In most markets worth being in and with most sustainable business models, sales is not a one time event, but a process. You first have to create awareness, then build trust, then finally make the sale. Do all 3 happen at once for some people? Sure, but probably not for the majority of customers.

My big issue with hyping social media is that most things that are popular on social media sites do not actually build credibility, and that you are going to have marginal success building your brand if you start by focusing on these broad third party communities rather than YOUR TOPICAL COMMUNITY.

When I first started getting well known there was no Digg. There was a Slashdot, but exposure on Slashdot did not make or break me. What really sent my personal brand on a sharp upward trajectory was when Danny Sullivan mentioned me. Because he felt I was comment-worthy many other people suddenly thought I knew what I was talking about and that I was trustworthy.

That perception of trust, audience, and personal-brand that Danny had spent years building was in some part transferred to me. Am I as well known as he is? Of course not, but while sites like Digg have audience they tend to lack that perception of trust and personal-brand that transfers BUYING CUSTOMERS to your site.

If a person who has trust and a broad base of readership recommends you that creates immediate sales. I see that in my daily sales data and my affiliate statistics. If you get featured on social media sites it does not lead to many sales. Perhaps that exposure leads to awareness, which can further be enhanced by writing about that community, buying banner ads from sites like Lead Back, or by writing other create subscription-worthy content, but generally in content editorial link from a trusted expert creates more sales than exposure on a nearly automated hollow social news site.

If your site is new to the market and you want some exposure you have two options

• eat Taco bell for a month, take the world's biggest crap, then write a leading 10 step how-to guide on how-to polish it, or
• create things that people INSIDE YOUR COMMUNITY will find useful

One of those strategies will get you in the Guinness book of world records. The other will make sales.

Does your content build trust?

Straight Up Spamming
The economics of spam.

Thin Arbitrage
In regards to that $130 million investment in Geosign by American Capital... it turns out to be the arbitrage investment that was not:

American Capital CEO Malon Wilkus told TheStreet.com that as a result of the split-up, his firm recovered a "substantial" amount of its original investment in the form of cash proceeds. He declined to give the amount.

Domain Names
Oversee.net bought Moniker. They purchased SnapNames earlier this year. They must be pretty good at business to be able to afford over $100 million in acquisitions in one year.

Never trust Network Solutions again. They are now registering any whois lookups that occur on their network, and are challenging RegisterFly for the dirtiest register ever award.

Marchex has dropped below the sharp fall off back when they lowered Q3 2007 guidance. They currently trade at an 82 P/E ratio, and could unlock a lot of value if they had a real development strategy or started selling off some of their names. A Domain Tools blog post highlights how generic domains could appreciate if capital was more accessible for premium domains. I think before that happens companies like Marchex are going to need to issue a new strategic memo that is valid in the current marketplace. The Domain Tools blog post also had a comment from a search marketer:

Besides, the real downside to generic domains from my point of view is that every day, the “type-in traffic” generation becomes smarter, or dies off. More people use a medium such as Google or other search engines. With search engines, sites such as “Travelocity.com” and “travel.yahoo.com” become the apparent winners for the term “Travel”. Not Travel.com

As a search marketer who keeps spending more and more on Google ads, I firmly believe the above comment, and this is why I have been buying decent names and developing them. A balanced investment strategy where pieces build off each other and I put my marketing skills to work will outperform a strategy where I enter a saturated market late without a unique strategy. A strong domain is a great advantage, but you can still succeed with only a decent one and a bit ofsweat equity.

Yahoo! Buzz Index
Perhaps this is an old arbitrage strategy I somehow missed, but the Yahoo Buzz Index links to a list of popular searches. What better way is there to rank for them and drive traffic than to reference them on an high authority page, likeso:

That might be a nice strategy for other leading publishers to follow, though it makes Yahoo look a bit desperate in their marketing approach.

General Publishing Trends
Seth Godin highlights trends in the music industry, which is a set of trend applicable to just about every industry.

Microsoft offered $1.2 billion, a 42% premium over market valuation, for Fast Search & Transfer. Fast Search & Transfer is largely an enterprise search solution. As an example web index to showcase their technology years ago they created AllTheWeb. In early 2003 Overture bought AllTheWeb, and Fast's web search unit for $70 million cash. Yahoo bought Overture the same year for $1.63 billion.

In 2005 Fast again appeared on the web search scene when they started powering organic search results for Miva, but they do not have their own search destination. Earlier this year Fast made noise about creating an independent ad network that allowed publishers to keep the bulk of the profits, but OpenAds already exists, and I have not heard much of Fast's proposed AdMomentum after the initial hype.

Fast recently missed quarterly numbers and changed their accounting practices. They do not have a great business model compared to Google (enterprise search is nowhere near as profitable as web search). If general web search relevancy moves beyond measuring links and more toward user feedback perhaps owning Fast would help Microsoft increase their core relevancy algorithms, and enterprise relationships can probably help them cross sell web ads too.

Update: Fast is to lead the Pharos search project, which will be funded in part by European governments. If Google gets regulated out of market domination in Europe then Microsoft may have bought a key competitive piece.

Potential search plays later this year:

• IAC is only worth about $7.2 billion. Earlier this year they announced that they are planning on spinning off into 5 major companies. Perhaps when that is done Microsoft, eBay, or Amazon.com should try to buy Ask.
• Why there is no money in second tier search stocks. They are all losing marketshare and money. CNET passed on buying Looksmart for a nominal sum while purchasing FindArticles.
• Perhaps search engines will start buying more major content sites. AOL is wasting away, and what else is out there?

Fake Businesses

Today I came across an AdWords ad for an automated ebook business model website. Their screenshot highlighting their Paypal account was:

• hosted on another site
• named powersell_paypal2.jpg
• did not show payments but showed withdrawals

Fake Business Statistics

A lot of (mis)marketing techniques are more covert though, through the use of

• false stats due to small sample size
• sponsored research
• syndicating bogus stats from third party research

Fake / misleading research is remarkable, so it is more likely to be cited, and recycled by people hyping similar business interests. A while ago MarketingExperiments did social media marketing research which was not really research, and yet those false stats promising social media goodness just appeared again:

Claiming that the above ROI is 1,427% higher is at best dishonest. You can teach the value of something without syndicating lies as truth.

Social Media Traffic Does Not Buy

Want to know the truth about most social media traffic? Its garbage. Some of my AdSense ad campaigns use an affiliate account to track ROI. Until I filtered them out for poor performance, MySpace and Digg were providing about 90% of my overall affiliate ad volume with 0 conversions, whereas some of my better affiliates make a sale a day or a sale every few days on far less traffic.

I know that was an isolated example and it would be unfair to judge the entire market on that, but consider this...those ads had a horrifically low clickthrough rate and still only cost a dime a click. If I was getting a lot of volume on a network that size while bidding next to nothing then that ad inventory is not worth that much. Simple as that.

Some Top Publishers Are Afraid Social Media Marketing

Some leading publishers are even worried about deflating their CPM by getting to much lousy social media traffic.

Comparing Social Media to Direct Navigation

Why do you think domainers make so much money without even needing to develop websites? For a person to end up on a parked page they have a lot of implied intent in their location. The same is true for a search result. If you just searched for something you have implied intent. Google is worth 200 billion and I am not. :)

For all the hype Facebook ad system has got, there is limited value in their user data:

Google actually knows all of that, and at least 10X more data about users than Facebook, but hasn't seen the need to really mine the data yet, since search intent has proven to be worth about 100X more than that kind of data so far.

If social marketing gets you clean links it is great. If people recommend your product to their customers that is great. I get mentioned on Seth Godin's blog and sales double. I make the front page of a social news site and nothing happens. Most of the social media hype is hollow and without value.

Put Social Media to the Test Today

Still don't believe me that most social marketing traffic is worthless? Ask yourself why StumbleUpon only charges 5 cents a visitor for any category - including big money categories like daytrading, gambling, and financial planning.

If the successful secret marketing strategies that send 4 cent traffic are buzzworthy then they could at least have the decency to tell me I can get the same thing for a nickel with no effort.

I think these two comments do a nice job of showing the difference between how people perceive something they paid for and something they got for free. If people do not have a tangible opportunity cost they often tend not to respect or value the product or service.

Compare these side by side reviews:

• the person who bought it thought it was one of the best ebooks they ever purchased.
• the person who won a free copy thought it was dry, above their head, and has 0 respect for copyright, offering to trade it

To build up publicity and mindshare you have to give away value, but the same product often has a vastly different perceived value based on price point and how they got it. It is so hard to win marketshare by lowering price, but easy to win marketshare by increasing (real and perceived) value.