Fixed Business Costs, Market Passion, & Profit Potential

When creating a content based website you can't just look at how big a market is and say thats a lot of money I am gonna go get some of it. You have to evaluate the profit potential of the market, and how easy it is for you to access it.

Biotechnology Blows:

Lets say I heard that biotechnology was a fast growing field and the market can not keep up with the demand, and I wanted to ride that wave. There are multiple problems with profiting from that market though:

  • lots of authority in that market: you are going to need many links to compete in the SERPs

  • lots of passion in that market: it is going to be hard to accumulate links as fast as the best channels
  • hard to write about: you can't just pay any old work at home writer to research and write about biotechnology the way they could write about something like personal finance
  • science and government: lots of high authority sites clogging up the search results
  • ad blindness: outside of children who do not yet understand advertising, most people studying science are less likely to click ads than the average person

Bad Markets:

The above bullet points are examples of things to look out for. Some markets that are generally tough to profit from (on an ROI perspective)

  • anything related to computers and the Internet

  • insurance or anything with heavy government interests
  • fields where everyone has the same duplicate content
  • science or other fields with lots of trusted links
  • high priced commodities in fields that are heavily marginalized and in decline

Good Ways to Play Bad Markets:

Zillow does well in real estate because they have a unique way of displaying information. If you have a new format / angle / niche you can do well in even the most competitive markets.

Non-competitive Markets that are Claimed to be Competitive:

Many markets that are allegedly competitive have a bunch of thin sites all doing the same stuff.

  • The Forex market has almost no editorial, and the channels that have editorial tend to be so technical in nature that they are hard to cite.

  • How many useful original ringtone sites are there? How hard would it be for someone who had a useful ringtone site to get 50,000 visitors a day?
  • How many markets are there where half of the top results are obviously written by Indians who barely know English?

Choosing a Profitable Market:

No matter what category you are competing in, you are going to have some minimum baseline writing, design, research, link building, and marketing costs. It is likely more profitable to be an established unique site in a field of sites all offering the same thing than it is try to be a market leader in a market with low search volume and virtually no commercial intent.

Extending the Reach / Circulation of a Web Based Content Site & Ad Network

Mar 28th

Once you have a trusted market position advertisers will buy in even if you hurt their business model or call their products crap:

To my enormous surprise, the company that threatened to call the feds on me made another offer to advertise on CamcorderInfo.com. Because of our popularity - we have the No. 1 search listing on Google (Charts) under "camcorder reviews" - it couldn't afford to avoid us anymore. I okayed the deal, comfortable that the electronics firm was aware of our ethics policies. It has since become one of our largest clients. When I asked the executive if he ever actually called the FBI on me, he insists he did. He said the agency found me guilty of nothing except a passion to build a reliable company.

Every Ad Network is Flawed:

Once an ad network has buy in they look for ways to leverage that market position. And there is fraud involved nearly every time

  • newspapers puff up their circulation numbers

  • magazines run ads and give themselves away to boost circulation
  • a keyword that normally costs me $4 a month on Yahoo! cost me over $100 this month due to syndicated click fraud
  • look at how much of the web spam Google funds

How to Extend Your Reach Without Getting Too Dirty:

Once you establish a trusted market leading niche site you can extend your circulation by buying traffic from cheap sources. Some people will just send fake traffic generators over their own site for impression fraud, but there are many cheap sources of traffic that may provide ongoing value and look much more natural than blatantly committing circulation fraud.

  • Keep your feed rather clean so it is easy to subscribe to. The people subscribing to it will likely be the people who link to your site. Maybe put one exclusive sponsored by ad unit in your feed.

  • Create an email newsletter that recycles your best online content. Maybe run one or two ads in it, and use it to drive traffic back to your site.
  • Buy interstitial ads from AdBrite on related websites. If AdBrite is underpricing the inventory of a strong site try to buy out all their ad slots.
  • If AdSense is under-priced in your market consider buying AdSense ads on related sites to drive longtail traffic back to your site and further position yourself as the market leader. You see this sort of activity all the time with web directories, where a couple of them have ads on other web directories.
  • If you are really motivated you may want to resell ad inventory of other smaller players in your field.
  • Buy traffic from StumbleUpon.
  • If you write what is essentially a news site try to get syndicated in Google News and other related news sites.
  • If your site has a high authority score, write a few posts here and there that use analogies or other ways to pull in related traffic without looking like you are straying too far off topic. For example, one of the leading search queries for this site is Google Auctions.

  • Interview industry experts that have greater reach than you do.
  • If you have been ignoring SEO at least give the topic a cursory look, and consider buying a few trusted links by doing things like joining trade organizations.
  • Create linkbait and get it exposure on the popular social news websites. Also consider promoting your best content via Review Me buys on popular channels. (disclaimer: I have an equity stake in Review Me)
  • If you have enough time to manage it (or know someone else who can) consider adding a forum or other user generated content sections to your site. Active forums can have hundreds of thousands or millions of page views each day.
  • Have your pages refresh once every few minutes to rotate through advertisements. I believe MarketingVox does this.
  • Make sure your site design is clean, you publish quality original content, and your about us page looks trustworthy. These will make it easier for people to buy ads directly from you, and will make it easier for the media to use you as a source.

If you have a high value market position in a large competitive sector and are not making much from AdSense make your site brand ad friendly by pumping up your circulation numbers. Many of those ad buys are cheap on a CPM basis and will lead to additional recurring traffic and links. In many high value markets as your get more exposure your ad revenues increase logarithmically because you get more traffic and people are willing to pay a higher CPM rate.

Writing for Multiple Audiences

Mar 28th

Many sites tend to steer clear of controversy, but want the traffic controversy can bring. What are the solutions?

  • Accidentally put things in / leave things out of your story that make it easy to take it the wrong way. Leave an easy angle that you know people will take so that when they do you can crush them. Depending on your strategy, it may even help to leave comments off on some of these types of posts.

  • Write your own controversial comment as though it was from someone else and then let people debunk that person.
  • When you syndicate your story to a social site that is politically biased, place blame for whatever is wrong on someone. People will vote on hating or liking that person without even clicking through to the story to see if it relates to the headline.

Eye Tracking from Search to Recall

Mar 26th

There have recently been a couple eye tracking studies in the news. Jakob Nielson did a study on the effects of clean content organization:

What if you could engage users in a story for about half the time, yet have them remember about 34 percent more of the content? That’s exactly what one test showed. Spending less than two hours rewriting and reformatting a story about New York City restaurants really paid off according to this study.

Gord Hotchkiss recently posted about how people scan search results.

We scan three to four listings at a time, which are temporarily loaded into our memory slots. From that first group of three to four listings we make a determination if any of them are relevant to the query we just launched. About 50% of the time, we make our selection from those first three or four listings and we click on one of them. If we don't find what were looking for in this first can, then we continue to scan down the page, slicing off our second consideration set of three to four listings, again loading them into our memory slots so we can compare them and make our choice.

As the business model for creating content erodes, and web entrepreneurs get better at recycling content, those who get the presentation and formatting from the search results right on through to site structure and article display will win marketshare as destination sites:

While many people want their website to be #1 (or even settle for first page) for their keywords, very few websites actually deserve it. The concept of Destination Marketing is about making your website better than the sum of its parts by combining strong SEO and strong on- and off-page marketing without compromising any of it. If your website is just another site doing the same thing that hundreds of others are and you provide no unique offerings, simply put, you don't deserve to be #1. Period.

Update: Poynter did research showing that when people pay attention online they pay more attention than they pay to similar offline pieces. Here is a video about their eye tracking study.

Preparing a Site for Sale

Mar 12th

If you are growing a site organically it might be worth it to sacrifice the short term earnings for long-term growth, but what happens when it comes time to sell a site? If you site has a strong brand or other intangible brand type assets worth far more than current earnings consider those before making any changes, and do not tarnish the site's image. If you site does not have those, and will likely sell at an auction it will probably sell for some multiple of current earnings, based on a number of factors including

  • how much work it is to keep the site earning what it is (fixed costs, in time and money)

  • general category growth (upside potential)
  • site position in the category (upside potential)
  • how aggressively it is monetized (upside potential)

Almost everything that has the word potential in it is going to be heavily discounted. Some people will not see the potential, while others will feel that they don't want to bid based on potential (because they feel that is their value add after they buy the site). Before you sell a site, make sure you spend a few months tweaking the monetization to max out your current revenue numbers. That is the base which most buy offers will be built from.

Domain Names and Defensible Traffic

Andy Hagans recently posted about his linkbait marathon strategy to rank his sites at the top of the search results. Brian Provost posted about his love for domaining. Domain names may play a big roll not only in anchor text, but also in overall domain credibility, linkability, and defensibility.

An Example of a Domain Waiting to Fall:

In spite of making over a thousand dollars a month, one of my unappealingly named domain names has cost itself significant credibility and links. Since it is an invisible cost it is hard to estimate how much it has cost, but I have a perfect example of showing how much it hurts.

One time I tried sponsoring an event and they said sure. They got my credit card details and then asked for the domain name. Once they saw the domain name they said sorry they couldn't accept my money. And this is a reputable content site in a field that is easy to like, but on a junky sounding domain name. Ouch.

Being Honest With Yourself:

If you have a quality legitimate content site, and people who typically sell reviews or links are unwilling to take your money you know it is time for a change.

Other Signs of Trust:

If people who need sponsorship are unwilling to take my money imagine how much a bad domain name suppresses my click-through rate in the search results, and how many other links it cost me. If and when relevancy moves toward an attention based metric I am screwed if my house is built on a cheesy domain name that looks spammy.

Domain Buyer's Pricing Tips:

You can sometimes capture emerging field names cheaply, but you are probably going to have to spend at least a few grand to get a good name if you are in an established field.

If you are new to domaining, and can't afford a great .com there are still a lot of great .org and .net names out there available for $1,000 to $10,000.

Is a 301 Redirect Risky?

I will eventually 301 redirect my high ranking ugly domain name to the undeveloped MyKeywords.org domain that I just spent $8,000 buying. Short term I will probably see some drop in traffic, but long-term it is going to be far less risky to create an leverage what looks like a real resource and a real brand.

If you do something like this, make sure you have enough other passive income streams to afford the risk, and keep developing links to the new domain name. Keep that old trusted domain registered and redirecting for many years into the future. If you lose it you will probably lose a large portion of your link authority.

There is No Value in Being Anonymous:

You can spend the money your site is making as a passive income source, but if you believe in what you are doing, and have money in the bank, there is no reason to use a bad domain name. It is like writing nameless.

You can get a decent design for few thousand dollars, or a design modification for a few hundred. You can get good content for $50 a page or less. You can move a CMS for a low price too. The cost of moving and re-branding a non-brand site are negligible compared to the potential upside.

If you ever decide to sell, you are not going to get much out of my-ugly-do-mainz.biz, but if you create a real brand on an undeveloped strong domain name you will be able to sell it for a premium far in excess of the domain name cost.

Self-Reinforcing, Self-Promotional Bias

A large part of making business successful is leveraging your authority and using nepotism to extend your sphere of influence. If things look a bit circular in nature that is because they are. Nearly everything you consume has a self promotional bias, but is that any reason to complain? Wouldn't be even scarier if the things you enjoyed and associated with were self destructing?

Examples of Self Promotional Bias in the Media:

If a politician pushes bogus laws (that they know will never be passed) for self promotion and news coverage then why wouldn't the media companies that grant that exposure also grant themselves some leeway? Do you think a news company owned by GE is going to publish a cover story about pollution by GE? Do you think Fox News will stand up against their big advertisers (even when their advertisers are responsible for causing cancer)? Of course not.

The bigger something gets the more hidden stakeholders it has to appeal to. Very rarely do owners get the opportunity to speak honestly about large companies. In many cases they are obligated not to in order to maximize shareholder value. I have had VCs offer to invest in me multiple times but have refused time and time again because I don't want hidden stakeholders controlling my actions.

People discouraging institutional analysis may say Noam Chomsky's Manufacturing Consent is a conspiracy theory, but why would it be? What business isn't biased toward their own self interests? Self preservation is a core goal of any institution.

Broken Egos:

Many junk products exist with demand driven by hype, spam, and scammy multi-level marketing, but many
business models exists because we as consumers have holes in our egos and want to lie to ourselves to justify our own flaws and actions.

As technology replaces the roles of many workers while making communication cheaper and easier, people have to do more to earn a living and it is harder to create new ideas, so we have to do more cause driven things to feel purpose and meaning in life.

We want to believe that ethanol
is providing cleaner fuel
even if creating it takes more energy than it creates.

As for the environmental impact, well, where do we begin? As an oxygenate, ethanol increases the level of nitrous oxides in the atmosphere and thus causes smog. The scientific literature is also divided about whether the energy inputs required to produce ethanol actually exceed its energy output. It takes fertilizer to grow the corn, and fuel to ship and process it, and so forth. Even the most optimistic estimate says ethanol's net energy output is a marginal improvement of only 1.3 to one. For purposes of comparison, energy outputs from gasoline exceed inputs by an estimated 10 to one.

Bias in Consumption:

Why is Fox News so profitable? Because it isn't really news. It is biased entertainment sold as news:

A new study based on a series of seven US polls conducted from January through September of this year reveals that before and after the Iraq war, a majority of Americans have had significant misperceptions and these are highly related to support for the war in Iraq.

The polling, conducted by the Program on International Policy (PIPA) at the University of Maryland and Knowledge Networks, also reveals that the frequency of these misperceptions varies significantly according to individuals’ primary source of news. Those who primarily watch Fox News are significantly more likely to have misperceptions, while those who primarily listen to NPR or watch PBS are significantly less likely.

Just like how we want to believe certain lies to make ourselves feel good, we also consume things
that reinforce our identities and worldviews.

How many decidedly centrist political blogs are successful compared to the number of strong democrat and strong republican blogs? It is easier to trust things that are easy to relate to, and trust has more value than objectivity.

I probably read just about every blog post that links to my site because I want to know why people are
talking about me. Is that a self serving bias? Absolutely. But why wouldn't I have that bias?

Changing Someone Else's Worldview:

It is much easier to sell someone something they want than to try to change their worldview.

An SEO thought they were going to change the image of SEOs on Digg by writing a letter about SEO. After getting many votes it was promptly removed from the Digg.com homepage.

It is even easy for a well rounded guy like Scott Karp to view SEO in a negative light after seeing so much negative coverage of the topic. Scott was more receptive to feedback than Digg because he only needs to change his opinion, he doesn't have to go against the group think consensus on Digg to change his content.

It is easy to be popular as a politician in the US by hating terrorists, gays, and gay terrorists. It is easy to be popular on Digg by hating SEOs. Neither of those mean that the blind hate is correct or has any value (other than realizing it creates a market that is easy to exploit - because as a market they are targeted and already letting others exploit them).

Many business owners create business models that explicitly are designed to take advantage of the blind faith, bigotry, ignorance, and hypocrisy core to many popular religions, or other large self-serving authority structures.

Fighting Noise:

As markets mature, market leaders have less time to learn (because they are so overwhelmed with things to do). Given that publishing costs have dropped to zero and web business models are so scalable, is it any wonder that market leaders tend to read less and do more testing on their own (especially if they became a market leader as a side effect of learning)?

Aaron Pratt has recently whined about the circular linking patterns of SEO elites, even having a guest post by Michael Goldberg, but a comment on that post by Ahmed Bilal was spot on:

In any such environment the good will rise and then naturally protect themselves by strengthening their following (herd). If you want to get to the top (topple them, beat them, match them, whatever), you have to build your own following, your own herd.

What are we doing about this right now? Are you actively finding, reading and linking to one new SEO blog a day?

If you want to be read, then you have to be interesting and you have to attract attention. That’s the way it works best - asking for attention or saying that you deserve it won’t help.

And yet on my recent blog post about the recent Google (update algo tweak refresh whatever) Aaron Pratt said this:

I am not seeing any loss/gain of earnings in Adsense which leads me to believe their is nothing going on.

Being a good SEO is about noticing patterns beyond your own experiences and surrounding yourself with others who can do the same.

Notice that I didn't outright call the latest Google Update an update, because Google heavily controls that language and wants to obfuscate examination of their changes (wait for the official word from Google on the data push / update / refresh / etc). Just how Google controls their update language, their self promotional bias and control of search related language is largely responsible for the public perception of SEO.

My Experiences With Authority:

Less than 5 years ago I got kicked out of the military. Since then:

  • I have been flown to a college and asked if I want to become a professor, but I think I wanted far more money than they wanted to pay. Since then I have created numerous passive income streams that far exceed what they would have paid.

  • I have had multiple VCs want to by a stake in my businesses, but turned them down.
  • I have been offered to get published by a major publishing house, but turned it down because it would have screwed up my business model. There is no business model in getting published unless you are publishing a thinly disguised advertisement or need the publisher for credibility.
  • I have been mentioned in the mainstream media numerous times. Not typically for the stuff I know best, but more for getting sued and for being the person who spent $8 registering BlackHatSeo.com. I have had done some long interviews that have never seen the light of day because I was far too honest.

Those were all opportunities at traditional forms of authority, and generally I turned them down because they were not worth the cost. The point here is that generally I am not a fan of most authorities.

Becoming an Authority:

If you are new to the market you do have biases against you: capital, market knowledge, relationships and attention. But you also have the advantage of being able to take the time to create really cool stuff and do lots of tests because people are not expecting you to do lots of things every day, and you can learn from mistakes of those who entered the market before you.

To get market recognition in a saturated market you have to come up with new, interesting, or innovative things. And if you can't do those you have to at least cause human emotions...do things that appeal to people and make people feel love or hate. Look how new SEOMoz is and they are already on the 1st page of Google for SEO and got a ton of media coverage.

If bias toward known authorities is something that is a common flaw with humans and all social structures there is little value in complaining about it. Instead accept it for what it is and let it feed into your marketing. Sure the Good Old Boy's club sucks, but if you don't offer solutions, then complaints about flaws in human nature are void of meaning.

Via (RCJordan (WMW))

"Resource" is an encomium bestowed only by users; "authority" is bestowed only by previously recognized authorities. Anyone who calls himself either one, is just an ego with vocal chords.

Large Networks Adding New Editorial Content Formats

Feb 22nd

Many top destination sites are adding blogs and other publishing formats to their site to build their authority and market-share. This editorial content creates value, builds trust and authority, and allows for a more profitable blend of content and advertisements.

Yahoo! & Yahoo! Tech:

  • Yahoo! Tech has a holiday shopping guide and a holiday gift guide as well as user voting. Notice the anchor text on those first two links...they are naming some of their services specifically for keywords.

  • Yahoo! Tech also offers fake celebrity wish lists where they tell you what they suspect certain celebrities would like. Which is quite absurd considering one of their celebrities is a Yahoo! worker. How hard would it be just to go get their real wish list directly?
  • Yahoo! wraps content in a small bite size video format called The 9. Notice how The 9 packages content, links off to other sites where necessary, but often features other Yahoo! content. This news is packaged as though it is not an advertisement for Yahoo!'s various content properties.
  • What is scary is that the editorial is fairly lenient, occasionally adding real value. Yahoo! is posting tips on how to save money on Amazon.com.

Amazon:

Some of the large platforms have significant market leverage, capital, the ability to quickly test and track the results of tests, improving user feedback integration, recommendation engines, and are adding features to make ordering easier in higher priced and more complex verticals. Add all those forms of value creation and optimization to a blend of ads and editorial content and it is going to be hard to compete with them in the search results.

If you are a niche player and do not have a compelling editorial element or industry standard reference documents it is going to be hard to compete in a few years.

Who Uses MySpace?

Feb 21st

While I still have a MySpace account I never log in anymore. There was too much spam to deal with. And my girlfriend got so many creepy messages that she had to delete her account. Generally, to use MySpace much, you have to do one or more of the following:

  • not value your time much

  • have a lot of spare time
  • be desperate to connect, and have few outlets
  • be a creep sending creepy messages
  • be an anonymous creep viewing profiles
  • be an automated spam bot or something that phishes accounts

MySpace grew too big to keep any sort of community feel the way that Digg has. It tried appealing to too large of an audience, and now it has no value outside of tracking the latest spam offers.

If I had a viral widget idea of course I would still want to pitch that to MySpace, but generally, as an end user, I just don't see any value to MySpace, do you?

This lack of value can also be thought of in ways that search engines may value certain types of websites that are not well integrated into communities on the web. If you spend time and money wading too deeply into those categories (or creating those types of site) you not only waste your time and money, but you also are not focusing on how to build trust and perceived value.

If it is your first site, it is awful hard to understand how to create perceived value and do the marketing well enough to be profitable before getting burned out. I think any type of site can have an editorial element bolted on to add credibility. And editorial content should be easy to add to a site if you are in tune with your marketplace and your customers.

If one channel is easier or more compelling to subscribe to than another then it is going to get more links, more attention, more readers, and win due to network effects. But if the channel gets so broad that it doesn't stand for anything eventually it will melt down, especially as smaller niche sites that are more relevant and easier to identify with are created.

Placing Your Brand Above Others

Feb 20th

When submitting to directories, buying paid search ads, buying display ads, or ranking in organic search a small company with a smart marketer can seem like it is much more powerful and much more authoritative than it is. But some webmasters undermine their authority by not considering how displaying ads on their own site could affect the perception of quality.

Which Directory is the Best?

Many directories sell sitewide banner ads to other directories, which directly states the other directory is of higher quality and more worthy of submitting to, not only for how the ads flow link equity, but also for the general brand perception.

Sell Yourself First:

Some sites make the same error of undermining their perceived site quality by placing external ads above their house ads or internal products. An earlier version of my site design placed other ads in-line with the content and the ad for my book on the sidebar. The day I put my ebook ad inline with the site content my sales tripled. If you have an editorial site that people subscribe to the easiest thing to sell should be your own stuff since people reading your site already trust you. Now my site has less ads, a better brand perception, and more profit.

Promote Your Content to Sell the Ads:

Without distribution it is hard to make money from advertising. Without heavily promoting the value of your content it is hard to get much distribution, especially with the self reinforcing nature of networks and the web.

Some sites are so optimized for short term profits that they undermine their own authority by placing a large ad block above the content. There are many creative ways to slightly reduce ad CTR while still leaving the general perception of quality to most site visitors. Just about every link you get will be from someone who visits your site. If your site leaves a good perception of quality and trustworthiness it is much easier to be deemed as linkworthy than if your site looks like an ad farm. AdSense aligned top and to the left is the equivalent of a noisy FFA page.

The order you place things in tells readers of your site what you think is most important. If you are in a competitive marketplace it is hard to compete if you place other brands or ads above your content.

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