Google: "As We Say, NOT As We Do"

Due to heavy lobbying, the FTC's investigation into Google's business practices has ended with few marks or bruises on Google's behalf. If the EU has similar results, you can count on Google growing more anti-competitive in their practices:

Google is flat-out lying. They’ve modified their code to break Google Maps on Windows Phones. It worked before, but with the ‘redirect,’ it no longer works.

We are only a couple days into the new year, but there have already been numerous absurdities highlighted, in addition to the FTC decision & Google blocking Windows Phones.

When is Cloaking, Cloaking?

Don't ask Larry Page:

Mr. Page, the CEO, about a year ago pushed the idea of requiring Google users to sign on to their Google+ accounts simply to view reviews of businesses, the people say. Google executives persuaded him not to pursue that strategy, fearing it would irritate Google search users, the people say.
...
Links to Google+ also appear in Google search-engine results involving people and brands that have set up a Google+ account.

Other websites can't hardcode their own listings into the search results. But anyone who widely attempted showing things to Googlebot while cloaking them to users would stand a good chance of being penalized for their spam. They would risk both a manual intervention & being hit by Panda based on poor engagement metrics.

Recall that a big portion of the complaint about Google's business practices was their scrape-n-displace modus operandi. As part of the FTC agreement, companies are able to opt out of being scraped into some of Google's vertical offerings, but that still doesn't prevent their content from making its way into the knowledge graph.

Now that Google is no longer free to scrape-n-displace competitors, apparently the parallel Google version of that type of content that should be "free and open to all to improve user experience" (when owned by a 3rd party) is a premium feature locked behind a registration wall (when owned by Google). There is a teaser for the cloaked information in the SERPs, & you are officially invited to sign into Google & join Google+ if you would like to view more.

Information wants to be free.

Unless it is Google's.

Then users want to be tracked and monetized.

Trademark Violations & Copyright Spam

A few years back Google gave themselves a pat on the back for ending relationships with "approximately 50,000 AdWords accounts for attempting to advertise counterfeit goods."

How the problem grew to that scale before being addressed went unasked.

Last year Google announced a relevancy signal based on DMCA complaints (while exempting YouTube) & even nuked an AdSense publisher for linking to a torrent of his own ebook. Google sees a stray link, makes a presumption. If they are wrong and you have access to media channels then the issue might get fixed. But if you lack the ability to get coverage, you're toast.

Years ago a study highlighted how Google's AdSense & DoubleClick were the monetization engine for stolen content. Recently some USC researchers came to the same conclusion by looking at Google's list of domains that saw the most DMCA requests against them. Upon hearing of the recent study, Google's shady public relations team stated:

"To the extent [the study] suggests that Google ads are a major source of funds for major pirate sites, we believe it is mistaken," a Google spokesperson said. "Over the past several years, we've taken a leadership role in this fight. The complexity of online advertising has led some to conclude, incorrectly, that the mere presence of any Google code on a site means financial support from Google."

So Google intentionally avails their infrastructure to people they believe are engaged in criminal conduct (based on their own 50,000,000+ "valid" DMCA findings) and yet Google claims to have zero responsibility for those actions because Google may, in some cases, not get a direct taste in the revenues (only benefiting indirectly through increasing the operating costs of running a publishing business that is not partnered with Google).

A smaller company engaged in a similar operation might end up getting charged for the conduct of their partners. However, when Google's ad code is in the page you are wrong to assume any relationship.

The above linked LA Times article also had the following quote in it:

"When our ads were running unbeknownst to us on these pirate sites, we had a serious problem with that," said Gareth Hornberger, senior manager of global digital marketing for Levi's. "We reached out to our global ad agency of record, OMD, and immediately had them remove them.... We made a point, moving forward, that we really need to take steps to avoid having these problems again."

Through Google's reality warping efforts the ad network, the ad agency, the publisher, and the advertiser are all entirely unaccountable for their own efforts & revenue streams. And it is not like Google or the large ad agencies lack the resources to deal with these issues, as there is some serious cash in these types of deals: "WPP, Google's largest customer, increased its spending on Google by 25% in 2012, to about $2 billion."

These multi-billion Dollar budgets are insufficient funds to police the associated activities. Whenever anything is mentioned in the media, mention system complexity & other forms of plausible deniability. When that falls short, outsource the blame onto a contractor, service provider, or rogue partner. Contrasting that behavior, the common peasant webmaster must proactively monitor the rest of the web to ensure he stays in the graces of his Lord Google.

DMCA Spam

You have to police your user generated content, or you risk your site being scored as spam. With that in mind, many big companies are now filing false DMCA takedown requests. Sites that receive DMCA complaints need to address them or risk being penalized. Businesses that send out bogus DMCA requests have no repercussions (until they are eventually hit with a class action lawsuit).

Remember how a while back Google mentioned their sophisticated duplication detection technology in YouTube?

There are over a million full movies on YouTube, according to YouTube!

The other thing that is outrageous is that if someone takes a video that is already on YouTube & re-uploads it again, Google will sometimes outrank the original video with the spam shag-n-republish.

In the below search result you can see that our video (the one with the Excel spreadsheet open) is listed in the SERPs 3 times.

The version we uploaded has over a quarter million views, but ranks below the spam syndication version with under 100 views.

There are only 3 ways to describe how the above can happen:

  • a negative ranking factor against our account
  • horrible relevancy algorithms
  • idiocy

I realize I could DMCA them, but why should I have to bear that additional cost when Google allegedly automatically solved this problem years ago?

Link Spam

Unlike sacrosanct ad code, if someone points spam links at your site, you are responsible for cleaning it up. The absurdity of this contrast is only further highlighted by the post Google did about cleaning up spam links, where one of the examples they highlighted publicly as link spam was not a person's spam efforts, but rather a competitor's sabotage efforts that worked so well that they were even publicly cited as being outrageous link spam.

It has been less than 3 months since Google launched their disavow tool, but since it's launch some webmasters are already engaging in pre-negative SEO. That post had an interesting comment on it:

Well Mr Cutts, you have created a monster in Google now im afraid. Your video here http://www.youtube.com/watch?v=HWJUU-g5U_I says that with the new disavow tool makes negative SEO a mere nuisance.
Yet in your previous video about the diavow tool you say it can take months for links to be disavowed as google waits to crawl them???
In the meantime, the time lag makes it a little more than a "nuisance" don't you think?

Where Does This Leave Us?

As Google keeps adding more advanced filters to their search engines & folding more usage data into their relevancy algorithms, they are essentially gutting small online businesses. As Google guts them, it was important to offer a counter message of inclusion. A WSJ articles mentioned that Google's "get your business online" initiative was more effective at manipulating governmental officials than their other lobbying efforts. And that opinion was sourced from Google's lobbyists:

Some Washington lobbyists, including those who have done work for Google, said that the Get Your Business Online effort has perhaps had more impact on federal lawmakers than any lobbying done on Capitol Hill.

Each of the additional junk time wasting tasks (eg: monitoring backlinks and proactively filtering them, managing inventory & cashflow while waiting for penalties tied to competitive sabotage to clear, filing DMCAs against Google properties when Google claims to have fixed the issue years ago, merging Google Places listings into Google+, etc.) Google foists onto webmasters who run small operations guarantees that a greater share of them will eventually get tripped up.

Not only will the algorithms be out of their reach, but so will consulting.

That algorithmic approach will also only feed into further "market for lemons" aspects as consultants skip the low margin, small budget, heavy lifting jobs and focus exclusively on servicing the companies which Google is biasing their "relevancy" algorithms to promote in order to taste a larger share of their ad budgets.

While chatting with a friend earlier today he had this to say:

Business is arbitrage. Any exchange not based in fraud is legitimate regardless of volume or medium. The mediums choose to delegitimize smaller players as a way to consolidate power.

Sadly most journalists are willfully ignorant of the above biases & literally nobody is comparing the above sorts of behaviors against each other. Most people inside the SEO industry also avoid the topic, because it is easier (& more profitable) to work with the elephants & attribute their success to your own efforts than it is highlight the holes in the official propaganda.

I mean, just look at all the great work David Naylor did for a smaller client here & Google still gave him the ole "screw you" in spite of doing just about everything possible within his control.

The linkbuilding tactics used by the SEO company on datalabel.co.uk were low quality, but the links were completely removed before a Reconsideration Request was filed. The MD’s commenting and directory submissions were done in good faith as ways to spread the word about his business. Despite a lengthy explanation to Google, a well-documented clean-up process, and eventually disavowing every link to the site, the domain has never recovered and still violates Google’s guidelines.

If you’ve removed or disavowed every link, and even rebuilt the site itself, where do you go from there?

Is Google Concerned About Amazon Eating Their Lunch?

Leveling The Playing Field

When monopolies state that they want to "level the playing field" it should be cause for concern.

Groupon is a great example of how this works. After they turned down Google's buyout offer, Google responded by...

The same deal is slowly progressing in the cell phone market: “we are using compatibility as a club to make them do things we want."

Leveling Shopping Search

Ahead of the Penguin update Google claimed that they wanted to "level the playing field." Now that Google shopping has converted into a pay-to-play format & Amazon.com has opted out of participation, Google once again claims that they want to "level the playing field":

“We are trying to provide a level playing field for retailers,” [Google’s VP of Shopping Sameer Samat] said, adding that there are some companies that have managed to do both tech and retail well. “How’s the rest of the retail world going to hit that bar?”

This quote is particularly disingenuous. For years you could win in search with a niche site by being more focused, having higher quality content & more in-depth reviews. But now even some fairly large sites are getting flushed down the ranking toilet while the biggest sites that syndicate their data displace them (see this graph for an example, as Pricegrabber is the primary source for Yahoo! Shopping).

Some may make the argument that a business is illegitimate if it is excessively focused on search and has few other distribution channels, but if building those other channels causes your own site to get filtered out as duplicate content, all you are doing is trading one risky relationship for another. When it comes time to re-negotiate the partnerships in a couple years look for the partner to take a pound of flesh on that deal.

How Google Drives Businesses to Amazon, eBay & Other Platforms

Google has spent much of the past couple years scrubbing smaller ecommerce sites off the web via the Panda & Penguin updates. Now if small online merchants want an opportunity to engage in Google's search ecosystem they have a couple options:

  • Ignore it: flat out ignore search until they build a huge brand (it's worth noting that branding is a higher level function & deep brand investment is too cost intensive for many small niche businesses)
  • Join The Circus: jump through an endless series of hoops, minimizing their product pages & re-configuring their shopping cart
  • PPC: operate at or slightly above the level of a non-functional thin phishing website & pay Google by the click via their new paid inclusion program
  • Ride on a 3rd Party Platform: sell on one of the larger platforms that Google is biasing their algorithms toward & hope that the platform doesn't cut you out of the loop.

Ignoring search isn't a lasting option, some of the PPC costs won't back out for smaller businesses that lack a broad catalog to do repeat sales against to lift lifetime customer value, SEO is getting prohibitively expensive & uncertain. Of these options, a good number of small online merchants are now choosing #4.

Operating an ecommerce store is hard. You have to deal with...

  • sourcing & managing inventory
  • managing employees
  • technical / software issues
  • content creation
  • marketing
  • credit card fraud
  • customer service
  • shipping

Some services help to minimize the pain in many of these areas, but just like people do showrooming offline many also do it online. And one of the biggest incremental costs added to ecommerce over the past couple years has been SEO.

Google's Barrier to Entry Destroys the Diversity of Online Businesses

How are the smaller merchants to compete with larger ones? Well, for starters, there are some obvious points of influence in the market that Google could address...

  • time spent worrying about Penguin or Panda is time that is not spent on differentiating your offering or building new products & services
  • time spent modifying the source code of your shopping cart to minimize pagecount & consolidate products (and various other "learn PHP on the side" work) is not spent on creating more in-depth editorial
  • time switching carts to one that has the newly needed features (for GoogleBot and ONLY GoogleBot) & aligning your redirects is not spent on outreach and media relations
  • time spent disavowing links that a competitor built into your site is not spent on building new partnerships & other distribution channels outside of search

Ecosystem instability taxes small businesses more than larger ones as they...

The presumption that size = quality is false. A fact which Google only recognizes when it hits their own bottom line.

Anybody Could Have Saw This Coming

About a half-year ago we had a blog post about 'Branding & The Cycle' which stated:

algorithmically brand emphasis will peak in the next year or two as Google comes to appreciate that they have excessively consolidated some markets and made it too hard for themselves to break into those markets. (Recall how Google came up with their QDF algorithm only *after* Google Finance wasn't able to rank). At that point in time Google will push their own verticals more aggressively & launch some aggressive public relations campaigns about helping small businesses succeed online.

Since that point in time Amazon has made so many great moves to combat Google:

All of that is on top of creating the Kindle Fire, gaining content streaming deals & their existing strong positions in books and e-commerce.

It is unsurprising to see Google mentioning the need to "level the playing field." They realize that Amazon benefits from many of the same network effects that Google does & now that Amazon is leveraging their position atop e-commerce to get into the online ads game, Google feels the need to mix things up.

If Google was worried about book searches happening on Amazon, how much more worried might they be about a distributed ad network built on Amazon's data?

Said IgnitionOne CEO Will Margiloff: “I’ve always believed that the best data is conversion data. Who has more conversion data in e-commerce than Amazon?”

“The truth is that they have a singular amount of data that nobody else can touch,” said Jonathan Adams, iCrossing’s U.S. media lead. “Search behavior is not the same as conversion data. These guys have been watching you buy things for … years.”
...
Amazon also has an opportunity to shift up the funnel, to go after demand-generation ad budgets (i.e. branding dollars) by using its audience data to package targeting segments. It's easy to imagine these segments as hybrids of Google’s intent-based audience pools and Facebook’s interest-based ones.

Google is in a sticky spot with product search. As they aim to increase monetization by displacing the organic result set they also lose what differentiates them from other online shopping options. If they just list big box then users will learn to pick their favorite and cut Google out of the loop. Many shoppers have been trained to start at Amazon.com even before Google began polluting their results with paid inclusion:

Research firm Forrester reported that 30 percent of U.S. online shoppers in the third quarter began researching their purchase on Amazon.com, compared with 13 percent who started on a search engine such as Google - a reversal from two years earlier when search engines were more popular starting points.

Who will Google partner with in their attempt to disrupt Amazon? Smaller businesses, larger corporations, or a mix of both? Can they succeed? Thoughts?

How to Obfuscate And Misdirect an Algo Update

Sharing is caring!

Please share :)

Embed code is here.

If you find the following a bit hard to read due to font size, a wider version is located here.

Google Algo Changes.

Gain a Competitive Advantage Today

Your top competitors have been investing into their marketing strategy for years.

Now you can know exactly where they rank, pick off their best keywords, and track new opportunities as they emerge.

Explore the ranking profile of your competitors in Google and Bing today using SEMrush.

Enter a competing URL below to quickly gain access to their organic & paid search performance history - for free.

See where they rank & beat them!

  • Comprehensive competitive data: research performance across organic search, AdWords, Bing ads, video, display ads, and more.
  • Compare Across Channels: use someone's AdWords strategy to drive your SEO growth, or use their SEO strategy to invest in paid search.
  • Global footprint: Tracks Google results for 120+ million keywords in many languages across 28 markets
  • Historical data: since 2009, before Panda and Penguin existed, so you can look for historical penalties and other potential ranking issues.
  • Risk-free: Free trial & low price.
Your competitors, are researching your site

Find New Opportunities Today

Counterspin on Shopping Search: Shady Paid Inclusion

Bing caused a big stink today when they unveiled Scroogled, a site that highlights how Google Shopping has went paid-inclusion only. A couple weeks ago Google announced that they would be taking their controvercial business model global, in spite of it being "a mess."

Nextag has long been critical of Google's shifts on the shopping search front. Are their complaints legitimate, or are they just whiners?

Data, More Reliable Than Spin

Nothing beats data, so lets start with that.

This is what Nextag's search exposure has done over the past few years, according to SearchMetrics.

If Google did that to any large & politically connected company, you can bet regulators would have already took action against Google, rather than currently negotiating with them.

What's more telling is how some other sites in the shopping search vertical have performed.

PriceGrabber, another player in the shopping search market, has also slowly drifted downward (though at a much slower rate).

One of the few shopping search engines that has seen a big lift over this time period was Yahoo! Shopping.

What is interesting about that rise is that Yahoo! outsourced substantially all of their shopping search product to PriceGrabber.

A Self-Destructing Market Dynamic

The above creates an interesting market dynamic...

  • the long established market leader can wither on the vine for being too focused on their niche market & not broadening out in ways that increase brand awareness
  • a larger site with loads of usage data can outsource the vertical and win based on the bleed of usage data across services & the ability to cross promote the site
  • the company investing in creating the architecture & baseline system that powers other sites continues to slide due to limited brand & a larger entity gets to displace the data source
  • Google then directly enters the market, further displacing some of the vertical players

The above puts Nextag's slide in perspective, but the problem is that they still have fixed costs to manage if they are going to maintain their editorial quality. Google can hand out badges for people willing to improve their product for free or give searchers a "Click any fact to locate it on the web. Click Wrong? to report a problem" but others who operated with such loose editorial standards would likely be labeled as a spammer of one stripe or another.

Scrape-N-Displace

Most businesses have to earn the right to have exposure. They have to compete in the ecosystem, built awareness & so on. But Google can come in from the top of the market with an inferior product, displace the competition, economically starve them & eventually create a competitive product over time through a combination of incremental editorial improvements and gutting the traffic & cash flow to competing sites.

"The difference between life and death is remarkably small. And it’s not until you face it directly that you realize your own mortality." - Dustin Curtis

The above quote is every bit as much true for businesses as it is for people. Nothing more than a threat of a potential entry into a market can cut off the flow of investment & paralyze businesses in fear.

  • If you have stuff behind a paywall or pre-roll ads you might have "poor user experience metrics" that get you hit by Panda.
  • If you make your information semi-accessible to Googlebot you might get hit by Panda for having too much similar content.
  • If you are not YouTube & you have a bunch of stolen content on your site you might get hit by a copyright penalty.
  • If you leave your information fully accessible publicly you get to die by scrape-n-displace.
  • If you are more clever about information presentation perhaps you get a hand penlty for cloaking.

None of those is a particularly desirable way to have your business die.

Editorial Integrity

In addition to having a non-comprehensive database, Google Shopping also suffers from the problem of line extension (who buys video games from Staples?).

The bigger issue is that issue of general editorial integrity.

Are products in stock? Sometimes no.

It is also worth mentioning that some sites with "no product available" like Target or Toys R Us might also carry further Google AdSense ads.

Then there are also issues with things like ads that optimize for CTR which end up promoting things like software piracy or the academic versions of software (while lowering the perceived value of the software).

Over the past couple years Google has whacked loads of small ecommerce sites & the general justification is that they don't add enough that is unique, and that they don't deserve to rank as their inventory is unneeded duplication of Amazon & eBay. Many of these small businesses carry inventory and will be driven into insolvency by the sharp shifts in traffic. And while a small store is unneeded duplication, Google still allows syndicated press releases to rank great (and once again SEOs get blamed for Google being Google - see the quote-as-headline here).

Let's presume Google's anti-small business bias is legitimate & look at Google Shopping to see how well they performed in terms of providing a value add editorial function.

A couple days ago I was looking for a product that is somewhat hard to find due to seasonal shopping. It is often available at double or triple retail on sites like eBay, but Google Shopping helped me locate a smaller site that had it available at retail price. Good deal for me & maybe I was wong about Google.

... then again ...

The site they sent me to had the following characteristics:

  • URL - not EMD & not a brand, broken English combination
  • logo - looks like I designed it AND like I was in a rush when I did it
  • about us page - no real information, no contact information (on an ecommerce site!!!), just some obscure stuff about "direct connection with China" & mention of business being 15 years old and having great success
  • age - domain is barely a year old & privacy registered
  • inbound links - none
  • product price - lower than everywhere else
  • product level page content - no reviews, thin scraped editorial, editorial repeats itself to fill up more space, 3 adsense blocks in the content area of the page
    • no reviews, thin scraped editorial, editorial repeats itself to fill up more space, 3 adsense blocks in the content area of the page
    • no reviews, thin scraped editorial, editorial repeats itself to fill up more space, 3 adsense blocks in the content area of the page
    • no reviews, thin scraped editorial, editorial repeats itself to fill up more space, 3 adsense blocks in the content area of the page
    • the above repetition is to point out the absurdity of the formatting of the "content" of said page
  • site search - yet again the adsense feed, searching for the product landing page that was in Google Shopping I get no results (so outside of paid inclusion & front/center placement, Google doesn't even feel this site is worth wasting the resources to index)
  • checkout - requires account registration, includes captcha that never matches, hoping you will get frustrated & go back to earlier pages and click an ad

It actually took me a few minutes to figure it out, but the site was designed to look like a phishing site, with intent that perhaps you will click on an ad rather than trying to complete a purchase. The forced registration will eat your email & who knows what they will do with it, but you can never complete your purchase, making the site a complete waste of time.

Looking at the above spam site with some help of tools like NetComber it was apparent that this "merchant" also ran all sorts of scraper sites driven on scraping content from Yahoo! Answers & similar, with sites about Spanish + finance + health + shoes + hedge funds.

It is easy to make complaints about Nextag being a less than perfect user experience. But it is hard to argue that Google is any better. And when other companies have editorial costs that Google lacks (and the other companies would be labeled as spammers if they behaved like Google) over time many competing sites will die off due to the embedded cost structure advantages. Amazon has enoug scale that people are willing to bypass Google's click circus & go directly to Amazon, but most other ecommerce players don't. The rest are largely forced to pay Google's rising rents until they can no longer afford to, then they just disappear.

Bonus Prize: Are You Up to The Google Shopping Test?

The first person who successfully solves this captcha wins a free month membership to our site.

Soft Launching SEOTools.net

Last month we soft launched SEOTools.net. Here are a few entries as a sample of things to come...

... do subscribe to the RSS feed if you like what you see thusfar.

Why create yet another site about SEO?

Good question, glad you asked. ;)

Our customer base on this site consists primarily of the top of this pyramid. I can say without doubt that I know that some of our customers know more about SEO than I do & that generally makes them bleeding edge. ;)

And then some people specialize in local or video or ecommerce or other such verticals where there are bits of knowledge one can only gain via first hand experience (eg: importing from China or doing loads of testing of YouTube variables or testing various upsells). There is becoming so much to know that nobody can really know everything, so the goal of our site here is to sorta bring together a lot of the best folks.

Some people newer to the field & a bit lower down on the pyramid are lucky/smart enough to join our community too & those who do so and participate likely save anywhere from 1 to 3 years on their learning curve...leveling up quickly in the game/sport of SEO. But by and large our customers are mostly the expert end of the market.

We could try to water down the community & site to try to make it more mass market, but I think that would take the site's leading strength and flush it down the toilet. In the short run it would mean growth, but it would also make the community less enjoyable ... and this site is as much a labor of love as it is a business. I think I would burn myself out & no longer love it if the site became noisy & every third post was about the keyword density of meta tags.

What Drives You?

When SEOBook.com was originally created SEO was much less complex & back in 2003 I was still new to the field, so I was writing at a level that was largely aligned with the bulk of the market. However, over the past decade SEO has become much more complex & many of our posts tend to be at a pretty high level, pondering long-term implications of various changes.

When there are big changes in the industry we are usually early in discussing them. We were writing about exact match domains back in 2006 and when Google's algorithm hinted at a future of strong brand preference we mentioned that back in 2009. With that being said, many people are not nimble enough to take advantage of some of the shifts & many people still need solid foundational SEO 101 in place before the exceptions & more advanced topics make sense.

The following images either make sense almost instantly, or they look like they are in Greek...depending on one's experience in the field of SEO.

My mom and I chat frequently, but she tells me some of the posts here tend to be pretty deep / complex / hard to understand. Some of them take 20 hours to write & likely read like college dissertations. They are valuable for those who live & breathe SEO, but are maybe not a great fit for those who casually operate in the market.

My guess is my mom is a pretty good reflection of most of the market in understanding page titles, keywords, and so on...but maybe not knowing a lot about anchor text filters, link velocity, extrapolating where algorithm updates might create future problems & how Google might then respond to those, etc. And most people who only incidentally touch the SEO market don't need to get a PhD in the topic in order to reach the point of diminishing returns.

Making Unknowable SEO More Knowable

SEO has many pieces that are knowable (rank, traffic, rate of change, etc.), but over time Google has pulled back more and more data. As Google gets greedier with their data, that makes SEO harder & increases the value of some 3rd party tools that provide competitive intelligence information.

  • Being able to look up the performance of a section of a site is valuable.
  • Tracking how a site has done over time (to identify major ranking shifts & how they align with algorithm updates) is also quite valuable.
  • Seeing link spikes & comparing those with penalties is also valuable.

These data sets help offer clues to drive strategy to try to recover from penalties, & how to mimic top performing sites to make a site less likely to get penalized.

The Difference Between These 2 Sites

Our goal with SEO Book is to...

  • try to cover important trends & topics deeper than anyone else (while not just parroting Google's view)
  • offer a contrary view to lifestyle image / slogan-based SEO lacking in substance or real-world experience
  • maintain the strongest community of SEO experts, such that we create a community I enjoy participating in & learning from

Our goal with SEO tools is to...

  • create a site that is a solid fit for the beginner to intermediate portions of the market
  • review & compare various industry tools & highlight where they have unique features
  • offer how to guides on specific tasks that help people across a diverse range of backgrounds & skill levels save time and become more efficient SEOs
  • provide introduction overviews of various SEO-related topics

Google Disavow Tool

Google launched a disavow links tool. Webmasters who want to tell Google which links they don’t want counted can now do so by uploading a list of links in Google Webmaster Tools.

If you haven’t received an “unnatural link” alert from Google, you don’t really need to use this tool. And even if you have received notification, Google are quick to point out that you may wish to pursue other avenues, such as approaching the site owner, first.

Webmasters have met with mixed success following this approach, of course. It's difficult to imagine many webmasters going to that trouble and expense when they can now upload a txt file to Google.

Careful, Now

The disavow tool is a loaded gun.

If you get the format wrong by mistake, you may end up taking out valuable links for long periods of time. Google advise that if this happens, you can still get your links back, but not immediately.

Could the use of the tool be seen as an admission of guilt? Matt gives examples of "bad" webmaster behavior, which comes across a bit like “webmasters confessing their sins!”. Is this the equivalent of putting up your hand and saying “yep, I bought links that even I think are dodgy!”? May as well paint a target on your back.

Some webmasters have been victims of negative SEO. Some webmasters have had scrapers and autogen sites that steal their content, and then link back. There are legitimate reasons to disavow links. Hopefully, Google makes an effort to make such a distinction.

One wonders why Google simply don't discount the links they already deem to be “bad”? Why the need for the webmaster to jump through hoops? The webmaster is still left to guess which links are “bad”, of course.

Not only is it difficult working out the links that may be a problem, it can be difficult getting a view of the entire link graph. There are various third party tools, including Google’s own Webmaster Central, but they aren’t exhaustive.

Matt mentioned that the link notification emails will provide examples of problem links, however this list won't be exhaustive. He also mentioned that you should pay attention to the more recent links, presumably because if you haven't received notification up until now, then older links weren't the problem. The issue with that assumption is that links that were once good can over time become bad:

  • That donation where you helped a good cause & were later mortified that "online casino" and "discount cheap viagra" followed your course for purely altruistic reasons.
  • That clever comment on a well-linked PR7 page that is looking to cure erectile dysfunction 20 different ways in the comments.
  • Links from sources that were considered fine years ago & were later repositioned as spam (article banks anyone?)
  • Links from sites that were fine, but a number of other webmasters disavowed, turning a site that originally passed the sniff test into one that earns a second review revealing a sour stench.

This could all get rather painful if webmasters start taking out links they perceive to be a problem, but aren’t. I imagine a few feet will get blasted off in the process.

Webmasters Asked, Google Gaveth

Webmasters have been demanding such a tool since the un-natural notifications started appearing. There is no question that removing established links can be as hard, if not harder, than getting the links in the first place. Generally speaking, the cheaper the link was to get the higher the cost of removal (relative to the original purchase price). If you are renting text link ads for $50 a month you can get them removed simply by not paying. But if you did a bulk submission to 5,000 high PR SEO friendly directories...best of luck with that!

It is time consuming. Firstly, there’s the overhead in working out which links to remove, as Google doesn’t specify them. Once a webmaster has made a list of the links she thinks might be a problem, she then needs to go through the tedious task of contacting each sites and requesting that a link be taken down.

Even with the best will in the world, this is an overhead for the linking site, too. A legitimate site may wish to verify the identity of the person requesting the delink, as the delink request could come from a malicious competitor. Once identity has been established, the site owner must go to the trouble of making the change on their site.

This is not a big deal if a site owner only receives one request, but what if they receive multiple requests per day? It may not be unreasonable for a site owner to charge for the time taken to make the change, as such a change incurs a time cost. If the webmaster who has incurred a penalty has to remove many links, from multiple sites, then such costs could quickly mount. Taken to the (il)logical extremes, this link removal stuff is a big business. Not only are there a number of link removal services on the market, but one of our members was actually sued for linking to a site (when the person who was suing them paid to place the link!)

What’s In It For Google?

Webmasters now face the prisoner's dilemma and are doing Google’s job for them.

It’s hard to imagine this data not finding it’s way to the manual reviewers. If there are multiple instances of webmasters reporting paid links from a certain site, then Google have more than enough justification to take it out. This would be a cunning way around the “how do we know if a link is paid?” problem.

Webmasters will likely incorporate bad link checking into their daily activities. Monitoring inbound links wasn’t something you had to watch in the past, as links were good, and those that weren’t, didn’t matter, as they didn’t affect ranking anyway. Now, webmasters may feel compelled to avoid an unnatural links warning by meticulously monitoring their inbound links and reporting anything that looks odd. Google haven’t been clear on whether they would take such action as a result - Matt suggests they just reclassify the link & see it as a strong suggestion to treat it like the link has a nofollow attribute - but no doubt there will be clarification as the tool beds in. Google has long used a tiered index structure & enough complaints might lower the tier of a page or site, cause it's ability to pass trust to be blocked, or cause the site to be directly penalized.

This is also a way of reaffirming “the law”, as Google sees it. In many instances, it is no fault of the webmaster that rogue sites link up, yet the webmaster will feel compelled to jump through Google’s hoops. Google sets the rules of the game. If you want to play, then you play by their rules, and recognize their authority. Matt Cutts suggested:

we recommend that you contact the sites that link to you and try to get links taken off the public web first. You’re also helping to protect your site’s image, since people will no longer find spammy links and jump to conclusions about your website or business.

Left unsaid in the above is most people don't have access to aggregate link data while they surf the web, most modern systems of justice are based on the presumption of innocence rather than guilt, and most rational people don't presume that a site that is linked to is somehow shady simply for being linked to.

If the KKK links to Matt's blog tomorrow that doesn't imply anything about Matt. And when Google gets featured in an InfoWars article it doesn't mean that Google desires that link or coverage. Many sketchy sites link to Adobe (for their flash player) or sites like Disney & Google for people who are not old enough to view them or such. Those links do not indicate anything negative about the sites being linked into. However, as stated above, search is Google's monopoly to do with as they please.

On the positive side, if Google really do want sites to conform to certain patterns, and will reward them for doing so by letting them out of jail, then this is yet another way to clean up the SERPs. They get the webmaster on side and that webmaster doing link classification work for them for free.

Who, Not What

For a decade search was driven largely by meritocracy. What you did was far more important than who you were. It was much less corrupt than the physical world. But as Google chases brand ad Dollars, that view of the search landscape is no longer relevant.

Large companies can likely safely ignore much of the fear-first approach to search regulation. And when things blow up they can cast off blame on a rogue anonymous contractor of sorts. Whereas smaller webmasters walk on egg shells.

When the government wanted to regulate copyright issues Google claimed it would be too expensive and kill innovation at small start ups. Google then drafted their own copyright policy from which they themselves are exempt. And now small businesses not only need to bear that cost but also need to police their link profiles, even as competitors can use Fivver, ScrapeBox, splog link networks & various other sources to drip a constant stream of low cost sludge in their direction.

Now more than ever, status is important.

Gotchas

No doubt you’ve thought of a few. A couple thoughts - not that we advocate them, but realize they will happen:

  • Intentionally build spam links to yourself & then disavow them (in order to make your profile look larger than it is & to ensure that competitor who follows everything you do - but lacks access to your disavow data - walks into a penalty).
  • Find sites that link to competitors and leave loads of comments for the competitor on them, hoping that the competitor blocks the domain as a whole.
  • Find sites that link to competitors & buy links from them into a variety of other websites & then disavow from multiple accounts.
  • Get a competitor some link warnings & watch them push to get some of their own clean "unauthorized" links removed.
  • The webmaster who parts on poor terms burning the bridge behind them, or leaving a backdoor so that they may do so at anytime.

If a malicious webmaster wanted to get a target site in the bad books, they could post obvious comment spam - pointing at their site, and other sites. If this activity doesn’t result in an unnatural linking notification, then all good. It’s a test of how Google values that domain. If it does result in an unnatural link notification, the webmaster could then disavow links from that site. Other webmasters will likely do the same. Result: the target site may get taken out.

To avoid this sort of hit, pay close attention to your comment moderation.

Please add your own to the comments! :) Gotchas, that is, not rogue links.

Further opinions @ searchengineland and seoroundtable.

The Death of SEO [Infographic]

Over the weekend Google did an update which continues their trend of diminishing the value of domain names in an SEO strategy as they "pump up the brand."

In light of that, we thought it would be a good time to get out in front of the tired "Death of SEO" meme that is sure to appear once again in the coming weeks. ;)

The font size is somewhat small in the below image, but if you click through to the archived page you can see it in it's full glorious size.

The Death of SEO.

Want to syndicate this infographic? Embed code is here. We also created a PDF version.

3 Reasons Google Won’t Offer Car Insurance Comparisons in the US Anytime Soon

The following is a guest column written by Rory Joyce from CoverHound.

Last week Google Advisor made its long-awaited debut in the car insurance vertical -- in the UK. Given Google’s 2011 acquisition of BeatThatQuote.com, a UK comparison site, for 37.7 million pounds ($61.5 million US), it comes as little surprise that the company chose to enter the UK ahead of other markets. While some might suspect Google’s foray into the UK market is merely a trial balloon, and that an entrance into the US market is inevitable, I certainly wouldn’t hold my breath.

Here are three reasons Google will not be offering an insurance comparison product anytime soon in the US market:

1) High Opportunity Cost

Finance and insurance is the number one revenue - generating advertising vertical for Google, totaling $4 billion in 2011. While some of that $4 billion is made up of products like health insurance, life insurance and credit cards, the largest segment within the vertical is undoubtedly car insurance. The top 3 advertisers in the vertical as a whole are US carriers -- State Farm, Progressive and Geico -- spending a combined sum of $110 million in 2011.

The keyword landscape for the car insurance vertical is relatively dense. A vast majority of searches occur across 10-20 generic terms (ie - “car insurance,” “auto insurance,” “cheap auto insurance,” “auto insurance quotes,” etc). This is an important point because it helps explain the relatively high market CPC of car insurance keywords versus other verticals. All of the major advertisers are in the auction for a large majority of searches, resulting in higher prices. The top spot for head term searches can reach CPCs well over $40. The overall average revenue/click for Google is probably somewhere around $30. Having run run similar experiments with carrier click listing ads using SEM traffic, I can confidently assume that the click velocity (clicks per clicker) is around 1.5. So the average revenue per searcher who clicks is probably somewhere around $45 for Google.

Now, let’s speculate on Google’s potential revenues from advertisers in a comparison environment. Carriers’ marketing allowable is approximately $250 per new policy. When structuring pay-for-performance pricing deep in the funnel (or on a sold-policy basis), carriers are unlikely to stray from those fundamentals. In a fluid marketplace higher in the funnel (i.e.  Adwords PPC), they very often are managing to a marginal cost per policy that far exceeds even $500 (see $40 CPCs). While it may seem like irrational behavior, there are two reasons they are able to get away with this:

a) They are managing to an overall average cost per policy, meaning all direct response marketing channels benefit from “free,” or unattributable sales. With mega-brands like Geico, this can be a huge factor.

b) There are pressures to meet sales goals at all costs. Google presents the highest intent of any marketing channel available to insurance marketers. If marketers need to move the needle in a hurry, this is where they spend.

Regardless of how Google actually structures the pricing, the conversion point will be much more efficient for the consumer since they will be armed with rates and thus there will be less conversion velocity for Google. The net-net here is a much more efficient marketplace, and one where Google can expect average revenue to be about $250 per sold policy.

How does this match up against the $45 unit revenue they would significantly cannibalize? The most optimized and competitive carriers can convert as high as 10% of clicks into sales. Since Google would be presenting multiple policies we can expect that in a fully optimized state, they may see 50% higher conversion and thus 15% of clicks into sales. Here is a summary of the math:

With the Advisor product, in an optimized state, Google will make about $37.50 ($250 x .15) per clicker. Each cannibalized lead will thus cost Google $7.50 of unit revenue ($45 - $37.50). Given the dearth of compelling comparison options in insurance (that can afford AdWords), consumers would definitely be intrigued and so one can assume the penetration/cannibalization would be significant.

Of course there are other impacts to consider: How would this affect competition and average revenue for non-cannibalized clicks? Will responders to Advisor be incremental and therefore have zero opportunity cost?

2) Advisor Has Poor Traction in Other Verticals

Over the past couple of years, Google has rolled out its Advisor product in several verticals including: personal banking, mortgage, and flight search.

We know that at least mortgage didn’t work out very well. Rolled out in early 2011, it was not even a year before Google apparently shut the service down in January of 2012.

I personally don’t have a good grasp on the Mortgage vertical so I had a chat with a high-ranking executive at a leading mortgage site, an active AdWords advertiser. In talking to him it became clear that there were actually quite a bit of similarities between mortgage and insurance as it relates to Google including:

  1. Both industries are highly regulated in the US, at the state level.
  2. Both verticals are competitive and lucrative. CPCs in mortgage can exceed $40.
  3. Like insurance, Google tested Advisor in the UK market first.

Hoping he could serve as my crystal ball for insurance, I asked, “So why did Advisor for Mortgage fail?” His response was, “The chief issue was that the opportunity cost was unsustainably high. Google needed to be as or more efficient than direct marketers who had been doing this for years. They underestimated this learning curve and ultimately couldn’t sustain the lost revenue as a result of click cannibalization.”

Google better be sure it has a good understanding of the US insurance market before entering, or else history will repeat itself, which brings me to my next point...

3) They Don’t Yet Have Expertise

Let’s quickly review some key differences between the UK and US insurance markets:

  1. Approximately 80% of car insurance is purchased through comparison sites in the UK vs under 5% in the US.
  2. There is one very business-friendly pricing regulatory body in the UK versus state-level, sometimes aggressive, regulation in the US.
  3. The UK is an efficient market for consumers, the US is not. This means margins are tighter for UK advertisers, as evidenced by the fact that CPCs in the UK are about a third of what they are in the US.

As you can see, these markets are completely different animals. Despite the seemingly low barriers for entry in the UK, Google still felt compelled to acquire BeatThatQuote to better understand the market. Yet, it still took them a year and a half post acquisition before they launched Advisor.

I spoke with an executive at a top-tier UK insurance comparison site earlier this week about Google’s entry. He mentioned that Google wanted to acquire a UK entity primarily for its general knowledge of the market, technology, and infrastructure (API integrations). He said, “Given [Google’s] objectives, it didn’t make sense for them to acquire a top tier site (ie - gocompare, comparethemarket, moneysupermarket, confused) so they acquired BeatThatQuote, which was unknown to most consumers but had the infrastructure in place for Google to test the market effectively.”

It’s very unlikely BeatThatQuote will be of much use for the US market. Google will need to build its product from the ground up. Beyond accruing the knowledge of a very complex, and nuanced market, they will need to acquire or build out the infrastructure. In the US there are no public rate APIs for insurance carriers; very few insurance comparison sites actually publish instant, accurate, real-time rates. Google will need to understand and navigate its way to the rates (though it’s not impossible). It will take some time to get carriers comfortable and then of course build out the technology. Insurance carriers, like most financial service companies, can be painfully slow.

Conclusion

I do believe Google will do something with insurance at some point in the US. Of the various challenges the company currently faces, I believe the high opportunity cost is the toughest to overcome. However, the market will shift. As true insurance comparison options continue to mature, consumers will be searching exclusively for comparison sites (see travel), and carriers will no longer be able to effectively compete at the scale they are now -- driving down the market for CPCs and thus lowering the opportunity cost.

This opportunity cost is much lower however for other search engines where average car insurance CPC’s are lower. If I am Microsoft or Yahoo, I am seriously considering using my valuable real estate to promote something worthwhile in insurance. There is currently a big void for consumers as it relates to shopping for insurance. A rival search engine can instantly differentiate themselves from Google overnight in one of the biggest verticals. This may be one of their best opportunities to regain some market share.

Comparing Backlink Data Providers

Since Ayima launched in 2007, we've been crawling the web and building our own independent backlink data. Starting off with just a few servers running in our Directory of Technology's bedroom cupboard, we now have over 130 high-spec servers hosted across 2 in-house server rooms and 1 datacenter, using a similar storage platform as Yahoo's former index.

Crawling the entire web still isn't easy (or cheap) though, which is why very few data providers exist even today. Each provider makes compromises (even Google does in some ways), in order to keep their data as accurate and useful as possible for their users. The compromises differ between providers though, some go for sheer index size whilst others aim for freshness and accuracy. Which is best for you?

This article explores the differences between SEOMoz's Mozscape, MajesticSEO's Fresh Index, Ahref's link data and our own humble index. This analysis has been attempted before at Stone Temple and SEOGadget, but our Tech Team has used Ayima's crawling technology to validate the data even further.

We need a website to analyze first of all, something that we can't accidentally "out". Search Engine Land is the first that came to mind, very unlikely to have many spam links or paid link activity.

So let's start off with the easy bit - who has the biggest result set for SEL?

The chart above shows MajesticSEO as the clear winner, followed by a very respectable result for Ahrefs. Does size matter though? Certainly not at this stage, as we only really care about links which actually exist. The SEOGadget post tried to clean the results using a basic desktop crawler, to see which results returned a "200" (OK) HTTP Status Code. Here's what we get back after checking for live linking pages:

Ouch! So MajesticSEO's "Fresh" index has the distinct smell of decay, whilst Mozscape and Ayima V2 show the freshest data (by percentage). Ahrefs has a sizeable decay like MajesticSEO, but still shows the most links overall in terms of live linking pages. Now the problem with stopping at this level, is that it's much more likely that a link disappears from a page, than the page itself disappearing. Think about short-term event sponsors, 404 pages that return a 200, blog posts falling off the homepage, spam comments being moderated etc. So our "Tenacious Tim" got his crawler out, to check which links actually exist on the live pages:

Less decay this time, but at least we're now dealing with accurate data. We can also see that Ayima V2 has a live link accuracy of 82.37%, Mozscape comes in at 79.61%, Ahrefs at 72.88% and MajesticSEO is just 53.73% accurate. From Ayima's post-crawl analysis, our techies concluded that MajesticSEO's crawler was counting URLs (references) and not actual HTML links in a page. So simply mentioning http://www.example.com/ somewhere on a web page, was counting as an actual link. Their results also included URL references in JavaScript files, which won't offer any SEO value. That doesn't mean that MajesticSEO is completely useless though, I'd personally use it more for "mention" detection outside of the social sphere. You can then find potential link targets who mention you somewhere, but do not properly link to your site.

Ahrefs wins the live links contest, finding 84,496 more live links than MajesticSEO and 513,733 more live links than SEOmoz's Mozscape! I still wouldn't use Ahrefs for comparing competitors or estimating the link authority needed to compete in a sector though. Not all links are created equal, with Ahrefs showing both the rank-improving links and the crappy spam. I would definitely use Ahrefs as my main data source for "Link Cleanup" tasks, giving me a good balance of accuracy and crawl depth. Mozscape and Ayima V2 filter out the bad pages and unnecessarily deep sites by design, in order to improve their data accuracy and showing the links that count. But when you need to know where the bad PageRank zero/null links are, Ahrefs wins the game.

So we've covered the best data for "mentions", the best data for "link cleanup", now how about the best for competitor comparison and market analysis? The chart below shows an even more granular filter, removing dead links, filtering by unique Class C IP blocks and removing anything below a PageRank 1. By using Google's PageRank data, we can filter the links from pages that hold no value or that have been penalized in the past. Whilst some link data providers do offer their own alternative to PageRank scores (most likely based on the original Google patent), these cannot tell whether Google has hit a site for selling links or for other naughty tactics.

Whilst Ahrefs and MajesticSEO hit the top spots, the amount of processing power needed to clean their data to the point of being useful, makes them untenable for most people. I would therefore personally only use Ayima V2 or Mozscape for comparing websites and analyzing market potential. Ayima V2 isn't available to the public quite yet, so let's give this win to Mozscape.

So in summary

  • Ahrefs - Use for link cleanup
  • MajesticSEO - Use for mentions monitoring
  • Mozscape - Use for accurate competitor/market analysis

Juicy Data Giveaway

One of the best parts of having your own index, is being able to create cool custom reports. For example, here's how the big SEO websites compare against each other:

"Index Rank" is a ranking based on who has the most value-passing Unique Class C IP links across our entire index. The league table is quite similar to HitWise's list of the top traffic websites, but we're looking at the top link authorities.

Want to do something cool with the data? Here's an Excel spreadsheet with the Top 10,000 websites in our index, sorted by authority: Top 10,000 Authority Websites.


Rob Kerry is the co-founder of Ayima, a global SEO Consultancy started in 2007 by the former in-house team of an online gaming company. Ayima now employs over 100 people on 3 continents and Rob has recently founded the new Ayima Labs division as Director of R&D.

Consultant to Agency - What I Learned From the Jump

I've been in the online marketing space since 1998. Somewhere around the year 2000, I stumbled into affiliate marketing. I played in very competitive spaces via SEO from the get go - and ranked. In 2007, in order to scale my affiliate marketing efforts, I co-founded MFE Interactive, a website publishing company, and built out several affiliate brands.

I'd always done consulting here and there throughout the years, but never on a regular basis. To be honest, I liked (and still do like) the affiliate (on your own schedule and no one to answer to but your bank account) lifestyle.

In 2009 I made my first foray into running a consulting company. I quickly found out that there was a lot to making the jump from consultant to agency - a lot of which I hadn't thought about, hadn't properly positioned myself for and I decided to sell my shares less than two years after venturing into that realm.

After 18 months of what my friends like to call "semi-retirement" and living very comfortably off the passive income I'd spent nearly a decade developing, I decided once again to start an agency and officially launched PushFire in May of 2012 and we're already a team of 13 and growing.

But this time I knew a bit more about what I was getting into and as a result, had positioned myself better for the task. I figured I'd share with you what I've learned about making the jump from occasional consultant to agency over the last three years in hopes that maybe someone else can be better prepared for "the jump" if and when they decide to take it.

Deciding Whether to Go Solo or with a Partner

I personally know what I'm good at and what I'm not. I couldn't see launching an agency - at least one you want to experience quick growth - without having a partner (unless you want to invest the salary to have someone handle a "partner" position as a paid employee). There is simply too much for one person to do for them to do it all alone - and fast.

My personal weakness lies in operations. I don't like being chained to the office every day and travel too much promoting the agency to be the person managing operations. My personal strength lies in business development, growth and strategy. My weaknesses make me a horrible COO. My strengths make me a good CEO. I've found that the absolute key to creating a successful partnership lies in making sure that your partner has strengths where you DON'T. In PushFire, my partner Sean and I compliment each other very well. I'm a veteran with SEO and link building. He's great with PPC management (something completely foreign to me). I'm good at business development and client strategy. He actually enjoys (and is good at) managing the staff and clients. That makes him a fantastic COO.

Before you rush to launch an agency solo, ask yourself if you can really handle every aspect of running said agency (or are willing to hire to fill the gaps). If not, ask yourself who you know that would be a great COMPLIMENT to your skill set. And then make sure you vet that they actually have the skills you think they do and that you can work as a team without wanting to kill each other and being "locked" into a company from a public perspective. Work quietly together for a few months and see how it goes (that is what Sean and I did for about 3 months). And if all goes well, make it official.

Business Formation and Operating Agreement

Once you decided to make it official you need to form your business. I actually own part of an incorporation service (an accounting firm owns the other half) so I got my advice on what KIND of company to form from my partners in that site since I didn't know all the intricacies of owning a business in Texas (where I'd recently moved). If you're not sure of what kind of company will work best for you (Incorporation, Limited Liability Company, S Corporation, etc) be sure to consult with an accountant or attorney to figure it out. It's a pain to change after the fact.

If you are forming your business with a partner, it is absolutely imperative that you have an Operating Agreement from day one. IMPERATIVE. The Operating Agreement defines your ownership (if it's not a corporation which issues shares), your roles and your responsibilities. Be sure to include what happens should a partner want to leave, should you want a partner to leave, should a partner die, should a partner get divorced - EVERY POSSIBLE THING THAT COULD GO WRONG SHOULD HAVE AN AGREED UPON SOLUTION IN THE OPERATING AGREEMENT AS SOON AS YOU BECOME AN OFFICIAL COMPANY.

I don't care if your partner is your parent, sibling, friend - you need an Operating Agreement and you need one from day one. Sean and I are married and we STILL have an Operating Agreement that details out every possible scenario and what happens in the event of it. And if there is one area where you stretch the budget and pay a lawyer (and NOT use some free template online) it is for the Operating Agreement if you enter into a partnership.

The Business Paperwork

Next up you'll need to file all that awesome paperwork with the IRS, state and in some cases even your county. Getting an EIN, getting a sales tax number, and getting local operating licenses (or even finding out if they're required). And if you're hiring employees, then you'll need to file paperwork to pay unemployment taxes, etc. I personally hired a local accountant to ensure we didn't miss anything in regards to these. I'd rather pay a modest hourly fee now than much more expensive government penalties later.

Business Insurance

If you plan to have an office and employees (which is likely because you decided to no longer be a sole consultant), then you're going to want to get insurance. The basics would be General Liability and Property Insurance and Workers' Compensation Insurance.

Additionally, because what we do for a living as online marketers is not an exact science, you'll likely want to look into getting Errors and Omissions (E&O) insurance too.

The GLP and Workers' Comp insurance was fairly easy to find and get setup. E&O was another story. Most insurance agencies I spoke with didn't handle "digital marketing firms" and it took me a long time to find a recommendation to a company that not only provided E&O for people who do what we do, but also was willing to include copyright infringement into the policy (say for an employee using a picture or content they don't have permission to use, unbeknown to you). I finally was referred to TechInsurance and was able to get all three insurance policies via them.

For the record, I was not compensated in any way for mentioning them - I just had a REALLY hard time finding an E&O provider and they had all the coverage I needed and at what I thought was a fair price. Cost for the policies will vary on a multitude of factors, including your personal experience at what we do, if you've ever been sued, etc.

Also know that if you plan to take on Fortune companies as clients, this insurance - and proof of having it - will be a standard requirement and they usually request that your GLP and E&O insurance covers you in the 1-2 million dollar range.

The Legalities

As an agency, you're going to need contracts if you weren't using them as a consultant. And you're going to want them to be drawn up by (or at least overlooked and approved by) an ACTUAL LAWYER.

We had a Master Services Agreement (MSA) drawn up as well as a Statement of Work (SOW) for each service type we provide (which at the moment is SEO, Link Building and Promotion and PPC).

We also had a Mutual Non-Disclosure Agreement (NDA) created. Additionally, if you plan to use contractors or employees, you'll need contracts drawn up for each (one for employees and one for contractors). While some clients require you to use THEIR contracts (they like to keep any legal disputes in their home territory) many clients will not have these types of contracts and you will need to provide them.

For the record, I don't "hold" clients into contracts. If a client wants to stop using our services they can do so at any time. We have a 30 day notice "out" clause (for either side) in our standard MSA. But we still have contracts that clearly state what we've been hired to do and what our (and the client's) responsibilities are. Even if you don't have clients signing "one year deals" etc, you still should have contracts. Cover Your Ass - it's a statement to live by as a business owner.

Finding Office Space

Since you're opening an agency, that means you plan to have employees - otherwise you'd remain a consultant. Office space is a tricky issue for a brand new company. You often don't need a lot of space in the beginning, but if your company does well and finds itself quickly expanding, you could find yourself outgrowing your initial space soon.

I'd recommend you'd do your best to find office space (at least initially) with a short term lease (which for office space is usually 1-2 years). Also, since most of your business - at least in the beginning - will be over the Internet, you shouldn't kill your budget trying to rent a Madison Avenue worthy space in the beginning (whether you should do it at ANY time is up to you).

We took a 1 year lease in an industrial building with a killer Chicago loft like interior and a great kitchen. From the outside, it looks like a trucking company (because we're next to one). But it's got a great look and feel on the inside and 90% of our clients will never come to our office anyway. The one year lease was key because we were way too small for the space when we took it and will be way to big for the space when our 1 year lease is up.

Additionally, don't stress too much over location. I talk with a lot of folks that ask us when we'll be moving from the small town we're in (Katy, TX) to the "big city" ten minutes away (which is Houston, TX). Sean and I just discussed this the other day and I don't know that we'll ever make that "move" so to speak. It is much easier to get local press coverage and be a "top" employer in a smaller town. And again, most of our clients will never come to our office anyway. I take my cue from Marty Weintraub, who, rather than ditch Minnesota for the more "tech" scene states as a newly minted Inc 500 company, instead chose to become a pillar business there.

Contractors Vs. Employees

I was very adamant from the day we launched that we were going the in-house, local employee route. It is tempting to work with long distance contractors - especially when you know they're talented but would never move. As a consultant, I utilized long distance contractors for years (and all of our long term contractors are "grandfathered in" to this new decision).

But if you plan to grow an agency, it's my opinion that you need people in-house to effectively do it. Especially when it comes to management positions. It's simply much easier to call a company meeting with in-house staff then to arrange a Skype call between 13 people. It's much easier to develop positive relationships and company camaraderie as well.

What to Know about Hiring and Having Employees

Hiring is a task you pretty much only learn via experience. You have to make sure you find people who will fit in with the company culture you want to build - so you'll need to put some thought into what that is before you start posting "help wanted" ads.

To attract great employees we've learned two things. The first is not to skimp on paying for a job posting, especially if you live in a smaller town. We post our ads on Monster.com and haven't been disappointed in the quality of applicants we've received by doing so. Prior attempts using more local services were a waste of time, especially when looking for people with online marketing and/or technical skills - they're all looking online.

Secondly, you need to offer benefits if you want to be competitive with the other companies around you. A great company culture and an exciting position usually don't make up for a lack of health benefits in the United States. We looked to our banking service to get us recommendations for small business health insurance.

They introduced us to Digital Insurance who got us a great quote for health insurance for our growing team (again, I'm only mentioning them because we found them to be awesome and extremely helpful). When looking at health insurance keep in mind that - at least here in Texas - you need 75% participation in your plan and need to pay a minimum of 50% towards the health insurance premiums of all your covered employees.

To give us an edge over competing employers, we decided to get a higher quality plan with a low co-pay and lower deductible and contribute more than the required 50%. Make sure that you consider your health insurance costs for your employees when deciding on salaries. Even if you don't have health insurance for the first few hires, when you DO implement, you'll have to contribute for everyone, regardless of if their salary took it into account.

Additionally, once you're past having one or two employees, you're likely going to need an HR manual. Our accountant was able to get us a standard HR Manual we were able to edit to fit our specific needs - and once again, have a lawyer look over the final product.

We also work hard to keep the team motivated. From team building events with prizes (our latest was laser tag, our next outing is bowling) to performance incentives (this month, we're giving away the New iPad as a performance bonus), you'll need to ensure your team is emotionally satisfied in addition to being financially satisfied to keep retention high. We appreciate our team and their dedication to the company and do our best to show them that.

Creating Internal Processes and Tools

Hiring employees means you're going to need to train them. In the beginning, you'll likely do this by doing it verbally, but when you get to the point that you're hiring frequently, you'll want internal training documents for your new team members to read first and for you to answer questions about later. And different jobs will likely require different processes and training documentation. We've been creating this as we go. But we've found that a lack of written documentation can cause confusion and frustration. So the sooner you can get everything on pen and paper, the better.

Additionally, at some point you're going to find yourself doing a lot of repeated basic processes that could be better handled by legitimate automation. We just hired our first developer for PushFire to begin building internal tools to not only make our team's job easier, but to make it less mundane as well. Be sure to keep an eye when hiring on if you're hiring because of a genuine need or because your current team is wasting time doing things they don't need to do. When the latter occurs, I'd look into hiring a developer to fill those productivity gaps with automation. We're already seeing the benefits of making our team's life easier.

In the meantime - don't try and reinvent the wheel. There are tons of great tools out there that can make your team more productive. From Raven Tools to Ontolo to HighRise to tons of other services - there is likely someone, somewhere with a tool to make your specific team's job easier. Seek them out. Then hire someone to build what ISN'T available as you grow.

The Books

My opinion? Never do the books yourself. EVER. Because saving yourself a few hundred to a few thousand in accounting fees could cost you BIG BUCKS down the road. We use FreshBooks for our invoicing and have an accountant who then downloads the FreshBooks data into Quickbooks.

I find FreshBooks easier (though I used Quickbooks until recently) and she prefers Quickbooks. Our accountant provides us with a Profit and Loss (P&L) statement every month and keeps track of our invoicing and cash flow. This allows us to ask her any information we need to know financially while keeping our eyes focused on the business growth and day to day operations. For now, we outsource accounting, but we know that at some point we will need to take it in house as we grow.

We also utilize the payroll services at our bank (Wells Fargo) because it's easy and they pay all the required taxes for us. Our accountant still runs our payroll, but through their service. Additionally, most payroll companies offer you a guarantee that if you're ever hit for them improperly accounting for taxes, that's on them and not you. To me, it's worth the (what I consider) small fee to utilize the payroll services.

I'm Still Learning

I'm by no means the definitive source on making the move from an individual consultant to an agency. I can't offer advice on financing or funding because we've bootstrapped ourselves the whole way. But I hope the above let's you know some of what to prepare for and what you'll need, at the very minimum, to launch a successful consulting agency.

Lastly, DREAM BIG. DO GOOD WORK. BE A GOOD PERSON, PARTNER, BOSS, CLIENT AND SERVICE PROVIDER.

P.S. If you live in, near or are willing to relocate to Houston? We're hiring. ;-)

Pages