Tuesday, January 19, 2010
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."
Labels: free, google adwords, google adwords book
Tuesday, May 13, 2008
Henry Blodget's post on the impending crisscrossing of lines on Google's and Microsoft's core businesses is timely. In 2009 sometime, Google's search ads business will be larger and more profitable than Microsoft's core Windows operating system business. (If Microsoft is lucky, that won't be the day Google launches a hostile takeover bid for Microsoft, a development Sergey Brin slyly alluded to several years ago, when such talk could easily be dismissed as a joke, or painful delusions of grandeur.)
Cloud computing, and ad-supported online business models are assumed to be a new naturally dominant business model. Chris Anderson has begun talking about the "power of free," as he gets set to release a new book on the concept.
But I think many analysts fail to grasp the complexity of the scenario. (Well, maybe it isn't that complex, actually. My wife, who teaches labour market theory among other things, notes that China can win a lot of business by simply undercutting other companies in the garment sector. But then India, or somewhere else, undercuts them. The result isn't beneficial to the guys who did the first round of undercutting.)
Today, Google is very wealthy, from a core economic driver. It is so wealthy, it is able to give away many products and services for free - sometimes, after acquiring a leading paid or freemium player in a space. This activity has been rampant. Blogger was acquired and its premium version was given away for free. Google Analytics continues to grow in sophistication. It costs $10,000 - $200,000 less than competing products; i.e. it's free. Google Checkout simply undercuts the pricing of PayPal on merchant services. Google Docs and Spreadsheets takes aim at Microsoft Office, and again, it's free.
This is what Microsoft used to do. It used to take out whole lines of business by adding them as a "feature" to Windows or Office. Now, it seems, the tables may have turned. Microsoft could only do that when it had a natural monopoly. That's being whittled away by open source, cloud computing, and giveaways galore. Much of that competition is going to come directly from Google.
So why do some analysts feel that Google itself is immune from tit-for-tat, any more than China can lose garment trade to an even cheaper competitor?
As consumers find ways of getting what they need from companies who choose to make it accessible with no advertising, ad supported models themselves are shaky. Brin has often said it himself: a competitor is only a click away. I can't avoid all commercial messages: I can't drive on a different highway, use a different subway platform, or wriggle out of my airline seat. It's a bit difficult to miss the glossy ads on the magazine I choose to read. And some messages, I actively seek. Google's business isn't going away anytime soon. But the real heyday of Google from a consumer standpoint might have been in the years when expectations of future profit (and some funding still in the bank) were subsidizing a search site that showed *no* ads.
[And as an aside, it's essentially the same phenomenon and "ethos" (an "ethos" that is more of an economic model dependent on acquisition or massive funding) that drives many Web 2.0 companies. Many of them make the mistake of divorcing "the power of free" from the need to be acquired. Others are smart enough to know when to fold 'em, for healthy valuations.]
If "free" is so great, then isn't even freer even better?
There is a certain false cleverness, then, about business models that smugly give stuff away to put others out of business, based on the knowledge that some other parts of an enormous (and hopefully, diversified) conglomerate can subsidize the insanely great deal consumers are getting on the other stuff. It works as long as that profitable part is safe! For most companies, it isn't.
Make no mistake though, for a handful of gigantic companies, these models are *very* clever and they work very well. The overall profitability comes from bringing a very large number of consumers and businesses into the "fold," and figuring out how to maximize profits from the few areas that consumers will actually "pay" for. Yes, in an era when everything seems free, I even have to put "pay for" in scare quotes.
That's why today I dub the large Internet companies (we used to call them portals) Super Funnels. It's far more complex than just the rather simplistic idea that we can offer cloud-based services cheaper, or free, or support whole lines of businesses with ads. But it is all about the rampant amount of investment capital and cash flow that makes it possible to create amazing user experiences and products that cost very little... as long as some element of the whole process, and hopefully many elements, are wildly profitable. Achieving this is not like falling off a log. The funnel has to be very well engineered, and the pockets have to be very deep.
Connected to my analysis (which basically says, beware of "the power of free" if all that means is an ad-supported model that assumes x% of users will tolerate and act upon advertising) is the rampant assumption that display ads online are holding up well as an economic model. What are the CTR's and ROI on such ads? So poor, metrics gurus have to come up with new measures that disguise the lack of engagement. Where people are really going to share and interact - platforms like Facebook - will let you bother users for a $0.30 CPM... and this may be the high-water mark.
Search ads are largely safe, for now, because they are quasi-classifieds, and because Google engineers the ad program to make the ads and the sites they lead to actually as good as or better than the sites in the organic/blended index results. That leads to the question, won't somebody eventually come up with more pleasing organic index results? What if someone releases something very, very good, and makes it available without ads for three years? They'll need a few hundred million dollars to try that stunt on any serious scale.
Can someone out-Google Google? Eventually, someone will, but for now the discourse of "the power of free" will sync up well with the next 5-10 years of Google hyperprofits. It's just a mischaracterization that "free" has true power, divorced from its rare, Super Funnel context. Google is the most efficient Super Funnel today, which will continue to be very disruptive to former dominant ones like Microsoft (other targets will be phone monopolies and the list goes on). To get back to a scale that can challenge Google's dominance, Microsoft has been rightly looking to bulk up to achieve more scale in today's dominant ("power of so-called free") business model. Hence its interest in Yahoo, Facebook, and others. Can Microsoft "go it alone" in this quest, as the current discourse of Ballmer and Gates suggests? It's highly doubtful. If they do not return to several bargaining tables soon, the buildout will take too long.
Labels: facebook, free, google, microsoft, search engine advertising, windows, yahoo
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