You Must Build a Destination if You Want to Create a Fully Valued Sustainable Business Worth Buying

Recently Google's Kevin Marks was interviewed by cNet, where he said:

OK, stop and think about your application. Do you really need to be a standalone site? Do you really want to write user registration code, or would you be better off taking your application and bringing these other sites where there are lots of users already and where they have already expressed both their personal information and their connections to other people?

The answer to that is of course you want to be your own destination. Writing registration code once means you can re-use it over and over again on various projects. If you can program a successful widget or application then you are not the type who thinks registration code is a roadblock.

Some of the most successful viral applications (like Paypal and YouTube) leveraged other platforms for growth, but a large part of their success was that they also chose to be destinations.

If you create a destination vs exclusively being a platform on another site, you...

  • have more direct contact with your customers (which often creates new revenue streams)
  • have greater organic growth opportunities due to a wider variety of organic distribution channels (rather than being someone else's user generated content)
  • make it easier for reporters to contact you. Public relations is huge for spreading viral stories and growing viral networks (look at how many times Plentyoffish was in the press)
  • create something that is easy to link at, where you control the link equity and attention and use it to profit as you wish (ads, market new related ideas, change your business model, etc.)
  • can extend your offering out into related fields and/or create a premium service
  • are more likely to receive funding if needed and can sell your business for a higher price point (since your business has more of what Warren Buffet considers a moat around it)

Consider some of the add ins that sold for millions or billions of dollars because they chose to become destinations

  • If Paypal was not a destination, eBay could have killed them and/or bought them for a small fraction of their potential value.
  • If or MyBlogLog was just a Firefox extension would Yahoo! have bought them?
  • If Feedburner was a browser plug-in of some sort would Google have paid an estimated $100 million for them?
  • If YouTube was not a destination could they have competed with Google Video and got bought for $1.65 billion?

Overture, which pioneered the paid search field, once had a dominant market-share, but was afraid of becoming a search destination because they thought that it could cost them syndication partnerships. The day AOL signed on to syndicate Google's ads, Overture became irrelevant as a business force. They bought a couple search engines in an attempt to become a destination, but it was too little too late. And Overture was bought by Yahoo! for about 1% of what Google is worth today. The pioneer in the paid search model that drives the current web economy sold for about the same price as a marginally profitable free video hosting site, largely because Overture failed to become a destination. Oops.

Why Google Guidelines Sometimes Depart From Reality

The Federal Reserve is somewhat like a market maker, or at the very least a market influence, on the value of currency. Google acts in a similar value, placing value on and evaluating the value of information and collections of information.

Reading this blog post about Ben Bernanke and replace words like credit and inflation with paid links and search spam and you can see (and perhaps even respect) how Google manipulates the press, why Google's guidelines are often forced to be removed from reality, and search engineer editorial action is often harsh beyond reason.

Here is an excerpt from the blog post about Ben Bernanke:

The last time a slowing economy failed to moderate prices was the 1970s. Even as the economy slid into recession, we had major spikes in the prices of energy, food, clothing.

What is particularly worrisome to me is that as we have slashed interest rates 225 basis points, consumer loans -- mortgages and revolving credit -- have actually moved higher.

Gentleman, this is a major problem. And our internal, non-public projections forecast it is only going to get worse for the next 4 quarters . . .

Paying a PR firm is not much different than buying PageRank, other than it perceived by Google as being cleaner.

And if you are big into economic stuff here is some more good stuff...

First, Warren Buffet's Berkshire Hathaway Annual Report [PDF] offers a lot of great business strategies and insights. If you have never read any of his letters, make sure to read from the heading on page 5 or 6 about Business - The Great, the Good and the Gruesome right on through to the end of that section a couple pages later. You can also read Warren's older reports here.

Nouriel Roubini on The Current U.S. Recession & the Risk of Systemic Financial Crisis [PDF] offers a bearish outlook on housing:

This is the worst housing recession in US history, and there is no sign it will bottom out any time soon. At this point it is clear that US home prices will fall between 20% and 30% from their bubbly peak, that would wipe out between $4 trillion and $6 trillion of household wealth. While the subprime meltdown is likely to cause about 2.2 million foreclosures, a 30% fall in home values would imply that over 10 million households would have negative equity in their homes and would have a big incentive to use "jingle mail" (i.e. default, put the home keys in an envelope and send it to their mortgage bank).

Some of the early lending institution losses are being socialized by inflation and other sources

Countrywide - an institution that was more likely insolvent than illiquid - has been bailed out with public money via a $55 billion loan from the FHLB system, a semi-public system of funding of mortgage lenders.

And this is altering the online economy heavily.

A few years ago credit card companies rewrote the bankruptcy laws, but mortgages have not yet been re-written to favor corporate interests. Nouriel Roubini highlights further risks associated with house price depreciation:

What is happening is just the consequences of rational economic behavior. In most US states mortgages are non-recourse loans; thus, if a home owner defaults on its mortgage then banks take over the collateral - the home - via foreclosure but once that happens it cannot go after the borrower for any difference between the value of the original mortgage and the current value of the property.

The Future of Business Process Outsourcing

The Disadvantages of Low End Outsourcing

My History of Outsourcing

Last year I lost thousands of dollars multiple times outsourcing projects to people who could "do them no problem" until time for showing the results came in, and that capital was simply wasted. At the lower end, where people will take your money and do nothing for you or offer services not worth paying for, there will always be a market where people are glad to take your money.

That piece of the market creates a market for lemons effect, be it SEO, web design, programming, eBay listings, whatever.

The Cost Advantage of Outsourcing is Quickly Eroding

Not only is there a market for lemons effect, but the cost savings advantage is quickly eroding:

The reality is that wages are rising in India. The cost advantage for offshoring to India used to be at least 1:6. Today, it is at best 1:3. Attrition is scary.

Jobs that are low value-added and easily automatable should and will disappear over the next decade.

That means that if you provide a high value service, there is a greater presumed risk to hiring you, unless you have great brand strength and/or enjoy valuable personal recommendations. Worse yet, if the job is easy to automate eventually a computer will do it.

The Problem With Most Outsourcing Projects

Many people who look to outsource have a marginal business model and are outsourcing rather than improving their business model, in a last ditch attempt to try to keep it surviving after the business model is already in decay, without changing their business model to fit the current marketplace.

High End Business Process Outsourcing

You Can't Outsource Loyalty

At the other end of the market, some of the most talented people are also so ambitious that loyalty or output is limited. When I decided to change the SEO Book business model about 6 months ago I started working with one of the best programmers I have ever met. He did great work and started off faster than lightning, but he wanted to grow his revenues so fast and was so overwhelmed with work that he had a hard time making time for my project. In spite of me sometimes paying him 250% of his original rate, he and I both decided that it would be best if I finished the project with someone else. So then I ended up spending thousands more to have some re-learn some of the stuff he did, and then create custom coding to

  • verify the affiliate program would work and give the proper affiliate credit while changing the tracking method
  • cross reference account status and permissions across 3 databases
  • integrate it all with Paypal subscription data

There are still a couple things with the site that I really need to improve (Drupal FlashVideo conversion and some stuff with the Autoresponder module), and that does not even include additional features I want to add. The second programmer is helping with some of it, I am doing some of it, and a third programmer is helping with some of it.

Freelancing to Pro: Training Your Workforce for Better Jobs

I outsourced the writing of one of my sites to a person who was passionate about the field. I let them be associated with the brand and put their name on it so they would be more passionate about building it up.

I have marketed the site quite aggressively and gave them my ideas for how to create featured content and what topics to write about. That has lead to them getting so much exposure that other people are offering them higher paying jobs.

There is an aspect of outsourcing where if you teach them enough and give them enough exposure they end up being worth more than you can pay them unless you already have a market leading channel.

When Outsourcing Works Great

Pre-made & Self Serve Software Packages & Services

All the above models work so well because they

  • allow a single piece of work to be sold many times
  • use the feedback of many customers to improve the product

Word of Mouth Recommendations

  • All my hosting providers that I recommend were recommended to me by other online friends.
  • I have a guy who makes banners for me who is fast and does great work. He was recommended by a fellow SEO.
  • My designer for this site and other sites came as a recommendation from other friends.
  • Most of my other custom service providers are people who read this site, learned to trust me, and built a relationship from there.

My wife and I have only bought outsourced services via word of mouth recommendation that I ended up regretting on 2 occasions. In both cases, the person giving the word of mouth marketing was recommending themselves. Other than that, I have rarely had a bad experience with word of mouth marketing. And I think this is true for two reasons

  • you first learn to trust the source, and they earn that trust over months and years
  • then you trust what they recommend

Spreading that risk out over stages lowers the chances of making a bad choice.

How to Continue to Profit as an Outsourced Service Provider

Seth mentioned this Gavin Potter quote a couple days ago

The 20th century was about sorting out supply, the 21st is going to be about sorting out demand.

As the cost advantage of outsourcing disappears, the web gets polluted with scams, the web gets saturated with competitors, and more offline conversations influence online transactions, it seems the best ways to make money outsourcing are:

  • work to build some of your own projects so you are not reliant on clients
  • specialize on a niche and own the idea
  • build a brand that demands market leading rates
  • give away a lot of value free to do your marketing for you and qualify your prospects
  • inspire customers and ensure you offer a remarkable valuable service worthy of word of mouth marketing
  • turn your service into a product that is sold as a service, and include customer interaction touch-points where it makes sense to add value

Starting From Scratch in a Fair Market vs Building an Honest Sustainable Competitive Advantage

Naive Excitement

When you are new to the field of SEO there is a certain excitement in starting a site from scratch and growing it out into a flourishing enterprise. You ask someone to link to you and when they do you get excited. When you get cited without asking for it you get excited. And when the rankings start to show up you get excited. At some point you may even develop an irrational emotional attachment to some of your websites. I know I have.

Fair is Fair

Search engines teach you that there are equitable rules to follow. The rules keep shifting in accordance with the search engine's business models, but somehow they are always fair. You see other people doing things that are "spammy," but refuse to. When you submit your site to 100 directories, donate money for links, attend every conference that will link at you, or when you syndicate your content to dozens of websites it is not spam. Your content is quality, you follow the rules, and one day you will be rewarded for it. One day...

Who Starts From Scratch?

But do you have to start from scratch to be doing SEO?

In Cosmos Carl Sagan said that "to make an apple pie from scratch, you must first create the universe." I tend to think the same way about SEO.

  • Some people who jumped on the web and were immediately successful started when the marketplace was much less competitive.
  • Some companies like lost millions or billions of dollars building their brands.
  • Others carried offline success and relationships online.
  • Some people have jobs or schools that offer them the opportunity to publish content on a trusted domain.
  • Some companies can do whatever they want because they have a big brand and/or a large ad budget.
  • Some people who are better salesmen than you may borrow your ideas, re-package them, and then talk trash about how ignorant you are.
  • And yet another group of people have a large following because they are highly biased and/or lie (ie: Fox News).

What is Fair?

Are any of the above categories unfair? Or is the concept of fair nothing more than bogus self-posturing by profit hungry corporations? Many companies who helped fund the large networks (affiliates, for example) later saw their sites classified as spam or priced out of the same markets they built by quality scores which said their sites are no good as the network got more competitive. Mind you many of these changes were not algorithm related, but were driven by direct human intervention.

The rules keep driving value (and profit) to the networks. They appear fair so long as your interests are aligned with those of the network. But behind the public rules, they fund theft of copyright work hoping it leads to the original publisher giving in and partnering with them to wrap their ads around the content. In other cases, if you get too successful human intervention within the network votes against you while leaving your competition unscathed. Why did Text Link Ads get penalized while Text Link Brokers still ranks?

Leverage Your Assets

Not every strategy works for every person, but if you are starting from scratch thinking that you are following the rules, you are missing out on some fundamental truths of the marketplace. If you are not leveraging and building upon your knowledge, passions, curiosity, and social relationships every day you are losing money (likely to an inferior and/or less honest competitor).

Take the Red Pill

Some of the most effective SEOs buy and sell links, buy and sell websites, buy and sell companies, rent personalities to promote their sites, openly engage is link schemes, use successful positions to promote other similar positions, expand out to other high profit market positions, and do whatever they see fit to profit. It is not our job to create the algorithms, we just satisfy the criteria to rank.

Take the Blue Pill

Others start every project from scratch, hoping that one day the market will be fair and shine a light on them. One day...

Improving SEO Book Customer Value

Sustainable Business Models

Most Sustainable Businesses Charge Recurring Fees for a Recurring Service / Relationship

Lots of sites, even more mainstream traditional publishing businesses, are deciding that the effective model to publish is to give everything away free, and charge recurring for anything you sell. Take a look at this image. Notice how in the top left there is an ad for house content offering a free gift that signs you on to a recurring subscription.

Charging More Can Increase Quality

Sometimes by charging more and making things less accessible you can make them better. Take the comment quality on this site. Requiring registration to comment is a cost in time and effort. Now that we require a user account to comment, people who interact with the site have stated that the conversation quality has improved:

I remember all the trolls that were here before the new login system went into affect and it seems to have helped. I know what spam can be like on my blog and I know that's nowhere how much attention you get here.

Making Sense Out of Complexity

Search Keeps Increasing in Complexity

As Graywolf stated, it is getting harder to profitably run thin affiliate sites:

In the coming months smaller publishers are going to have more competition from more and more larger publishers. Instead of the default one Wikipedia listing to contend with, you’ll now have one Wikipedia, one knol, and maybe a squidoo or Mahalo listing as well. Unless you start building good linkable content that builds your link equity it’s going to become more and more difficult to rank.

Not only is the competition increasing, but with Google aggressively hand editing their search results the answers to many questions about the best strategy to use depend on the site, its vertical, its design, its age, its brand, who owns it, how long it has been around, and how clean its link profile is. In other words, search (and thus SEO) keeps getting more subjective.

But Do People Want a More Complex Book?

The only way to counter this increasing complexity with a book is to write a book that grows to 1,000 pages thick. But who wants to read that much in one sitting? I had trouble getting through books half that size covering topics that were much less subjective and much less complex.

The web allows us to jump from idea to idea and consume as we like. Shouldn't information about web marketing be structured in a way similar to how the web is structured? One of the people who took my recent customer survey said:

I really like your book, great stuff. The only negative is that it's too long, kind of overwhelming.

I really think to stay successful in online markets you have to sell an experience more than information or an item. As an individual, it is hard to create an experience for 20,000 people unless there is a community or some form of interactivity to it. You have to let people learn a bit if they want to, or dig in where they really want to learn. Different people learn different ways. What might be easy for you and me might not be so easy for others to learn.

Interaction & Perceived Value

The Product Dialog

Creating a book is like a monologue. You are able to convey a lot of knowledge in a linearized format, but I don't think everyone prefers to learn that way.

In a single day I got

  • a refund request telling me that my book had no useful information in it,
  • a refund request telling me that my book was overwhelming, and
  • an email from a head of search quality at a major search engine telling me that "he bound my ebook, and it is required reading for everyone on his team."

If the problem existed only on one end (too complex or too shallow) that would be solvable, but it being claimed an issue on both ends is something much harder to solve, which hints at the growing irrelevancy of the format (relative to how we desire to learn and the vast array of potential customers).

The Perceived Value of Ebooks is Dropping

Ebooks, by and large, are perceived to be of low quality because most are of low quality. If that wasn't bad enough, Google made a blog post essentially voting against ebooks, grouping ebook sites amongst sites that may merit a low quality score. While the strength of my blog and brand means that Google is not likely to ban my business model, their indictment of the ebook field as a whole, and their power over the web, indicate that there is great risk is staying branded as an ebook author / publisher.

Add to that a leading not for profit organization in the search marketing field writing a 3 part series on how you can't learn SEO from a book, and that further lowers the perceived value of a book on SEO.

To appreciate how price-point can change the perception of the value of a product, compare the feedback here from a person who bought my book to a person who won it.

Copyright is Growing Irrelevant

My Current Format Encourages Theft

Some people who buy my ebook tell me that they "accidentally" purchased it. Others send me berating emails calling me a thief within 2 to 3 minutes of purchase AFTER they downloaded the ebook AND subscribed to updates. Of course I take them off the update list before giving them a refund, but there is a big issue with my current price point and format. It encourages people to steal from me by allowing them to keep the value without payment.

As more of the old school Internet marketers have started hyping SEO some of the people who could not afford their programs decided to buy mine and then ask for immediate refunds when they found out I was not selling a get rich quick scheme. The Clickbank return rate was over 50% (while the Paypal return rate is much closer to 1%) so I simply stopped selling via Clickbank. But that still does not stop thieves from buying my product and immediately calling me a thief minutes later. And while I have thick skin it still makes my outlook on humanity a bit bleak to have to deal with that stuff.

Who wants to read questions like this

What do I do if I don't have $79 dollars?

or this

I don't want to be negative, but I have frequently been disappointed with offerings like these. So is your 90 day guarantee real - no service charges etc?

i.e. I pay you only $79 and if I don't find the book useful you give me back $79

every morning?

Could you lower the price? $70 is a lot of money! I'd buy it for $5, but $70

Those people are not prospective customers...they are not sold on me. My price point and format are encouraging some of the wrong types of people to enquire about my site, and making some people think the quality is lower than it actually is:

I have not purchased your book because I have had a lot of warnings it is a beginners approach. Would like to see a professional approach ebook from you.

The Tragedy of the Commons

When 12,000+ people buy and read your book it becomes common knowledge (at least amongst that group of customers). If you aim to layer higher value businesses on top of it (say consulting services) then having a broad base of customers helps you. But, some customers end up diminishing the value of your product.

How do I monitor eBay, Digital Point, the Google index, and torrent sites effectively? People in China sell outdated versions of my ebook for $10 and it is not easy to stop them as long as I am selling only information. All types of information, sold and packaged as information, are seeing much of their value transfer to aggregators that profit from encouraging the erosion of copyright. There is a tragedy of the commons effect to all information based businesses unless you have some sort of network advantage.

This blog is a Technorati top 100 blog which covers a topic that is generally hated amongst a large portion of the web. To achieve that with an SEO blog requires knowledge beyond the field of traditional SEO, branching into publishing, blogging, viral marketing, and traditional marketing. But it is hard to put all that transferable knowledge in one book. And I would rather have one great product than many watered down ones.

If I sold a service it would be much harder - impossible - to put that on a printing press or copy machine.

Fulfillment Issues

When I was new everyone who bought my book knew it was an ebook. But as my brand grew I started getting shipping questions on a no ship item. I could create a print version of SEO Book, but that would likely only lower the perceived value because most books sell for $20 to $30. Plus it is much harder to offer a money back guarantee when I am paying to create and ship product.

When I did updates some people requested individualized addendums. Updating a 350 page ebook is not only time consume, but also emotionally draining. If I got the latest news and analysis and strategies out in a more timely fashion, greater value would transfer than offering personalized addendums would. Email updates highlighted the major changes, but it is virtually impossible to offer individualized adendums without making the purpose and the structure of the book a bit arbitrary. Again, this suggests greater value in breaking the book into modular pieces.

Sales Trends

My Sales Are At All Time Highs

The above statement would indicate that I should not be worried about my business model. But there is a side effect of ever-increasing growth. I am but one person. My wife helps me with some stuff, but I get hundreds of emails a day. Some of them are 5 or 10 pages long, and if I answer all the email I get that is all I would - no blog posts, no testing SEO strategies, no reading, no learning, no exercise ... just email.

And, while I try to answer most all of my email, sometimes I miss some. Consider the two following pieces of feedback

I would like to say that not only is your information helpful, your attention to customer service is one of the best I have dealt with since 1995 when I first started. Thank you


You never answer customers questions or request.

I got both of those emails the same day but from different people. And clearly they both believe what they wrote and I made each of them feel that way. In part by providing great service, and in part by having more customers than any one person can possibly handle.

How I Can Easily Drive Sales Higher

When I first started publishing how to videos to this site my sales doubled. And I thought it was maybe an anomaly. So I tested it again and again. Almost every time I published video content to this site my sales doubled, which is my customers and prospective customers telling me they prefer that content format more than what I was traditionally publishing.

Honestly Analyzing Opportunity Cost

I Have Too Many Customers

I am not asking anyone to cry me a river and I realize that having too many customers, as it is a problem most people would love to have.

I could hire employees to handle customer relations, but I don't think I could hire someone to talk to my customers who has as much SEO knowledge as I do, and pay them a wage above opportunity cost for both them and I while using the current business model.

The Economics of My Situation

SEO Book was not even a search term until I created this brand, and now it goes for $3 a click. What happens when people with recurring business models start to create similar products and bid on similar terms? Would my current model be simply driven out of those ad markets?

I make about 1/3 to 1/2 of my income from this site. But this site takes over 90% of my work time. One of my income streams that took less than an hour to set up produces 30% of what this site produces. There are many other similar opportunities I could explore if I did not have 1,000+ emails in my inbox. My wife, who I have helped teach, has been on the web actively about a year, and she is starting to come close to my earnings on much less work or effort than it takes to run this site.

I sold consulting on this site for $500 an hour, but stopped promoting it because I was spending hours a day everyday doing consulting. I increased the price and sell it on another site to lower demand. But I do not know how to effectively deal with hundreds of emails a day, when some people buy my book after their site is banned, and/or write me a 5 to 10 page email with their purchase. Just reading a 10 page email can take 20 minutes...which was $166 I turned down by demoting my high selling consulting by the hour model.

In spite of increasing prices and virtually hiding the offer, I still have another paid consult to do bright and early tomorrow morning.

The Need to Improve SEO Book as a Service

Does My Ebook Still Offer Value?

Based on feedback like this

A 25 year old affiliate marketer here. First read your ebook about 2 years ago, had no idea how to do SEO, read it, and in my second year netted over $2 million.

I have to say yes. And many other people have offered similar feedback

Thank you once again for being so generous with your time.

I downloaded your book a few years ago and it was a turning point in my life, I was an average salesman selling very competitive products and to be honest it was really tough work, I kept missing my sales targets and getting fired.

After reading your book, I decided to give SEO a go and it just clicked for me, I fell in love with search.

A few years later I'm making $100,000 a month, reading your book changed my life for the better. - Christopher Angus

Solutions to Improving My Service

A customer who reads every updated version of SEO Book in full told me this

In my personal opinion - you've done everything really, really well - you've built up authority with the book and media coverage, credibility (probably most important) with your peers and customers, a massive customer list and subscriber base, and popularity amongst your readers (because your a likable, genuine, intelligent guy - this really comes across in your writing).

I think your only problem was entering the market with a perceived 'cheap' product (______ ______ & ________ charge way more for much less) which may be a result of not valuing yourself highly enough... and destroying any continuity income by updating your book for free (I would have happily paid for every update).

My feeling is that your customers value you very highly - and actually want to spend more money on your information and advice. Your main job is deciding 'who' you want to be your customer.

I could drastically increase the price but use the same format. That would create fewer customers and make the average customer perceive greater value, and give me more time to spend on each customer, but that alone may not necessarily deliver greater value. Part of value is down to how it is perceived., but another big piece of value is not just perceived value but actual value transference. The easiest way to increase value transference is to

  • raise prices and charge recurring such that I have fewer customers and can give more attention to each of them
  • build an exclusive interactive community forum
  • make the content more modularized, and more interactive, published using a wide variety of formats

Ensuring that value transference not only allows one to establish more meaningful relationships and charge higher rates, but it also fosters the creation of brand evangelists. I already have over 3,000 affiliates right now, but most of my sales come from unpaid word of mouth recommendations. How much better positioned might my brand be if I offered a more interactive service?

Why Now?

The Web is Getting More Polluted

Each day when we wake information pollution is at an all time high. There are an unlimited number of fake reviews, more malware stealing commissions, lower AdSense payouts, affiliate programs are getting saturated, and more people are lying to gain 15 seconds of fame.

But all the noise, lies, and garbage only increases the value of an exclusive moderated community which fosters the free flow of information without the noise that appears on most public forums.

Why Did it Take so Long to Change My Business Model?

Many businesses that charge recurring are sleazy...drug companies that get you hooked on addictive antidepressants, or internet marketers offering low quality propriety platforms with baked in multi level marketing scams that keep up-selling you more garbage AND steal all your information if you don't keep paying them and marketing them on your website.

But high touch businesses require recurring payment. When I got sued in a bogus lawsuit that cost me $40,000, and I have offered many of my customers far greater value than that lawyer offered me. I pay many hosting bills every month, and I subscribe to many $10 to $100 a month information services that offer far less information and value than I intend to deliver.

And I believe there was some truth to my customer's suggestion that I was underselling myself. Since getting married to the most wonderful woman in the world though my sense of self is much better, and I have no problem charging more if I feel I can deliver greater value.

My past jobs did not fit me well either. I have been doing internet stuff as long as any other job I have ever had, and know I want to stick with it long term. In many ways I feel I am just warming up to the web's potential.

Thinking Through the Future

Who Do I Want My Customers to Be?

That question offered by one of my customers puts it in great perspective. I like to think I can change the world, and I set out with the goal of dominating any market I enter. After working on some large corporate sites that were doing just that, and many entrepreneurs who were doing the same, I decided I want my customers to be market leaders, people with a deep found passion expressed through their websites and businesses, and people who aspire to dominate their market but are just a couple good marketing ideas short of getting there. I want to sell a service that helps them change their lives.

If You Can’t Seem to Make Enough to Quit Your Day Job

This is where I was in December of 2006 when I attended the first Elite Retreat, and by March the things I learned there had enabled me to put all the pieces together and finally take my business to the next level. Check out this revenue graph for just one of my sites:

On that one site, we jumped from $5,461.50 in revenue to $11,3501.51 in just one month — and that was pure profit.

Not only that, but it was right there under my nose the whole time. It just took Aaron Wall to put the pieces in place for me at Elite Retreat.

If I can cause that sort of a change with an ebook or a 2 day conference, what more if I offer a more personalized higher value service?

Years ago Microsoft figured out that service based business models were disrupting their business model. I don't think selling information is a safe long-term strategy. Publishers need to become digital media artists who sell an experience that can't be copied.

What Next

As a starting base for my offering I have already created an exclusive online training program with over 100 modules and a community forum. I am still working on setting up the account permissions and determining price points, but am hoping to launch before the month is out. Perhaps as soon as next week.

I still have about 200 customer surveys to read through and respond to get the feedback needed to decide how and when to launch. I am also thinking about limiting membership to something like 2,000 people to ensure I can spend time with everyone who needs or wants it.

Thanks for This Sweet MySpace Friend Bot Spam Tool, Google!!!

Should companies that claim to vigilantly fight web spam allow people to advertise spam tools on their network and sell the spam tools using their payment processor service?

Google signed a billion dollar ad deal with MySpace, and at the same time recommends people buy friend bots to spam the same website:

What’s among the biggest contributor to blight on MySpace? The leagues of sock puppet profiles and automated friend requests that jamb your inbox. Google — the company that stands on a soap box attacking companies for SPAMMING their index to manipulate search results — is selling keyword advertising for software designed to create fake profiles and send SPAM friend request.

How is a direct paid link any more sinister than Google recommending email users dating cheating housewives? Why does Google put less effort into policing their own ad network than they try to enforce on the rest of the web?

Yahoo! Tells Microsoft to Bid $40 a Share

Yahoo! shares were trading in the $19 range before Microsoft offered to buy the company for $31 a share. People inside of Yahoo! talked to the NYT and WSJ stating that Monday they will reject the offer and request at least $40 a share. Unless Yahoo! accepts this deal their shares will likely fall, which will lead to lawsuits from shareholders. The one thing that could help Yahoo! unlock greater short term value would be partnering with Google on search. But if they did that, it would suck for SEOs and web publishers...90% of the search market would be controlled by Google, which would give Google even more leverage over content providers.

For Yahoo! to give Google control of search they would need to curb their ad network, which not only has syndicated search and ad partners, but also powers a lot of arbitrage and direct navigation domain traffic. Yahoo!, being far more desperate for traffic and revenues, likely pays partners a bigger cut than Google does. Yahoo! being in play cuts the value of many thin arbitrage models (like Marchex) because

  • Yahoo! going to Microsoft would make Microsoft /Yahoo a more efficient marketplace and make it hard to arbitrage one through the other
  • Yahoo! Search being outsourced to Google would allow Google to pay publishing partners a smaller piece of the pie and have a tighter control of the ad market. Google recently killed Ask's sub-syndication deal.

Marchex posts Q4 results on the 14th. If they underperform they may have to start layoffs, cut their dividend, or start selling off some of their domain portfolio. Assuming names were sold one at a time, in a like format, more clean domains on the market would present a great opportunity for SEOs and smaller independent publishers, but they may sell off names in large blocks.

A side shoot of this Yahoo! in play even is a great blog post by Henry Blodget on how Microsoft's forward vision on ad supported software is failing to realize the full potential of subscription based software:

Corporations are shifting to cloud-computing platforms--Software as a Service vendors like and NetSuite, Google Apps, etc--but, for the most part, they are not shifting to "free software supported by advertising." On the contrary, they continue to pay fat, per-employee license fees. Even some corporations running Google Apps pay license fees. The fees are lower than the per-seat costs charged by Microsoft, but they're in the same same ballpark (according to the NYT, big companies pay about $75 per Office seat per year vs. $50 for Google Apps).

In the current web 2.0 market, far too many start ups are focused on being ad supported rather than adding enough value to be able to sell a service. The easiest way to protect yourself from Google is to create something worth paying for.

Why I Think (aka Commission Junction) is a Garbage Affiliate Network

I run a good number of websites in a variety of verticals. One of my sites that does exceptionally well in the search engines monetizes poorly with contextual ads and does not yet have the scale to sell direct ads, so I tried integrating affiliate ads on it.

When I initially applied for CJ with this site, the advertiser I wanted to partner with rejected my site (I am guessing because there was a new account associated with that site). The traffic quality and relevancy are as high as you can get though. About 3 months later that same advertiser contacted me asking me to join their affiliate program with my website, which is wildly off topic. I joined the affiliate program and also added my relevant site to the account about two weeks ago. I integrated the offer and waited for the money to roll in. But did it?

This particular affiliate program was a lead generation program, which I figured had a delay in reporting while the leads were classified and approved. This site is a high traffic site in a big money vertical. The advertiser's ad was integrated similarly to how it is integrated on other sites still in their program today, and their ad was seen by about 100,000 people.

I logged in today and still no conversion. Odd. Weeks for an approval? Hmmmm.

I looked at my invalid clicks report and it said my offer from this advertiser was disapproved. I was not told why, and was not even informed of this disapproval (from the advertiser who approached me) until after I searched out the information.

Meanwhile that same company is paying search engines thousands of dollars to buy similar traffic to the stream they rejected from me. I know someone in upper management in the marketing department at that advertiser, so I will ping them to see what is up with their affiliate manager, but how many publishers get scammed like this every day? Sleazy workflow their CJ.

The value add for publishers going through an affiliate network (vs going direct) are

  • having fewer accounts
  • independent reporting (for if you don't trust the advertiser)
  • the offer data on top performing offers

But on the down side,

  • many other marketers are looking over the same offers you are
  • some networks (like CJ) require tracking images or other footprints that identify your site as an affiliate site to search engines (and search engines do have algorithms to detect and demote certain types of affiliate sites)
  • communications channels are generally worthless when you add a bulky affiliate network to the mix

I have had a number of affiliate networks come to me asking me to join them, often offering reduced rates, but I still don't see their value add, especially after this experience.

Selling Ads Without a Precise Brand = Bad Business Model

JP Morgan Chase published a research on internet companies titled Nothing But Net [PDF], hyping the future of web ad growth.

Yahoo!, a leading internet brand (a brand that means nothing) is up for grabs. The NYT, a generalist news company, is also seeing their stock tank, in spite of a market leading position in their vertical.

As large media sites open up to user generated content they are going to keep losing brand and value to niche channels owned and operated by people who are so passionate about their subject that their brands have purpose and lasting value.

Understanding & Visualizing Network Effects

When markets are healthy and growing that growth can hide major issues, but when the markets swing toward a loss the winners are separated from the losers. As the markets consolidate and the thin arbitrage opportunities fall away the market leaders own a much bigger piece of the market.

The above chart could just as easily be a finance chart comparing Google's 5 year performance to Yahoo's, or any other industry undergoing heavy consolidation. Google's brand is search. Yahoo's brand is ???

Many people view you how you view yourself and label you with the labels you attach to yourself. Something to consider when creating a new business in a saturated field.

If you are not considered the #1 site in your class / vertical then you need to change your brand, find ways to add value (like editorial content, unique data formats, syndication, or open APIs), build an organic advantage (using a strong domain name, a great site design, and through public relations) or do something else to change the rules.