I am going to be speaking at SES San Jose Tuesday of next week on SEO Tools stuff. My wife and I should be there for most of the conference roaming around. If you see us please say hi. :)

I am also hoping to be up in time to catch the Clay Shirky keynote on Tuesday. He has been right about the direction of the web on so many fronts including newspapers, micropayments, and communities. While his new book Here Comes Everybody book might be a bit idealistic, it is also one of the most compelling looks at the ever-changing nature of how the social aspects of the web intersect with our lives, and a nice counter view of the web to Nick Carr's The Big Switch.

Anyone who is a member of of our community likely knows that I am a fan of Cartman. It all comes down to Cartman's understanding of marketing principals:

Being perceived as a trusted authority is a powerful marketing tool for many reasons. Here are a few examples...

• People fear making bad decisions. The fear of loss is one of the biggest emotional hurdles in the conversion process. And so we turn to authorities to help us out. This is why...
  • Google is huge and only getting bigger.
  • many scammy diets run "As Seen on Oprah" or some such on the ads.
  • Fakevertising goes so far as telling you a fake weight loss story from a specific celebrity.
  • cumulative advantage is such an important concept for online marketers to understand.
• When I was sitting in jury selection one potential juror did not feel it was fair that the DA had to prove guilt. She presumed guilt based simply on accusation, without any other facts.
• Most people are ignorant to the sausage-like nature of media, the corruption that is core to large centralized governments, and the fraudulent private banking interests that skim off the top of every transaction and enslave society in debt. We are trained to be ignorant consumers who trust authority. How else could you justify virtually nobody caring about bankers & politicians robbing trillions of Dollars from the country while budget constraints are forcing some local sheriffs to call in the national guard for security. The head of the Federal Reserve put in a half-trillion Dollar short on the US Dollar to aid foreign central banks (at our expense) and yet nobody cares! Steal from the semi-rich, middle class, poor, super-poor, unborn, etc. and give to the super rich. Let them have another round of casino capitalism until the country is bankrupt.
• If you ever want to sell anything, then people trusting you and seeing you as an authority makes sales far easier. Back when I sold a how to SEO ebook there was a month where Google rolled in a filter that whacked some branded sites from ranking for their brand. Even though our site was selling an SEO how to book ***while not ranking*** our sales that month were still 85% of the record month. Because the site had so much perceived authority it developed distribution channels outside of search strong enough to sell even when the rankings made the site look like it was (at least temporarily) lacking in credibility.
• Think of how the vast majority of searchers click on the top few listings in the search results. That is because perceived relevancy and authority. Even if you most the most relevant result down the page, many people will still click the first listing because of the perceived authority of that ranking position.
• Many of the quality links that can't be easily replicated and are actually organic only come about after you are established as an authority. I just got referenced on the Network Solutions blog in passing...no way those types of links happen unless you already have lots of established exposure and perceived authority. But how do you develop it?

Anyway, enough of my rambling.

Brian Clark recently announced a free report called Authority Rules. Its killer, and you should go check it out right now! There are tons of gems in there like

Brain scans show that the decision-making parts of our brains often shut down when we encounter authoritative advice or direction.

SEO Question: Hello, How do site suchs as: ____ and _____ work with flat fees Where everyone else charges us up the wazoo.
Do you offer such a program for my business. - Thanks, Paul

Short answer: "Laws control the lesser man. Right conduct controls the greater one." - Mark Twain

Some People Provide Value, Others Steal Money

Long answer: Believe it or not, at one point in time I was an SEO client who bought a trashy scammy service. The site I was trying to market was terrible, they offered no link building solutions for it, and instead suggested I create copies of pages on the site with hidden links pointing back and forth to try to rank well for some obscure 5 word phrases that nobody searches for.

Now those people could have told me that my site was a poor website and I can improve it by doing x, y, and z. But they didn't care about the actual outcome of the work. They just wanted $149 and they got it. That was over six years ago, and they are still scamming people today.

Many Big Organizations Sell Scammy No-Value SEO Services

Most SEO buyers are allured by the prospect of free traffic and that free price-point sets their anchoring for the price. Further their first introduction to SEO comes from non-SEO. Many web hosts, domain registrars, clueless web designers (who talk up web standards but do no actual SEO research), and sleazy telemarketers offer low priced flat rate packages that have no value. Some of the domain registrars and web hosts run on such thin margins that they would be bankrupt without selling stuff like the scammy bolt on no value SEO packages. To highlight such scams I created dollarseo.com to show how they did not work.

Which Creates a Market For Lemons Effect

John Andrews also highlighted this issue in the past, in a post about a market for lemons, comparing the market for SEO services to the used car market:

As non-selling good cars were removed from the market, masquerading “lemons” dominated, setting the tone for the used car market, and further blocking actually good used cars from appearing. In the end, the used car market becomes a market for lemons, not a used car market.

It seems SEO has the same problem. As “boiler-room” SEO firms cold-call companies and pitch ridiculously low prices for SEO contracts, based on old and incorrect SEO information readily accessible to consumers, high quality SEO firms start looking “too expensive”. Consumer research into SEO does not reveal better information, since that knowledge comprises a significant portion of the value SEO consulting, and is thus not freely published. The entire market for SEO services starts to become a market not for actual search engine optimization, but more a market for “snake oil SEO” than true SEO.

Consider the Baseline

To further put the economics of SEO in context, any great SEO should be able to profit from marketing their own websites about their own interests. If I was still interested in baseball cards (like I was in high school) I have no doubt that I could make 6 figures a year promoting a website about baseball cards. That interest faded. But any interests I have I can attempt to monetize. That sets the barrier kinda high for client services. Why would I market someone's thin affiliate site selling Viagra cheaply when if I poured the same effort into my own sites which I love I would make far more profits?

Competent SEOs Have Many Options

Because of snake oil SEO salesmen (and people who want to buy something cheap) the SEO market is very hard to extract money from in service based businesses unless...

1. you run your own publishing business (monetized through affiliate ads, contextual ads, lead generation, direct ad sales, creating & selling your own products + services) and optimize your own websites (which we do)
2. you sell information and/or tools that others can use to apply to learning SEO (which we do)
3. you sell other niche services (like keyword research or link building) that help clients, but are only a piece of the overall strategy (we do not do too much of this, but sometimes do)
4. you have very few select high end client relationships (which we do)
5. you hire a bunch of salesmen to sell worthless trash to the bottom 80% of the consumer market. (which we do NOT do)

This site is about 90% of my labor and about 30% of our profit. But we still run it for a variety of reasons...

• it is one of my favorite hobbies
• income diversity
• running this site (and interacting with hundreds of smart SEOs) helps give us more feedback on international markets and inform some of marketing strategies
• there are a lot of ways to make money online that are somewhat dirty, but this site is pure as snow and helps thousands of families put food on their tables.

Some Markets Are Competitive & Expensive

Anyone who is selling flat rate SEO services is selling a service priced without exploring the market and learning how competitive it is. Ranking well for credit cards might be worth millions of dollars. But it might also cost that much to rank. Ranking for Salem, Oregon bus rental is far easier and can be done using less than 1% of the capital investment.

Worse yet (for the consumer of a flat rate SEO service), SEO is a winner take most market. Most people click on the first page of the search results, with most those clicks happening on the top few listings. So lets say one of the flat rate companies was surprisingly not a scam and actually gave a crap about your business. This is doubtful in most cases, but lets just consider it. Well if they under-price the flat rate and rank you on page 2 or 3 you still are not going to get very much traffic, and (in spite of them trying their best on limited resources) you still probably lost money because page 3 of the search results = fail.

Is Google Flat Rate?

And here is another way of looking at it. Google AdWords doesn't sell their keywords for a flat rate. The words live in an auction that rises and falls with consumer demand. At the same time, advertisers who are paying Google over $10,000,000,000 a year are starting to put some of that budget into organic SEO. With the average SEO employee earning roughly $80,000 a year it is hard to believe that an outsourced discount flat rate package can compete.

Flat Rate Dream Homes Located in _____ for Only $5,000

I am not sure who came up with this analogy. I think it was Danny Sullivan (he is always great with those), but how many contractors do flat rate home building? Probably 0 legitimate ones. Everything is important from the foundation, to the number of rooms, to the materials used, and any special requests need to be considered.

Knowing if the house is on the side of the mountain, if it needs rocks cleared away, if it is in a swamp and could sink is important. Likewise legitimate SEO consulting aims to know the direction of the market, understand the brand, evaluate domain name selection, survey the market, and assess strengths and weaknesses.

Only AFTER all that work has been done to establish a foundation then you have to establish a well researched market strategy and keyword strategy. Then you need to do push marketing and other forms of marketing to build links. You might need to build 100 or 100,000 to compete. No matter how perfect your site is optimized, you generally are not going to rank for competitive keywords until AFTER some link building has been done. On-page optimization has a glass ceiling.

Rarely, if ever, do flat rate SEO service providers build quality links. And if the do buy them, then it is generally to some prescribed generic schedule rather than a specific plan catered to your market and your website. And while the provider is stuck working within that flat rate someone else is subscribing to sites like this one, learning SEO, and aggressively reinvesting their profits to further build a competitive advantage.

It is very hard for an outsourced discount service to compete with a self-interested business owner.

In the markets worth being in, pre-defined flat rate SEO rarely gets it done.

Well they got that link because they were the best site out there. That was organic. It is a naive view of marketing to assume that if you are the best people will notice you and people will care. It is not enough to be the best...you need others to say that you are. If anything the web is making most people more driven by self interest - rather than lending a helping hand.

Worse yet, due to the anonymous nature of the web (and other automated technologies), we are bombarded with every type of spam imaginable (auto-dial telemarketing, fakevertising, reverse billing fraud, phishing, bait & switch marketing, etc etc etc) and the people who have distribution are gaining a predisposition that if you contact them out of the blue with anything commercial you are a spammer. Further tools like Twitter pull links off the web graph and make conversations more shallow, limiting the discussion of many complex topics.

Affiliate programs are great for distribution (and whoring fake reviews), but most good affiliates typically target brands that already have their own gravity around them.

Even if you make someone millions of dollars they typically don't want to give a testimonial because they are afraid of creating competition for themselves.

Companies worth over $100 billion dollars - like Google - still need to buy ads and bribe customers for testimonials:

The site has a range of options for letting your company or organization know that you want it to “Go Google,” including things like fliers and pre-populated emails to send out.

And Google is also promising to give away “goodies” each week in August to users who have Gone Google and fill out a Google Doc describing their experience.

Eventually the goal of many forms of marketing is to create something that has enough targeted awareness that it begins to market itself. To become synonymous with a field. Kleenex & Xerox are great examples. But you have to use push marketing, begging, bribery, ass kissing, capital, sweat, blood, luck, and a bit talent to get in that type of position.

You can't be a successful market maker without first being a market manipulator. And even when you get to the top of a market you still have to try to control market perceptions. To get a refund for an Apple iPod that literally blows up you need to sign a confidentiality agreement:

The letter also stated that, in accepting the money, Mr Stanborough was to “agree that you will keep the terms and existence of this settlement agreement completely confidential”, and that any breach of confidentiality “may result in Apple seeking injunctive relief, damages and legal costs against the defaulting persons or parties”.

In spite of their strong market positions, Apple and Google are still heavily focused on manipulating public opinion of their products.

And Google's CEO Eric Schmidt sat on Apple's board to avail himself of key information. He sat on that board as Google attempted to clone the iPhone with Gphone, and stayed on it until his company pushed the FCC to go after Apple for blocking the Google Voice app: "Google brought down the disapproving scrutiny of the FCC onto Apple on Friday night, and on Monday morning Schmidt resigned. It is difficult not to make a connection between these two events."

And while Google paints the media as trustworthy, it rarely is. The news corporations do business deals to engage in cross-censorship in an attempt to increase short term corporate profits:

GE is using its control of NBC and MSNBC to ensure that there is no more reporting by Fox of its business activities in Iran or other embarrassing corporate activities, while News Corp. is ensuring that the lies spewed regularly by its top-rated commodity on Fox News are no longer reported by MSNBC. You don't have to agree with the reader's view of the value of this reporting to be highly disturbed that it is being censored.

One of the biggest flaws with the field of SEO is the presumption some people have that there is only 1 right way to do things, everything should be free, marketing should be entirely organic, you have to keep it all above board or you risk losing everything, and other BS pitched by companies trying to minimize and regulate the field.

The bigger risk for most businesses is being too conservative and thus remaining obscure, unknown, and unprofitable.

Yahoo Had No Leverage...

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

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

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

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

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

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

How Search Sets a Baseline

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

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

Web Search Holds Everything Together

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

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

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

And Microsoft bought Yahoo! Search for $0:

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

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

Deal Terms

From Microsoft's press release:

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

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

SEO Stuff Up in the Air

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

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

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

Increased SEO Costs & Increased Barrier to Entry

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

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

Bing SEO Tips

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