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Tuesday, January 26, 2010

Is Your Search Marketing Knowledge Outdated? You Know What to Do

It's becoming a truism that search engine marketing as practiced by busy in-house marketing managers, and others in similar positions who may drift in and out of direct responsibility for those initiatives, need serious "brushing up" every year or so. That used to be described as "changes in the search ranking algorithms you need to keep up with." Now the issue is broader, with changes in the paid search algorithms, new search products, blended search, and more.

Much like going to the dentist, it's polite to claim that you go in for a refresh every six months, and it's polite to tell the dental people that you really do floss every day. But if it's been one, two, or three years since you took a close look, well (cough cough), we'll look the other way and point out that it's what you do next that matters most -- not how many months or years you've been away.

How silly are some of the outdated paid search theories of the past? Well, I couldn't quite believe it when I came across this old piece by myself, pre-Quality-Score, in 2004. (As an added bonus, it was published on a site by my friend Mike Grehan (then being called Mike "Merlot" Grehan) and with associate editor Christine Churchill, another great in the biz.) The piece talked about a narrow tactical debate about high CTR's and whether racking up a strong account history based on overbidding might actually get you discount prices to stay in high spots later on. The CTR history would create a "seal," insulating you from competitors for a long time, unless they bid ridiculously high.

In reality, it was a flukey and inconsistent strategy at the time, as Google already made it clear that CTR (important in the PPC ranking algorithm) was "normalized for ad position". In other words, just because CTR's are naturally higher in 1st ad position than they are in 5th won't make it impossible for you to rise up through the ranks if you spend some initial time testing the waters in 5th. You don't get undue "credit" for hanging out in 1st spot, either.

That's evolved even further, in a couple of ways. Quality-Based Bidding is now 4.5 years old and the algorithm is more opaque and more complex than Bid X CTR. A separate quality check, of your landing page and website, has been working in the system for 4 years, ever-evolving. Well, about 18 months ago, a bunch of folks over on the SEO side discovered all of this and promptly started handing out bad advice that paid search quality scores somehow depended on tweaking landing pages for keyword relevance. Not a terrible idea, but terribly misleading advice.

The second change, related to the first, is that account strategy today needs to be more comprehensive. The auction is mature, most every company that is going to show up in some industries has already showed up, and so you have to get all the moving parts right. Back in the old days, you could listen to someone at Google give you best practices like "don't use a call to action," "you must use a call to action," "capitalize the first letter of every word in your ad," and other warmed-over, highly inadequate snippets of advice.

In reality, paid search isn't a game of gimmicks. High bids, low bids -- neither are magical. Landing page testing is for conversion improvement -- not to magically improve your quality score.

How do you cut through the sea of bad advice if you're new or just returning to the space? Short of reading a 400-page book, I hope that this 40-page ebook, Google AdWords - A Brave New World - I released a few months ago is still helpful to folks getting their feet wet, not wanting recycled advice from 2004, or tips from SEO's trying to sell SEO tactics to people who really need marketing strategy. (There's no charge for this ebook, just opt-in email signup.)

To stay really up to date, though, people do need to pop into the SES conferences for a refresher. Upcoming we have SES London, SES New York, and SES Toronto, to name a few.

For those seeking full immersion in a one-day workshop environment, I'm pleased to announce that Page Zero will launch a paid search training day in conjunction with SES New York, on Monday, March 22, 2010. The full day session will be led by Mona Elesseily and myself. It's aimed at intermediate level (not advanced) digital marketers who want to dig deep and get the fundamentals bang on, and then stretch out and get introduced to a range of intermediate level ways to improve performance.

I really look forward to seeing you at one of these events, whether you're a returning visitor or newer to the game.

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Posted by Andrew Goodman




Monday, January 25, 2010

Why I Won't Invest in Avid Life Media

Jason Calacanis, the notorious web entrepreneur of Weblogs, Inc., and Mahalo fame, recently raised a flap by telling everyone to boycott comScore and indeed, to sell or short-sell its stock. I'm glad I came to my senses and decided not to get caught up in that catfight, though I sometimes have questions about the accuracy of comScore's numbers (which is the real point needing more sophisticated debate, but also more transparency on comScore's part).

Observers have been quick to distance themselves from Calacanis, but in fact this underscores an important point: bloggers, journalists, and company owners in the space are afraid to agree with Jason because they perceive some kind of threat of being ostracized or singled out in some way.

Watering down the fervor just slightly, I won't tell you what to do, but I'll tell you why I won't invest in the following growing Canadian digital media company when it goes public.

Avid Life Media, the notorious owner of infidelity dating website AshleyMadison.com, is looking to raise $60 million through an initial public offering on the Toronto Stock Exchange.

As much as many investors and underwriters will have turned up their nose at the share offering for moral or optical reasons, what it really comes down to is that you're buying into the people who run a company, and their attitude towards risk. You're also trying to gauge their likelihood of telling the truth, the whole truth, about the business and how it operates -- now, and in future years.

That's why I noticed the part of the story that states that part of the deal would involve a merger with Moxy Media, "an online advertising sales company based in Guelph, Ontario." Moxy Media is made to sound pretty big: $192 million in revenues in 2009, dwarfing Avid's $30 million.

The combined company plans to go public using the RTO method, finding a shell company already traded on the exchange.

Moxy Media's predecessor, TrueLocal, is legendary in the industry for making a lot of short-term money on something called "click arbitrage". Hint: what you found at the home page of TrueLocal had nothing to do with TrueLocal's actual business. Like their successor, the new, improved, Moxy Media, TrueLocal had a network of 300 websites (or actually, more like 3,000) "each providing consumers with information and access to products and services," as the Moxy Media site states. Meaning: TrueLocal built topical pages of (largely Yahoo driven) paid links, sending inexpensive Google AdWords clicks to pages that were well-engineered to create a high proportion of clicks on ads. Those ads would eventually get a user to a paying advertiser's website; vendors like fireplace manufacturers and bridal gown retailers would be typical targets.

For years, Google's top management has been against these "click arbitrageurs," because the user is being deceived and ultimately winds up dissatisfied with the extra clicks it takes just to find a vendor. All the extra clicking created revenue for Google, Yahoo, and TrueLocal alike, but at the price of dissatisfied users and dissatisfied Yahoo advertisers (at least, those who twigged to the problem).

In addition to that, arbitrageurs, like many affiliates, are "lowballers" in the Google AdWords system. They only wish to advertise if they can get a click for a very cheap price. Google's landing page and website quality guidelines were designed almost entirely to scrub such advertisers from the system, especially in the most mature market (the United States). While lurking in the sub-30-cents click arena, the arbs & affiliates can clog up Google's system with an incredible amount of data as they're willing to bid on pretty much unlimited numbers of keywords.

Few in the industry know the TrueLocal story, so even fewer are bound to look twice at the (cleaned up, less arbitragey, but still boilerplate) Moxy Media sites and question whether the story told about them is accurate.

Much the same as the owners of the company might have called Gator/Claria a "targeted contextual advertising product of an opt-in nature" (that company, once on track for a big IPO, went the way of the dodo when it proved closer to true that the industry saw Claria as a "scumware" company), or, for that matter, the owners of AshleyMadison.com might call their website "a dating site for funsters who just happen to be of an adulterous bent," it's possible to describe Moxy Media's business in bland terms of websites, ad sales, earnings, and EBITDA without explaining what really makes the business tick.

In the past, what made the business tick was Google's willingness to accept those lowball bids on clicks (but that was largely shut down), and Yahoo's continued willingness to partner with arbitrage sites to distribute these ad links to less savvy advertisers (this will undergo a review as the Microsoft partnership proceeds). Those assumptions are no longer valid. Anyone investing in Avid Life Media - moralizing aside - should be aware of those risks.

Now, some investors will be fine trading some stock based on putting one company they don't understand together with another company they don't understand, all run by management they don't respect because they seem strangely cool with advertising for infidelity on subway billboards. But I don't see Warren Buffett piling in anytime soon.

Posted by Andrew Goodman




Saturday, January 23, 2010

AdSense Revenue Share: 72% for partners, 28% for Google

Google's impressive Q4 2009 earnings report makes certain aspects of the business clear for all to see. For example, they report that revenues of $2.07 billion in revenue was generated by "Google partner sites through its AdSense program," and that "amounts ultimately paid to our AdSense partners" totaled "$1.47 billion in the fourth quarter of 2009".

Misleadingly, the report states that "TAC (traffic acquisition costs) as a percentage of advertising revenues" is 27%. True, but as a percentage of same-channel advertising revenues, it's 72%. There are virtually zero TAC's for "Google-owned sites."

Speaking of those Google-owned sites, they generated $4.42 billion, or 66% of Google's revenues.

In these numbers is the usual picture of impressive strength -- including the fact that the overall number of paid clicks rose 13% YOY (indicating continued success in optimizing page layouts while satisfying users) while click prices rose just above the rate of inflation, at 5% (indicating a leveling-off). But coupled with that strength is the interesting point that financially speaking, Google continues to provide only the illusion of a diversified company. It continues to do well, very well, based on its core cash cow. Elsewhere, it serves as a relatively polite intermediary that continues to face downward margin pressures.

The growth picture is an interesting mix: heavy investment in new areas like mobile (a longer road to profitability), and a relatively smooth path to continued growth simply by enjoying the great upside that remains in international markets in its core strength.

Which, in case anyone has forgotten, features the catchy advertising product: "Google AdWords."

The financial picture for GOOG remains very bright, but mainly because its core strength has such high margins, and Google (needless to say) owns the key "publication" (Google Search) outright.

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Posted by Andrew Goodman




Wednesday, January 20, 2010

Attention SES Toronto Alumni

Hey there! If you've attended SES Toronto in the past, you should have received an email offering a deep discount off the price of a pass to this, the world's best Canadian search engine marketing trade show coming up June 9-11, 2010. This early bird discount is so great, it doesn't make sense for you or your company to pay the higher rate.

The offer expires Feb. 1. If you didn't receive the email, ping me and I'll try to hook you up with the Right People.

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Posted by Andrew Goodman




Tuesday, January 19, 2010

Incredibly Specific: A Trend for 2010 (Like Never Before)

I just paid $100 for an extremely targeted information package, written and recorded by an affiliate marketer, about a very specific element of Google AdWords advertising (hint: it's in the content network).

I've seen this working already in practice, and I figure his tips will mean a lot more than $100 to my business, so I bought it right away.

"My business" isn't an affiliate marketing business. It's for clients. Even better. They have bigger budgets.

Let's be clear: he promises that for most affiliate marketers (especially clueless ones), this technique could add up to peanuts. Many campaigns will try as best as they can and spend only $5/day.

So I paid $100 for it?

Yep, because I understand the value. I know it's valuable info.

The other curious thing is I rejected all the add-ons, freebies, and accoutrements that could have come with it. I didn't want to accidentally sign up for something that turned into a renewing contract, and besides, I didn't want to get distracted from the core information I wanted.

Here's what impresses me. Legions of would-be experts and helpful souls will offer up mounds of information this year in an extremely helpful, and free, fashion. Doesn't info want to be free?

And yet this relatively unknown affiliate marketer, proverbially working from his basement... should clear about $75,000 this month from this information product. It may not have huge legs, but it got the job done for him, income-wise. And the value is real. Many really good authors will earn less than that this year, needless to say.

So what impresses me is not that you can make more from specific information, but *how* specific the information is. This product covers a *tiny* sliver of the marketing universe. No one will grade the author on how well he grasps marketing as a whole. Not even how well he grasps AdWords as a whole. Just whether he taught one specific technique in decent enough detail so you can try it: $100.

Will his "loophole" close? Maybe. But in this game, if you can't squeeze $100 out of something before the loophole closes, you gratefully accept the chump label and move on.

I learned the lesson along ago: when I burped out the Google AdWords Handbook in 2002 it was a semi afterthought after 18 failed months attempting to put together a magnum opus on SEO best practices (or something like that). It did great.

In 2004, while I was writing the first edition of a more serious grown-up book on Google AdWords with a big publisher, several times I got panic calls from the publisher. They'd read one of those negative stories about Google's business, and they figured that AdWords was a flash in the pan. This continued through 2005! Really! I'd have to reassure them that they were seeing some very odd (if seemingly respectable) journalism. And that Google's advertising program was not too small to go to press with.

What's stunning to me (but it should not have been) is that a book on Google AdWords is almost too broad today. There's room for books that cover a broad topic. But they don't get people to whip out their credit cards to pay $100 online, do they? Odd paradox. Less is more.

I don't have any New Year's resolutions on the books, but if I did, I bet it would be to try to go to market with an incredibly specific piece of information. And, for a change, screw "free." In Chris Anderson's book, he actually reminds us that the real quote was something like "commodity information wants to be free, and scarce information wants to be expensive."

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Posted by Andrew Goodman




Thursday, January 14, 2010

Introducing My New ClickZ Column: Paid Search Strategies

After enjoying nearly three years writing monthly columns in the paid search channel at Search Engine Land, starting tomorrow (Friday), I'll be writing a column every other week at ClickZ.

For Search Engine Land I wrote 37 columns, starting with one about paid search "slaying dragons and back-checking" and getting little respect in return. In open forums no one wants to discuss the unsexy channel - they just quietly do it in real life, because the digital economy basically revolves around it. Beginners will still mis-prioritize efforts and risk wrecking their companies by installing costly Meatball Sundaes.

Whether it be at Search Engine Land or ClickZ, or at conferences and seminars, whether it be in discussions of tactics or high level budget strategy conversations, my goal remains: dissuading companies from installing those costly Meatball Sundaes to the exclusion of making performance marketing work for their bottom line. There is nothing wrong with spending heavily on "the basics". "The basics" also don't "just work" for just anyone. They aren't "tried and true" unless you try and try and try, and make them true. There is nothing turnkey about paid search and related basics.

To many digital marketers, neither Search Engine Land nor ClickZ need any introduction.

The latter, ClickZ, was founded in 1997 by Andy Bourland and has channels for every aspect of digital marketing. Increasingly, under the rejuvenated stewardship of Incisive Media, it is the flagship brand for content about digital marketing and strategy. It's also finding its way out onto the conference circuit, underscoring the importance of integrated digital strategies moving forward.

Search Engine Land, the "upstart" search marketing publication, was founded under the rubric of Third Door Media by Danny Sullivan and partners about three years ago, and has done phenomenally well ever since that time. Danny Sullivan is of course no upstart in that he, for all intents and purposes, launched the whole idea of tailored conferences and trade publications in the search marketing industry back around the same time ClickZ was getting founded. If you have to look up who Danny Sullivan is, that must mean you're new to the business. Tip: Danny is not a race car driver.

I'm excited to join the ClickZ team. Friends and colleagues I respect have been writing there for many years, some nearly since inception -- Bryan Eisenberg being a shining example. Debbie Weil is one friend I recall writing some pioneering stuff on ClickZ. A column called "to blog or not to blog" was written in 2001! I'm not sure how some of the current crop of experts get away with recycling Debbie's material :).

As the focus of ClickZ leans towards the agency and bigger-company crowd, I'll try to move in a slightly more strategic direction. The column, appropriately, will be called Paid Search Strategies.

My Page Zero Media colleague, Mona Elesseily, is still going strong at Search Engine Land in the paid search channel. I'm pleased to note also that Matt Van Wagner, a good friend, has joined the SEL columnist roster to add his experience to the paid search channel.

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Posted by Andrew Goodman




Tuesday, January 12, 2010

Google Considers Pulling Out of China Four Years After Grand Entrance

Google is reporting through its Chief Legal Officer David Drummond that it's ending the censored version of its site in China, and considering pulling out of the country.

This is a gripping development.

Google's so big, they almost face the same dilemmas as a country trying to trade with China -- almost.

Summing up, purists argued that Google shouldn't go in in the first place, and certainly in our response in January 2006, we felt Google was being naive, but agreed that there was complexity in trying to initiate political change by being open to a partner that was far from perfect. We added that if it didn't pan out, they could leave. We figured they could set a time limit, then leave if the human rights situation didn't improve.

Six months after that, Sergey Brin was already expressing misgivings, and no doubt the company has been thinking about the relationship ever since.

Although the current shift in policy seems to be triggered by episodes of Chinese government hacking and espionage to spy on human rights advocates, no one episode need to explain the desire to pull out; certainly it doesn't seem like this is the only issue at hand.

Indeed, the US government has been alarmed at widespread security breaches of the Pentagon and other federal institutions dating back to at least 2007, clearly traceable to China. The early denials by China have given way to regular confirmations from well-placed security experts.

Google, as a private company, turns out to have the luxury of pulling out of a country if it doesn't like their policies. They can even chalk it up to "regulations" that make it "hard to do business," if they wish.

So, Google isn't a nation-state just yet. While there will be forgone revenue, the repercussions are likely to be relatively mild, and Google answers to its shareholders, stakeholders, and customers.

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Posted by Andrew Goodman




Monday, January 11, 2010

Study Assesses Sales Lift From Display Ads: Zero

Given the prevalence of studies that prove a certain lift in sales from costly display ad campaigns -- often showing indirect impacts of sales increases in populations "exposed to" the ads -- it's refreshing to have someone report an instance where the campaign had zero effect.

I've always been wary of the flaws in these studies. In general, you'd like to know what the overall campaign cost, at least. But in addition to that, being "exposed to the ads" to me still means you're also "exposed to the websites" and "exposed to certain communities" (or rather than being exposed to them, your likelihood of seeing these ads is driven by your membership and interests, which you had in the first place). The causal weight of the ads is still in question, if content and community are potential causes of sales patterns as well.

In this SF Chronicle piece about Yahoo by reporter James Temple, we hear of a national retailer joining forces with Yahoo to measure sales lifts associated with a major display ad campaign. The good news: sales lifts came in at 5%, 93% of that coming in-store. The bad news: the sales lift figure for buyers under 40 was... zero.

If you're going to report the good, it's only fair to point out the bad. At least the ads didn't lead to a drop in sales.

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Posted by Andrew Goodman




Congratulations, RIM, on Atlantic Canada Expansion

On a brilliant summer day this past summer, driving with my wife on the rather deserted and beautiful Fredericton-to-Saint-John highway, I recall musing about economic development in the province of New Brunswick. That's a topic that's pretty much on everyone's mind out there, given the scarcity of good jobs in the region, and the paradoxical scenario that many native sons and daughters don't want to leave (but are forced to).

The potential of Fredericton, the jewel of a provincial capital located scenically by the river, came up and took up the next 10 kilometres of rambling conversation. The city is small and does have its share of knowledge workers and interesting businesses, but it could easily triple in size with the right critical mass of good jobs. Especially, the kinds of good jobs in software (and other Creative Class endeavors) that could employ recent graduates of the University of New Brunswick, St. Thomas University, etc. Those historic buildings and world class professors should be good for something other than sending kids off to work for engineering companies and law firms in Toronto and Calgary. Yet so many grads are forced to high-tail it out of the province in search of work.

Not all want to. Many Atlantic Canadians have a powerful family attachment and general love of the look and feel of their region. If you can get a good job there (a good job in Atlantic Canada is one that pays $50,000 or more), you can live like a king - or queen. There are abundant recreational opportunities and a relaxed, affordable pace of life that many prefer to big city living. This general line of thinking took up another 15 km of rambly discussion on the empty, excessively wide highway. (If there's one thing they do well in New Brunswick, it's road construction funded by the federal and provincial governments.)

So why wouldn't leading software companies work with various levels of government and the local chambers of commerce to set up shop here, I wondered? Why not Research in Motion? You'd get nearly twice the coding muscle for your dollar. And you could literally secure a loyal customer base of people throughout the entire Atlantic Canada region more likely to buy Blackberries if you created a few hundred jobs here and there. (That's sort of the way it works out there. If you create good jobs, people talk about you. Loyalty to employers is high.)

I'm certainly glad that RIM overheard the conversation we had in the car. Today, they announced the creation of 50 new jobs in Fredericton (city population 50,000 - greater metro area population 125,000). I hope other big software companies consider the benefits of mini clusters of qualified graduates in regional university towns like Fredericton.

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Posted by Andrew Goodman




Friday, January 08, 2010

Yahoo Hiring More Engineers? Good Idea

In her self-evaluation for a "B-" Grade, Yahoo CEO Carol Bartz notes that the company has become more focused. This Bloomberg article about the Yahoo turnaround cites recent new hires in sales and engineering as an example of the forward motion now that the tough stuff has been done. (Some Yahoos are also tweeting about the hiring, which should be no consolation to those recently downsized.)

"Geeking up" by hiring more engineers (after letting go less productive units) was one of our urgent recommendations in our Open Letter to Jerry Yang in June of 2007. It's taken 2.5 years to get that going?

In subsequent scorecards we focused on a couple of other things Yahoo could do to make a splash.

First, although the merger fell through, we're back to what we recommended in the Open Letter:

"...to this wish list I'd certainly add an interesting new partnership with Microsoft, or inking a deal to re-partner with Microsoft for search and search marketing."

Note: to re-partner with Microsoft for both search and search marketing, our recommendation of June 2007. This deal is now inked, and we're waiting for full implementation; seems like this will drag out months.

For achieving partial success on matters like this (some of them certainly disappointing for Yahoo and its shareholders), Bartz certainly deserves her B- rating (no lower).

One interesting piece of unfinished business from the wish list was urging Yahoo to acquire local search juggernaut Yelp. Recently, Yelp was rumored to be under consideration by Google to the tune of $500 million. Then, rumor had it the deal was dead. Today, Google announced a mobile feature called "Near Me Now," which some have called a potential Yelp Killer. Perhaps this would rightly send Yelp heading into the arms of a sympathetic suitor like Yahoo. But some of that depends on Yahoo's financial health and stock price over the next few months.

Even though Yelp would greatly strengthen Yahoo by helping them push hard into local search, that would also leave one major bit of unfinished business. The mobile market has progressed rapidly with the leading players, RIM, Apple, and now Google, having control over OS's as well as handsets. That leaves Yahoo in a weakened position. How to strengthen it? We always thought they'd make a nice fit for Research in Motion, since both companies seem to be in Google's and Apple's sights. It's unlikely Yahoo can play in this space with full chutzpah like Google and Apple, but they're a sympathetic brand that needs to grow or die and do so soon? They need to pull a big rabbit out of their hat here, it feels like. A confusing array of partnerships and "friendly arrangements" with their cutthroat competitors? You're only kidding yourself. Of course there's no way that Yahoo merges with RIM given the very different cultures at the two companies, and given that RIM's market cap dwarfs Yahoo's currently at $36b vs $23b.

Maybe the solution is cleaner if Yahoo continues to strengthen ties with Microsoft, before ultimately being absorbed by them. Then the three (RIM, Microsoft, Yahoo) could combine forces in the mobile market.

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Posted by Andrew Goodman




Thursday, January 07, 2010

Google Suggest and the Term 'Scam'

There are so many positive, non-controversial uses of Google Search, it makes it hard to believe that sometimes there are serious problems in it that constitute the proverbial "growing threat" that you'd expect to see flagged in a USA Today Editorial.

Take, for example, the search results for my latest query. Needed to use up some ingredients in my kitchen, needed to build a tasty winter dish around that need: immediately thought of tex mex chili.

Do a search - get some recipes. This is fun! No controversy. No Google Suggest results leading me to search for "tex mex chili SCAM!"

You can just imagine it, right?

At texmexchiliscam.net, rico88 writes a review. "Oh sure, first it all seems innocuous, with the need for tomato sauce, chili powder, beans, and meat. But that's when they HOOK you. NO ONE tells you about the 2 CANS OF CORN you have to buy to make this so-called 'easy' 'dish'. I am betting the Green Giant is behind the whole thing."

nochilinocry chimes in: "There's one reason he's called the GREEN Giant, and that's the $$$$ he rakes in on a daily basis for this Tex Mex Chili $cam!!"

Yeah, that's never gonna happen.

That's why I love making chili. No tinfoil hat required.

So...

One of those growing threats -- on searches that really do lend themselves to the use of controversial, value-laden terms -- is the presence of words like "scam" in the Google Suggest results. The problem is real: that's proven by yesterday's Google lawsuit loss in France. Google must remove the term "arnaque" manually from Google Suggest phrases in relation to a specific company. (There have been complaints from other companies, too.)

The problem seems trivial until you realize just how widespread it is. And it could grow further.

As more consumers see Google Suggest results, just imagine how pervasive the problem of oversimplifying all criticism of businesses into the word "scam" can be. I tried a few queries to get the hang of it, and I saw legitimate, legal companies being hung with this term. As we know with memes, some of them are almost too easy to spread. Scam is a nice, neat word. That totally overstates the case when it comes to disagreeing with a business's practices or having a particular complaint. The next thing you know, more vocabulary-challenged customers are calling your business a "scam". I just watched a nine-minute video of a guy describing a "scam" by a utility company that plainly wasn't.

Big problem: Google Suggest can start to reflect this overheated rhetoric, and the problem escalates for the business in question, even if they move to respond to specific customer complaints. Before you know it, the phrase Tex Mex Chili Inc Scam is the most popular Google Suggest Result for Tex Mex Chili. And subsequent customers keep selecting that result, algorithmically perpetuating its high standing. That business is permanently harmed because Google Suggest may have the effect of keeping a long term red flag hanging over the company, using a word that does a poor job of truly capturing specific complaints about a business.

All of that could happen in a relatively normal situation. That leaves aside malicious potential -- say, competitors, SEO's, or the publishers of certain online forums finding a way to benefit from putting up these kinds of negative reviews, putting SCAM in the title tag.

That's why I think the French court was probably right about this. Google Suggest may work simply "algorithmically," but they've nipped in the bud what could become a growing problem for many legitimate businesses: the problem of an all-too-casually-used meme to become permanently entrenched as a high ranking Google Suggest term, creating a harmful environment for business.

Google will have to study the impact of Google Suggest in locking in pernicious phrases that harm legitimate businesses and people, much in the same way that link bombing can be defamatory.

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Posted by Andrew Goodman




Monday, January 04, 2010

Local Search: A Winner-Take-All Market?

Earlier today, David Szetela asked for big bold predictions for paid search for 2010, for his PPC Rockstars show.

Partly jumping off Aaron Wall's earlier guest post about Google testing flat-rate pricing on local search ads, I called in to predict that there would be a further shakeout in local -- not that one particular local search engine (like Yelp) would win, but rather that in the race for growth and low cost leads by small to midsized local companies in any given market, there's going to be a major change afoot.


(So I'm really making a broader point about a massive shift that is happening in the local listings category - though that point was motivated by the experiments Google is working on right now in the PPC space.)

Local businesses may have a history of doing a lot of marketing without thinking in the past, but that's because the core medium (yellow pages, primarily, for many) didn't reward thinking, and didn't offer much means (other than buying a really big ad) to differentiate yourself. Google's new flat-rate click pricing for the local little guy may be a way to "relieve" them of the pressure of actually marketing. But that just illustrates that those looking to relieve themselves of the effort of marketing will be out-marketed by those who take a special interest in it.

This state of affairs will continue for the majority who sheepwalk their way through local lead generation and reputation management efforts.

A small minority will outwork, out-savvy, and out-hustle the rest. They'll win big. While winning big in a local market isn't the same as the "winner take all" quest for customers in the Amazon sense, it's still cool & lucrative to be a winner. Small is the new big, remember?

Let's walk through an example.

The pitter-patter of little feet here at home (mice, squirrels, or possibly raccoons partying in our attic, and ready for a long, toasty winter) has started to disturb those wintry sweet dreams.

We went to our usual go-to source for "pest control". The Yellow Pages? Are you kidding?

Word of mouth is fine, but what if you run out of information before you have the problem solved? It's pretty cold out. I don't want to go up and down my street knocking on doors telling people I have a raccoon problem.

Being a co-founder of HomeStars has its benefits: you believe so strongly in the local ratings and reviews concept, you want to use it for real!

Turns out the search for pest control companies in my town produced a no-brainer "best vendor". One pest removal company in Toronto has 105 reviews -- all resoundingly positive. I like to think I'm good at picking up on fake reviews, and on top of that, so is the HomeStars editorial team, so I'm not too worried. Normally, if a company scored perfect, I'd be suspicious. In this case it looks legit.

Success begets success here. Once you get such a great reputation, you keep coming up as a company with a great reputation. More homeowners will hire this company, because others have vouched for them. That's regardless of the level of investment by the company, GTA Wildlife Removal and Pest Control (sorry the word "Control" is obscured by the crown denoting "Best of '08"). Clearly, they need to understand how to help their customers find the website to write happy reviews (and be open and aware that any unhappy customer could write a negative one if they so choose). It also helps that they reply to customers -- shows they have a pulse and are even more engaged. And it helps that most of their competitors didn't make the effort!

That's a far cry from the days of yore. How did a business like this get noticed in the Yellow Pages? Pay more? Not really fair, was it? And it offered consumers no voice.

Since most people searching categories are looking for the "best," it's not going to cut it if you don't have positive reviews. Or if you're great at bringing in leads through high pressure marketing but then fail to deliver great service. In fact, the traditional ways of using cash to bring in local home improvement leads, when you're a less than reputable provider, can backfire! The more disgruntled customers you leave in your wake, the more race online to post about their experiences. The situation snowballs. It's not 1974. It's nearly impossible to pull off a "coverup".

Winner take all doesn't matter as much in pizza or Greek food, over at Yelp. People like to try different restaurants, and what tastes good is pretty subjective. $50 is at stake, not $1,000 or $50,000. By contrast, most homeowners aren't planning to hire a variety of pest control companies, or window installers, or garage architects, in the next year or two. They want to hire the one that people like themselves say is the best. At the very least, they'd like confirmation that the company they do plan to hire delivers quality service for the money, and that in the event of problems, they're present and accountable, and follow up.

So that's where we stand with getting rid of the furry critters from our attic. Can 105 reviewers be wrong? I'll be hiring this company. And will keep you posted!

[photo credit: Tammra McCauley]

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