Broken Reward Circuitry: Money vs Happiness

Unbelievable Stupidity

When I was in the military they would run these stupid drill where they would try to create as much stress and chaos as possible in a short burst of time, find someone who makes an error, and chastise them for it. That killed morale. So to make up for declining morale they decided to run more frequent test and drills. And thus being an enlisted nuclear power sailor in the US Navy is a horrible life that I wish on nobody.

At one point in time I was on watch when a new kid made a mistake during maintenance that killed all electrical power on the submarine. Later we had a discovery meeting where we found out what went wrong. Having been 5 feet from the maintenance, I knew that the kid's boss came over and told him "remember to trip close trip the breaker when maintenance is done." The kid listened to that wonderful tip and turned the turbine generator into a turbine motor.

But since the new kid was dumb enough to listen to the bad advice he took all the shelling and blame. It was as simple as that, but even the captain of the boat (along with everyone in the chain of command - including the guy who gave the stupid tip) were together in a huge group insult fest where they tried to one up each other insulting the new guy. It lasted for like an hour and a half and the lines were so bad that things like do you realize how stupid you are? were said to that kid. I thought that if the meeting lasted another 5 minutes they were going to start chastising him with questions like do you realize how fat you are?

It got so bad that the electricians had to set up a work area to change a light bulb, making each bulb about a half hour process. But since I wasn't an electrician (I was in reactor controls) I could go ahead and change the light bulbs in about 30 seconds each. But if I wasn't helpful to the next division what took me a half hour would have took them about a whole day. The solution to every problem is closer scrutiny, more testing, and more baby sitting.

On the same boat the leaders had us take out the flooring railing in the engine room to have them repainted. This flooring railing was never meant to come off and would not fit out of the boat's escape hatch. BUT someone was stupid and said it must be done. And so there we were using a hacksaw to chop up the floor supports (ruining their structural integrity and making the submarine far noisier and less safe in the process) so the floor supports could be freshly painted and look slightly better.

If you want to see a horribly run organization full of miserable people put them in a confined high stress environment where no matter how shitty they make someone else's life, they get no market feedback or pain for coming up with an endless array of stupid ideas.

The military is a rat testing lab.

You can learn a lot about yourself, what drives you, how to succeed, and how to fail by putting yourself through such a miserable experience...though I would not recommend it to anyone smart enough to be reading this blog right now! ;)

What Drives You?

I respond well to positive feedback and I simply shut down from negative feedback. One of the hardest things I have struggled with is someone I know giving me the wrong kinds of motivation. XYZ knows less than you, works less, sells far inferior products, and makes more so you must be screwing up.

This is true of a lot of direct marketer types who don't give a crap about the success of their customers but are willing to hype anything and everything they can put their name on - even if they make false promises and don't know what they are selling. But if you care about the quality of your product, use what you make, and actually provide real customer service you can't compete on hype without pulling in a lot of people who were not worth having as customers.

In the short run you can't compete with the top line numbers (especially the inflated ones before the affiliate commissions and the huge number of refunds & chargebacks associated with people realizing they bought into a scam), but after a decade of solid effort you can compete with the scammers on earnings (plus many of them get flushed out of the market, constantly replaced by a new breed). But are your goals short term or long term? What are your goals? What drives you? Is it money?

Money in Context

Money is just a tool for exchange. If it is your sole motivation you will end up losing motivation quickly. And as long as you are not printing the money supply and do not have lobbyists working CONgress for funds, it will almost universally hold true that someone dumber than you who doesn't work near as hard will earn more money. But it is not a relevant mindset that will lead to anything productive with your life. What good is money if chasing it makes you miserable?

After reaching a certain level of success an additional dollar of income doesn't provide much additional marginal utility and a singular focus on it can harm other aspects of your life. Money can buy a bit of happiness, but it can't buy a lot of it. And we often spend it incorrectly.

The problem isn’t money, it’s us. For deep-seated psychological reasons, when it comes to spending money, we tend to value goods over experiences, ourselves over others, things over people. When it comes to happiness, none of these decisions are right: The spending that make us happy, it turns out, is often spending where the money vanishes and leaves something ineffable in its place.

Measuring Success

In time smart efforts (combined with a bit of luck and a lot of learning) produce results. So long as you are honest even dumb or failed efforts produce wisdom. But you can't be #1 at everything.

You have to decide what you view as success and stick to comparing yourself against only yourself, or else you will get burned out, singularly focusing on an arbitrary goal while your health and happiness erode. Until the past week I basically had chronic back pain which is just now lifted and I feel like a kid again. That was only made possible because I decided to temporarily close off the site to new members to make enough time for exercise. And it is already working. Paying customers are still getting great customer service, but for now I am not stuck doing as much admin stuff as new members cycle in and out of the site. That leaves a little bit of time for sanity, which I hear is important. ;)

Giving Praise

  • If a person who is gifted but lazy is praised they will just become more lazy and arrogant and worthless, feeling they deserve the world even if they did nothing to earn it.
  • If a person is doing their best and you keep telling them it is never good enough (like the Navy ORSE testing regime) you are just going to make them miserable, shut them down, beat them into submission, and kill their happiness. Such policies kill motivation and drive away talent.

You shouldn't praise the results, but praise the right kind of effort:

Those who had been praised for their effort significantly improved on their first score—by about 30 percent. Those who’d been told they were smart did worse than they had at the very beginning—by about 20 percent.

Social Clustering

Much like you are what you eat, many of your good and bad traits are driven by (and drive) the people who are in close proximity:

When a Framingham resident became obese, his or her friends were 57 percent more likely to become obese, too. Even more astonishing to Christakis and Fowler was the fact that the effect didn’t stop there. In fact, it appeared to skip links. A Framingham resident was roughly 20 percent more likely to become obese if the friend of a friend became obese — even if the connecting friend didn’t put on a single pound. Indeed, a person’s risk of obesity went up about 10 percent even if a friend of a friend of a friend gained weight.

So if you are living an unbalanced lifestyle and sacrifice other aspects of your life for a singular (and often short-sighted) view of success, it will likely harm you AND the people around you.

The Frequent Failures of Self-Help Groups

Many well established organizations built around causing change eventually become stuck in their ways, fearing change and becoming yet another bureaucratic institution. How much harder is it to create lasting change that creates growth if they bond is built around a weakness?

When people go to support groups they often create bonds around their weaknesses with others who share the same weaknesses. Perhaps this makes the weakness become more ingrained in their identity, makes it seem more normal, and makes it harder to change. If this is true then perhaps the support groups that work are those based around doing something positive, rather than those based around not doing something negative.

And, from an online publishing perspective, if you write about having a specific personal problem (not being able to quit smoking, being overweight, etc.) then that can attract people with similar flaws into your life...recalibrating your sense of normal and making it harder to change the behaviors which create the undesirable results. It is no wonder that most sites in some such self-help categories are scams - anyone who legitimately cares often surrounds themselves with negative influences - making it harder to build and maintain lasting change.

The more you try to erase me, the more that I appear.

Synthetic Happiness

Dan Gilbert has a great talk about how we can synthetically create the happiness that we seek. If our fears or ambitions are not limited then it is hard to be sustainably happy. But by overcoming our fears and limiting our ambitions it is much easier to be happy sustainably.

Do You Realize How Lucky You Are?

Speaking of happiness, I saw the following video on Kevin Kelly's blog, which really helped add perspective.

Now that I have enough spare time to think and grow I see some of the errors in my ways from as little as a month ago. Life is great :)

BTW, this free Clive Thompson article on how social networks work is probably the best marketing article I have read in the past year. It is 10 pages, but well worth the price of admission.

What Parts of Marketing Can't be Automated?

Keyword Technology Improvements

WordStream offers a free tool for keyword research. The coolest feature it offers is that it allows you to download thousands of keywords at once, though it requires giving them your email address to get the keyword list. Their FAQ states they use a variety of keyword sources: internet service providers, browser toolbars, and search engines.

At SES I got to see a demo of their keyword management software, which uses semantic analysis to help cluster keyword themes to automatically mine and group related keywords based off the incoming traffic going into your site. It has a blended set of automated and manual features. From my take I think it could be useful for SEO in some cases, but where it really sings is in decent sized pay per click accounts. I have had beta access to some cool Wordtracker features that are being tested as well. I can't mention everything they are testing just yet, some of those features will be quite cool from an SEO perspective.

Moving Beyond Keywords?

Keyword research + management tools (like the above mentioned tools and Google's suite of keyword tools) are becoming so advanced and affordable, but at some point search may move beyond keywords, at least with the paid search ads. In a recent Search Engine Land article titled Coming Soon: Paid Search Without Keywords, Mona Elesseily mentioned a recent Nick Fox keynote where he mentioned the idea of keyword-less paid search accounts:

Nick mentioned that keywords were used as a proxy for relevance. Conceptually, there is no reason an advertiser couldn’t achieve the same results without having to directly manage a keyword list. Down the road, Google wants to state outcomes and have machine-based learning and algorithms come up with the best method of achieving specific outcomes. In the case of no keyword search, an advertiser (like a retailer) would provide information on products, product descriptions, pricing, etc. and Google would use the information to find the most effective way to place ads in front of potential customers.

Where Will Additional Ad Yield Come From?

Doing keyword-less search efficiently could eventually mean Google integrating themselves into your inventory management system, but that data will eventually be used against you. How else could Google build enough yield to make automated systems perform better than laser targeted hand-rolled campaigns?

And remember, Google is already working as the invisible hand in the online economy. I have some keywords with 0 competing bidders, about a 20% click-through rate, and Google still wants 14 cents a click. The relevancy is there, but the pricing floor is arbitrary. The purpose of the quality score ***is*** price gouging.

What Can't be Automated?

This is where the more abstract + complex (branding & public relations & social networking) and iterative (increasing lifetime customer values & improving conversion rates) aspects of marketing will keep increasing in value. This is where being on the bleeding edge (entering new markets & building your own markets & using marketing techniques that are not common) provides a sustainable competitive advantage.

People (and algorithms created by people) usually can't clone what they don't understand.

To be able to afford being Google's preferred partner for automated ads everywhere you are going to need to build value in the hearts and minds of consumers and/or be more efficient than everyone else in your industry and/or operate in markets that some of the bigger competitors missed. You have to be creating value where the algorithms can not, operating at a level well above execution.

Illusions of Easy Success

While the social networks that flourish on the web bring an artificial closeness to the popular and lead to the illusion that opportunity will be available to everyone, eventually such automated technologies will lead to increased market consolidation and sharper market breaks between the successful and unsuccessful.

As Google plays the role of other established multi-national corporations lots of externalities will appear. Many content-based publishing businesses are getting crushed and will continue to get crushed

“So I don’t know how to characterize the next 10 years except to say that we’ll get to the point - the long-term goal is to be able to give you one answer, which is exactly the right answer over time…what I’d like to do is to get to the point where we could read his site [the definitive authority on a particular searched query] and then summarize what it says, and answer the question” - Eric Schmidt

Shortcuts Partnering With Google?

Sure getting in the flippers can seem like an advantage, but any destination Google builds just gives them more leverage over the rest of the market. Nickels today, pennies tomorrow.

Moving Beyond the Google Economy

The best businesses - the ones that are sustainable for decades - may use Google as a starting point and a distribution channel, but the more distribution channels you can build outside of search the less likely you are to have your business killed by search innovation.

A word from Adam Smith:

In the progress of the division of labour, the employment of the far greater part of those who live by labour, that is, the great body of the people, comes to be confined to a few very simple operations, frequently to one or two. But the understandings of the greater part of men are necessarily formed by their ordinary employments. The man whose whole life is spent in performing a few simple operations, of which the effects too are, perhaps, always the same, or very nearly the same, has no occasion to exert his understanding, or to exercise his invention in finding out expedients for removing difficulties which never occur. He naturally loses, therefore, the habit of such exertion, and generally becomes as stupid and ignorant as it is possible for a human creature to become... His dexterity at his own particular trade seems to be acquired at the expense of his intellectual, social, and martial virtues. But in every improved and civilised society this is the state into which the labouring poor, that is, the great body of the people, must necessarily fall, unless government takes some pains to prevent it.

Rely too heavily on Google and your business becomes a commodity. One of the healthiest things a worker can do is explore something they know nothing about. It helps prevent you from becoming a tool (which also makes it harder for tools to clone what you do), making it easier to be.

Micropayments: Could Google Make It Happen?

Remember how the news media wanted Google to come riding to the rescue and save them, and their failing business model?

Well, Google might have found a way.

This should be of huge interest to anyone who produces content on the web.

IF

...it comes off.

Micropayments

Google is planning to roll out a system of micropayments within the next year. Micropayments, as the name implies, are small payments - a cent or even a fraction of a cent - and the idea is that micropayments can be used to pay for accessing web content.

Google sent a paid content proposal to the Newspaper Association of America outlining their ideas. Micropayments will be an extension of Google Checkout, Google's PayPal competitor.

While currently in the early planning stages, micropayments will be a payment vehicle available to both Google and non-Google properties within the next year,” Google wrote. “The idea is to allow viable payments of a penny to several dollars by aggregating purchases across merchants and over time.”

Micropayments are not a new idea, of course. People have been suggesting micropayments will be the next big thing for quite a while now. Jakob Neilsen got it rather wrong in 1998:

I predict that most sites that are not financed through traditional product sales will move to micropayments in less than two years. Users should be willing to pay, say, one cent per Web page in return for getting quality content and an optimal user experience with less intrusive ads. Once users pay for the pages, then they get to be the site's customers, and the site will design to satisfy the users' needs and not the advertisers' needs."

Will Google be the first company to make micropayments work? It remains to be seen, but if they do, this will be the biggest game-changer on the web since PPC.

The Decline Of News

The news industry have been howling as their outdated business model falls apart. Their days of running regional oligopolies are fast coming to end, eroded by the ubiquitous web and the low cost of online publishing. The media is fueled by advertising, and as their readership fragments, the value to advertisers drops.

But what happens if 100% of a newspapers revenue came directly their readership? Micropayments may make this possible.

The big question is: who would pay for the garbage the media serves up? Why should we pay for regurgitated press releases and stories about celebrities shopping expeditions?

Micropayments could help increase the quality of news. Paid news outlets, like STRATFOR charge $349 for annual membership. How can they do this? By providing a level of analysis and research you don't get from mainstream media. Clearly some people are prepared to pay for news that isn't driven by advertisers and the lowest common denominator.

However, the subscription price is still a barrier for most. But what if micropayments, by introducing economies of scale, made it possible to get quality news, analysis and content for a few cents a week? What happens when the price is so low you barely even notice you are paying it?

The scale of the web, plus the tiny charging increments, could be a game changer. And not just for news. This opportunity applies to anyone in the web content business.

How Would This Work?

Nielsen may have got the timing wrong, but he had some good ideas about how a micro-payment system should work:

A true micropayment system would operate invisibly and simply accumulate charges on the user's monthly bill without an explicit confirmation for every click. That's exactly how electricity bills and long-distance telephone bills work. True, people wouldn't make many long-distance calls if they first had to discuss the fee with an operator (though we certainly made calls back when we had to talk to a long-distance operator and acknowledge charges for each call). In any case, telephone companies now simply add up the calls and put them all on a single bill. Intellectually, you know that it costs money to use the phone and turn on a light, but if you want to talk to somebody, you pick up the phone. And if the room is too dark, you switch on the light. You don't go out to the meter every few minutes to check on your electricity bill.

A micro-payment system should be quite different from existing payment systems. You won't be asked to fill out your details each time. Rather, it would be as simple as a click of a button, and tracking and billing would happen in the background.

Google Extends Their Reach

With Adsense, Google cleverly figured out a way to click the ticket on content it didn't own or produce.

The problem with Adsense is that it works best when placed on content heavily geared towards commerce. Micropayments opens up a business model for other types of content, content that is not easily aligned with a commercial imperative.

Imagine the potential for high quality, non-commercial content. Imagine the potential for channels like YouTube. On demand television and movies for a few cents. With micropayments, the volume of content Google could click the ticket on gets much, much bigger.

But the big question remains....

Will users pay the price?

What do you think?

Poscript by Aaron: Clay Shirky published an article in 2003 about fame vs fortune & micropayments. And, while I have generally been skeptical about micropayments, we recently had an interesting thread about this topic in the forums that changed my perspectives of the topic.

Design Agency SEO Model

Following on from my post "What To Consider When Starting An SEO Agency", we had a few questions about how to approach the design agency model. This is a model whereby you partner with web design companies. I used to run this model, so here are my ideas on how you can approach it.

What Is The Design Agency Model?

This is when you partner with one or more design agencies who do not have a SEO skillset in-house. This can be for a variety of reasons. Perhaps SEO has never occurred to them, they might not have enough full-time SEO work for a new hire, or SEO just seems like too much hassle.

Forming design agency partnerships can be quite lucrative for the SEO. The design agency typically has a stable of existing clients, and if they're big enough, a salesforce who bring in new clients on a regular basis. The design agency bills hours. In essence, they are a consulting business. The more hours they bill, the more money they make. To scale a design agency, they simply add more bodies.

This is where the opportunity lies for a win-win

How To Approach It

When a design agency is pitching to a client, their incentive is to pile feature upon feature, which of course, takes time to build. The more time they can bill for a build, the more money they make.

SEO is an add-on feature.

Some agencies will be happy just to have an extra service option available to clients so the client doesn't go elsewhere, but most agencies will want a cut. I used to work on 10-15%. Because the clients tend to be corporates, you could charge quite high prices, and they wouldn't blink.

Chances are, the design agencies clients are already asking about SEO. Typically, this happens after the site is actually built, and the client can't find themselves on Google. When you find such an agency, it's not difficult to put a mutually beneficial deal together. The demand already exists, and they can't service it.

Identify agencies that are not so big as to have an SEO capability in house, but big enough to attract a steady flow of clients. It's good if they are in your town. Having the ability to go and see them, and work alongside their sales people and designers if need be, is a big plus.

Try to arrange a face-to-face meeting. SEO has a fly-by-night reputation, so it's much easier to establish credibility if you're sitting in front of the people making the decisions, rather than being a detached voice on the phone. They'll also want to see that you're presentable to their clients if you need to attend meetings.

The pitch is you offer white-label search marketing services. You can sweeten the deal by offering to do the first project at cost. The aim is to prove concept and prove that you can fit in with their way of working. It's no different than a job interview and trial period in this respect.

The seamless white label SEO service you provide has little or no overhead cost to the agency. They don't need to hire you and provide you with staff benefits. They'll want to know how and where you fit into the design process, so be prepared to answer such questions. The subtext of this question is they want to know if there are hidden costs i.e. is your work is going to slow the designers down, or make life difficult for them. You could approach this question by saying that if you're in the projects at an early stage, you can make painless recommendations in terms of site build. Emphasize how your work will fit in smoothly, yet provide their clients with added benefit.

Also provide them with marketing collateral. This is the text they include in sales proposals. State the benfits of search engine marketing from a business perspective. You'll get a feel for the type of infoirmation you need to include by looking at their existing proposals. Typically, sales proposals aren't technical in nature. Give an overview of what you do, the benefits you provide, and the cost.

I found that including a PPC option is a good way to go, especially for clients, or agencies, who don't have much awareness of SEO. Even if the designers ignore all your recommendations - believe me, this happens - you can rescue the situation by ensuring traffic still arrives via PPC. You can then demonstrate that traffic is arriving via the search engines, and if you have more input in future, those traffic levels will increase.

Once you've got the first job under your belt, you can negotiate long term arrangements with the agency. You can then go to other agencies - careful that the agencies don't compete directly - and offer the same service, using the first agency as a reference. Repeat until you have as many agencies as you can handle. 4-5 reasonably sized agencies can create a flood of work for an SEO, so much so you'll soon find yourself employing extra staff. That's a great return for 4-5 hour long meetings.

Billing can be by the hour or project based.Try to fit in with however the agency bills. I found most like a project based pricing scheme unless there is significant level of ongoing work.

Benefits

There are significant benefits to this model for the small SEO provider.

Firstly, you outsource the sales function. Sales can be very time consuming and expensive, and have long lead times. The agencies sales force has an incentive to work hard for you because they can sell higher billing projects, upon which their commissions are likely based. Get onside with the sales people as early as you can. Emphasize benefits such as how many people are looking for SEO services, how valuable an add on it is, and how much agency level SEO can charge. The sales people are your friends, as you earn them more money.

If you've selected your agencies carefully, you get to work with bigger clients than you might otherwise land yourself. Besides being more lucrative, you get to work up more and more contacts at high levels. These people often job hop from corporation to corporation, which opens further opportunities for you down the line.

You don't have to build up your own brand, which can take a lot of time and effort. You leverage off the pre-existing brand and reputation established by the agency.

Downsides

Loss of control. It can be harder to pick and choose clients if the sales person is keen to sell every client on SEO. This is why it is important to plan for contingencies i.e. if you get a client hell bent on an all flash, brand heavy site, then be prepared to become Mr PPC. You'll also have less control over projects, as projects are typically managed by dedicated project managers.

Hostility form designers. Designers typically don't like people dictating design standards to them, especially people from outside the agency.

Look for areas where there is cross-over and articulate SEO in their terms. For example, if an agency is focused on usability, then talk that aspect up - usability imperatives and SEO often go hand in hand. Have alternative, low impact SEO strategies ready if you can't get your first choice on strategy. For example, add a site map to facilitate crawling, focus on off-site strategies like link building, build a site-within-a-site consisting of pages that aren't part of the main design, and suggest alternative navigation for those with disabilities.

Some designers are fine, of course, but expect the most push-back in this area. If you get too much push-back because you are imposing what they perceive as draconian conditions, then they will likely complain about you to management. As the designers are the bread and butter of the agency, and you are merely providing an add on, you may soon find yourself out of a contract.

You don't own the clients. The clients belong to the design agency, and they might not want you to use the names of their clients in your promotional material. Also, if you ever want to sell you business, you don't have a client list to sell, which is typically the only thing of value. Essentially, you are not building a business you can likely sell, you're operating as an independent contractor.

When it comes to billing, make sure this is not dependent on the agency getting the money out of the client. Bill the agency directly and let them worry about credit risk. It can be difficult to chase their clients for money due to the indirect nature of the contract.

Any questions? Add 'em below. It would also be good to hear from SEOs who run this model.

Are You Fighting Human Nature? Measuring Opportunity Cost

Danny Sullivan highlighted his frustrations with dealing with running Sphinn, a social media voting site for internet marketers:

Sounds easy, right? Sure, but as I’ve learned in the two years since we’ve run it, it’s a minefield.
...
While a community site can be fraught with egos, and concerns about double-standards or fairness, at least you have sympathy for people who are part of the community itself. Who have invested time, or energy or part of their souls to it. You want to do well by them. You want to do nothing for the drive-thru asshole who makes no effort at all.

A number of years ago I bought Threadwatch and eventually shut it down in part because it was facing some of the same issues. Largely it can be summed up with drinking well = pissing well (and, to some, a full on outhouse).

We can complain about human nature, but we can't really change it.

The problems with free for all internet marketing sites are 3 fold

  • The economic incentive for sharing is broken. Apply an idea to your own website in obscurity and make thousands of dollars (or more) off it. Share it publicly and lose a competitive advantage as you watch it get cloned and/or burned to the ground. If it is really effective then sharing the idea can not only cost you a competitive advantage, but can also put you on the Google watch list, and make search engineers more likely to penalize your websites.
  • There are perhaps at most a few dozen SEOs who both a.) are original thought leaders b.) who frequently share original strategies publicly freely. While there are over 1,000 SEO firms listing in DMOZ AND there are over 4,000 SEO blogs listed in BlogCatalog's SEO category. Most of the market ***is*** noise. Sure people who are relatively obscure have great ideas from time to time, but rarely are they the people trolling public internet marketing sites to vote up a pool of (largely) spam & rehashed content.
  • Those who really know what they are doing in the SEO field should eventually be able to earn x hundred to y thousand Dollars per hour. Whereas the media that is freely available is often presumed to have limited value because of its price-point. Even if you share great tips with people they won't value your help. A couple days ago a person who bought a domain name based on a mention here also wanted me to link to them for free. And if you went to their site there was no mention of me and no link to my site, in spite of me being the reason they have the great domain name. Take. Take. Take. Take. Take. No thanks!

Want to get rid of the noise? Charge $100 (or more) to open a new account (and maybe an annual membership fee). That will clear out the 99%+ of the market that are faking it until they make it and/or who are there just to spam the site with dreck. And (if required) you could charge $1 each for votes, making them have a real economic cost.

Such moves would clear out a big chunk of the current Sphinn audience, but no pain no gain. Longterm the site would be far stronger if the signal to noise ratio was improved. Take the earnings from new account registrations and apply that to hiring a full time editorial staff that both writes original featured content AND scours the web to submit stories. Maybe some of the features become member's only.

To further promote hunting for leading content across the web, perhaps whoever submits posts that make the homepage get some "earnings" for finding that story (though this would need some thought to prevent encouraging of spamming...but it is easy enough to have advertising sponsors offer prizes and such that are non-monetary to some degree).

One of the lessons I learned the hard/slow/stupid/painful way is that anytime you put all of the opportunity cost on yourself people will abuse it. They will treat you like a tool and waste your life. And some days they will make you loathe humanity. The more popular you become the more nutcases you reach. (Of course you reach great people as well, but they are not the pain in the ass that the bottom 10% of the market is).

You have to cut off the bottom feeders and charge for anything that wastes your time. Today a guy called me up for phone support for one of our free tools. He got no help because my business model is not built around offering quality tools AND premium personalized support for free. If I value my time at $0 then eventually so will the market. I can't think of another person who works as hard as I do who sits around waiting for calls demanding free help. Of course people can pay for help and get my best. And that is the beauty of economics...it fixes most of the noise problems. But if you don't value your time you can't (legitimately) expect others to do so.

What To Consider When Starting An SEO Agency

Starting your own SEO business can be a challenge. In DMOZ, a directory often hostile to SEO listings, there are still over 1,018 SEO service companies listed. Do a Google search on SEO companies, are you'll see.....quite a few more!

Ok, it's a big planet, and there is room for many operators, but it's true to say that in the SEO game in 2009, no one is short of competition.

There is a lot of competion because there is a low barrier to entry. In order to enter the SEO market, someone only need put out an open for business sign, in the form of a website, and they are as much an SEO Agency as the next guy.

Maintaining a profitable business is another matter, of course.

If you're thinking of starting an SEO agency, here are some aspects you should consider, and some recommendations on how to position in today's marketplace. If you're an SEO who has started their own business, and made a success of it, it would be great if you could share your experiences in the comments below. What are the things you know now, that you wished people had told you when you started?

Essential Considerations

1. You

The first part of your plan should be all about you.

What are your strengths and weaknesses? Are you a self starter, or do you prefer being given work to do? Take a long look in the mirror and be honest with yourself: is running a business really something you want to do, or is this a means to avoid looking for employment? How suited are you to running a business?

No doubt you can see where I'm going with this. There are personality traits people have that make them suited to running a business, including a desire for independence, being a self-starter, and having the ability to take financial risk. One such risk is the lack of steady salary. Do you have a means of financial support? Savings? If you do, it will make life a lot easier. If you don't, consider building up that safety net before you start.

Once you've decided that this is definitely for you, great! Working for yourself can be an immensely rewarding thing to do.

2. Strategy

Where are you going and how will you get there?

Map out a business plan.It need not be complicated. In short, what can you offer that your competition can't? How much will you have to sell in order to cover your expenses and make a profit? How, exactly, are you going to sell your services and execute delivery?

Once you get a feel for the figures, it will make it easier to see if your ideas are achievable.

3. Finances

How much money will you need in order to get out and sell, and then to provide the services? How much money will you pay yourself? Do you need staff? Do you have an accountant? Do you know your break-even figure? How will you manage bad debts or late payments?

All business ultimately comes down to maths. You need to bring in more than you pay out. Failure to do that means the business fails.

Two important areas are cashflow and value of a good accountant.

Business lives or dies on cashflow. A business can be selling well, but if it doesn't have enough money in the bank to meet payroll or rent at the end of the month, it is finished. Try to arrange sufficient overdraft or investment to ensure you can survive between bill payments. Clients often pay later than you want them to.

Secondly, an accountant is worth their weight in gold. Not only do they take on tedious business of tax filing, they make sure you are claiming all the deductions you're entitled to. For example, your computer equipment, your use of home, your broadband, your electricity use can all be charged to your business. This reduces your costs and tax obligation.

4. Your Idea

Does your business serve a customer need or want? Can competitors easily copy what you do?

These are two critical areas. Many people go into business because they want to do something they like doing. That's ok, so long as there is enough consumer demand. However, think about the number of actors and musicians out there. Most aren't making much, if any money. This is because they are pusrsuing a job they enjoy, and largely ignoring supply and demand considerations. Ignoring supply and demand is ok for actors, but it's poor way to run a business. What can you supply that there is a ready demand for? Can you create new demand?

Secondly, the barrier to entry. Because it is so easy to start an SEO business, you'll need something else to differentiate yourself, other than just having a website. A website is the base level entry point. What have you got that others can't copy? Are you able to service a geographic locality better than other providers? Do you know a particular market vertical well i.e travel/fashion/finance/auto? Do you have a name/brand people know? Can you leverage reputation and contacts from your previous career?

5. Marketing and Sales Strategy

This is part of your business plan, but it is an area that requires special attention. Without a marketing strategy, how are people going to know who you are? How are you going to sell to them? If your answer is SEO or PPC, you'll be up against a lot of competition. Those channels are saturated, and in most cases, there is little to distinguish one service provider from the next.

How do you intend to implement your strategy? What channels will you use? Have you allocated time and money to that strategy? For example, if you intend to speak at conferences, you need to budget for the travel and attendance. You also need a plan for who is going to do the work while you're away marketing and selling.

The sales cycle can be long and tedious. The bigger the client, the longer sign-offs can take. Typically what happens is that many prosposects will all sign off at once, after months of indecision! Can you scale up quickly if a lot of work comes in? Will you turn down work?

The Challenge In 2009

The specific challenge to SEO services providers in 2009 is differntiation. There are many people offering services, so how do you stand out from the rest?

One way is to zig when other zag. Is everyone heading off to the same SEO conferences, saying much the same thing? Instead, how about going to the conferences no one else goes to? Travel industry conferences. Dental conferences. People in those industries need SEO, and you might be the first person who has ever talked to them about it! With careful selection and a little luck, you might corner a lucrative, untapped market.

Do companies really need SEO services? Perhaps they just need their own people trained. Can you offer in-house training courses? How about providing a number for them to call whenever they have an SEO question? Be the go-to guy for a number of small firms who may not be able to afford a full seo service, but might be able to afford an hour of advice or coaching each month.

Partner with design/devlopement companies. Perhaps they can't afford to hire a full time SEO on staff, but if you sign up 4-5 design companies, and offer your SEO service as an add on, you should enjoy a steady stream of work. They do all the sales work for you, you just do your part, and bill the agency. They take a cut.

Got any other ideas on differentiation, or war stories about running your own business? Please feel free to comment :)

The Virtual SEO Office

Credit: HardForums

Do you work in an office?

From home?

If you're thinking of starting SEO business, one of the key decisions you'll need to make is where to setup. One of the advantages of the internet is that distance doesn't become the obstacle it once was. An office can exist virtually, with the workforce spread out across the country, or around the globe, with employees working from home.

Let's take a look at the many advantages and disadvantages of the virtual business. It would be great if those who have already established their own SEO businesses could share their experiences in the comments :)

1. Financial Concerns

One of the biggest problems for any start-up is lack of finance. Keeping overheads low in order to maximize cashflow is therefore a good idea, and one of the biggest overheads a business faces in the early stages, besides wages, is setting up an office. The rent must be paid and equipment must be hired or purchased.

A virtual company uses existing premises i.e. the home and, in many cases, existing equipment.

2. Opportunity Cost

Small companies can out-maneuver bigger companies by being more efficient and more productive.

Say employees in a traditional company must commute an hour round trip each day. Then add the time they take to get ready for work. Perhaps that all adds up to an hour and half each day. In a year, this dead time adds up to months! Whilst employees can get work done on the commute if using public transport, it's not an ideal space for concentrating.

The lost time for the virtual office is essentially zero. No commute. No getting ready. Well, maybe putting some pants on might be a good idea :)

3. Less Meetings/Water Cooler Activity

How much meeting time is actually useful? How many hours of the day do we spend chatting with work mates?

Having worked both in traditional environments and virtual environments, I've found I get a lot more done in virtual environments. The social element of traditional workplaces, whilst beneficial in terms of morale, can result in less productivity. The virtual office, on the other hand, tends to be a lot more task focused. "Meetings" (Skype) are a lot shorter, organising them is a lot easier (no room bookings), and because you're not face-to-face with people all the time, there are fewer minute-by-minute distractions.

4. Virtual Office Employees Can Work Longer Hours

I don't know why this is, but I suspect it's because virtual office employees make less of distinction between working time and personal time. It was actually one of the "downsides" I found when I first worked from home - it was near impossible to leave work! Each time I passed the office, I was tempted to do a little more.

When you commute to an office, it's easier to walk out the door and leave it all behind.

5. Employees Really Like It

Some people will work for less wages for the privilege of working from home. They gain in other ways i.e. more flexible arrangements, time spent near family, reduced costs of lunch, enjoying their own surroundings, not having to communte, etc. A happy employee typically produces more work, and stays at the company longer, thus increasing productivity and reducing expenses.

Downsides?

Of course, the virtual office has downsides. One of the big downsides is the reduced social interaction. Some people thrive on the social interaction of the work place, and are not suited to the virtual office. The key is to screen employees carefully. Some virtual offices also setup in coffee shops to help counter the social isolation.

Home can also be a distracting place. Employees need an area away from other people.

Clients may perceive your company as less serious if it operates out of a home address. The way to get around this is to rent a mail forwarding address and the occasional meeting room in the center of town. There are companies that offer these facilities, and you can use meeting rooms and secretarial services on an hourly basis. I've also found that big clients don't go to small suppliers anyway. They demand you to come to them!

Some people need to be micro-managed. Again, careful selection is the key. Also try to make delivery task-based as opposed to based on hours worked.

What have been you experiences - positives and negatives - of your office setup?

What Do SEOs Know?

IIf you could tell the web 2.0/read-write/blogging/crowd-sourcing crowd one thing about search marketing, what would it be?

In a recent talk, given to bloggers, by Google Engineer Matt Cutts, Matt posed the question:

"What Do SEOs know that bloggers might not know?"

Matt goes on to talk about the merits of keyword research in terms of topic selection, and how understanding this concept can bring you a great deal of traffic. In summary, if you find out what keywords people search on, then add these to your page, you stand a good change of having those searchers land on your page. As SEOs know, there's more to it than that, but that's the quick version :)

Let's look a bit deeper into keywords.

Search Is A Reverse Broadcast System

I think Danny Sullivan first described search as a "reverse broadcast system". It's a great way to describe the value of search, and how to approach search in terms of marketing.

I liken search engines to being a 'reverse broadcast network.' People pay tons to be on television because you can get your message out in front of millions of people: broadcasting. With search engines, millions of people are telling you *their* messages: what they want to buy, purchase or get information about. You don't broadcast to them; instead, it's the reverse, they broadcast to you. There's very little if anything as a marketing or information medium that I can think of that compares to this. It's golden and still today amazingly unrecognized

In search marketing, you prosper when you let your visitors determine your content. They broadcast their intent to you, by phrasing a search query, so you should listen to that intent, and respond by providing appropriate content. Google does the match-making.

For example, if you learn that 5,400 people a month search for "antivirus software comparison", you could research and create this information, thus matching that demand with your supply of information.

How do we determine visitor intent?

The Search Phrase As A Means To Measure User Intent

If you're not an SEO and encountering this blog for the first time, you now now the most important thing about search marketing, and that is you need to match the content of your site to the intent of the search visitor. In a blog post recently, Seth Godin talked about the problem with advertising:

"(The internet) has created a surplus of attention. Ads go unsold. People are spending hours on YouTube or Twitter or Facebook or other sites and not spending their attention on ads, because the ads are either absent or not worth watching"

Seth was talking about the differences between old media advertising and new media advertising, but this is a problem related primarily to to a mismatch of user intent. The intent of users on Facebook is primarily social. Search, however, provides a more specific - and ultimately more lucrative - eco-system for the online marketer.

The intent of the visitor may be determined by analyzing the search phrase itself.

Three Types Of Search Queries

The study "Query Type Classifcation For Web Documents" (PDF) identifies three types of search query and how to quantify them:

  • Informational
  • Navigational
  • Transactional

An informational search is when people want to find out about something. i.e. What is the capital of Finland?. A navigational query is when users want to find a certain site i.e. Dell Computers A transactional query is when users want to aquire, although not necessary buy, something. For example, "where can I get guitar schematics"

There is a fair degree of guesswork involved in determining user intent. The keyword itself may provide clues. For example, "buy LCD monitor overnight delivery" tells you a great deal about user intent. "LCD monitor", less so.

When evaluating keyword terms, and deciding what content to provide, it pays to examine the keyword query in terms of query type. For example, the query "Buy LCD monitor overnight delivery" is clearly transactional. A visitor would expect to see an e-commerce page that facilitates a purchase, as opposed to a Wikipedia entry explaining the history of LCD monitors.

Generally speaking, transactional queries are good to target if you monetraize by providing something, either a good or service based upon a transaction or call-to-action. Navigational queries are good to target if you provide "where to" information - like a directory or a list of links - or you provide information closely aligned to a web destination. Informational queries are self-explanatory.

Of course, there are exceptions to these rules, and numerous points of cross-over i.e. a query might be informational, navigational and transactional.

The takeaway point is it is to seek to understand the main visitor intent. It will effect what information you present and how you present it. A page based around achieving a transaction will look very different to a page that provides information. If you're ranking well for a transactional query, but you only provide information, you'll lose an opportunity to engage visitors.

On-Page Keyword Integration

Once you've figured out user intent, and chosen your keyword phrases, you then need to integrate these terms into your content. A page should reflect and confirm the intent of the searcher. If the searcher is expecting to undertake a transaction, then the page should be organised in a way to facilitate the transaction.

Amazon provides a good example:

The "Buy Now" function is never far away from the users mouse click. The title is clear and prominent. Informational aspects are relegated to the bottom of the page.

You should provide confirmation the visitor has arrived in the right place. A good way to do this is to feature the search phrase high up on the page, preferably as a headline. This serves two purposes - it tells the search engine what the page is about, and confirms to your visitor that what they searched for and what they got are the same thing. If the visitor has to wade through too much information in order before getting a signal of confirmation, they're more likely to click back.

PPC marketing strategy also supports this theory. Common PPC practice is to include the keyword in the ad title, which can lead to higher click-thru rates than if you leave the keyword out. It stands to reason that a searcher expects to see the same keyword term they searched on echoed back at them.

The Long Tail

Did you know that 20-25% of search phases at Google are unique? 1/4 of all keyword searches have never been searched before! This is why it is important to include related phrases and synonyms on your page. The addition of related phrases and concepts allows you to pick up additional search visitor traffic from obscure combinations of keyword phrases.

The term "The Long Tail" was coined by Chris Andersen, and applied to online retailers, such as Amazon:

"A frequency distribution with a long tail has been studied by statisticians since at least 1946.[2] The distribution and inventory costs of these businesses allow them to realize significant profit out of selling small volumes of hard-to-find items to many customers, instead of only selling large volumes of a reduced number of popular items. The group comprised of a large number of "non-hit" items is called the Long Tail."

The Long Tail also applies to search. Whilst millions of people search for "used cars", a few hundred search for "used cars east texas". If you sell used cars in east Texas, then it makes sense to target these specific, long tail terms. What these terms may lack in sheer traffic numbers, they make up for in broadcasting specific intent.

Match that intent with your service provision, and you're laughing.

How To Put It All Together

  • Visitor search streams determine your content. Use the SEOBook Keyword Research Tool to find keyword terms relating to your business/topic. You can approximate the highest value terms using SEM Rush
  • Having assembled a keyword list, find related keywords and synonyms of those terms. You can use the SEOBook Keyword Research Tool. Or Google's Keyword Tool
  • Split the obvious terms into transactional, navigational, and informational. This will dictate how you prioritize the content on the page. i.e. a transactional query needs a clear call to action featured prominently
  • Create pages. Place the keyword term in a proment place on the page, preferably in a heading. This will help confirm to the visitor they have arrived at the right palce
  • Watch visitor traffic and interaction. If you're seeing high frequency - or strong conversions - for obscure terms, consider writing a page dedicated to this term.
  • Rinse and repat

So long as your site is being crawled by Google, and you've got a few inbound links, traffic will soon flow to your door. What you do with all that new found traffic is up to you :)

For an indepth look at keyword strategies, check out Aaron's tutorial in the members area.

The SEO Police Caught Duping Their Clients With Rehashed SEO Tools

While some members of the SEO industry encourage outing, it should be highlighted that they are not above duping their customers with launching a "new" tool that is actually a dumbed-down rehash of a tool we have offered for years here.

If you want the full version with additional features please do check out Hub Finder, as it is way better than the hyped knock-off is.

No Hype Required!

Our co-citation tool has way more options than the competition. It is better in every practical way, other than hype...and that is why we decided to make it free for you to test it for the next 24 hours.

Why Hub Finder is Better than the Hyped Knock Off Tool

  • It allows you to automatically pull in search results from Google, Yahoo!, or both
  • It allows you to enter up to 10 competing sites
  • It allows you to mix and match the above
  • It allows you to select pages that are linking to any page on a site OR pages that are linking to only the specific pages that were ranking
  • It shows you the exact pages the links came from AND tracks multiple links from a single site even if different pages within that site were linking to multiple resources in your industry.
  • Shows IP addresses
  • Offers lightning quick CSV export

Knock Off Marketing

How can a person roll with those sorts of business ethics (clone someone else's work and then pawn it off as their own) and then encourage SEOs outing each other (even after they have read about the caustic effects of outing multiple times)?

How About Honesty For a Change?

If you are dirty be dirty.
If you are clean be clean.
But no point being one and acting like you are the next.
The web has too long of a memory to play those kinds of games.
IMHO.

Update

Rand edited his post to add attribution, for which I thank him. Had the whole "standing on the shoulders" bit or any sort of attribution existed originally I never would have published this post. But it was the re-packaging something that has been around forever as being brand new (without any attribution) that is inconsistent with the openness some claim to strive for.

Cleansing Misinformation, One Blog Post at a Time!

Recently a well known SEO blogger mentioned that they didn't understand why real professional SEOs advocate variation between page titles and on-page headings. This blog post is a free SEO consult for that person :)

Hopefully it clears the public SEO space of some misinformation.

Are You Missing Keywords?

People search for literally billions of unique search queries each month. You either target those searchers, or you miss them. Think about how many people query Google every day, and then look at this graphic:

Keyword tools are driven off of a sample of keyword data, and are thus top heavy. In some cases a keyword tool will only show you 5 or 10 related keywords for a core keyword that has driven traffic to a page via hundreds of unique search keywords.

What is Duplication?

Each piece of duplication in your on-page SEO strategy is ***at best*** wasted opportunity. Worse yet, if you are aggressive with aligning your on page heading, your page title, and your internal + external link anchor text the page becomes more likely to get filtered out of the search results (which is quite common in some aggressive spaces).

Even if you build a site (and a particular page) that are authoritative enough to capture a #1 keyword ranking, if your on-page SEO is strong you still get far more traffic from longtail keywords.

How to Include Variation in Your SEO Strategy

So how can you balance your on-page SEO strategy to capture more of the highly valuable search traffic? You can...

  • use singular vs plural
  • use synonyms
  • use various keyword modifiers
  • change word order

The bottom line is using more relevant keyword variations = more traffic.

Apples to Apples

Thinking about this site...we have competitors who have similar site age, way more inbound links, ~10x the number of employees, 5 times as many pages of content indexed by Google, more comments on each page, and yet we still get more search traffic.

Meanwhile I have made over 15,000 forum posts + build out a bunch of other websites (ie: doing a lot of work other than SEO for this site)...so our relative out-performance on much more limited resources comes from using a smarter and more comprehensive SEO strategy.

We don't get as much Twitter traffic, but then we don't target the hype and misinformation game as well as others do. ;) (Everyone has their own niche target market!)

Bonus Tip

Some people understand SEO on a mechanical level. Others understand it on a holistic level. This is one of those tips that separates the men from the boys. ;)

Some content management systems force the page title and the heading to be the same by default. But both Drupal (Page title) and Wordpress (SEO title tag) have plugins that allow you to make the on-page heading different from the page title. This allows you to optimize for different things. You can...

  • create a headline for RSS readers that is designed around piquing curiosity and/or targeting emotional reactions to pull in clicks
  • create a keyword laden page title that is designed to pull in latent search traffic

Not only does variation allow you to target those 2 different audiences (and pull in more search traffic), but readers often link to content using the official title in the anchor text. So if you make the page title and on-page heading different that can help you get more keyword variation in your inbound link anchor text as well.

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