budgetary reasons.

The ideal client for Outspoken Media is someone who believes in us and trusts us to do what we do best.

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Thanks Rae. To read more of her latest thoughts on marketing, affiliate business models, the internet, or life in general subscribe to Sugarrae and her consultancy PushFire.

Often, in our rush to get ahead and do things, we forget to plan.

Do you have a business plan? Do you have a plan, but haven't updated it in a while?

A business plan need not be complicated. A few bullet points on the back of an envelope can constitute a business plan. A business plan is simply a description of what you intend to do, and how you intend to do it. Once you write down a plan, your business becomes a lot easier to visualize, and you have a clear, simple means to measure your performance.

The Importance Of Writing Things Down

We all make lists. Why? Probably because our memories aren't that good. A list also helps to focus attention. There's something about the very act of writing things down that makes a nebulous action concrete.

The same theory applies to business plans. Write down what you plan to do, how you plan to do it, and put some milestones around it.
i.e. I'm going to achieve target x by December. It's also a good idea to have a rough idea of how much that milestone is going to cost you to achieve, and the revenue you expect from it.

For Whom Are You Writing The Business Plan?

Is you aim to attract VC? Get a loan from the bank? For internal staff to be clear about direction? For your own use? Depending on your answer, you business plan will have different requirements in terms of the information provided.

All business plans have the following components:

• Executive summary
• Business description
• Market strategy
• Competitive analysis
• Design and development plan
• Operations and management plan
• Financial factors

Business plans aren't just for start-ups, either.

As a business transitions through different stages as it grows, the plan needs to change. You might want to figure out the best way to invest or fund expansion. A new financial period may be beginning. What are your plans for the next financial year? Do you need to refinance? Are you taking on more employees? Does your old plan fit your new reality?

The Three Types Of Business Plans

Complete business plans often contain all these elements. However, if you haven't got the time to construct a detailed plan, you can break it down based on intended audience.

Short Plan

Could be as short as one page.

Answer the following questions.

• What is your concept?
• How much money will you need to execute your plan?
• How do you intend to plan to market your business to customers/clients?
• What will your cash flow look like, and over what time frame?

Simple questions, right. Many business ideas can be adopted or discounted on those four questions alone, saving you a lot of time, money, and more importantly - opportunity cost.

However, these plans aren't detailed enough if you're seeking investment.

Presentation Plan

The essential difference between a working plan and a presentation plan is style and appearance. It's tone is serious, and it usually comes complete with charts, forecasts and diagrams designed to convey to people that you've put a lot of consideration into your venture. Presentation plans should be free of industry jargon. Investors like to see a lot of due diligence, especially when it comes to competitive threats.

Working Plan

A working plan is a plan used to operate your business. Like a short plan, it is less formal in terms of style. It is used internally to ensure everyone has enough information to be on the same page.

The SEO Business Plan

We've drawn up a complete business plan that provides an out-of-the-box SEO model for those thinking of starting up their own SEO service. This includes charts and detailed financial breakdowns, as well as SEO industry information and a ready-to-use strategy for 2009-2013.

You can use this plan as it is, or use it as a template to adapt it for your own needs.

In the coming weeks, we'll also provide detailed business plans for an SEO publisher model and SEO product seller.