Transparency vs Asymmetrical Information

Jan 8th

"All things are subject to interpretation. Whichever interpretation prevails at a given time is a function of power and not truth." - Friedrich Nietzsche

Everyone Except Me Should be Open

Being labeled as open or transparent is a great public relations strategy. Executed effectively it gets ditto heads to feel like they are part of a movement and spread your propaganda.

However actually being transparent is often a poor business strategy.

When WordAds opened up someone in the comments suggested that they should win by being open like Google. I read that and laughed. Where Google is losing you can count on them pushing the open label in order to build momentum & destroy the asymmetrical information advantages of existing market leaders. But where Google leads non-transparency is the norm.

A few examples & comparisons:

  • Claiming to run an open auction, while running obfuscated quality metrics that price gouge advertisers.
  • At the same time Google is trying to push social sites to offer transparent data, they decided to block some Google search referral data (unless you are paying for the clicks, then you get that data).
  • When planning some of the features behind Google+ one of their employees wrote a book about the social circles concept with Google's blessings. Then, after he wrote the book, Google revoked permission to publish it!
  • Nuking affiliate links of some websites & then investing in Viglink, a network that automatically turns links into affiliate links.
  • Burning some networks of websites for being doorway pages & then investing in the Whaleshark Media roll up & launching Google Places.
  • Nuking some UK financial comparison sites for link buying & then buying BeatThatQuote.
  • Suggesting 60 or 90 days of penalty is a reasonable penalty for sketchy links & allowing BeatThatQuote to rank 2 weeks after penalizing it without cleaning up any of the paid links.
  • Android is open but internal Google emails revealed that carriers were getting wise to Google using compatibility as a club.
  • Not sharing revenue share stats with AdSense partners for a half-decade.
  • When websites are nuked they are frequently given no explanation. Worse yet, their content often re-appears in the search results on some other domain that stole it, in many cases while being wrapped in AdSense ads.
  • Arbitrarily making it hard to export AdWords campaigns to other services (& making it against the TOS to do same via the API).
  • The Panda update was needed to rid the web of garbage content. And yet Google is pre-paying Demand Media to post videos on YouTube. Since the Panda update downstream Google traffic to YouTube has more than doubled & YouTube is serving over a trillion streams per year!
  • In spite of not having permission to do so, Google has been scanning books for nearly a decade now. Yet whenever Google goes to court they try to get the court documents sealed so that their statements couldn't be used against them.

Judge, Jury, Executioner

Calls for "transparency" in SEO may sound great on their face, but once you peal back the covers the absurdity is laughable. If Google didn't discriminate against certain types of players & if Google didn't compete in the very markets that it judges then perhaps transparency would be a good idea.

However Google is perhaps the single biggest direct competitor in many markets, so to be fully transparent with them when they are the opposite with you is a naive business strategy:

I also disagree that outing each other would make the industry less like a mafia, because SEOs aren't the mafia. SEO is a symbiotic marketing channel reliant on Google, until the next big search engine/method comes along. In a mafioso analogy, Google would be the mafia - as they control the market. Removing all webspam wouldn't necessarily create better search results or a fairer market, as Google still decides who wins and who loses. The biggest winner being Google itself, the next level being their friends.

Secrecy is also the cornerstone of all marketing channels. Social Media for instance works in a similar way to SEO, except they have secret voting methods rather than secret linking methods. You don't see major social media companies outing a rival's voting methods, as it would shine a torch on their own methods. Even outside of marketing, McDonalds probably worked out KFC's magic blend of herbs and spices decades ago, but it's not in their best interest to tell everybody.

Outing webspam helps an SEO blog to keep their UVs up and their VCs happy. It helps a failing newspaper to appear modern and edgy, whilst allowing the contributor to launch a protection racket off the back of another company's misery.

Do You Want SEOs to Seem More Professional?

How often do you see tier-1 public relations firms marketing themselves by smearing other PR firms?

You don't.

You might see a company like Google hire a PR firm to push a bogus study to smear the security of a competitor, but you rarely (if ever) will see one PR firm smear another in the media.

While some of the more intellectually challenged members of the SEO industry associate search spam with molesting children (talk to Google about that after their recent Chrome fiasco), those with a bit of intelligence and/or experience realize that many of the issues are gray and murky. What one person considers as spam one day they later sell as "advanced" months or years down the road. The ecosystem isn't some static black & white code:

The question is less whether black hat and webspam are a good thing or not, but if Google is the unbiased and benevolent instance who shall make the rules. Google is a business and persuits its very own interestes, since it is aware of its market power with a lot of arrogance, aggresivity and obviously double standards. That was also Aaron's point, but seomoz has been missing the point completly in the last time.

I expect an SEO portal/community to focus on how stuff actually works/can work, not to propagate how the monopolist does it want to work. It is their risk of doing business if they decide for an algorithm, not ours. It is our risk however, to decide whether to stick to the rules or not. And it's not only about ethics but has several practical implications...

Full Disclosure Required, Except From Us

On paid links Google claims to require machine AND human readable disclosure. Then on their own site they use an ad color background that literally fades to white on many monitors. Maybe it is legitimate that they are only able to fool some of the users some of the time. But some of their ad initiatives have 0 disclosure at all. None.

That is now part of the "organic" search results, but is that a paid ad?

You wouldn't know by looking at it, but according to the WSJ it is: "Google lists booking links to the airlines as advertisements, but the company declined to comment on how much money it makes from the arrangement."

There is no disclosure that you are in a paid ad funnel until the very last click. And those who fail to pay are either unlisted, listed last, or have a broken booking process where their brand is arbitraged in an attempt to flip the click to somewhere else. According to Leocha, “Google and the airlines have a sweetheart deal with each other, and the consumers are getting screwed.”

In the hotel market Google is also testing comparison ads & price ads.

Notice how little they care about relevancy so long as they keep the click on Google or are paid for the referral. They rank the car rental company Avis as a top Las Vegas hotel! And even the ad links that are sold off of that do not line up. Priceline pushes the Plazzo Luxury Suites & Booking.com pushes the Venitian.

Retarding Investment in the Search Ecosystem

What do you suppose the above behavior does to cash flow & multiples of websites in that vertical? Of course it contracts them & retards investment. Who wants to start a new hotel website at this point? What other verticals have investment held back by the fear of Google's eventual entry?

If you only had to manage competing against other market competitors & staying inside Google's editorial guidelines then investment isn't that difficult, but if you have to stay within Google's guidelines in the short term yet try to build a business that is sustainable even after Google enters & destroys the market it is far more difficult.

Skimming the Cream

At any time Google can enter any market and skim off the cream: "An independent study from Leads360 showed consumers using Google’s comparison ads converted better than any other lead provider."

Other affiliate networks which do not own the search channel have to fight through quality issues if they try to build similar scale.

A Self-serving Bias You Can Count On

When Google enters a market it might buy out a competitor, buy out a supplier, bundle, use predatory pricing, grant themselves superior search placement, adjust the relevancy algorithms and/or editorial guidelines, violate IP, scrape 3rd party content, work with sketchy advertisers & publishers to undermine competing business models, or any combination of the above.

They are rarely transparent with their interests when they enter a market. Almost everything is labeled as "a beta" and "just a test." They promise to "act appropriately" & you may not be aware of the steamroller until you are under it.

Web Scrape Plus+ (Now With More Scraping)

When the +1 button & Google+ launched, Google highlighted how they would use the + button usage as a "relevancy" signal. Google recently started inserting + pages directly into the search results for brands & right from the very start they were using it as a scraper website that would outrank the original content source.

Google used the buy in from their promised relevancy signal to create a badge-based incentivized system which acts as a glorified PageRank funnel to further juice the rankings of these new pages on a domain name that already had a PageRank 10.

I recently read a blog post about how anyone could do the above & the opportunity is open to everyone. But the truth is, I can't state that something will become a relevancy signal that manipulates the search results in order to get buy in. Or, if I did something which actually had the same net effect, Google would likely chop my legs off for promoting a link scheme.

Recently the topic of Google+ as a scraper site came up yet again via Read Write Web & on Hacker News a Googler stated that it was "childish" to place any of the blame on Google!!!!!!

Google determines how much information is shown near each listing & can create "relevancy" signals in ways that things tied to Google get over-represented (look at the +1 count here). When they do that & it destroys other business models *of course* Google deserves 100% of the blame.

It may be more profitable for Google to squeeze out some of the players, but if Google's quest for free content manages to destroy business models & the ecosystem as a whole, then they are not "doing what is best for the user."

Things We Do Not Approve...

Google can bundle themselves into markets, but when others do the same it is a big no no:

A Google spokesman said "applications that are installed without clear disclosure, that are hard to remove and that modify users' experiences in unexpected ways are bad for users and the Web as a whole."

Google's founding research highlighted how bad ad-driven search engines were & then Google's core revenue engine of paid search was built on their violation of Overture's patent. They keep buying swaths of patents to protect against their other violations.

The business model of "violate & then buy protection" has helped lead to a protection-racket styled marketplace in patents that makes the risk of innovation for smaller players so expensive that it drives them under.

Where Google has gained a dominant position in a marketplace they can begin misdirecting for profit. Let's say you link to your own location on Google Maps to drive traffic to Google & help your users locate your office. Well in some cases they then reciprocate by confusing users by putting an ad in your location bubble.

Once again, you are forced to buy your own brand unless you teach your customers (and prospective customers) to avoid Google products.

Sure I May Have Failed, But at Least That Failure Was Transparent...

If you are fully transparent against an arbitrary set of guidelines when the company that judges you also competes against you & brushes up against the limits of the DOJ & FTC then you might lose for no reason other than being transparent. And not only are you competing directly against Google, but the algorithms are biased toward certain players.

Creating a Two-tier Web

In 2006 Google's Eric Schmidt admonished others for attempting to create a 2-tier web:

Today the Internet is an information highway where anybody — no matter how large or small, how traditional or unconventional — has equal access. But the phone and cable monopolies, who control almost all Internet access, want the power to choose who gets access to high-speed lanes and whose content gets seen first and fastest. They want to build a two-tiered system and block the on-ramps for those who can’t pay.

But when Google launched their Panda algorithm they did the same thing.

Their "quality content" thesis could have come across as being honest if they weren't still pre-paying Demand Media to upload "content" to YouTube.

You might get smoked by a Panda update or have your accounts arbitrarily frozen while operating at a 7 out of 10 level, and then you see Ask is Google's biggest advertiser, their arbitrage gets a pass, & that feed even monetizes misspelled searches for Google's brand. ;)

Risks

Risk is needed for adaptation, so some amount of risk is good, but...

If the old established corporate competition needs to be as good as you to compete then there is little risk to being transparent if the competition is doing nothing beyond following you around. But if the playing field is tilted and the competition only needs to be 5% as good as you are to beat you (and can easily come from behind to copy any success you have) then full on transparency brings much more risk than potential profits.

You Are the Ad

We are moving into a media world where the content becomes ads & even how people interact with the ads and content becomes a part of the ad.

Further Google uses their data advantage to create other asymmetrical advantages. While credit card companies sell personalized ads in network, Google is creating a marketplace to buy and sell user data.

Every time you view a page and click an ad (or even don't click an ad) you are feeding highly personal data back to Google. And they will use it as they wish. Here they are saying thousands of people like eBay, which is of course plenty reasonable, except for the fact they claim the people voted for that specific page rather than the site as a whole.

What's worse is that sometimes they will put your picture next to a listing and claim that YOU PERSONALLY voted for a specific page & use that to market that item to your friends and contacts. The problem with this is that:

  • even after you remove the vote for a site they still keep showing it
  • you may vote for site A & they will show your image as voting for site B
  • when they show your picture they claim you voted specifically for the page being advertised (even if that page is promoting a scam or something else you wouldn't endorse)

Once again, I will highlight that they use the votes against the wrong sites & pages and that they keep showing the votes even weeks after you remove them.

Where is the transparency in that deceptive crap?

Others Are Just as Bad, But Are Not Monopolies

But Aaron, you are just being hard on Google, why don't you ever mention Ask or Yahoo! or Bing?

I did mention Ask above. ;)

Bing has done numerous self-serving things, including some that are flat out sketchy.

Yahoo! offers a useless "buying guide" for fish tanks that is nothing more than a paid pointer to Overstock.com.

If you click on their coupons tab on that fish tanks search Yahoo! shows you coupons for tank tops, which is pretty idiotic.

Why is this Yahoo! Shopping & Yahoo! Deals product so ugly? They outsourced it years ago. So it is a non-product & thus the integration can't be anything but crappy.

Why do Yahoo! & Bing typically get a pass? They own a fairly low search marketshare. Missing traffic from either or both of those is certainly significant enough to be felt, however even when they are combined it is still less than half of what Google controls in most markets. Market leaders are expected to operate in less conflicted & less self-serving ways than also ran players in their market do. If Microsoft would have had 10% or 15% marketshare for their operating system then it is unlikely their browser bundling would have come under such scrutiny.

Transparency in The Real World

In the past I highlighted how every form of media is manipulated in Why Outing is Bad, but I thought it would be fun to run through some other markets and highlight how transparency often exists only as an illusion (to lure in punters so they can be rooked).

TrueCar aimed to make that market more transparent by giving consumers pricing data online to remove some of the asymmetrical advantage dealers have & makes the sales process smoother for consumers. How does the automotive market respond? Honda issued threats to their dealers & now TrueCar has a hate video ranking for their brand.

This nontransparency is not something new, but rather the way it has always been.

It exists at every level of society. Countries spy on one another & companies may chose to show different views of the world to different markets.

And what they do internally doesn't match the story they share publicly. Look no further than the News of the World's hacking scandal:

News International’s leading profit centre, the News of the World, was dependent on a very ugly culture of lawbreaking, hacking and impunity. This freewheeling, ask-no-questions attitude spread to other parts of the organisation, such as the Times and the Sunday Times, both of which used have used illegal or unethical techniques. Even more troubling, when senior News International management were confronted with evidence of wrongdoing, the company made false statements and took actions which prevented key evidence from reaching the public domain.

The same company has not only been accused of hacking at some of its other news outlets (by its own employees no less) but was also accused of similar in other lines of business:

Both cases involve News America Marketing, an obscure but lucrative division of the News Corporation that is a big player in the business of retail marketing, including newspaper coupon inserts and in-store promotions. The company has come under scrutiny for a pattern of conduct that includes below-cost pricing, paying customers not to do business with competitors and accusations of computer hacking.

Were The Robber Barons Transparent?

Going back into history it is sort of hard to pick a starting point (one can go to the spice trade & orders that are unsealed at sea, or likely earlier than that) but to pick a somewhat recent starting point, we could look at the railroads:

So how did unnecessary, inefficient railroads get built? Because of government subsidies. In short, the federal government paid to build the railroads through massive financing subsidies and also gave them ample land grants. The trick to building a railroad was not knowing anything about railroads or even about business; it was having friends in Washington who could give you the right financing and land subsidies.

Even then, the railroads lost money. Not only was there insufficient demand for their services, but they were run by people who were generally incompetent. (For one thing, they didn’t even know their own costs of doing business.) Yet the people who owned the railroads made fabulous amounts of money (of which Stanford University is one symbol). The main way to do this was simple. The people who controlled a railroad (generally by putting up very little of their own money, thanks to the government subsidies) would also wholly own a construction company. They would cause the railroad to overpay the construction company to build the railroad—in effect transferring wealth from railroad stockholders and creditors into their own pockets

What did the Robber Barons invest in? In large part government, media & educational institutions so that they could help "educate" society on how to behave much more civilly than they have.

Corporate Advocacy

There are tons of marketing campaigns designed to "educate" society about the impacts of various companies. BP now markets the gulf coast economy they plundered.

AT&T's astroturfing campaign to acquire T-Mobile was so over the top that it actually backfired.

"Get the facts" styled campaigns are rarely about promoting a complete worldview.

Remember the $500 million fine for Google from them pushing ads selling overseas Viagra in the US? Now they promote scaremongering ads against fakes from filthy labs.

Coca-cola runs The Beverage Institute & has "doctors" highlight how healthy soda is.

At the same time, when Pepsi was sued over an alleged rat being in a can of Mountain Dew. Pepsi's defense claimed: "the mouse would have dissolved in the soda had it been in the can from the time of its bottling until the day the plaintiff drank it" turning the mouse into a 'jelly-like' substance. But don't worry folks, it's healthy. :D

At least we still have water.

When they are not busy making it illegal to collect rainwater, Bechtel wants you to follow them on Twitter.

It is hard to know what is in our food & those who label things as organic have to fill out more paperwork than those who manufacture frankenfood. Then there are the baseline chemicals sold as biodegradable which are not. ;)

Oh well, at least we have insurance.

State Farm is the #1 ranked bad faith insurance company, but at least they upload & advertise irrelevant funny videos to YouTube to create brand signal for Google.

Transparency in Everyday Life

Of course some of the worst affiliate offers, the most aggressive sales calls & other scams are designed to prey on ignorance of small print & rebilling, but even generally good businesses practice in asymmetrical skimming.

A few recent examples:

Is Our Financial System Transparent?

When one looks at the field of finance it is story after story of deception, nontransparency & lawlessness. It is a constant reminder that there is no such thing as business ethics.

  • Wachovia laundered $378.4 billion in drug money for violent drug cartels. As if that wasn't bad enough, we also sold them weapons that wound up at murder scenes with our own border patrol dead & the Koch brothers sold weapons to states that we brand as "rogue."
  • Bank of New York Mellon ripped off their clients with unsavory Forex rates: "As investigators sought to determine whether the bank overcharged clients to execute their currency trades, a senior BNY Mellon executive nicknamed "Rambo" urged traders not to tell clients how much money they made on trading, according to the informant."
  • A former Federal Reserve member writes about the Fed: "No matter the legalistic interpretation, the Fed is, working through the ECB, bailing out European banks and, indirectly, spendthrift European governments. It is difficult to count the number of things wrong with this arrangement."
  • Bank of America recently had to pay $335 million to settle a discrimination lawsuit against minorities, due to Countrywide (who is NOT on your side) charging juiced interest rates. Bank of America had to pay an $8.5 billion settlement to investors who bought some of the junk mortgages out the other end.
  • "What’s happened is that, almost overnight, we’ve switched from democracy in real-property recording to oligarchy in real-property recording. There was no court case behind this, no statute from Congress or the state legislatures. It was accomplished in a private corporate decision. The banks just did it." - Christopher Peterson
  • The financial markets are becoming glorified crack houses: "Frankly, I am concerned that Wall Street is becoming little more than a glorified crack house. Day after day, the sole focus of Wall Street is on more sugar, stronger sugar, Big Bazookas of sugar, unlimited sugar, and anything that will get somebody to deliver the sugar faster. This is like offering a lollipop to quiet down a 2-year old throwing a tantrum, and expecting that the result will be fewer tantrums. What we have increasingly observed over the past decade is nothing but the gradual destruction of the ability of the financial markets to allocate capital for the benefit of future growth. By preventing the natural discipline of the markets to impose losses on poor stewards of capital, and to impose interest rates high enough to force debtors to allocate the capital usefully, the world's policy makers are increasingly wrecking the prospects for long-term economic growth."
  • Companies are often brought private, leveraged up on debt & have their pension programs destroyed to make "profits" for private equity investors: "Nowadays private-equity firms often spend hundreds of millions of their own money on an acquisition (BW -- Feb. 27). Just as often, though, they load up the companies with debt and use the money to pay themselves special dividends and other fees that allow them to profit even if the company itself struggles. Then the backers take the company public, often pocketing the lion's share of the offering."
  • Individuals who put in extra hours of work because they are sold on the promise of their options may also find those disappear: "Taking away the value of options that are vested means that the concept of vesting becomes bogus. It doesn't matter whether the employee understood if this was the deal or not, it's a scummy practice, and it's ultimately self-defeating (both for the company and the industry as a whole). Who would go to work for Skype (or any PE-backed company) in the future? "
  • Limitless fraud before the courts & dancing on the graves of the newly homeless: "Court records show that the firm angered state court judges for alleged false statements and filing suspect documents. Arthur Schack, a state court judge in Brooklyn, in a 2010 ruling said that pleadings by the Baum firm on behalf of HSBC Bank, a unit of London-based HSBC Holdings, in a foreclosure case were "so incredible, outrageous, ludicrous and disingenuous that they should have been authorized by the late Rod Serling, creator of the famous science-fiction television series, The Twilight Zone."
    ...
    The law firm said it would shut down after New York Times columnist Joe Nocera in November published photographs of a 2010 Baum firm Halloween party in which employees dressed up as homeless people. Another showed part of Baum's office decorated to look like a row of foreclosed houses."
  • That theft of physical property is ongoing: "Also announced over the weekend was the jaw-dropping, yet illuminating fact that the MF Global bankruptcy was fraudulently, nefariously and illegally drawn up as a Chapter 7 BK for a SECURITIES DEALER and NOT a commodity brokerage as it should have been. Look, MF Global was the second-largest non-bank FCM in the United States next to NewEdge which is the old FIMAT. If MF Global wasn’t an FCM, then there are no FCMs. Of course it was an FCM. It had $7.2 billion in customer seg funds as of August 31, 2011. And yet MF Global was immediately, from the get-go, put into Chapter 7 BK as a SECURITIES FIRM. This is fraud. MF Global’s BK should have OBVIOUSLY been established under Subchapter IV of the Chapter 7 code as a COMMODITY BROKERAGE."
  • And as banking criminals literally steal money, destroy lives & undermine the rule of law to grow their "profits" sleazeballs like Jamie Dimon think that the reason people hate them is envy.

The above makes no mention of helping Greece hide governmental debt, bid-rigging bribes in Jefferson County, robosigning bogus foreclosure documents, and a host of other crimes. But one thing in common with all the above crimes is this: no jailtime for the banksters.

Since there is nothing stopping those criminals they keep up their crimes:

Big banks represent the ultimate in concentrated economic power in today’s economies. They are able to resist all meaningful reform that could really change their compensation schemes. Their executives want to get all the upside while facing none of the true downside.

But capitalism without the prospect of failure is not any kind of market economy. We are running a large-scale, nontransparent, and dangerous government subsidy scheme for the benefit primarily of a very few, extremely wealthy people.

The actions of the financial cartel are both obvious & predictable. And the damage they do is felt worldwide:

Credit-financed economic booms, by turns in private then public credit as one ratchets up the other over a series of booms and busts, are as irresistible to politicians as hookers and maids.
...
The failures of American FIRE Economy policies are behind the movements in Libya, Yemen, and Syria, as reflation measures, from quantitative easing to currency depreciation, steal purchasing power from low income families world wide, acting as the most regressive tax imaginable. Simmering hatreds are exacerbated by the developing global crisis over oil supplies and costs.
...
The so-called debate about debt ceilings, spending cuts, and entitlements reductions is a red herring. The public debt crisis arose from the 2007 - 2008 private credit market crisis, not the government liabilities that have been building for decades. The mistake of both the left and the right is thinking that we can escape an output gap without facing up to the politically unpopular task of demanding that creditors take a loss on loans taken out during the credit bubble era.

A creditor that makes bad loans deserves to go out of business. Their outsized compensation can't be justified unless they are also made to eat their losses. But rather than holding them accountable for their own actions, societies the world over absorb that pain.

"Fascism should more appropriately be called Corporatism because it is a merger of state and corporate power"- Benito Mussolini

Slavery, Debt & Freedom

There are currently more slaves alive than at any point in history. And many people who are not slaves are still being enslaved by crushing debt:

Money is a human construct. The fact that our money is now backed by nothing more than our collective future ability to "produce" relegates us to that of slaves.

Money=paper=blood hours.

Blood hours are a finite measure. Heartbeats.

What's in your wallet? Is it the new debt slavery card: "A personal bankruptcy is supposed to cut borrowers loose from lenders and debt collectors, but Capital One Financial Corp.—one of the nation's largest credit-card issuers—sometimes doesn't want to let go."

Citigroup has an "effective" strategy they employ in some 3rd world countries to deal with those who can't pay:

After dropping his younger daughter at school, Octa walked into Citibank’s credit card collection department on the fifth floor of the Jamsostek tower just after 10 a.m. Four hours later, he left the 25-story building slumped motionless in a wheelchair -- a victim of what police allege was a violent assault by debt collectors. Driven to a nearby hospital in a Citibank car, Octa was pronounced dead on arrival.

Unfortunately, even if you stay out of debt, you are forced to support banking scams:

before being bailed out by governments, banks had never made any return in their history, assuming that their assets are properly marked to market. Nor should they produce any return in the long run, as their business model remains identical to what it was before, with only cosmetic modifications concerning trading risks.

So the facts are clear. But, as individual taxpayers, we are helpless, because we do not control outcomes, owing to the concerted efforts of lobbyists, or, worse, economic policymakers. Our subsidizing of bank managers and executives is completely involuntary.

In the US the reason the government debt outlook is so bad is in part due to overpaying for "assets" owned by the likes of Citibank:

The way the banks make money now is by hiding their losers off balance-sheet, or by forcing them on the taxpayers, and after having themselves declared "systemically important," adjusting their on balance-sheet exposures accordingly, crashing the system and cashing out on their leveraged derivative bets, also at the taxpayers' expense.

In real life, if there is such a thing anymore, all of the major banks are arguably insolvent. So, in reality, they're not making any money at all, they are merely having it transferred to them by their political operatives in Congress and the Federal Reserve Bank. This, after all, is the modern purpose of the Congress, and has always been the purpose of the Federal Reserve System.

Even as they destroy savings, kill jobs & undermine the competitiveness of the economy, why does the government continue to support such scams? Without the scams & cost-shifting those in government wouldn't have as much wealth, power & influence. It is debt & cost-shifting that fuels them:

government and banks are stuck together like a couple of dogs screwing and we don't know which is on top. Here, Republicans need government to finance war and Democrats need it to finance social programs. Both need it to finance both, as that is how government attempts to maintain power and influence over the people this day and time.

The congress literally sells insider tips to hedge funds:

When Senate Democrats finally brokered a compromise over the proposed health-care law, a group of hedge funds were let in on the deal, learning details hours before a public announcement on Dec. 8, 2009.

The news was potentially worth millions of dollars to the investors, though none would publicly divulge how they used the information. They belong to a select group who pay for early, firsthand reports on Capitol Hill.

Since most money comes into circulation as debt (and due to the compounding nature of debt interest), if those at the top are not allowed to fail then those at the bottom will fall hard:

In the past, periods dominated by virtual credit money have also been periods where there have been social protections for debtors. Once you recognize that money is just a social construct, a credit, an IOU, then first of all what is to stop people from generating it endlessly? And how do you prevent the poor from falling into debt traps and becoming effectively enslaved to the rich? That’s why you had Mesopotamian clean slates, Biblical Jubilees, Medieval laws against usury in both Christianity and Islam and so on and so forth.

Since antiquity the worst-case scenario that everyone felt would lead to total social breakdown was a major debt crisis; ordinary people would become so indebted to the top one or two percent of the population that they would start selling family members into slavery, or eventually, even themselves.

Well, what happened this time around? Instead of creating some sort of overarching institution to protect debtors, they create these grandiose, world-scale institutions like the IMF or S&P to protect creditors. They essentially declare (in defiance of all traditional economic logic) that no debtor should ever be allowed to default. Needless to say the result is catastrophic. We are experiencing something that to me, at least, looks exactly like what the ancients were most afraid of: a population of debtors skating at the edge of disaster.

And, I might add, if Aristotle were around today, I very much doubt he would think that the distinction between renting yourself or members of your family out to work and selling yourself or members of your family to work was more than a legal nicety. He’d probably conclude that most Americans were, for all intents and purposes, slaves.
...
Clearly any pretence that markets maintain themselves, that debts always have to be honored, went by the boards in 2008. That’s one of the reasons I think you see the beginnings of a reaction in a remarkably similar form to what we saw during the heyday of the ‘Third World debt crisis’ – what got called, rather weirdly, the ‘anti-globalization movement’. This movement called for genuine democracy and actually tried to practice forms of direct, horizontal democracy. In the face of this there was the insidious alliance between financial elites and global bureaucrats (whether the IMF, World Bank, WTO, now EU, or what-have-you).


Those who have the least often give the most. Excessive income inequality (especially when driven by fraud) leads to a moral and cultural rot. Financial cartels & governments can only enslave people in so much debt & hand out so much soma before they either revolt or simply lose faith.

(On a related note, December saw record gun sales.)

State actors have repeatedly use violence to try to encourage a similar response. Instead they created a viral meme & the movement lives on.

Of course there are "opposition research" hacks willing to dig up dirt on anyone with wide reach who opposes the state-sponsored fraud: "It will be vital,” the memo says, “to understand who is funding it and what their backgrounds and motives are. If we can show that they have the same cynical motivation as a political opponent it will undermine their credibility in a profound way.”

The state has long manipulated mainstream media and has tools for spying on social networks, hacking accounts & astroturfing online, but sock puppets can only go so far against reality.

Who Does 100% Marketing Transparency Help & Who Does it Hurt?

We have an SEC that shreds over a decade of evidence (and engages in other illegal behaviors), a government that bails out the criminal enterprises & a court system that broadly makes it nearly impossible to win a financial fraud lawsuit.

The biggest companies & the biggest people in business at this point are simply above the rule of law & are not held accountable for their actions. Worse yet, the corrupt system has global influence.

  • In 2004 the FBI warned that there was an "epidemic" of mortgage fraud and that it would create a crisis.
  • "My administration is the only thing between you and the pitchforks," the president told them.
  • And, in spite of the FBI highlighting the massive mortgage fraud, and the above quote, the president (who is a horrible human being) aims to keep the population misinformed & ignorant, publicly stating that what Wall St did wasn't illegal!

Henry Kissinger has a famous quote about power: "Before the Freedom of Information Act, I used to say at meetings, ‘The illegal we do immediately; the unconstitutional takes a little longer.’ [laughter] But since the Freedom of Information Act, I’m afraid to say things like that." Since then government officials have become much more evasive & smooth talking. Unfortunately, freedom of the press only goes so far:

this is how the much-lauded "freedom of the press" myth in the US actually works. If you perform the job of an actual journalist, telling truth to power, forget about attending press conferences at the White House, Pentagon or State Department. You won't even be admitted in the building.

When you ask for total market transparency it changes nothing with the criminality at the top, but it does create a juicy data source for criminals while harming personal civil liberties & unpeople with limited power:

The people who most heavily rely on pseudonyms in online spaces are those who are most marginalized by systems of power. “Real names” policies aren’t empowering; they’re an authoritarian assertion of power over vulnerable people.

Passive Online Income vs Sustainable Online Income

Aug 31st

Is there such a thing as "passive" income? Generally no. A person can cash out existing brand equity and exposure, but if they cash out too aggressively and/or do not reinvest enough then they are ultimately cashing out their market position and will eventually fade.

Does Google Make "Passive" Income?

Online there are some network effects that are hard to beat. MySpace had them over Facebook & only lost due to years of systematic incompetence & mismanagement. But if you are boastful about your business model competition will come and eat your lunch. Look at all the Groupon clones. And even Google has to claw and fight for every percent of search marketshare.

A person could say "well Google makes passive income" and I would counter that with "not really."

So far this month Google has made about a dozen search interface changes or tests & the underlying relevancy algorithms have likely had at least 3x or 4x as much change.

Keeping Google's Marketshare Costs Big Money

The propaganda Google spreads include statements like: "users keep coming back to Google even though they have a choice of a search engine every time they open a browser"

While Google maintains that their monopolist marketshare is due to user appreciation of superior technology, a ton of their exposure is paid for. I was helping a friend set up a new laptop and the amount of Google added to the machine made me feel like Google is the new Norton or Symantec.

If you use the Internet Explorer browser to access the web it comes with a Google Toolbar.

That toolbar defaults to enhanced features enabled.

Google not only pays to be the default search provider, but as part of that they also pay to have competition removed from the default options list!

Google also pays for Chrome to be installed in the laptop.

If you are curious enough to click on the pinned Chrome logo then when it opens they try to set it as your default browser.

If you do use Chrome regularly you see Chrome store ads bundled right into the browser.

Ads are also included within the interface of their online tools. For example, if you use Google Analytics they may recommend you try AdSense, AdWords, or their affiliate network.

The act of logging out of 1 Google service may trigger ads for another.

Google bundled chat into Google+ & they were fined by the FTC for bundling Google Buzz into Gmail, a violation of user's privacy.

Google's doodle drawings on their homepage may also promote their other offerings

Even if you don't use Chrome or the Google Toolbar in Internet Explorer then whenever you use Google they suggest setting it to your home page.

And even if you don't change your homepage, Google paid to be the default search box on Toshiba's default start page!

If you manage to somehow avoid all the above Google payola then they also pay other browsers (like Firefox) to be the default search service. Further, they then wait for those 3rd party browser plugins to have security issues & then do a bundled cross-promotion there, thus turning competing browsers into ads for more Google crap.

And when you go to update Flash, look where they tell you to search from

If your default search provider isn't Google when you install Chrome they use an option screen to help you change it, with Google being the first choice

Either Google is fibbing when they state how much of their existing marketshare is due to superior quality service, or they are hedging a risk of losing marketshare to Bing by buying placement everywhere they can. And to me this really highlights one of the big issues with truly "passive" online income. In spite of Google's success (& the great network effects they enjoy), even Google feels the need to spend hundreds of millions of Dollars a year buying exposure for their own browser, buying default search provider exposure in 3rd party browsers, and ensuring new computers are filled with promotional Google crapware.

Google also uses their browser's start screen to push beyond software into hardware...a cautionary tale for Android manufacturers after seeing Google acquire Motorola Mobility.

This sort of cross promotion is everywhere, from ads on Youtube promoting Chrome

to Gmail ads highlighting featured Youtube videos

and Google+ games having Chrome ads integrated as special items in the game

right on through to Google buying display ads promoting display ads.

Facebook realizes how powerful this cross-integration is & thus buys ads on Youtube as well.

But if you want to leave Google's ecosystem it takes a lot of effort, as Google is willing to advertise the Google alternative aggressively wherever they can.

Google recently extended their ecosystem of cross-referencing further by automatically adding Google Related to Google Chrome & the Google Toolbar, which recommends Google content within the browser no matter where you are on the web.

Google's bundling not only follows users around the web & personalizes ads, but it also bakes right into the core of their relevancy algorithms. Eric Schmidt stated "the internet would be better if we knew you were a real person rather than a dog or a fake person. Some people are just evil and we should be able to ID them and rank them downward."

Either you sign up for a Google Profile or you suffer the consequences! Forbes published (then quickly pulled) an alarming article titled “Stick Google Plus Buttons On Your Pages, Or Your Search Traffic Dies.” Wired followed up spreading a similar message & a new Google trusted stores rating system for merchants was also spotted.

With so many attempts at lock-in there is no surprise that some other browsers which have partnered with Google are considering moving on.

This is not to say that Bing doesn't do marketing as well. They just are not as slick about it.

Policing Advertisers Costs Billions

In addition to evolving their core relevancy algorithm, Google has to police advertisers who are willing to be deceptive, market counterfeit goods & use the lowest common denominator. When Google is too loose that can cost them a pretty penny: they just paid a $500 million fine to the US government for ads from Canadian pharmacies. The DOJ claimed Mr. Page knew what was going on:

Mr. Neronha said those efforts amounted to "window-dressing," allowing Google to continue earning revenues from the allegedly illicit ad sales even as it professed to be taking action against them. Google employees helped undercover Justice Department agents in the sting operation evade controls designed to stop companies from advertising illegally, he said.

"Suffice it to say that this is not two or three rogue employees at the customer service level doing this on their own," Mr. Neronha said in an interview. "This was a corporate decision to engage in this conduct."

Likewise, it costs Google a lot of money to deal with lawsuits that arise due to their business practices & lack of respect for copyright with photos, books & videos. They eventually had to develop an expensive video footprinting technology to adopt DRM features on Youtube.

And building the partnerships Google has to run Youtube isn't easy. They pay something like a half-cent per video view & if you create a site with a "no soup for you" message (like the above Google page) for markets where the finances do not work out then you are violating their search guidelines by cloaking, whereas Google overly-promotes YouTube in the search results and is free to count ad views as video views (once again, against Google's guidelines).

New Niche? New Lawsuits

Eric Schmidt highlighted how the lobbyists write the laws & then Google went out and hired over a dozen lobbyist firms. Anything that disintermediates search costs Google a cut of revenues.

While Groupon is still unproven as a business model, Google was willing to spend $6 billion to buy it in order to avoid the risk of missing out on a new form of local ads.

Mobile search now represents 12% of the search market. To look in their dominant search position onto the new devices Google:

  • build a new operating system to give away for free
  • paid carriers a revenue share (in addition to giving it away)
  • likely violated Oracle patents (that will likely cost them in the B's)
  • had other patent issues which required Google to spend $12.5 billion buying Motorola (that is nearly 1/3 of the cash Google has built up through their IPO & saved profits in the 10-year history of the company)

Sneaky ISPs Redirecting Search Traffic

What is worse for Google, is in spite their default status, their huge ad budget, and being large enough to be sued regularly, even all that isn't enough to keep all the traffic they pay for, as there is widespread hijacking of search traffic by ISP providers.

Google Isn't Passive, but ___ Is

Google may have bit off more than they could chew & are certainly doing anything but being passive. But maybe some other companies that make great money are doing so passively. Offline that is certainly true in many instances, but online passive companies tend to disappear.

Look at all the work Yahoo! has done with their news box & their sports vertical, yet when you back out the cash on the books & the foreign investments the company isn't valued at much above $0. AOL has also cratered. In spite of their huge traffic streams they are not growing with the market due to search bypassing them & niche players picking them apart one vertical at a time. Running a portal profitably & sustainably is anything but passive.

Even deep into the long tail at the other end of the equation the profits may be every bit as scarce. Demand Media's accounting techniques show that they were far better at growing revenues than growing profits & the company may never be profitable.

The Limits of "Search"

Google & Bing keep eating more of the value chain through content scraping & a more interactive search experience that include new ad formats, like coupons & product ads with pictures.

In addition, search companies are challenging the boundaries of search by creating vertical media & ad networks that compete against a wide array of publisher websites.

The Huffington Post

Autonomy / Fast Search

Groupon

BankRate

MapQuest + TomTom

The Yellow Pages

Dell / HP

That "Shady" Competitor

When Google talks about "protecting users" one of the case studies / angles they push is the health angle:

The paid post at the top happens to be about brain tumors, which is a really serious subject. If you are searching for information about brain cancer or radiosurgery, you probably don’t want a company buying links in an attempt to show up higher in search engines. Other paid posts might not be as starkly life-or-death, but they can still pollute the ecology of the web.

While Google was using the life-or-death approach to policing link buying outside of their AdWords ad network, Google was knowingly selling search ads to Canadian "pharmacies" providing illicit drugs in the US. The official settlement document lists how Google insiders knew work-arounds to the automated systems & were working directly on managing the ad accounts associated with the illegal activities. Google had done so for over a half-decade & only changed their approach *after* they knew a sting operation was underway.

For those scoring at home, this has been Google's approach to the health vertical:

  • 3rd parties buying links that *could* influence search results for important health topics = morally reprehensible
  • Google selling links *within* the search results for important health topics to criminal organizations = totally reasonable

Given the above investigation, it is not surprising that they shut down their health records initiative. They had already spent all their credibility.

Google may protect you from some third parties, but Google can not protect you from Google. :D

Not only can Google hardcode the algorithms toward promoting certain websites (while editorially discriminating against other webmasters for doing the exact same thing), but Google also actively invests in the publishing ecosystem, which pits them directly against anyone who doesn't receive their largesse.

Webmasters are told that having networks of similar websites is spammy. And yet, Google invests is a company that owns about 7 copies of the exact same business model in the exact same niche as a roll up.

As we saw with BeatThatQuote, Google owned-and-operated websites get penalized for a shorter duration of time for the same offense that other websites get penalized for longer periods of time for. It was only through *repeated* exposure of the absurdity on SEO blogs that Google decided to treat their own property like they treat a typical webmaster.

You can also do nothing wrong, but have your model undermined by looking too similar to a company that is exploiting Google's relevancy weaknesses & forces Google to apply retribution. A lot of small ecommerce sites were purged in the content farm update. What is so sad about that is that if not for accounting games & selling stock as a business model a lot of the biggest "success" stories in the content farm might not even exist.

While the above section focuses on Google, it could be about any competing business that touches the web...a bank which uses bogus accounting driving smaller banks out of business, a company that receives no bid government contracts associated with bribes & uses those "profits" to price dump in related fields, an ISP redirecting your traffic, etc. No matter how clean a business model looks at a glace, there is some gray area where businesses meet & exceed the numbers quarter after quarter.

Look, for example, at the sorts of links NetZero puts in some of their customer emails

And those links point at the illegal "fake news" styled $1 trials (with endless unstoppable recurring billing).

Look closely at any mainstream media site & you will run into those ads.

Are Passive Revenues Impossible?

It really comes down to how you define passive.

If your site doesn't evolve & isn't aggressively marketed then eventually a search engine or another competitor will pick away at your advantages until you are soon found ranking #2 then #3 then #7 then #20 then invisible. Or you might get clipped by an algorithm all at once in a sudden stop torch job that makes your site essentially invisible, or it may be a slow & painful debt by a thousand cuts.

This is one of the reasons I generally prefer to have a site with a 30% or 50% profit margin over one with a 90% or 95% profit margin. Sure high margins are great while they last, but if you don't reinvest enough over time an algorithm or a competitor will eventually torch some of those high margin projects.

When it comes to online income, passive and reliable are not synonyms.

If you saved the margins you made while they were there then you are lucky, whereas if you adjust your lifestyle to that level of income & don't save anything then dark times have appeared.

It turns out having passive frugal spending habits & active savings habits are crucial if your lifestyle relies on "passive" income. ;)

eCommerce SEO? Google AdWords or No Soup for You

Aug 12th

Affiliates Are a Dying Breed

Being an ecommerce affiliate keeps getting harder & harder unless you have a strong brand and/or are selling things with a complex sales cycle.

Portable air conditioners is a pretty niche category, but when I look at it I simply don't see any opportunity on the SEO front unless you take on the significant risk of carrying inventory & drop hundreds of thousands to millions of Dollars on branding.

The Corporate, The Bad & The Ugly

Head keyword: note the brand navigation, the extended AdWords ads & the product search results that drive the traditional search results below the fold

Tail keywords are every bit as ugly, with Google product ads sometimes coming in inline, further driving down the organic search results.

And it is nastier when Google Instant is still extended. 10% of browsers can see a single organic search result!

Corporate, Corporate, Corporate

As ugly as that looks, not only do the larger merchants have an advantage in AdWords (getting their product ads on a CPA basis while smaller merchants have to pay on a CPC basis), Google product search (more reviews), inline search navigation options (featuring the same brands yet again), but most of the organic results (that are generally below the fold) are also the same big brands after the Panda update gave them a boost while torching their smaller competitors.

The Chicken vs Egg Problem of Scale

For online pure-plays (outside of Amazon.com, eBay & a few others) the "no opportunity anywhere" problem in search also harms the ability to be competitive on pricing because without the ability to rank you don't have the leverage over the supply chain the way that the big box stores do from winning everywhere in the SERP & having offline distribution. There is little opportunity to organically grow to scale over time unless you enter the market with some point of leverage (like going so far as creating the product right on through to marketing it to consumers), sell something totally different than what is already available in the market (and hope it doesn't get cloned), buy out an existing company that went bankrupt, and/or build significant non-search distribution channels first.

I suppose the last option on that front would be to promote your stuff on a large platform that is already doing well in Google (say eBay, Amazon, or Facebook), but doing that gives you limited control over the customer experience & forces you to keep chasing new one-off sales rather than building & deepening relationships with customers.

Killing Off Diversity

As Google collects more usage date (mobile is already 12% of search) these big box stores will have an even bigger moat between them & smaller competitors.

The "big box stores only" search results also create an experience that is bland & uniform. At first glance things may look different, but it is the same type of sites again and again: a lot of the brands cross hire, have similar "politically correct" cultures & have roughly similar customer experience sets. When you buy from Walmart you are not going to get that caring email from a founder offering hands on tips & advice. Scale requires homoginization, which generally kills of personality & differentiation.

Killing Off Innovation

The problem with the "be huge or die" approach to search is that most legitimate economic innovation comes from smaller players that challenge the existing power structure. Set the barrier to entry too high and you might have less spam to fight, but you certainly will have less economic innovation & more of the would-be innovators will be stuck working dead end job at dysfunctional corporations.

Now You See it, Now You Don't

Most people can't see what they are missing out on so they won't know, but (as Tim Wu put it so eloquently in The Master Switch) the same was true for AT&T when it held back innovations like the answering machine & what ultimately came to be the WWW. What sort of price do you put on email taking a decade longer to launch? How many other disruptive changes built off of incremental improvements will never appear because they simply weren't large & corporate enough to compete on Google's web?

The web was great because it offered something different. Unfortunately you have to search using something other than Google to find it.

Corporate Sites Deserve to Rank #1 (Brand Ad Dollars)

May 13th

Facebook is a Sleazy Organization

Facebook recently hired the PR firm Burson-Marsteller to plant a Google smear campaign in the media:

Somebody, it seems, hired Burson-Marsteller, a top public-relations firm, to pitch anti-Google stories to newspapers, urging them to investigate claims that Google was invading people’s privacy. Burson even offered to help an influential blogger write a Google-bashing op-ed, which it promised it could place in outlets like The Washington Post, Politico, and The Huffington Post.

And why would Facebook run such a campaign?

Confronted with evidence, a Facebook spokesman last night confirmed that Facebook hired Burson, citing two reasons: First, because it believes Google is doing some things in social networking that raise privacy concerns; second, and perhaps more important, because Facebook resents Google’s attempts to use Facebook data in its own social-networking service.

So now Facebook is trying to position itself as an advocate of consumer privacy rights?

Seriously?

Yes. Yes. Yes.

The bottom line is this: Facebook is a sleazy organization.

Google is a Sleazy Organization

The above Facebook complaint sounds like the same complaints that came from the old media powers which Google used high power lawyers to steamroll over.

How can Facebook be surprised with Google entering a new vertical by not respecting the property rights of existing market participants? It has been Google's approach to virtually everything:

So far Google has only fell flat on their face once: when they challenged the pharmaceutical corporations:

Google Inc. is close to settling a U.S. criminal investigation into allegations it made hundreds of millions of dollars by accepting ads from online pharmacies that break U.S. laws, according to people familiar with the matter.

The pharma corporations are powerful & are in bed with the government. In spite of repeated felonious behavior in marketing their drugs for illegal off label use (which has literally murdered millions of people) these companies can have the government step in and protect their property rights, by having the government enforce unto others the same laws that these same pharma corps regularly break (literally killing millions of people).

Maybe Google is Philosophically Opposed to Property Rights?

Yes, but only when convenient!

Everyone *but* Google should be open.

While Google tramples on the property rights of everyone else, the first sniff of someone operating anything like they do drives Google into black-ops mode & they conduct a smear campaign. Google launched Buzz without warning, but when their feared Facebook was collecting more personal information than they could Google went into black ops PR mode warning against security issues in Facebook.

Remember that bogus "Bing is copying our results" stuff Google engineers did earlier this year? Google later rolled out their content farm update & many of the sites which were torched by Google are now getting more traffic from Bing. What does that tell us? If Bing was putting *any* significant weight at all on Google rankings & traffic then why didn't that carry any weight when Google torched a bunch of websites?

Here is the Google traffic profile for a site that was torched by Panda

And that same website's Bing traffic

Google traffic fell through the floor, while Bing traffic kept climbing. Some sites that were hit by Panda are getting more visits from Bing or Yahoo! Search than from Google.

Conclusion? Once again Google distorts media to promote itself & its business interests, while bogusly smearing competitors with fabricated trash.

Part of why Microsoft's search marketshare is less than Google's is that Microsoft is willing to block sleazy traffic partners, unlike Google. But Google's treatment of their partners is inconsistent. Using "inside voices" Googlers openly explain in plain English how they treat their partners: "we are using compatibility as a club to make them do things we want" - Google's Dan Morrill.

Big Companies Hate Honest Market Innovation

Large companies are largely counter to honest innovation in the marketplace. They are comfortable atop the perch and want to lock down innovation to maintain their current dominance.

Sure the big banks welcomed CDOs, MERS, etc. ... but those were welcomed precisely because they were part of an elaborate scheme of dishonesty and fraud. But the same society which brings us CDOs built on fraud (that ultimately cost you your job, your house, your retirement savings, the value of the currency, etc.) is also a society where dirty corporate whores push to force smaller market competitors to be entirely transparent.

This stuff is literally everywhere. Consider this: Major Record Labels Forced to Pay $45M USD for Pirating Music. Once again, property rights are only important when they are forcing their own rights, but they are willing to walk on the rights of others. Consider the actions of MarkMonitor, yet another seedy Google partner:

I have for years been telling you even if you have no interest in the new gTLD’s you had to pay close attention to the process as whatever rules come out of that process will be attempted to be applied to all existing TLD’s including .com, .net and .org.

This is especially troubling because as you know the new gTLD process has not even been approved yet since the .Net contract is up for renewal, trademark groups are going to push for this new system to take away domains, be imposed on .net

The very domain name of the front organization that is pushing to remove domain privacy is registered using a private registration. ipconstituency.org uses Domain Discreet!

Read this piece on Google & Skyhook and ask yourself if Google is actually open & is promoting or suppressing market innovation.

Small Businesses Typically Can't Act Sleazy

Try getting customer service from Google & you will quickly find yourself in a hall of mirrors. Compare that to the customer service you get from a small company. Sure some small companies may decide they have no interest in supporting freetards, but if you are actually a paying customer you will usually be treated well by small companies because word of mouth marketing is the most important lead channel for many small businesses.

When a consumer or small business owner gets caught (acting like a big business, and) doing something illegal they go to jail. When a big business repeatedly commits serious crimes the wost thing that could possibly happen is a shake up of management. A company has no soul. A corporation can't go to jail.

This is precisely why Google's corporate-first approach to relevancy is bad.

Soon after the Facebook/Google story broke a friend of mine told me they put “facebook smear of google” in Google & they got:

  • Image result = Globe and Mail
  • Number one result = Huffington Post
  • Number two result = TechCrunch (top websites are both AOL properties)
  • Number three result = Get more results from the past 24 hours
  • Number four result = The Daily Beast – better known as the site that broke the story.
  • All other results are a retelling and mashup of the original.

The big publishers complained that smaller sites were stealing their stories. Google made secret arrangements with the Online Publishers Association & now the big companies get to rank at the top of the search results for stories that they stole from smaller outlets.

While small players are desperately fighting against each other for scraps off the table, the pawns have been driven out of the search ecosystem.

All webmasters are equal but some webmasters brands are more equal than others

Society hierarchy has been restored.

Don't be evil, just be corporate.

Search Power Plays, And How To Avoid Getting Crushed

Nov 11th
posted in

The little guy often loses.

As market niches get saturated, the winners are typically those with the deepest pockets.

Up until the last few years, the little guy has been able to prosper with SEO. The little guy didn't face much competition from big companies, because the big companies didn't get SEO. However, Google's current algorithmns and corporate strategy often have the side effect of benefiting large companies.

According to Google CEO Eric Schmidt, the Internet is a "cesspool" where false information thrives....Brands, he said, are the way to rise above the cesspool

There is a danger in reading too much into Schmidt's words, however this statement mirrors a lot of what happens in the search results. A big company or brand, with a crawlable site, will find it easy to dominate the search results. A big company will be linked to, discussed in the media, and have established keyword query volume - all factors which Google rewards. All these factors are becoming increasingly difficult for the small guy to emulate.

Factor in Google's ongoing moves to "own" verticals, and many more little guys will be crushed underfoot. It doesn't matter if your site is white hat, grey or black, if your site competes directly with a big company, or with Google - who are now a big company themselves - you'll almost surely lose.

This isn't just true in the SERPs, of course. It's also true in Adwords, which essentially rewards those with deep pockets. It's true in print. It's true across all media. It's true in politics, in money markets, and in life.

Power is like that.

Even if you don't face competition from big operators, you'll face competition from a million other little guys, especially if there is no barrier to entry. This is often the case on the web. Check out this article by Tim O Shea, founder of the short lived UK group buying site Snippa. Snippa was similar to Groupon.

Due to the number of players, commission levels are being eroded far from the 40-50% that Groupon achieves down to 0% just to get the deal (at Snippa our deals averaged around 10-20%). Merchants are getting numerous phone calls from prospective group buying companies and the conversation with many is more about the commission level charged rather than how they could offer a great discount for a group of new customers. This will continue until a clear leader emerges that can demonstrate a large customer base allowing them to negotiate better deals and commission levels. Many companies chasing the same deal is counter productive for the end customer.

Too many competitors errode margins to zero. Eventually, the biggest operator wins.

How To Protect Yourself And Win

When you're looking for a niche to get into, how do you evaluate it?

Do you look at the search volumes and look to position a site top ten for that search volume? An ok strategy, and one used by many in the SEO business.

However, lets take it a step further.

If you're thinking long term, you need to consider other factors, especially competitive threats. Ask: is this niche likely to be so lucrative that it will attract big companies? If so, then you may need a strategy to become one, or be bought out by one. You may win such a fight for a while, but the big company will invariably win in the end through greater reach and purchasing power.

Are you the cheapest, or are you the best?

Pick one.

The little guy is almost always better off aiming to be the best at what they do. Being the cheapest requires volume, and is very difficult to sustain. Many companies, both big and small, get locked in a downward spiral of price cutting. Again, you'll last being the cheapest until a bigger company turns up. Bigger companies can get price advantage through volume. If the internet equivalent of Wal Mart is your competition, you're in trouble if you compete on price.

Zappos was a small company, that eventually became a big company, not by competing on price, but by competing on service. They aimed to be the best at service. Had they competed on price, they wouldn't have got anywhere. The big shoe and clothing chains would have crushed them.

Is SEO your only strategy to dominate a niche? If so, then you're vulnerable to the whims of Google. Instead, think about ways you can develop a brand. I use the term brand in the widest possible sense. Being the best guy in the world to talk to about, say, the eating preferences of neon tetra fish - is a brand. Whatever it is you do, if you're not competing on price, aim to be the very best. If you have to carve a niche even finer, do it, at least until the costs outweigh the benefits.

Think about ways you can lock in customers/visitors and keep them coming back. If you only ever have search volume, then you rely on people who haven't seen you before. Encourage visitors to bookmark you, or sign up for a newsletter. Hook them in some way. Above all, be memorable. Being memorable will create search volume out of nothing (how many people searched for Zappos years ago? Or SEOBook? ). Building an audience may not be enough to fend off big companies, but it will help you fend off other small companies and new entrants, especially if they only rely on SEO.

Be the big guy in the little niche :)

Money is an Arbitrary Value System*

Nov 8th

* If you think otherwise, do you care to debate the following video?

"Perhaps the only lessons learned by the banks in the crisis is that the rules don't apply to them." Ain't that the truth. The video is completely accurate:

Richard M. Bowen, former chief underwriter for Citigroup’s consumer-lending group, said he warned his superiors of concerns that some types of loans in securities didn’t conform with representations and warranties in 2006 and 2007.

“In mid-2006, I discovered that over 60 percent of these mortgages purchased and sold were defective,” Bowen testified on April 7 before the Financial Crisis Inquiry Commission created by Congress. “Defective mortgages increased during 2007 to over 80 percent of production.”

Read that bold sentence again.

The bankers KNEW they were committing fraud that would create trillions of Dollars in losses.

Rather than suing them for the appraisal fraud, accounting control fraud, securities fraud, mortgage fraud & foreclosure fraud, instead we have a government that assists them in the fraud by papering over their mistakes and forcing other institutions to waive the right to sue over the fraud.

Everyone else is forced to eat the socialized losses that mirror the "profits" generated by the banks in years past. We have a central bank holding rates at 0 while running the printing presses in overdrive. That is destroying pension accounts and the living standard of the elderly as their life savings is literally stolen from them to prop up a bunch of criminal thugs on Wall Street.

The goal is not to create value or stability, but rather to engineer instability, with sharp market moves which can be profited from on the way up AND on the way down:

Bubble, Crash, Bubble, Crash, Bubble ...

We will continue this cycle until we catch on. The problem isn't only that the Fed is treating the symptoms instead of the disease. Rather, by irresponsibly promoting reckless speculation, misallocation of capital, moral hazard (careless lending without repercussions), and illusory "wealth effects," the Fed has become the disease.

The average person is fed backwards looking misinformation by the media, which is sponsored by those selling the bag to others.

If you are in debt for consumption driven reasons it is worth noting that the game is rigged. These people have done, are doing, and will continue to act as criminals to rip you off. There is no reason to go out of your way to make yourself easy prey.

Are you anti-American? Do you have an axe to grind? Did you somehow fail at life? These are questions we are trained to think when anyone complains about scams embedded in the political economy.

Speaking for myself, I have never been as successful as I am today, and much of that success comes from the free market ideals that have been preached (and meeting my wonderful wife). The issue I have right now is that we still preach those free market ideals, but are doing nothing to follow them (and are actively undermining them). If I was born 5 years or 10 years later I might be a street beggar, simply because my opportunity to succeed had been marginalized by the market corruption of the bankers. Maybe I still would have done ok, but a lot of people are being driven to the margins and off a cliff. Many of them are even sadly conned into believing it is their own fault.

Certainly consumers are to blame for some stuff, but they had no idea how much fraud was embedded in the financial engineering going on beyond the headlines. They didn't know that the central banker believed that there was no reason police fraud. Most people are too busy to be macro-economic experts on the side, and yet if you made the mistake of trusting the bankers in some cases they may have destroyed your life savings or left you living a meager life as a debt serf.

Back when the FBI warned that there was an epidemic of mortgage fraud (in 2004), the US federal government shifted some of those resources to policing other areas like homeland "security." When states tried to protect their citizens against predatory loans the federal government used preemption to block them, allowing the fraud to continue. As Alan Greenspan states: there was fraud, it was intentional, and it was indeed a series of criminal acts.

None of that is a matter of debate.

And none of the banking executives are in jail.

The federal government sided with the criminals on the way up. And it is siding with the criminals on the way down. They would rather debase the currency and steal your savings than let their criminal buddies on Wall Street go bankrupt.

Society is nothing more than a system of laws and the culture they promote. Betray someone's trust and they become less trusting toward everyone else. That creates friction in the marketplace which shrinks the economy and living standards. Make heroes out of criminals & at some people a lot of people are going to say "screw it, the laws do not apply to me either." When that happens (as it will) then at some point there will be a sharp increase in violence.

This is not about promoting communism, or some other such label. What we have now in the capital markets is far worse than communism, as they have privatized profits AND socialized losses. If you believe in capitalism OR communism then what is happening now is broken.

And yet the people who just privatized the profits and socialized the losses are to be worshiped and followed. You should be thankful that the government bailed them out & you should just suck it up. The role of government is to protect the wealth of the opulent from the stupid majority. It has always been.

The stupid thing about it is that all (or at least most) of that pain & suffering is easily avoidable by letting the people who preach free market values to eat their losses and fail. By pushing those off onto everyone else, ultimately the government just creates uncertainty and makes people less trusting. And as society breaks down, the government won't be able to sort out the issues, as they already gave away all the money to a bunch of brigands on Wall Street.

They will dance while your family starves.

"I believe that banking institutions are more dangerous to our liberties than standing armies . . . If the American people ever allow private banks to control the issue of their currency, first by inflation, then by deflation, the banks and corporations that will grow up around [the banks] . . . will deprive the people of all property until their children wake-up homeless on the continent their fathers conquered . . . The issuing power should be taken from the banks and restored to the people, to whom it properly belongs." —Thomas Jefferson

Universal Truth Of Selling On The Web: Easy & Simple Wins

Sep 8th

The following is a guest post by Jim Kukral.

Google knows this. Now you do as well. Easy always wins. Take a moment and picture your website or your blog or your product or service in your head right now. Now, think of Google’s. Which one is easier? No, you're not a search engine, you're probably a small business owner with a variety of products services, entrepreneur with a business idea, or blogger . But the comparison remains because regardless of what it is you do easy will always win.

So keep thinking about your Web business. Is what you’re selling easy to buy? By that I mean; when somebody comes to buy from you, or to simply get information from you like a phone number or to download a white paper… is it easy to do? Or are you making it too hard?

Picture Google.com again in your head. It's pretty darn easy, no? There's a logo and a big input box underneath it. You put in what you're looking to find, and hit search and boom, you find it. Easy. Google understands that customers use them for one reason, to have a problem solved, and therefore, that’s what they deliver, without all the frills that other search portals like Aol or Yahoo! try to offer.

Your opportunity right now is to figure out the main one or two reasons people visit your website, because despite what you might think, your customers probably have only those one or two things on their mind when they visit you.

If you visit the home page of Orbtiz.com, you’re probably there to do one of a few things only. Book a flight, find a car, or make a hotel reservation. Possibly all three at once. But honestly, that’s pretty much it, right? I would bet that 99% of their traffic is trying to do one of those things. The same goes for you and your website, blog, membership site or anything you produce online.

What exactly are your customers looking for? You need to find out and find out right now! Check your analytics (I recommend Google Analytics, it's free! www.Google.com/Analytics) to find out things like the most viewed pages of your website, as well as the most exited pages too. You may find out that 90% of your visitors are focusing on the free white paper download page and ignoring the other pages you thought were important. That’s great news! Now, you at least know what your customers want. And now you can make it easier for them to get it. You may also find out that a large percentage of your visitors always leave your website on one specific page, giving you the insight that perhaps they aren't finding what they're looking for, getting frustrated, and surfing away. That's bad.

So what should you do with that knowledge to make things easier for your visitor, and better for your business? If you're getting a lot of traffic to your free white paper download, go ahead and take that download information and make it stand out on your home page. If done right, you'll make it as easy as possible for your visitors to get what they were looking for, and you’ll see even more downloads, and happier visitors because you didn’t make them work so hard.

Now, you may also find out that the page you really wanted your visitors to see is not being viewed enough. This could be the specials page on your e-commerce site, or the packages page on your consulting site or maybe your customer support contact information page. Whatever it may be, once you know what it is, that page obviously needs to be viewed more, and while you can’t force it down your visitors digital throats, you can redesign your page so that it limits the other choices that can distract your visitor.

Make it easy and simple, then win!

For over 15-years, Jim Kukral has helped small businesses and large companies like Fedex, Sherwin Williams, Ernst & Young and Progressive Auto Insurance understand how find success on the Web. Jim is the author of the book, "Attention! This Book Will Make You Money", as well as a professional speaker, blogger and Web business consultant. Find out more by visiting www.JimKukral.com. You can also follow Jim on Twitter @JimKukral.

Labor Day = Yeah

Sep 7th

When you think of labor day what comes to mind? For me it is these 2 thoughts

  • lower earnings because few people are online today
  • since almost nobody is online, any hours worked today are me getting ahead of the market ;)

Working hard & working long hours can almost be a disease...the web makes it easy to be addicted.

But for every person who is putting in hard work trying to help people there is another person selling image.

The big issue with the image game is the risks. As the lies pile up they corner people into a bad situation, to where they can (and do) lose everything.

If I had to take a single point of reference to help a stranger judge the difference between a hack and someone who wants to honestly help people, I would say it is this: do they encourage you to take on debt.

  • If they do then there is a good chance they are the type of person who will go out of their way to screw you.
  • If they do not then they are likely not a maximizer type (because if they were then they would be encouraging you to go into debt to sell you more stuff).

It is not that all debt is evil (when I got started online I was naive enough to start on a credit card), but life and markets are unpredictable. If I wasn't smart enough to get a job to cover my 6 or so months of education before going full time online who knows where I would now be. What seems like a short term gain can lead to longterm failure. We are human, and so we are flawed. Wen you have debt/leverage you have no spare parts. So if something goes wrong you are done. Nassim Taleb spoke about the importance of savings and diversity of revenues as keys to survival, while noting that the very structure of our public markets encourages risk + leverage (options encourage short term performance & volatility rather than sustained growth, and you hope the guy on the next watch is stuck holding the Madoff ponzi bag).

The falls of past empires have typically been preceded by rapid inflation in food costs. Our food supply, like most other aspects of modern day life, has been so extended as to be poisonous. Fishes soaked in chemicals literally change sex back and forth, and shrimp in the ocean (with traces of Prozac) swim toward the light - where they get ate.

Its not about fixing the conversation. Its about filling in the blanks. If people are prone to click on something that is exactly what they will get, even if it is not something they want.

We misinform kids about sex in a way that can screw up the rest of their lives. Against the will of people data is collected so that they may be stalked and harassed. If you once thought you were fat in the past, long after becoming anorexic there will still be ads reminding you how fat you are, following you around the web.

When bits of culture die the life lessons wrapped in it fade as well. Sure there may be HTML codes for emotions, but (beyond ad targeting) it is hard to reduce people to number.

Is the push toward homoginization to increase yield and chasing the lowest common denominator making people happier or more miserable?

I realize that reading the above can quickly make me sound like some ultra left-winged hippie, but the point of this post is not a political one ... rather one on the basic rule of law.

We justify (or downplay) harming ourselves, our environments, and the environments of other animals so we can have more and better. But to do this we often take on debt and leverage and put ourselves in precarious situations. Worse yet, we often have *others* decide to take on leverage for us, without our desire or permission.

Why is it that the government is giving Google tax credits to build more low income housing while the Federal Reserve is sitting on over $1 trillion in bad mortgage paper? How can the government want to make housing cheaper / more affordable while simultaneously propping up (and thus ensuring overvaluation of) virtually the whole of the market? How can the government taking both sides of the same bet lead to anything but waste, fraud & abuse?

If you believe in efficient market theory then banking should represent a small portion of the profit pool (since banks are all dealing in the same commodity of cash). And yet the banking class keeps representing a growing portion of the profits, while the bad sides of their trades (the losses) are passed on to tax payers.

I don't mind someone else levering up with risk so long as they have to pay the consequences of their failures. But capitalism without failure is like religion without sin.

These banks threatened tanks in the street if they didn't get their bailouts.

They went so far as to say even auditing the Federal Reserve would threaten the financial system. Sorry, um, but that is exactly what the banking class did. If they are not punished for committing crimes then the lawlessness will only grow more extreme, as it has.

When the bubble popped some of these scammers, charlatans, shysters, swindlers, and tricksters claimed that "nobody saw it coming," but in fact as things started to go wrong these folks leaned into it and made it worse.

Rather than having CDOs go unsold they engaged in self-dealing & kept mixing the bad chunks in, sorta like making new sausage out of old sausage. They knew what they were doing. They intended to commit fraud:

"On paper, the risky stuff was gone, held by new independent CDOs. In reality, however, the banks were buying their own otherwise unsellable assets."
...
"One rival investment banker says Merrill treated CDO managers the way Henry Ford treated his Model T customers: You can have any color you want, as long as it's black."

Its labor day. The criminal bankers who ripped you off in the past, who are currently ripping you off with more crimes, and who will rip your children off are stealing your labor. And since neither political party cares to stop it its up to you how much you want to give...there is no end to how much they would love to take. Time for me to take a break. ;)

Are You Thinking Like Google?

Sep 3rd

No, not like that, but in the good way! :D

The following is a guest post by Jim Kukral highlighting one of the most fundamental tips to succeeding online.

Have you ever really taken a step back from all the technical SEO stuff and thought about why Google wins? The real reasons why they have mass-market share and why they continue to dominate? It's time you should, because once you understand how to start thinking like Google, you can finally begin to go beyond just ranking better, but also how to be a master Internet marketer so you can get more sales, leads and publicity.

After all, once you've been found, you now have to convert. Otherwise, it's a waste of time.

So why does Google win? Because Google is the world's biggest, and best, problem solver. The truth is that there are only two reasons why we all go online, using Google or not. Those two reasons are:

1. To have a problem solved
2. To be entertained

That's it. Everything, and I mean everything you do online falls under one of those categories. For example, let's say you're planning on cooking your wife her favorite chicken marsala dish for your anniversary. You go online and do a search for "chicken marsala recipes". Boom, you now have recipes, and videos, and images and cookbooks and all kinds of information to help you solve your problem.

As another example, let's say you wanted to relax after work and watch your favorite musician play some of your favorite songs. You go to YouTube and do a search for "Rolling Stones Videos" and boom, you're now watching video content that entertains you.

YouTube, which is owned by Google, is already the number two most searched search engine on the Internet (behind Google of course). That means that today billions of people are actively searching the Internet for video content. That also means that because of the public's fast-growing massive hunger for content in video form, that regular people and businesses alike are now able to profit from the creation of that said video content.

The truth is, Google (and your business) has to solve problems for their (your) customers, the Internet searcher. If they (you) can't do that, they (you) lose customers. It's that black and white.

So I'll ask you again. Are you thinking like Google? Have you sat down and figured out what your target audience's biggest problems are? If you haven't done that you need to do it now. Anticipate what they need. Figure out their pain and then create products/services that take that pain away.

Just like Google.

For over 15-years, Jim Kukral has helped small businesses and large companies like Fedex, Sherwin Williams, Ernst & Young and Progressive Auto Insurance understand how find success on the Web. Jim is the author of the book, "Attention! This Book Will Make You Money", as well as a professional speaker, blogger and Web business consultant. Find out more by visiting www.JimKukral.com. You can also follow Jim on Twitter @JimKukral.

Selling SEO Services: A Consultative Approach

Aug 26th
posted in

Does the thought of selling fill you with dread?

If you see yourself as a technologist, or marketer, then selling may not come easy to you. But we all need to sell something, even if it is just our opinion! If you're a consultant of any description, it comes with the territory.

So it pays to know a few techniques. Luckily, sales isn't something you have to be born to do - it does not require supernatural charm, charisma, a hide as thick as an elephant, and a superhuman drive.

Selling can be like a doctors consultation.

A Visit To The Doctor

When you go to the doctor, do you expect the doctor to just guess what is wrong with you?

A doctors consultation involves the doctor asking you a series of questions. This questioning is to help determine what the problem is, and how it can best be solved. At the end of the process, the feeling is probably one of relief and assurance i.e. that the doctor has your best interests at heart, and will cure what ails you.

It's the same in business.

Any client you encounter has a problem. Like a specialist doctor, it is your job to ask a series of questions to help nail down the problem and find a solution. The very act of questioning - known as consultative selling - helps build trust and rapport with the client in the same way you may experience with a doctor. This works especially well in the field of consulting, which is based on information sharing.

The emphasis is on clients needs, as opposed to getting a signature on the dotted line. You first establish a client's needs, then you provide a solution, if you have one. You're building a relationship, based on trust, by asking a series of questions.

Not so hard, really.

The Mechanics Of Consultative Selling

Ok, so how do you do it?

First, you need to understand the buyers buying process. You then match your selling process to their buy process.

All buyers go through a specific process. For example, if a company needs internet marketing services, do they go to their established provider - possibly the web design company who built their site - or do they go direct to the SEO market? Do they attend conferences? If so, which ones? Hint: they may not be SEO conferences. Do they ask other business people in their business network? Do they go with a known brand?

It's pretty simple to determine the buying process if the buyer comes straight to your website, fills out the contact form, and requests a call-back. But life often doesn't work that way.

A prospective client may ask their web design company. Their web design company may not have had a clue, had you not been in to see them a week earlier. You asked the web design people a few questions about whether they had an SEO capability in house, found out they didn't, and found out they had a lot of clients who quite possibly needed SEO. You proposed a joint deal whereas they would refer their clients to you, for a 10% commission.

Try to find out how your prospective clients buy SEO services, and position yourself accordingly. Think business associations and clubs, their existing providers in related areas, and the other companies they have an association with.

You need to get yourself positioned correctly in their buying process.

If you've managed to get in front of them, you then need to think about the questions you are going to ask. You should be asking about their business, where they see it going, what problems they are having, their place in the market, and their competitors. Business owners typically like doing this, and will welcome your interest, so long as you're seen as a "doctor" i.e someone they trust to help. You'll also need to make a presentation, which, depending on the context, need not be formal. It could consist of showing them case studies of how you've helped solve this problem before. Let's face it, most SEO/SEM problems and solutions are going to look pretty much the same.

It's all about trust relationships. It's a fact of life that people buy more readily from people they trust.

But how do you know if you can trust your prospective buyer?

Screening Buyers

Consultative selling is also a great way to screen out tire kickers. A person who is just pumping you for information will reveal very little about themselves. The conversation will be one sided.

If they are genuinely interested in your service, they are more likely to answer questions. They do have to trust you first in order to do this, so try to think like a doctor if you encounter resistance. i.e. "I want to help you get more traffic, but I can't do so if I don't know more about your business before I can devise an appropriate solution".

Be prepared to walk if they don't volunteer the information you need. Even if you did land the job, you may end providing a substandard solution to their problem, which will likely end in tears. Better to find clients who you can work with, rather than against.

Another method of screening is to pre-close the sale. When you are gathering needs, ask that if you can solve their problems to their complete satisfaction, as a result of this discussion, that they will buy your services.

This will sound to them like a fairly safe bet i.e. you have to propose something that solves their problem. However, it also creates an implied obligation on their part to do so. There is no risk on your side, as you can either solve the problem, in which case you'll likely get the business, or you can't, in which case you'll walk anyway.

If they are hesitant, it is either an opportunity to walk, and thus stop wasting your time, or an opportunity to find out something more about their buying process.

In short, when thinking about sales:

  • You are not a salesperson. You are a "doctor"
  • Focus on the needs of the client, not landing the job. Sale hucksters typically focus on the close too soon, which can destroy trust
  • It's ok to walk away. You won't be able to help some clients
  • Insist that the client engage in conversation. A client who asks you questions, and volunteers little information, might be pumping you for information

These consultative sales techniques are covered in various sales theory books. Check out "Consultative Selling", by Mack Hanan, Jay Abrams "The Sticking Point Solution", and "Stop Telling, Start Selling: How to Use Customer-Focused Dialogue to Close Sales" by Linda Richardson.

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