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Monday, April 26, 2010

Google Affirms the Vital Role of Marketing and Advertising Agencies

It's great news that Google has taken the time to think through the pivotal role of agencies in helping advertisers advertise on the Google AdWords platform, and to release a new AdWords Certification program. As the head of a search marketing agency, I value the fact Google is explicitly affirming their philosophical support for the agency world at the same time as they release specific changes in programs and pricing that support that relationship. Official mission statements are important; they ensure that no one at any level in the company is hearing contradictory messages. Sometimes, all it takes for us to be able to work better together is to hear someone say (and write): you've got a formal place in our ecosystem, and a special place that won't be interchangeable with everyone else's place, or too easily devalued.

So, the obligatory punch on the shoulder, and "aww shucks, thanks, guys".

To be sure, no one is naive enough to think that Google won't also work directly with some advertisers. But there should be no more talk that Google is uncertain in its approach to the agency ecosystem, or that the powers that be at Google somehow want to "cut agencies out of the equation." You don't invest in support, agency teams, new certification programs, and new API models unless you're sincere in the support.

Waiving AdWords API fees for agencies using their own bid management tools adds up to a significant chunk of change. It also, as Google notes, leads to more innovation. In developing new ways to automate marketing, developers at agencies (and the end client) won't have to mentally subtract out the cost of the API tokens when deciding how much time and money to invest in new tools. If some agencies abuse the privilege, that's easy enough to stop. Tell them to stop it, or the fees will kick back in (and their Partner status could be revoked).

Outside the AdWords ad world, this might seem like a minor deal. To those in it, it's pretty significant because it means Google has indeed evolved into a mature player much as many of us hoped and expected.

Here's a quick before and after to give you a sense of things:

Before: A confusing Google AdWords Professionals certification that was very easy to achieve, handed out to a wide variety of semi-qualified individuals, with no clear delineation between scrappy upstarts who can pass a simple test, and who would be really interested in helping you with your AdWords advertising; and real agencies with infrastructure and a track record of working cooperatively with Google and solving many client problems over time. Later, a Qualified Company certification got bolted onto that. While a step in the right direction, it left too much confusion in the marketplace and didn't give enough credit to the difference between entities (agencies) and individuals (anyone who can get a decent grade on what amounts to an open-book exam).

After: A redefinition of the Qualified Individuals status to help individuals showcase their talents to potential employers (not directly competing for clients with more qualified agencies or experienced in-house talent); a redefinition of the Partner Certified Qualified Companies to mean more rigorous exams, and a range of other benefits like a searchable Google Partners listing.

There's quite a bit more to it, but that's a start.

I started as early as 2005 trying to articulate the case for such an evolution at Google -- mainly, in both editions of Winning Results with Google AdWords. While many in the space sort of took Google's informality at face value (panting with lust at any announcement of any kind of Google certification), I always figured they'd have to take another crack at this because the ecosystem of resellers and partners (assuming it demonstrates its value and shows itself deep, wily, and resilient enough to maintain customer relationships as opposed to being disintermediated/crushed) must be treated formally as such, much as it always has been in the technology world, with companies like Microsoft serving as the global standard (but there have been hundreds of others). As Google began rolling this type of thing out with Google Website Optimizer and Google Analytics (as strange as it is to be a "reseller" of free products), the logic became clearer, and you knew/hoped that Google would soon be on its way towards formalizing those relationships on a few fronts.

The old approach and the old programs were a bit tantamount to us out here being asked to "fan" Google on a Facebook page, without too much interaction, formality, or "anything in it for us," and as a result, on the other side, Google couldn't ask too much in terms of stated qualifications, business characteristics, more rigorous certifications, etc.

The new approach takes aim at the future and walks us all kicking and screaming into adult relationships. The old, informal ways were fun and we will miss them. But they're a thing of the past.

I'll leave off quoting at length from Winning Results with Google AdWords, 2nd ed. (2008), where I addressed this sort of thing.

"Third parties often advise clients on how to use AdWords, or directly manage complex campaigns. ... Observing Google's progress in dealing with the environment of marketing and advertising agencies, they have never fully given up on the idea that advertisers really should be coming directly to them for advice. However, this situation appears to be improving.

A Google Advertising Professionals (GAP) program, launched in November 2004, was an interesting initiative that was supposed to sort out qualified from unqualified individual AdWords campaign management practitioners. A company wide (agency) version of this is also available. This is more of a training and indoctrination program than anything else, however. The reward to the qualified professionals and agencies is minimal at best, though ostensibly it helps advertisers avoid working with "hacks".

Agencies certainly get much less out of Google in terms of financial rewards (such as a commission) than they have in any relationship in the history of advertising. On a variety of fronts, including the Google-agency relationship, observers have asked the question: is Google sucking the proverbial oxygen out of the room? While consultative relationships have improved and become more formalized -- a key improvement, to be sure -- many of the leading AdWords consultants and evangelists must make their living from service fees alone ... while Google's extreme profit margins continue to fuel the company's growth. There are practical hurdles to be addressed before such traditional advertising industry practices can be adopted, particularly in the "geek culture" which has served Google so well. However, the goodwill ... of the search marketing agency community ... may hinge on a recalibration of their financial relationship with Google.

In its formative years, having the right (geeky, iconoclastic, world-beating) attitude at the right time was a big part of what made Google into a global powerhouse. Some critics predict that this same attitude could be its undoing. Experts believe that the degree of cooperation with the developer community (and I would add, the marketing ecosystem) will determine whether the company has the staying power of a Microsoft.

Through the back door, Google may be studying ways of responding to the above analysis. Beyond AdWords, the company has new, highly technical products, like Google Analytics and Google Website Optimizer. It has initiated partner and reseller programs for these products. By instituting criteria for membership, working closely with the community on product development, and figuring out ways of steering valuable consulting business to such resellers and partners, Google can study the ins and outs of forming such productive relationships. Such relationships seem to be founded on classic models common in the software industry, especially in high-ticket enterprise software. What makes this unorthodox (as usual) is that Google's products are often free, and many of the customers for them are small to midsized businesses. What will it mean for my consulting firm to "resell" Google's free product to a small customer, I wonder? Like many others, including Google themselves, I can't wait to unravel that puzzle. ..."

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Posted by Andrew Goodman




Monday, March 01, 2010

Making Marketing Matter: A Reply to Mitch Joel

Taking Mitch up on a challenge like joining the dialogue as to how we can make marketing meaningful (and not scummy) carries only one danger with it: you can overshoot, egged on by the spirit of the exercise, and say something you really don't mean.

Back before Howie Mandel had a serious(?) career, he appeared on one of those late night comedy shows that was so late that you had to use "late" like five times in the title. This was back in the days when Howie inexplicably put a latex glove on his head and did that thing with his hand when he did standup. Anyway, Howie would appear in a sketch where everyone was sitting around after a couple of drinks, usually near an open window, describing their most edgy or daring escapades. Howie would open his mouth and overshoot the level of the group so far, with the filthiest, most perverted comment imaginable. Even the most depraved members of the group would slowly edge their way out of the room.

Then again, probably no danger of that here. If you've really built your career around Cluetrains, Whuffie, Permission, Life After the 30-Second Spot, and the like, as I have, you've probably reached the point of no return.

Anyway, to throw some fuel on the fire:

I still believe in an abstract distinction I introduced in Winning Results with Google AdWords (2nd ed.), and that is that there is something called "reasonable targeting," to be contrasted with "surplus interruption." Empirical evidence appears to suggest, as Godin has boldly argued for years, that people simply avoid messages if they get too many of them that aren't personal, anticipated, and relevant. But evidence aside, you have to believe it in your heart.

I want to live in a world - not exactly like, but similar to - Google AdWords, where relevance is rewarded and spammery is punished through a sort of "user experience tax". I also want to live in a world where we can freely experiment with a variety of forms of advertising. The "AdBusters" and "no logo" crowd take it too far, not understanding that imposing a moral code that restricts communications is a (totalitarian-style) cure that is worse than the disease.

I do not want to live in a world where:

  • We change the definition of permission (and other things), because we're marketers and hey, it's OK to spam people if you're a big company, right? This just creates a tragedy of the commons and degrades consumer trust over time. See Seth Godin, "Permission Marketers: Did We Blow It?" (September, 2001)
  • The professional association for marketers in a given nation sells me on a membership renewal, in part by telling me they'll continue lobbying to loosen up on those horrible "do not call" laws. As a consumer, I hate to be spammed on my personal phone lines. I'm supposed to feel differently as a "marketer"?
  • For that matter, in my renewal application for the same association, in 2010, it would have been nice if the same trade group had finally put in a checkbox for "search marketing" as a special interest, given that it is nearly half of digital marketing, and certainly more than half of the (targeted, voluntary, granular) traffic to many corporate websites. To go alongside the checkboxes for companies specializing in printing brochures, keeping databases, building websites, maintaining outbound call centers, and emailing people. Maybe next year.

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Posted by Andrew Goodman




Wednesday, November 26, 2008

"Everyone" Can't Do It For Ya: Finding Your Tribe

I'm most of the way through Seth Godin's great new book, Tribes.

It's a book about leadership, and the need for leadership at every level to achieve meaningful change in any setting.

It's also about distinguishing between a passionate group that can "go places" and achieve something together, as opposed to a loose aggregation of people who don't really care enough to matter.

Great changes can be achieved by leaders with faith in their vision, followed by a relatively small number of people who help make it happen. One of many examples Godin gives in the book is the animal shelter activist who was able to make San Francisco into a No Kill zone (typically, 70% or more of healthy animals in shelters are eventually destroyed). He went on to replicate the feat in upstate New York. In this case, many people in established agencies actively resisted the initiative, and many others in these locales simply didn't care. The ones who did care made the difference.

Thinking about this I can see many parallels in business and online community, in things I see or do every day. Take Avinash Kaushik's common-sense exhortation that "aggregate" is never the name of your website visitor. If you get bogged down in aggregate statistics, you might be overwhelmed with just how many loosely-engaged, "valueless" clickthroughs come to your website every week. Yes, but why not make an exercise out of ignoring the 80% of people who aren't connecting with you and zero in on just the 20% of those who do? Study their characteristics. Build and grow with them. (And it's easier than ever to study them. This week, using Google Analytics' custom segment features, I hand-built a segment called "engaged quintile," for the 20% of website visitors on a client's site that stayed a long time and viewed many pages. By definition, guess what the "bounce rate" was for that segment? Yes, it was 0%! It's heartening and inspiring when you look at life through that lens.)

I've also been noticing how some online communities take off, and others have much more trouble doing so. I think that's because we often wildly overestimate the importance of numbers, and underestimate the importance of engagement, as Godin says. Even in communities that are supposedly in a niche, we wind up with a mass, semi-engaged group that never takes anything and runs with it. One online community of 2,000 people (sounds like a niche, right?) spins its wheels and goes nowhere, while another of the same exact size takes off. The second one doesn't take off because 2,000 people are doing stuff. It takes off because the core leadership is making this place their main mission in life, and an outer core of maybe 20-30 enthusiasts make it their mission, too. Most everyone else joins in over time because of that passion displayed by 20-30 people. Momentum starts with leadership, and a tightness and clarity of mission that breeds passion.

The first group is doing what Godin calls sheepwalking. The second is on a real mission.

This is also why broad online content plays like Yelp take so much money to get off the ground (and why InsiderPages, Judy's Book, OurFaves, and maybe MojoPages are fighting an uphill battle, or have already run aground). They're very wide, so nothing is happening in a lot of parts of the network. Yelp managed to roll ahead despite their breadth because of the passions of Yelpers, and the relentless effort to build community offline as well as online.

But other, similar communities just have a much tougher time of it. It goes back to another Godin recommendation, from Unleashing the Ideavirus or perhaps somewhere else, to pick a hive you can dominate (read: a genuine, small, focused niche). Weak passion spread across a wide field provides little sense of mission.

TripAdvisor got lucky, and maybe fooled quite a few copycats into thinking they succeeded because they were in a "niche". Sure, travel was a "niche" in 2001. But it's actually far too wide for most aspiring community builders to attempt today.

If you talk to a venture capitalist about a user-generated content "idea", they might ask you about what major cities you plan to roll out in. I hope you expect to raise rounds B and C to the tune of $20 million or more in total, because on a shoestring ($1-2 million) budget, you can dominate maybe one or two major markets, if you throw all of your passion and resources at them. Angie's List started off in Columbus, OH, and expanded slowly. They kept in business for 17 years before some Web 2.0 guys decided to pony up that big $20 million+ to help that business "go big." But the majority of the action is in the hives Angie's List was able to dominate: perhaps six or seven midsized markets. Few large ones. Many markets remain weak, with few homeowner reviews, memberships, etc. And Angie's List is considered to be wildly successful, relative to competitors.

What if you were actually starting on a shoestring as Angie Hicks did, with less than $1 million in capital? Probably you would be best off finding passionate groups of homeowners in midsized markets, and trying to get passionate leadership growing those markets. Try doing the same in a half dozen even smaller markets, even, in metro areas of half a million people. That's sort of how Angie did it, and that's how she grew passionate followings (tribes) of homeowners in the markets she does dominate.

Eventually, building a brand in that way, national dominance is indeed possible. But for the time being, forget New York... unless you really know what you're doing.

Amazingly, Angie's recent round of investors expected some of the proceeds to be used for European expansion. Insane. If you're the size of eBay or Amazon, that makes sense. It makes no sense for a company of mid-sized American tribes like Angie's List.

Meanwhile, I'm working with a niche (very small) ecommerce site that also focuses on community. It is in only one segment of travel, evaluating a particular type of vacation. On this site, in spite of the fact that they are open about the fact that they're trying to sell you a trip, the visitors are extremely engaged. Passionate people are writing reviews. And the "engaged quintile" is spending 10-15 minutes on site, on average looking at 14-15 pages on the site (regardless of their geographic locale or other characteristics). (And did I mention that 0% bounce rate in that quintile?) I believe the reason for the surprising level of engagement with this startup is that they truly understand what a passionate niche is today, and they mean to provide true leadership to that niche. 

A niche like "travel," or "bars and restaurants" sounds like a "niche" to the uninitiated, but unless you've got bottomless pots of money, remarkable and unflinching leadership, a core of 20-30 passionate co-leaders, and a really different hook, those "niches" today are just far too broad to maintain and grow a passionate tribe.

It's interesting that we were able to reach all of these conclusions without a single mention of technology, or "feature sets," isn't it? Makes ya think. At Yelp, Angie's List, Epicurious, Craigslist, and Flickr, the technology ranges from clunky to cutting-edge. But it's always in service of the tribe and its passions.

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Posted by Andrew Goodman




Tuesday, May 01, 2007

Big Thoughts for a Tuesday

Thanks to Per Koch of Pandia for letting me share them. Per and I go way back, virtually speaking. Our meeting at the frenetic SES New York was all too rushed.

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Posted by Andrew Goodman




Thoughts on Process, Results, Transaction Costs, and Scale... and Realism


Compared to some of my competitors, who tend to specialize, my firm has probably worked for the most eclectic client list in the search marketing business. It's important to see, in my view, potential success stories in all industries. (I've certainly also seen plenty of high-risk or low-potential projects in RFP's that we are shy about handling.)

Like any consulting company we certainly "cherrypick" the projects that seem to have the potential to be workable, but beyond that, we've experienced a wide diversity of expectations and management styles, from the tiniest to the biggest companies.

Preamble: Yesterday somebody forwarded me a saying: "unrealistic expectations are planned resentments." Example: a company with a target ROI or cost-per-order target that is better than anything we've ever seen in the industry. If costs are rising because it's a competitive auction and new players haven't yet stopped entering and driving costs up, we'd be crazy to promise to hit unrealistic ROI targets short term. What we can do is implement better testing protocols or work on fundamental changes to messaging, or a dozen other things, but we can't just draw a tiny speck on a wall and hit it with a dart from 100 paces. One way to guarantee pristine ROI numbers, conversion rates, etc. is to reject growth and to focus only on a few keywords and a few slam-dunk customer relationships. That's why aggregate conversion rates aren't as meaningful as folks think. Volume matters too.

Another example of unrealistic expectations that constantly get built into our (paid search) industry: some folks can't resist touting the lowball bid strategy. We have a few of those accounts working pretty well, but that's sort of because there is demonstrably high quality content or products at the other end of the click. Beyond a few remaining skilled players, the belief in a lowball bid strategy making you rich is like waiting for Christmas on Jupiter while taking LSD. The hallucinations are great while they last, but then you start shivering uncontrollably, and Christmas never makes it to your planet. By all means play around on your own time, on your own time, but if you work for a company, budget realistically for a media buy based on what "high quality" competitors are likely to bid to stay in the top 4-5 ad positions.

Moving on.

Let's start with a broad premise about process: true process is good and leads to efficiency and better communications. Results, the end goal to which we're all oriented, aren't achieved by simply stating goals, although it isn't bad to have targets.

I'll further break process down into two types: technique process and communications process. And hey, I'm not trying to write a textbook - I'm sure there are many better thoughts on this. It's just a blog post.

Broadly paraphrasing theories of the firm, I'll suggest that process has a price and that by and large bigger companies can afford more of it, but no matter what the size of your company, you need to worry about overinvesting in this costly good, just as you need to worry about ignoring it entirely. The decision to outsource comes from inadequate in-house resources in technique process (as well as its higher-order cousin, domain wisdom). That decision now creates slightly higher costs and requirements in the area of communications process. But the key is that results in a competitive, creative field are generally only achieved with a long-term focus combining technique process and domain wisdom. Results orientation is actually assumed. No one in our industry is being paid to watch a clock or to look busy.



Imagine four golf "head coaches," and Tiger Woods. (There is no such thing as a head coach in golf. The golfer himself is the head coach. Work with me.) We all know that "shooting 65" is the goal. That's a given. Coach #1 - we'll call him "Hockey Mom," - nonetheless assumes that constantly reminding Tiger of hitting his "birdie targets" and that he "needs to sink this 30-footer" or that he "shouldn't have missed that four-footer" is the sum total of what his supervisory role entails. Tiger doesn't improve.

Coach #2 - we'll call him Sarge - realizes that improved technique, including fitness fundamentals, will improve Tiger's overall game. He follows Tiger to every fitness session, logging every activity, suggesting very small changes to his situp and treadmill technique. He fires the swing coach and begins changing Tiger's hand positions. He also tells Tiger what clubs to use; not a small point. Tiger benefited from that type of minute help when he was a small boy; Earl Woods' exacting practice regimens helped make him what he was. But now, he's Tiger Woods. His game soon goes south on the over-processed regimen.

Coach #3 - we'll call him Big Company Guy - doesn't meddle in the exact performance of the situps, but does expect an elaborate reporting regime. Instead of asking Tiger if his body was responding well to last week's agreed-upon workouts, he asks Tiger for color bar charts, heart rate and blood pressure readings, and so forth. Unable to process the information Tiger submits at first, he asks for a different kind of presentation, as well as an hour-long recap and explanation of the workout program and explication of the reporting documents. Various colleagues join the conference calls, and suggest additional statistical reports for next time, in case they might shed light on the fitness regimen. Unfortunately a few of these meetings and reporting requirements make Tiger late for a meeting with a sponsor, and in one case, he gets to the course only 30 seconds before tee time.

Coach #4 - we'll call him Goldilocks Excellent - places a heavy degree of weight on technique process in determining outcomes, just as Tiger himself - as a motivated, recognized professional - does. He manages that process and understands the purpose of various elements of the training program. When Tiger's scores are subpar, he doesn't assume Tiger "failed," but wants to know whether it was just an unlucky day (randomness, missed putts) or something specific that might have gone wrong in terms of deviating from sound process. He spends not too much but also not too little of Tiger's and his own time in the necessary communications process. Tiger is held to exacting standards, but is also facilitated in pursuing his own, self-motivated exacting standards. Goldilocks Excellent gets 2% of Tiger's winnings (less than Tiger's caddy, Steve Williams, but still pretty good), and becomes wealthy by bringing out the best in the Tiger.

Now that I've offended just about everyone, let's try to put it back into dry economic terms.

The smallest companies are at a disadvantage if all they look at is short-term results. Larger companies do this too, but very small companies are particularly susceptible to it, because they lack capital. It's pretty hard to intellectuallize getting kicked in the shins (or worse) for weeks on end in the name of some long term goal. (Again, The Dip by Seth Godin seems like it's going to address this and no, I haven't read it just yet.) Results, though, are just a common, assumed goal. The real key is to have enough of a plan and enough resources to devote to technique process and domain wisdom. Often, the smallest companies don't, so they get killed. Make a few extra mistakes -- say, overinvesting in communications process or telling Tiger what golf clubs he should use -- can throw the economics completely off course.

Big companies can afford to make many more mistakes. Where they thrive is in executing long-term plans based on domain wisdom coupled with technique process. Whether these are found in-house or outside the organization is not as important as some may think. This comes down to cost and timing, more or less. Contracting relationships abound, so every day, many calculations are made that point to a more efficient outcome by using a specialist. Otherwise, every company would have its own shipping department, web designer, auto mechanic, and massage therapist. Yep, some have all those things, but those company names tend to be Chrysler or Google. Very big companies with unique all-encompassing cultures.

Big companies generally overinvest in communications process. It's a quirk of corporate culture. Internally, this makes sense because the cost is absorbed into a larger entity. But if the outsourced expertise is a much smaller entity, the cost of communications process too easily crowds out the technique process. But while annoying, most larger companies' overinvestment in communications process is not economically harmful to them.

Either way: in spite of small company romanticism and some major advantages of nimbleness, big companies have many levers in the marketing of products and services. Smaller companies have to get it exactly right. They also have to bite the bullet and invest money they don't have into processes and medium-term planning exercises needed to compete. No wonder successful small businesspeople are considered heroes.

Final point: none of this stuff seems to matter on the days Tiger shoots 65.

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Posted by Andrew Goodman




Thursday, April 19, 2007

The "Stupid Google" Meme That Refuses to Die

Business 2.0 writer weighs in with "I can't believe Google can't attract some standout marketing talent from the world of consumer packaged goods."

Yep, Google can't brand. They don't do that verb.

Today, they announced quarterly revenues above $3 billion (though the mainstream press has taken to showing "revenue not including income passed along to ad partners"); higher than their revenue for all four quarters of 2004. And once again, record profit.

With all due respect to my close friends from the world of consumer packaged goods: these hypothetical helpers could scarcely have done anything but completely screw up what Google managed to build without them.

For some reason, Froogle didn't take it off. But it isn't because it had a stupid name.

Remember when they said that Google had better hire more "traditional advertising industry schmoozers" lest it be defeated by the wiser, more schmoozy, Yahoo?

Whether Google has succeeded in spite of, or because of, their quirky corporate culture -- is it really becoming for any of us to second-guess what it's resulted in to this point?

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Posted by Andrew Goodman




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