Speaking at a conference for newspapers Eric Schmidt said:

"We've been careful not to bias it using our own judgment of trust because we're never sure if we get it right. So we use complicated ranking signals, as they're called, to determine rank and relevance. And we change them periodically, which drives everybody crazy, as or algorithms get better. ... The usual problem is you've got somebody who really is very trustworthy, but they're not as well-known and they compete against people who are better known, and they don't 'in their view' get high enough ranking. We have not come up with a way to algorithmically handle that in a coherent way."

So the big flaw in the algorithm there is "to be well known." SEOs have exploited that since Google first got on the web - buying, trading, borrowing, and stealing links as needed. Arianna Huffington claims that to succeed today you need to work in the links based economy

But what won't work -- what can't work -- is to act like the last 15 years never happened, that we are still operating in the old content economy as opposed to the new link economy, and that the survival of the industry will be found by "protecting" content behind walled gardens.

But the problem with that line of thinking is that the link based economy is quietly disappearing. Links are not flowing as well as they once would have. Take for example, this post - it covers a currently hot topic, is 8 pages long, contains multiple custom images, is easy to consume, and is published on a blog with over 30,000 RSS subscribers. The reward for such work? Less than 30 links so far, and maybe a total of 5 links if you back out the temporal social media links. (And some of those 5 links are on sites that routinely link back and forth).

Would you be willing to write for 4 or 5 hours to only get 5 links to a fairly non-commercial page of a site that already has over 1 million inbound links? No way...totally not worth the effort if we were operating in a "links-based economy."

A couple days ago I talked with a friend who works for some news companies, and they wanted to use rel=nofollow on their editorial selected links because they were afraid of leaking PageRank. To say that we are entering a links based economy is to ignore the corruption of nofollow and how "social" media is pulling editorial links away from those who earned it. But the web changes, and so must we, lest we become the mainstream media writing our own obituary each dawn.

We have moved past the links-based economy into a passion based economy.

In Someone Can Charge for News Content, but Who? John Andrews reminds us of today's most popular news programs:

Today Bill O’Reilly reports the news, and Jon Stewart reports the news. Very popular news shows, right? Think about it.

If the links are not counting in the algorithms then you need to get paid another way to make creating in depth high value content worthwhile. To do that, you need to publish content that is aligned with a particular passion, niche, and/or bias.

Call it tribe based or fan driven marketing. Your customers must play a critical role in your marketing for you to succeed.

Trying to maintain a false appearance of objectivity (as the media does) simply can't compete with deep rooted biases founded in passion, experience, and expertise. I would rather trust a known bias than fake objective with hidden agendas I later need to figure out.

• The mainstream media sites can profitably build businesses if they focus on high value niches and create stand alone brands for each that are worth charging for access to.
• The mainstream media sites can profitably arbitrage Google's organic search results by filling their sites up with eHow-like junk content that costs less than $5 per page to produce.
• But doing what they doing, half-assed generic publishing while slowly trimming costs off huge inefficient organizations guarantees bankruptcies & consolidation. Their current strategy gives them neither passion driven content nor cost efficiency...they are wounded animals mindlessly roaming awaiting their death - the one topic they cover with passion.

Ironically, some of the best content online comes in the form of walled garden paid membership websites. But, it turns out, we don't need the media to figure out who shares our passions.

When an economy is booming, companies can risk being sub-optimal.

They can get away waste and inefficiency. They can get away with providing less value, because customers aren't as focused on the bottom line as they are when cash is tight.

In a down economy, it is less likely people will be prepared to pay too much for things they don't really need.

So now we're in a down economy, how will things change? What can the webmaster do to adapt to these changes?

Here are a couple of interesting articles:

One on Gapingvoid.com, which predicts a return to value. Another on UnlockTheGame, where a 96 year-old ex-business woman talks about what happened during the last depression.

.... I remember seeing bankers standing in their fancy suits at street corners selling apples......there are millionaires made in good times and in bad times.so the lesson there is the "times" have nothing to do with it.......If you're going to read the news, it's important to read it separating yourself from it. .....Read between the lines and look for the silver lining, because behind every negative news story is a turnaround success story waiting to happen.

While the Gaping Void article makes a number of broad assumptions, the important points of those two articles are that things are going to change, and where there is change, there is opportunity.

So where is the opportunity going to come from?

The Gaping Void article points out:

It was quite a disconnect for me to hear the guys on CNN yapping endlessly on about THE RECESSION, in contrast to all the groovy cats I met at SXSW, who told me how their businesses were booming. It was like two alternate universes colliding. Which one was the real one?"

Been hearing those stories a lot lately? So have I.

It is probable that traditional marketing money (i.e. television, radio, print) is shifting to internet channels, because the internet is seen as providing better value. Also, people may use their cars less often, and shop on the internet to save money. Bad for brick n mortar retailers, good for internet stores.

The UnlockTheGame article talked about surviving the last depression by adding value i.e. selling a freezer stock full of meat.

A good approach in a down economy, especially for the little guy who seldom does enough volume to compete on price alone, is to think about ways to add value.

It is good we're in the internet game :)

How To Add Value

1.Re-Focus On User Needs

What do users really need? As money gets tight, people focus more on their needs than their wants. If you're selling a "want", can you twist it round into being perceived as a need?

For example, one of the first areas to get cut from corporate budgets during a downturn is marketing spend. But a company still needs to talk to consumers. If you sell internet advertising, you could address this need by comparing various channels i.e internet vs tv/radio/print.

Frame your message in terms of results and benefits. In a down economy, positioning is often a lot less important than the bottom line.

2. Segment Your Market

Typically, the wider your market, the more average your service or product. By being all things to all people, chances are you aren't delivering excellent value to some.

If customers are more driven by excellent value because cash is short, the generic products and services may miss out to a competitor more focused on a segments needs. Look for ways to segment your existing market.

3. Improve

Can you be more timely? More convenient? More accurate? Can your offering be customized? Can it be made more usable?

What more can you do for people?

4. Seek Feedback

Your users and customers know what their needs are. Do you make it easy for them to tell you? Ever asked them about it? How do you currently evaluate their needs?

5. Partner

Are there opportunities you see, but can't act on because you don't have the resources? Does someone else have those resources? Are there opportunities to partner up to create more value?

How about within your own company? Is every member of your team focused on providing customer value? Make every team member a partner in the adding value process.

6. Assess The Value Of Existing Relationships

It might seem like a strange time to cut customers, but the customers that aren't making much money present a huge opportunity cost to provide real value to someone else. Assess which customers make you the most money and focus on their needs. What extra value can you create for them?

In the 1960s, advertising was all about the faceless masses.

The idea was that you devise and build a product, throw it over the wall to the marketing department, who would figure out an angle, then engage in a marketing blitz. They'd try and get in front of as many eyeballs as possible, for the lowest CPM.

In the cynical, jaded 00's, advertising works on a more personal level. People are bombarded with messages, so instinctively tune most of them out. The most effective messages are those that people internalize, make personal, and pass on.

Marketing Models

Traditional marketing looked like this:

Very linear.

Modern marketing looks more like this:

Who controls the message now?

The audience.

The audience is no longer a passive recipient. The audience can pass a message on. They become a vector by which your message travels. If people don't pass your message on, chances are your message is dead.

The audience has control, because they have their hand on the remote, and on the mouse, so bombarding them or interrupting them no longer works. This is why companies try to engage people on a personal level, Google being a fine example.

Word of mouth, in other words.

Why Is Word Of Mouth King in 2009?

Word of mouth advertising is powerful because it resonates on a personal level, and it travels via established, personal networks. Those networks by-pass the mass marketing blitz, which people have long since tuned out, as those channels are low trust. They aren't trusted because they are impersonal, and politics in the 00's is all about me, me, me.

And my friends.

Word of mouth is how social media marketing is going to work. It isn't going to work using interruption or mass market techniques.

Review you message to see if it has a word of mouth quality. Is it remarkable enough for people to repeat to their friends?

Seth Godin, who I like to quote, because he puts his ideas in such a way as you want to repeat them, illustrates it like this:

First, Ten

This, in two words, is the secret of the new marketing.

Find ten people. Ten people who trust you/respect you/need you/listen to you...

Those ten people need what you have to sell, or want it. And if they love it, you win. If they love it, they'll each find you ten more people (or a hundred or a thousand or, perhaps, just three). Repeat.

If they don't love it, you need a new product. Start over.

Your idea spreads. Your business grows. Not as fast as you want, but faster than you could ever imagine.

This approach changes the posture and timing of everything you do.

You can no longer market to the anonymous masses. They're not anonymous and they're not masses. You can only market to people who are willing participants. Like this group of ten".

The thing I often find frustrating about Seth Godin is that he offers few practical examples. Perhaps his goal is to make us think.

Let's start with a checklist:

• Is you product or service remarkable? If not, can you twist and shape it so that it is? If not, start again.
• Who are the ten people in your niche who matter? Identify them. You need to spend your time and money being remarkable to them
• Who are the ten people who are really resonating with your brand? Survey them. Find out why they are attracted to your service. Give them tools and reasons to spread the word

One example that springs to mind is the MLM sales launch.

These launches often target trusted industry players first, who in turn spread the message to their readers. It's celebrity endorsement. The tools are the free giveaways and marketing collateral.

Social media marketing is going to work in much the same way. In social media, people listen to people, not networks. So find out who the ten people are you need to talk to, and make your message remarkable to them. Hopefully, they'll do the rest. Handing a bottle of expensive water to Paris Hilton was no doubt a good idea.

Check out this post on developing a social network platform. Notice how he integrates outside people into the internal processes of the company.

Perhaps that's the new version of MLM.....

Differences Between Word Of Mouth And Going Viral

One of the differences between word of mouth and going viral is that in order to go viral, people need to become part of the network in order to pass the message on.

Roelof Botha, the guy behind PayPal and YouTube points out:

Many people think the word "viral" is interchangeable with "word of mouth"--implying that the product or service is so good that people are compelled to talk it up with their friends. But there's more to it than that. Google and Amazon.com are both great Internet companies, but they aren't viral businesses....word of mouth is when I tell you to shop on Zappos because I think the service is great," explains Botha. "It becomes viral when you have to be ‘in the system’ to use it. For example I can post a video on YouTube but then you would need to go to the site in order to see it

Where Does SEO/SEM Fit?

But hang on, I hear you say. I'm an SEO/SEM, what does this have to do with me?

You're already slicing up the niche and targeting via keywords. But if you're buying clicks, or targeting SERPs, you're wasting a valuable opportunity if people visit your site and forget you the moment they click away. Perhaps that person didn't buy or sign up now, but they might tell someone else about you if your message resonates with them. Your message could then skip from the search channel into their closed social networks - Twitter, Facebook, et al - which increases your exposure and reach.

To do this, your message needs to be remarkable on a personal level.

Does your site convey such a message? If I click on it for the first time, do I know the one unique thing you do that no one else can? The problem you solve for me? And would I tell my friends about it? And will you provide me with the means/tools to do so?

Via an email to affiliates, Amazon.com announced they are scaling back their associates program in North America by disallowing direct linking from paid search results:

After careful review of how we are investing our advertising resources, we have made the decision to no longer pay referral fees to Associates who send users to www.amazon.com, www.amazon.ca, or www.endless.com through keyword bidding and other paid search on Google, Yahoo, MSN, and other search engines, and their extended search networks. If you're not sure if this change affects you, please visit this page for FAQs.

As of May 1, 2009, Associates will not be paid referral fees for paid search traffic. Also, in connection with this change, as of May 1, 2009, Amazon will no longer make data feeds available to Associates for the purpose of sending users to the Amazon websites in the US or Canada via paid search.

As the paid search market has matured and competitive research tools have improved the value of using affiliates for discovering new keywords has been sharply reduced. Other merchants will follow Amazon's lead. Some might wait for the economy to pick up first, but the fact that Amazon is trimming this in a down market (recession/possible depression) shows how little they feel they benefit from affiliate arbitrage of paid search results.

Yet another reason to find SEO based affiliate work more stable than PPC affiliate efforts. Any PPC-based affiliate that is sick of having to rebuild from the ground up over and over again would be smart to (and is welcome to) taking the enlightened path :)

Everywhere you look on the internet, there are people who try to convince you that marketing success can be reduced to a formula.

Get rich quick ebooks are a classic example. Hand over $97, follow the guaranteed steps, and you'll get the exact results the author claims. Yes, you, too, will be able to hold up a huge, comedy check, featuring lots of zeros!

SEO forums are filled with questions that presume prescriptive answers: "what keyword density should I use?", "How many links do I need to rank #1?" "How many words should I have on a page?" "How many outbound links are too many? "

Unfortunately, a successful internet business can't be reduced to a simple, paint-by-numbers prescription. If it could, those e-books would be selling for a lot more money, and nobody would be giving away tips in forums.

Paint-by-numbers marketing produces a facsimile of where someone has already been, but the market has long since moved on.

Take A Holistic Approach

The way to approach internet marketing is to do so in a holistic manner.

Once you understand the underlying philosophy of various tactics and strategies, you'll be more likely to apply them successfully, and adapt them to devise new strategies.

There are underlying patterns common to the most successful sites. Once you identify and and internalize these patterns, you can easily out-maneuver any competitors who may be locked into a more inflexible, prescriptive approach.

Bad Artists Borrow, Great Artists Steal

That quote is often attributed to Pablo Picasso. What I suspect he was getting at is that bad artists copy surface techniques. Great artists, on the other hand, get inside an idea. They internalize it. Then they innovate to produce something genuinely new.

For example, many people will advise you to start a blog.

Whilst that might have been an attention-getting idea in 2001, starting a blog today isn't worth remarking upon. Blogs generated a lot of attention early on because they provided an easy way for people to become citizen journalists, and the writing style was somewhat new, at least in when compared to conventional journalism.

Blogging used the personal voice of the opinions pages, as opposed to impersonal voice to the reporting pages. Blogs also provided immediacy in the days before Google News. Twitter has now leap-frogged blogs and news outlets to provide that very function.

These days, the biggest sites on the internet use nothing but the personal voice i.e Twitter, Facebook etc - and the barriers to producing content are very low. Anyone can publish web content. So the blogging Cluetrain has long since left the station.

Instead of copying the format - the surface - try to provide the type of information people want. That's where the idea for blogs came from. That's where newspapers came from. They solved an information problem for people.

One trend right now is social networking, but this results in a shallow surface of unreliable information. There is a growing flight to quality information, which people will pay to read. Some of the best information on the web is now being locked up behind pay walls.

Ask yourself the fundamental questions. What need is your site serving? Is that need changing? Where will your sites audience be in six months or a years time?

That's where you should aim now.

The future is where Google focuses their efforts:

We started with the early-adopter crowd. That was on purpose. We wanted to build a product for people who were getting hundreds of e-mails a day, because we believe by focusing on the power user, you're designing the product the rest of the market will want in a couple years when everyone's usage habits catch up to the most active users.

Barrier To Entry

When some guru tells you "a secret" - i.e. to get into mobile ring tones - he's safe in the knowledge the area is already saturated and he has moved on.

Once you see that sort of information published in the public domain, it's too late. The horse has bolted. But he will still tell you the market is ripe and that you should sign up under his affiliate link. Even if you lose money he still profits from your efforts. You are the key ingredient of their wealth generation formula, you just don't know it yet. ;)

One good way to evaluate the worth of such prescriptions is to evaluate the barrier to entry. A barrier to entry is some condition that makes it difficult for late entrants to enter a market. An example of a barrier to entry would be, say, the start-up cost of an airline. The capital investment required is significant, which disqualifies most of us ever starting one.

On the internet, if anyone can copy a technique cheaply and easily, then it almost certainly won't work. Once a technique is out there, too many people will copy it, which dilutes the market to the point where it fast becomes uneconomic. Do you think starting a blog today and running Adsense on it will make you money? It might, but it will also require a lot of work, luck and a significant point of difference. Without those fundamentals, it will remain unread, and is highly unlikely to make money.

So look for areas that have a barrier to entry. Do you have an established brand you can leverage? Can you partner with someone who does? Can you spot a niche where none of the players are spending much? What happens if you throw some money at it? Do you have a means of grabbing attention that other people don't have?

What is your point of difference? And can you make it defensible?

Steal A Business Plan, Apply It To A Different Niche

In the financial world, investment firms often use forensic accountants to deconstruct the tactics and strategies of their competitors.

One famous example is Harry Markopolus, who worked out that Bernie Madoff was running a Ponzi scheme. Markopolus bosses wanted to learn how they could match Madoff's double-digit returns. He was assigned to deconstruct Madoff's strategy to see if he could replicate it.

If you've found a new niche, try applying a model that has already proved to be successful in another niche. Deconstruct the features, tactics and philosophies of the successful site, and either go head to head, or even better, apply those same strategies to a new niche.

For example, one characteristic common to many successful sites is that they were first movers. They were in the niche early enough to command attention simply by existing. Can you slice the niche you're in even finer in order to be seen as a first mover?

You could also try the same idea in different geographic locations. TradeMe is a New Zealand version of Ebay. New Zealand is a tiny market, but TradeMe recently sold for $700 million, mainly because it was a big fish in a small pond. The business idea was the same proven idea as Ebay, simply applied to a different regional niche.

Show Leadership & Connect People

As Seth Godin notes, what works today is leading:

Leading a (relatively) small group of people. Taking them somewhere they'd like to go. Connecting them to one another....a tiny sliver of the market is enough. Bill Niman used to run Niman Ranch, a cooperative raising meat for fancy restaurants and markets. That was already a sliver of the huge huge market for meat. He moved on to start BN, a 1000 acre farm raising goats for a subset of that subset. It's enough. It's enough if the tribe you lead knows about you and cares about you and wants to follow you.....go down the list of online success stories. The big winners are organizations that give tribes of people a platform to connect.....People want to connect. They want you to do the connecting.

If you look around the search niche, you'll find the biggest sites have very clear leadership. These sites also serve as connectors for the community. The least significant search blogs follow others and repeat information. But the audience doesn't want that. Someone who follows the followers isn't valuable to them.

You don't need to pull in a big community, you simply need to lead whatever niche you happen to be in. Look for ways you can carve out you own leadership niche, then connect people within that niche.

People want to be led. They want someone to follow.

What can you teach others? What can you help them to do? How can you connect them to each other?