"The future is already here — it's just not very evenly distributed." - William Gibson
Not only do they monetize via AdWords, but Google has 6 listings in the "organic" search results.
Any Google search engineer care to have a public debate as to the legitimacy of that search result set?
If an SEO gets half of the search results (for anything other than his own brand) he is an overt spammer. If Google eats half of the search results with duplicating nepotism across their own house "brands" then it is legitimate.
Making the above even worse, smaller niche brands are regularly disappeared from Google's index. Google has the ability to redirect search intent to one that is easier to monetize & more along a path they approve of. I was searching for a post John Andrews (webmaster of johnon.com) wrote about Google censorship & what did Google do? They used their power over the dictionary to change the words I searched for on the fly & then promoted their ebooks offering yet again.
Note that listings 1 & 2 promote the exact same book. Google just lists the content they scraped into multiple categories that deserve to be showcased multiple times. How many ways did Google screw up the above search result?
they auto-corrected the search query to an unwanted alternate search
in spite of auto-correction, they still allowed their other verticals to be inserted in the results inline right near the top (when rare longtail searches are auto-corrected, one would expect them to be more adverse to embedding such an aggressive self-promotion in the search results)
they associate content hosted by them as being about their brand simply because they host it (even though that piece of content has no relation to them outside of them scraping it)
they list it not once but twice, right at the top of the results (even though it is duplicate content available elsewhere & both pages are the same on Google, with the exception of one promoting a recent version of the book & the other page promoting a decade older version of the exact same book)
As a publisher you are *required* to keep spending more money on deeper editorial to avoid being labeled as spam or tripping some arbitrary "algorithmic" threshold. And as you do so, Google is humping you from the backside to ensure your profit margins stay low, scraping whatever they can within the limits of the law & operating the types of websites that would be considered spam if anyone else ran them. Once regulatory pressures or public opinion catch on to Google's parasitic behavior, they buy a brand & leverage its content to legitimize their (often) illegitimate enterprise. :)
Oh, and how about a quote from the Censored Screams book: "censorship, like charity, should begin at home, but, unlike charity, it should end there."
Smart SEOs have been preaching brand for years and years now (& so has Google if you read between the lines).
For some time Google has appended prior search queries in AdWords. In some cases they also show ads for related search queries, append your location to the search query for localization, spell-correct search results based on common search trends, and (as the Vince update showed) they can also use search query chains & brand related searches as a signal.
As far back as 2008 Google sugested previous query refinements for organic search, but they haven't been very prevalent thusfar IMHO.
While researching another article, I was searching for some browsers to see how search engines were advertising on various keywords, and after searching for Firefox I later searched for SEO & saw the following:
This is yet another way brand familiarity can boost rankings. Not only are you likely to score higher on generic search queries (due to the Vince & Panda updates), but having a well-known brand also makes Google more likely to recommend your brand as a keyword to suggest in Google Instant, makes people more likely to +1 your site, and it now also can impact the related organic search results further if people search for that brand shortly before searching for broader industry keywords.
Yet another problem with Google's brand first approach to search: parasitic hosting.
The .co.cc subdomain was removed from the Google index due to excessive malware and spam. Since .co.cc wasn't a brand the spam on the domain was too much. But as Google keeps dialing up the "brand" piece of the algorithm there is a lot of stuff on sites like Facebook or even my.Opera that is really flat out junk.
And it is dominating the search results category after category. Spun text remixed together with pages uploaded by the thousand (or million, depending on your scale). Throw a couple links at the pages and watch the rankings take off!
Here is where it gets tricky for Google though...Youtube is auto-generating garbage pages & getting that junk indexed in Google.
While under regulatory review for abuse of power, how exactly does Google go after Facebook for pumping Google's index with spam when Google is pumping Google's index with spam? With a lot of the spam on Facebook at least Facebook could claim they didn't know about it, whereas Google can't claim innocence on the Youtube stuff. They are intentionally poisoning the well.
There is no economic incentive for Facebook to demote the spammers as they are boosting user account stats, visits, pageviews, repeat visits, ad views, inbound link authority, brand awareness & exposure, etc. Basically anything that can juice momentum and share value is reflected in the spam. And since spammers tend to target lucrative keywords, this is a great way for Facebook to arbitrage Google's high-value search traffic at no expense. And since it pollutes Google's search results, it is no different than Google's Panda-hit sites that still rank well in Bing. The enemy of my enemy is my friend. ;)
Even if Facebook wanted to stop the spam, it isn't particularly easy to block all of it. eBay has numerous layers of data they collect about users in their marketplace, they charge for listings, & yet stuff like this sometimes slides through.
And then there are even warning listings that warn against the scams as an angle to sell information
But even some of that is suspect, as you can't really "fix" fake Flash memory to make the stick larger than it actually is. It doesn't matter what the bootleg packaging states...its what is on the inside that counts. ;)
When people can buy Facebook followers for next to nothing & generate tons of accounts on the fly there isn't much Facebook could do to stop them (even if they actually wanted to). Further, anything that makes the sign up process more cumbersome slows growth & risks a collapse in share prices. If the stock loses momentum then their ability to attract talent also drops.
Since some of these social services have turned to mass emailing their users to increase engagement, their URLs are being used to get around email spam filters
Stage 2 of this parasitic hosting problem is when the large platforms move away from turning a blind eye to the parasitic hosting & to engage in it directly themselves. In fact, some of them have already started.
According to Compete.com, Youtube referrals from Google were up over 18% in May & over 30% in July! And Facebook is beginning to follow suit.
Want a good example of Google's brand-bias stuff being a bunch of bs?
Niche expert value-add affiliate websites may now lack the brand signal to rank as the branded sites rise up above them, so what comes next?
Off-topic brands flex their brand & bolt on thin affiliate sections.
Overstock.com was penalized for having a spammy link profile (in spite of being a brand they were so spammy that they were actually penalized, counter to Google's cultural norm) but a few months later the penalty was dropped, even though some of the spam stuff is still in place.
Those who were hit by Panda are of course still penalized nearly a half-year later, but Overstock is back in the game after a shorter duration of pain & now they are an insurance affiliate.
While most the content farms were decimated, that left a big hole in the search results that will allow the Huffington Post to double or triple the yield of their content through additional incremental reach.
Before I go on, let me stop and say a couple of more important things: Aol, Aol Acquires Huffington Post, Aol Buys Huffington Post, Aol Buys Huffpo, Aol Huffington Post, Huffington Post, Huffington Post Aol, Huffington Post Aol Merger, Huffington Post Media Group, Huffington Post Sold, Huffpo Aol, Huffpost Aol, Media News.
See what I did there? That's what you call search-engine optimization, or SEO. If I worked at the Huffington Post, I'd likely be commended for the subtle way in which I inserted all those search keywords into the lede of my article.
I was given eight to ten article assignments a night, writing about television shows that I had never seen before. AOL would send me short video clips, ranging from one-to-two minutes in length — clips from “Law & Order,” “Family Guy,” “Dancing With the Stars,” the Grammys, and so on and so forth… My job was then to write about them. But really, my job was to lie. My job was to write about random, out-of-context video clips, while pretending to the reader that I had watched the actual show in question. AOL knew I hadn’t watched the show. The rate at which they would send me clips and then expect articles about them made it impossible to watch all the shows — or to watch any of them, really.
Doing fake reviews? Scraping content? Putting off-topic crap on a site to monetize it?
Those are the sorts of things Google claims the spammy affiliates & SEOs do, but the truth is they have never been able to do them to the scale the big brands have. And from here out it is only going to get worse.
We highlighted how Google was responsible for creating the content farm business model. Whatever comes next is going to be bigger, more pervasive, and spammier, but coated in a layer of "brand" that magically turns spam into not-spam.
Imagine where this crap leads in say 2 or 3 years?
It won't be long before Google is forced to see the error of their ways.
What Google rewards they encourage. What they encourage becomes a profitable trend. If that trend is scalable then it becomes a problem shortly after investors get involved. When that trend spirals out of control and blows up they have to try something else, often without admitting that they were responsible for causing the trend. Once again, it will be the SEO who takes the blame for bad algorithms that were designed divorced from human behaviors.
I am surprised Google hasn't hired someone like a Greg Boser or David Naylor as staff to explain how people will react to the new algorithms. It would save them a lot of work in the long run.
Disclosure: I hold no position in AOL's stock, but I am seriously considering buying some. When you see me personally writing articles on Huffington Post you will know it's "game on" for GoogleBot & I indeed am a shareholder. And if I am writing 30 or 40 articles a day over there that means I bought some call options as well. :D
My personal preference on subdomains vs. subdirectories is that I usually prefer the convenience of subdirectories for most of my content. A subdomain can be useful to separate out content that is completely different. Google uses subdomains for distinct products such news.google.com or maps.google.com, for example. If you’re a newer webmaster or SEO, I’d recommend using subdirectories until you start to feel pretty confident with the architecture of your site. At that point, you’ll be better equipped to make the right decision for your own site.
Even though subdirectories were the "preferred" default strategy, they are now the wrong strategy. What was once a "best practice" is now part of the problem, rather than part of the solution.
Not too far before Panda came out we were also told that we can leave it to GoogleBot to sort out duplicate content. A couple examples here and here. In those videos (from as recent as March 2010) are quotes like:
"What we would typically do is pick what we think is the best copy of that page and keep it, and we would have the rest in our index but we wouldn't typically show it, so it is not the case that these other pages are penalized."
"Typically, even if it is consider duplicate content, because the pages can be essentially completely identical, you normally don't need to worry about it, because it is not like we cause a penalty to happen on those other pages. It is just that we don't try to show them."
I believe if you were to talk to our crawl and indexing team, they would normally say "look, let us crawl all the content & we will figure out what parts of the site are dupe (so which sub-trees are dupe) and we will combine that together."
I would really try to let Google crawl the pages and see if we could figure out the dupes on our own.
Now people are furiously rewriting content, noindexing, blocking with robots.txt, using subdomains, etc.
Google's advice is equally self-contradicting and self-serving. Worse yet, it is both reactive and backwards looking.
You follow best practices. You get torched for it. You are deciding how many employees to fire & if you should simply file bankruptcy and be done with it. In spite of constantly being lead astray by Google, you look to them for further guidance and you are either told to sit & spin, or are given abstract pablum about "quality."
Everything that is now "the right solution" is the exact opposite of the "best practices" from last year.
And the truth is, this sort of shift is common, because as soon as Google openly recommends something people take it to the Nth degree & find ways to exploit it, which forces Google to change. So the big problem here is not just that Google gives precise answers where broader context would be helpful, but also that they drastically and sharply change their algorithmic approach *without* updating their old suggestions (that are simply bad advice in the current marketplace).
It is why the distinction between a subdirectory and subdomain is both 100% arbitrary AND life changing.
Meanwhile select companies have direct access to top Google engineers to sort out problems, whereas the average webmaster is told to "sit and spin" and "increase quality."
The only ways to get clarity from Google on issues of importance are to:
ignore what Google suggests & test what actually works, OR
publicly position Google as a monopolist abusing their market position
How valuable is that email? How about "not at all" for $500 Alex?
I think Fantomaster is brilliant, but I would much rather read one of his blog posts that dozens or hundreds of Tweets. Sure knowing that 9,000 might have saw a message can be comforting, but 1 blog post will get you way more views (and with far deeper context & meaning).
How to Test the Value of Social Media
Want to see big numbers get small quickly? Try charging anything...as little as $1 & you will quickly see that social media is mostly garbage. Alternatively, try giving away $5 or paying for the in-stream ads that directly manipulate relevancy & once again you will see how worthless social media is as a signal...something that anyone can quickly buy.
Online reputation is important to most researchers, and about 10% of respondents to our survey complained that they or their work have been misrepresented on the Internet. The web has a long memory, and rumours, lies and bad information can spiral out of control to be remembered by posterity.
For a lot of businesses the social media stuff will be nothing but blood & tears. A resource drain that money, time & hope gets poured into with nothing coming out the other end.
That said, I don't think ignoring it is a wise decision at this point. The best tip I have for most people is to try to set up automated systems that help your social signal grow automatically. That can mean onsite integration & perhaps a small token amount of advertising. Beyond that it is probably only participating as much as you enjoy it. And if you are more of a huckster/PR type, pay attention to how folks like Jason Calacanis leverage these channels.
The second best tip would be measure it with stats that actually matter. Revenue and profit are important. Time spent tracking the number of retweets is probably better spent building more content or improving your business in other ways. If you have something that works the rabbit hole goes deep, but if it isn't working then it is likely better spending your time being a bigger fish in a smaller pond.
Inspired by Barry's implementation, we recently added the social buttons to the left rail of the site. That is probably one of the best types of integration you can do, because it is out of the way for those who don't know what it is and/or want to ignore it, but it stays right in the same spot (always visible) for anyone who is interested in those types of buttons.
What Makes the Web Great (for Small Businesses)
Two things that make the web great are the ability to fail fast (and cheaply) & the ability to focus deeply. If social media increases the operating cost (being yet another hoop you have to jump through) & robs valuable attention that could go into your website then it is 0-for-2.
It remains to be seen if an author will be able to carry his or her trust with them to their next gig, but if they can then that would make the media ecosystem more fluid & pull some amount of power away from traditional publishers. Some publishers are suggesting putting their book content online as HTML pages...well if they are doing that then why doesn't the author just install Wordpress and keep more of the value chain themselves (like J.K. Rowling just did)?
Their answer to that question is generally "no" but that they would even ask themselves that question is fallacious Orwellian duplicity.
Would you trust the local plumber to work on your house if he was posting "exciting viral content" online about how some projects went astray? Now every plumber needs to become a marketing expert to not get driven off the web by Roto-Rooter & other chain-styled companies that can collect +1 signals from all their employees & some of their customers across the country or around the world.
Google knows they are tilting the search game toward those who have money. They even flaunt it in their display ads!
Google itself explains that not allowing its device maker partners to ship Skyhook's software was just, the way Google describes it, a necessary measure to prevent damage (Google says "detriment", which is the Anglicized version of the Latin word for "damage") from being caused to the whole ecosystem.
But Google does not want to allow Oracle to control Java the way Google controls Android.
Google today is saying that "social media is important." Just look at their wave of product announcements & their bonus structure.
I loathe the approach (and the message), but I accept it. ;)
The idea behind such Cassandra calls is that the web should be graded based on merit, rather than who has the largest ad budget. The Google founders harped on this in their early research:
we expect that advertising funded search engines will be inherently biased towards the advertisers and away from the needs of the consumers.
Google is not the only search engine in town, and they have been less forthcoming with their own behavior than what they demand of others.
Ads as Content
Both SugarRae and I have highlighted how Google's investment in VigLink is (at best) sketchy given Google's approach to non-Google affiliate links. And now Google's "ads as content" program has spread to Youtube, where Google counts ad views as video views. The problem with this is that any external search service has no way to separate out which views were organic & which were driven by paid exposure.
(Google has access to that data since they charge the advertisers for each view, but there is no way for any external party to access that data, or know how Google is using it other than what Google states publicly).
That is the *exact* type of pollution Google claimed would undermine the web. But it is only bad when someone is doing it to Google (rather than the other way around).
Youtube = Wikipedia + Wikipedia + Wikipedia
As independent webmasters it can be annoying seeing Wikipedia rank for everything under the sun, but after Google's "universal search" push Youtube is far more dominant than Wikipedia. When the Panda update happened Youtube was around 4% of Google's downstream traffic. Youtube has grown their Google-referred traffic by about 4% a month since Panda, up until last month, in which it grew by 18.3% according to Compete.com. That now puts Youtube at over 5% of Google's downstream traffic (over 3x as much traffic as Wikipedia gets from Google)!
1 in 20 downstream clicks is landing onto a nepotistic property where Google has blurred the lines between ads and content, making it essentially impossible for competing search services to score relevancy (in addition to making features inaccessible, the data that is accessible is polluted). It is unsurprising that Youtube is a significant anti-trust issue:
Google acquired YouTube—and since then it has put in place a growing number of technical measures to restrict competing search engines from properly accessing it for their search results. Without proper access to YouTube, Bing and other search engines cannot stand with Google on an equal footing in returning search results with links to YouTube videos and that, of course, drives more users away from competitors and to Google.
Google promotes "openness" wherever they are weak, and then they erect proprietary barriers to erode competitive threat wherever they are strong.
At some point it is hard to operate as a monopoly without being blindingly hypocritical. And this is at the core of why Google's leading engineers feel the need to write guest articles in Politico & Eric Schmidt is working directly with governments to prevent regulatory action. They understand that if they curry favor they can better limit the damage and have more control of what sacrificial anodes die in the eventual anti-trust proceedings.
Is Google Lying Again?
As a marketer & a publisher you can go bankrupt before governments react to monopolies. Thus you need to decide what risks are worthwhile & what suggestions carry any weight.
Here is the litmus test for "is this piece of information from Google more self-serving garbage" ... does Google apply the same principals to itself in markets it is easily winning AND markets it is losing badly?
If their suggestion doesn't apply to Google across-the-board then you can safely ignore it as more self-serving drivel from a monopolist.
As long as end users get their Angry Birds they really don't care how it comes to them. But they should!
Right now, an aggregated link to this entry places higher in a search of the title than my own site, which is a Page Rank 5 site (i.e. it has a lot of "strong" links in and a lot of content). That is a snapshot of what is pushing the Media to spewing ever louder and more meaningless sounds and furies.
search engine offshoots have failed the nation, profoundly, deeply and irrevocably. - Charles Hugh Smith
If you are the first person in your vertical to leverage these new formats that can help your listing look more appealing & help you capture a bit more of the traffic (for a while). But after a half-dozen sites in your vertical use it then it no longer becomes a competitive advantage, rather just an added cost of doing business (just like Google Checkout or +1).
Then eventually it becomes much worse. Rather than being a "top resource" you get to become a "top reference" (unlinked, of course).
Your content ends up in the search result and you are an unneeded artifact from the quaint & early days of the web.
"Many answers to search queries can be computed, rather than simply returning a list of links from an index." - Eric Schmidt
Google Places is at it again, brazenly borrowing reviews from Yelp. But this time it’s in their iPhone app and they are not even bothering to link back to Yelp or attribute where they are getting the reviews.
Apparently the issue is also happening with other sources of reviews and local data such as TripAdvisor. Google says it is a mistake and it is fixing it.
If you go outside Google's guidelines & they try to penalize you for it, simply remind them that it was a technical glitch, a misinterpretation, an accident. No need to worry, as you will fix it on your end at your leisure.
It is almost universally far more profitable to do what Google does, rather than to do what they tell you to do. A fact many webmasters are waking up to 100 days after Panda torched their websites.
On a related note, JC Penny (which flagrantly violated Google's guidelines with bulk link buying) was allowed to rank again after 90 days.
"You don’t want to be vindictive or punitive, so after three months the penalty was lifted." - Matt Cutts
Those that were hit by Panda are still left in the lurch over 100 days later.
If penalizing for greater than 90 days for flagrant guideline violations would be considered "vindictive" or "punitive" then how would one describe a 100-day penalty for not breaking the guidelines?
As the original content sources disappear from the web, the aggregators eat more clicks & get fatter on the no-cost, no-effort profits (in some cases their duplication not only replaces the original source, but drives the original source into bankruptcy, making the duplicate become "unique" content). Youtube's traffic from Google has grown over 4% a month for a few months in a row. Ask grew their Google search referral traffic by roughly 25% in a couple months (while starting from a rather large base).
Keep working on adding quality and value. Then mark up your work. Google will keep working on sucking profits out of the ecosystem.
There are many approaches to online navigation & discovery. On the surface many of them look exceptionally different, but when you look a bit deeper many of them are playing the same game with the same game plan. The main differences are brand perception & marketing angle, but they all copy off of each other.
New Ideas, or The Same Ideas?
There is an illusion that social media is significantly different because messages from friends are mixed in with the other stuff. However, when you look at the aggregate trends, ultimately social media pushes the same stuff that the mainstream media pushes (which is the same stuff that post-Panda Google pushes).
Huberman and three fellow researchers demonstrate that "user activity and number of followers do not contribute strongly to trend creation and its propagation."
Instead, says Huberman, "we found that mainstream media play a role in most trending topics and actually act as feeders of these trends. Twitter users then seem to be acting more as filter and amplifier of traditional media in most cases."
it's amazing how you can be the king at one point, quote unquote, and everyone loves you and the minute your time has passed and it's time for you to get torn down. When it's tear down time -- woah, it's harsh. There's no pity. They will hurt you however. Jabs, uppercut, hooks, and they want to see you on the floor knocked out. TKO. That's what they want. I saw it happen to some people, but when it happens to you, it's amazing how devastating it can be. When the negativity is directed at you, it hurts because you're there as an entertainer. You want to please your fans, have a good time and make them smile. You do the best you can on stage for them, and suddenly, you're nothing but a joke. - Fab Morvan, Milli Vanilli
Most of the "social" signals will generally promote that which is already large, or (for smaller businesses) that which is weird, funny, exotic, extremely biased, comforting & (falsely) empowering, fluff, or brutally honest.
If you are small, race toward an edge & stick with it. Own an idea. ;)
As I wrote earlier, many of them are playing the same game with the same game plan.
Other Search Engines
Blekko's slashtag model is all about highlighting content from the most well known sources in a niche. When you think about some of the really awful misinformation shared in the SEO space it is clear that popularity & quality are not the same. But if you have brand, sound authoritative, and speak of innovative changes; those can easily mask any factual errors. ;)
Bing's Stefan Weitz was recently interviewed by Eric Enge. In the interview Stefan points out how he thinks Bing sees the web differently than Google, in that:
they "look at the web as a digital representation of the physical world"
search will move from a web of nouns to a web of verbs, helping you to complete tasks in a more integrated manner: "there are enough services opening up their protocols and their APIs, Bing can then broker out that request to a number of different services across the web and stitch that information back together to help me go from I want to do this to I have done it."
"Humans have this primal behavior around the social experience where we almost always ask our friends and acquaintances for advice."
I highly recommend the interview as a must read to understand where search is headed. The speed of change in technology is increasing at a logarithmic progression & search is going to become much more of a complete end-to-end service.
The big takeaways for me from that read were that Bing will be doing hard brand pushes at some point (a digital representation of the physical world) & a lot more tight vertical integrations (a web of verbs). In summary, that means their game plan is just like Google's.
Sidewiki feels like another swing at something Google seems to desperately desires — a community of experts offering high quality comments. Google says that’s something that its cofounders Larry Page and Sergey Brin wanted more than a system for ranking web pages. They really wanted a system to annotate pages across the web.
Who are the real wine experts in Portland? Maybe the people who...
actually live there (confirmed by the address associated with their credit cards, the IP address of their home computer & the location information Android phones share with Google)
those who are consistently spending hundreds to thousands of Dollars a month buying wines (the more skin you have in the game the more weight Google can put on your feedback & reviews.)
those who review wines (Google can offer perks & bonuses to get people over the hump, & then add social game dynamics like badges)
those who review wines who have positive reviews from other wine drinkers (nothing like a little peer review to an academic mind)
What wine stores in Portland are the best? Probably the ones which the above wine reviewers shop at. Looking up driving directions can be seen as a relevancy signal.
What wine stores in Portland are less scrupulous? Those which are mostly given 5 star reviews by out-of-town (or, out-of-country) people who have never logged into Google from an IP address in the Portland area, never used an Android phone in the Portland area, and have never looked up driving directions around the Portland area.
At one point in time online was a new and (fairly) level playing field where one could win based on meritocracy. Increasingly though search is becoming "a digital representation of the physical world." To win online you will often be required to win offline.
With all the above data being included in Google's algorithms in the coming years (along with other brand signals) some people might decide that SEO is becoming too hard for the head keywords & that they are better off playing in the tail of search. But even that has 3 big problems:
if you have too many low quality pages Google can torch the whole of your site for it (and at this point it has been close to 100 days since Panda, and virtually no recoveries have been reported)
the eHow model will be reformulated at some point & added into some of the larger publishers that Google's algorithms boosted the rankings for, so if you are not one of those guys then they would still have a cost advantage over you through increased rankings & distribution (along with easier influence of social signals & such)
Certain categories with significant guilt or shame (say genital wart removal, criminal defense lawyers, etc.) won't have much end user data shared publicly (or, at least, users won't intentionally share that data with Google - though they may do so accidentally). Many (most) categories will have a sea of data available. And in those categories, at some point jumping through technical loopholes will be so tiresome & expensive that it will be cheaper and easier to create the signals Google wants to see through brand, public relations, and consumer experience than it is to try to fake them.
As search is becoming "a digital representation of the physical world" some of the best SEO tips in the years to come will have nothing to do with sitting at a computer. In due time, in search, there will be no security through obscurity.
The idea of an exact match domain (EMD) is that you are buying a piece of land right next to the highway. You sink in a lot of money upfront, but hope that it backs out over time by lowering your traffic acquisition costs. For many years this model was both logical and profitable.
At the peak of the domain name bubble recently, the domain name Poker.org sold for a million Dollars.
A domain name is an asset just like a stack of cash, a piece of gold, or a CDO is. But rather than having a fixed universal value, it is only a *relative* store of value that can go up or down based on market conditions. (Many of these other "fixed" stores of value also change in value when measured against other value stores over time, but they typically change value somewhat slowly and due to the acts of the entire market. With domain names, Google can use their dominant search position to drive massive changes in value in a short period of time).
Search Engines Influence the Value of Domain Names
Search is the primary mode of online navigation. For years search has been replacing almost all other forms of online navigation as the new default. There are about 7 billion people in the world with about half of them online. Google likely gets about a search per person every day!
Search engines can decide what variables they want to count & how much. In a world where subjective marketing aspects (like branding) are replacing signals of relevancy the value of keyword domain names is greatly diminished.
If your model works out to where it takes 3 or 4 years to break even & recoup the initial investment, then that model may look quite different if Google manages to redirect 50% or 60% of that traffic stream at some point in time ... at some point the price of the domain has to adjust to the new market conditions.
An Example of the New Normal in Search
With the above in mind, I thought it would be worth highlighting how the domain bubble grew & ultimately popped.
First, lets start with a current search result. The below example is for "pool tables."
Note that brands get a number of options to play here: AdWords ads, AdWords product ads, Google Product Search, branded navigation, big brands in the organic search results, niche vertical brands, and any local results for nationwide chain brands with a local outlet. Go back a couple years and this search result would have mostly been dominated by smaller online retailers & niche hobbyist websites.
The below image is from 2008. Notice how small the AdWords ads are & how 7 of the 10 organic listings on page 1 have "pool tables" in the domain name.
Today most of those results are off onto page 2 or 3 or beyond, where few searchers dare to go. Now even the exact match domain is forced to buy AdWords to compete for it's own name. Without the AdWords ad, the exact match domain would require a searcher to skip over 45 other links before finding it somewhere below the fold.
Other keywords (like engagement rings) which once left room for review & comparison sites have been completely dominated by brands. Outside of end consumer reviews (and who but an expert publicly reviews more than 1 engagement ring? and who is not biased in their review of said rings with emotional attachments?) there is no way to get a comparative view of quality. There is no room for such an idea in Google's brand-only search results.
Update: Checking back in a few years later ... as of August of 2013 this post has only grown more true over time. In the following image, notice how the ads keep on scrolling, the size of the local result insert increased & now even the .com EMD "category killer" isn't even on page 1 of the search results any longer.
The algorithm is only going to keep adding more signals that boost brands. PoolTables.com might have better editorial content than a mega-retailer like Amazon.com, but it is hard for them to collect as many reviews as Amazon can.
For commercially viable keywords these have the net effect of pushing the organic search results further down the page. A recent study by Optify highlighted that while low CPC & tail keywords send most clicks (~89%) to the organic search results, for high CPC & head keywords AdWords ads consume most search clicks (~ 60%).
Google Comparison Ads
In certain high money verticals Google offers Google Comparison / Google Advisor ads, which allow them to place a 4th ad slot above the organic search results.
Notice how much larger some of these ads are than typical ad units. When Google targets your keyword with one of these ads they significantly change the dynamics of the market.
Google has offered graphical product ads automatically matched to the search results. Generally for bigger brands Google offers these on a risk-free cost per acquisition pricing, whereas smaller advertisers need to pay by the click to use this ad format.
Googler announced that searchers clicked on this ad format nearly twice as often as regular search ads & in some cases Google has even started testing including these ads in their ad space that appears above the organic search results.
Search clicks are a zero sum game, so the more risk-free clicks the big box brands get from this ad format the lest clicks there is to go around for everyone else.
Product Search Listings
These serve as more eye candy to distract searchers from the organic search results. Once again these typically feature listings from larger brands & Google doesn't mind if these are a bit off because they still push the eye away from the organic results and toward the AdWords ads.
Look how off those "necklaces" are. Evidently if you are not a sport's fan you have no business wearing necklaces ;)
Localization is a boon for small local businesses which can now gain a slice of the local traffic stream that they were priced out of the market on. However, as a domain buyer, the value of AutoInsurance.com drops significantly after the large metro areas have localized results which do not allow the cost of an expensive domain to be amortized by the potential to rank everywhere. What is worse, is that the largest cities are the ones with the most vibrant economic activities (more businesses, more residents, larger loan sizes, and so on). Through localization any generic unbranded nationwide player simply misses out on the most valuable traffic.
Verticalization & Double Dipping Ads
Much like how localization locks generic players out of local markets, Google's increased verticalization (and allowing certain brands to double or triple dip on ad serving) now means that some results have over 80% of the screen's real estate dominated by a single key player.
Search Box > Address Bar
When Google Chrome launched it replaced the address bar with a search box.
That allows Google to...
intercept & redirect type-in traffic demand
re-highlight content you have already seen in the past (likely to be from some larger brands, as they have larger ad budgets & more ways to be found)
recommend popular searched-for keywords (which are often brands, since awareness-based advertising creates search demand
When Internet Explorer 9 was launched Microsoft also adopted these features
Google Instant's search auto-completion directs users away from some keywords and toward others. At first that statement seems like it could be saying that it consolidates search volume to a smaller set of keywords & thus could make domain names more valuable. However, if you have ever looked at a list of the most popular keywords you would know that they are largely filled with branded keywords. The media was aware of this obvious shift & Amit Singhal had to do an interview stating that there was no brand bias to Google Instant.
In the most recent beta Google has tamed this down a bit from the absurdity they were first testing, but Google has shown an interest in using whitespace trickery to drive the organic search results further down the page.
The rise of mobile applications & mobile search devices further pull leverage away from publishers & toward ad networks.
What's worse, is through personalization they have an asymmetrical information advantage over publishers in their ad network. They can tell you that you are getting 68% of the value of an ad click, but how do you know if they don't undervalue the contribution of that click while overvaluing the contribution for clicks where they keep 100% of the income on?
Google Small Business Taxes
Some sites get the benefit of the doubt, whereas other sites just get doubt. I highlighted how Google's approach to link buying, AdWords penalties & other issues vary based on who is getting whacked in our recent post about Google small business taxes.
Too Small to Matter
Smaller sites are more likely to come under attack from "the algorithm" as they are easier to knock over & are generally less stable. That gives them a higher risk factor & makes it even harder to build reliable business processes around it. How do you scale employment (or even inventory) when one month you are up 50% and the next month you are arbitrarily off 60%?
Further, Google has consistently screwed up original source attribution, which makes it even harder to justify for a small business to go the extra mile & spend extra money creating premium content, if the result will be Google paying someone to steal that content & wrap it in AdSense ads.
Where Does this Lead Us?
If you buy a "category killer" it is critical that you rank #1, but in many niches the exact match domains that ranked #1 for nearly a decade are now #3 or #4 in the organic results. Add in 3 AdWords ads above the organic results & things like product ads and it isn't hard to end up below the fold. If your relationship to that 1 keyword is your core competitive strategy but you can't even promote the keyword (because you are below the fold) then the strategy is a failed one.
Further, as Google keeps adding more usage signals into the relevancy mix that will keep favoring brands.
This is not to say domain names are dead across the board. there is still plenty of opportunity in some areas, but equally some names require large investment & as an SEO strategy may get thrown under the bus by any of the above (or similar future moves in other market niches).
I Stopped Buying Domain Names
I believe I was one of the first SEOs to publicly highlight the benefits of exact match domain names. Back when Google engineers were dismissive of it some of the smart money was dismissive of what the engineers stated and made plenty of money from it. But I have prettymuch stopped buying domains at this point...as in most cases the valuations generally don't make sense on a risk adjusted basis in the current market (let alone what the market will look like after the introduction of +1 & other brand signals).
Deep Pocketed SEOs Are Selling Their Domain Names
The person who was likely the single SEO most responsible for running up the price of exact match domain names (he over-paid for some of them based on the presumption that the numbers would back out similarly to some of his earlier investments in a market that was dominated by a government-sponsored bubble) has now become a domain seller.
You don't get much more amoral capitalist opportunistic than this person is (see the following before and after for his payday loans effort)
In March Matt Cutts talked down exact match domain names, but the truth is that Google never really needed to discount them, simply by adding more criteria to the relevancy algorithm which boosts brands they already had the same impact.
Search has moved away from relevancy toward promoting brands. As SEOs we don't control Google. We can only focus on promoting that which they reward.
The smart money is now saying that domain names are generally significantly overpriced, especially as an asset class valued based on SEO potential.