Archive for the ‘markets’ Category

Pay-Per-Click is So Overrated

Thursday, March 8th, 2007

Google AdWords logoA bold statement to say the least - considering it is the basis behind Google. But I think it should finally be proclaimed to the world. Pay-per-click (PPC) is overrated beyond belief. If big changes don’t happen soon, we may see a new advertising model take shape. Just don’t ask me what it looks like…

First, we know that as much as 30% of all PPC traffic is driven via click fraud. I would even wager that this number could be higher, but some might call me a conspiracy theorist. Nonetheless, this means that deserving businesses can immediately write off as much as 30% of their PPC marketing budgets, as they will produce no results or sales. This has a huge impact on Internet marketing ROI.

This brings on another interesting point. Who the hell clicks on those damn text ads anyways? I don’t know of anyone, personally. Therefore, an elaborate scheme of low-paid Chinese clickers and/or Internet bots (or some other form of click fraud) must be present. The only other possible explanation is that non-savvy Internet users mistake these ads as being part of a given page’s content or part of the organic search results, and naively click through. Once again, this usually results in no sales for the advertiser and a lackluster ROI.

Basically, I’ve detailed why I think PPC sucks and how quality of the incoming clicks are weak at best. So where does one turn to drive qualified traffic and a reasonable ROI? Search engine optimization (SEO)…

Now excuse my bias to SEO (I do consulting in the area), but this form of search engine marketing is highly underrated, yet super effective. So why is it so often overlooked? It takes time and doesn’t usually provide instant results. Furthermore, a strong knowledge of the area is necessary to maximize results and most companies do not have the in-house expertise to do so. PPC campaigns drive instant, ‘qualified’ (or as I like to say, fabricated) traffic.

All I need to say is this…

PPC: Paid, non-qualified traffic.

SEO: Free, qualified traffic.

I mean… this seems like a no-brainer to me. But companies continue to focus on PPC. Here is a startling fact: 90% of company search engine budgets are allocated to PPC as opposed to SEO. This boggles my mind to no end. It should be the other way around.

PPC just seems like the trendy thing to do. “Everyone is doing it so why not us?” Eventually, companies will open their eyes, re-evaluate their ROI, and embrace SEO in a big way. Until then, the short term traffic gains of PPC seems to mask the longer term gains of SEO.

Now I know PPC does work for some and I will get slammed for such a post. But for the majority of us (including companies), PPC is a wasted of human and financial resources. Time and money can be better spent on other marketing initiatives.

Satellite Radio Deal = Sirius Regulatory Fiasco

Wednesday, February 21st, 2007

XM Satellite Radio and Sirius Satellite Radio merger logoAfter numerous months of speculation, satellite radio titans XM and Sirius have agreed to tie the knot. This new media monolith has not yet announced a new name, although Xirius might be an interesting thought. The marriage creates an entity with a market cap of $13 billion (including $1.6 billion in debt) and a subscriber base of over 13 million. Current Sirius CEO, Mel Karmazin, will remain CEO of the new company, while XM chairman Gary Parsons will retain his position after the merger as well. Current XM CEO, Hugh Panero, is expected to step down after the deal is finalized. This is probably a good call as he has received bad press as of late, amid allegations he provided positive outlook knowing full well the targets would not be met. This doesn’t sound all that bad until you hear that he also sold millions of dollars worth of shares during that time.

As you can imagine, the merger is expected to create economies of scale, hence cost savings. I would expect big lay-offs to come. The most important number for both companies up until this point has been the user acquisition cost. This deal is expected to cut that expense significantly. Furthermore, the union will produce a greater variety of subscriber products and flexibility within packages.

As both players accumulate bigger losses on their balance sheets, it was only a matter of time before they banded together to do what had to be done. Some call it a last ditch attempt. The companies call is a strategic move.

But wait. Stop the press. Will the deal actually go through? I HIGHLY doubt it.

The satellite radio industry is quite interesting. Why? Because they’re are only two players. Forget market share or niches. There are only two players in the industry, period. What other special-case industries can lay the same claim. Very few… only the soft drink and airline manufacturing industries off the top of my head.

Now if Pepsi and Coca-Cola were to merge, I’m sure all hell would break lose. Conspiracies theories would run amok and regulators would absolutely not let such a deal pass. The same is true of Boeing and Airbus. Collaboration as such eliminates competition completely and provides the opportunity for inflated pricing, as no other alternatives. Just take a look at Microsoft Windows…

To say the two companies face regulatory hurdles is the understatement of the year. In order for the merger to pass, FCC chairman Kevin Martin says ”the companies would need to demonstrate that consumers would clearly be better off with both more choice and affordable prices.” Hmmm… it could happen. But I bet it would unfold like any government candidate platform. Short-term lies to attain long-term gains.

In any case, knowing the state of ethics in corporate America nowadays, the merger will pass with little or no scrutiny. 

TutorLinker Links Tutors with Students

Friday, February 9th, 2007

With such a wild, outlandish domain, it’s makes you wonder how they came up with the name TutorLinker for a service that links tutors with students.

Californian college student Sol Eun and a friend built the mash-up to help tutors connect with students for free. Revenues are generated via Google AdSense and Paypal donations. Sol says:

“TutorLinker is a tool which helps you find a tutor in your area for your tutoring needs. It uses the Google Maps API to locate tutors in students’ neighborhood in other words, students can find local tutors by simply typing their address.”

Apparently, the site and service is designed as such because the location of tutors is an important factor in the decision-making process.

An added feature in the inclusion of a ’driving range’. No, not like at a golf course. When a user types in an address, the service automatically locates every nearby tutor and provides directions. In addition, driving distance is calculated and appears by simply hovering the mouse over the tutor’s icon.

Be sure to check out the service, if not for its actual use, then for its coolness as a mash-up.

PS. Find out about updates by reading the TutorLinker blog.

Dethroning the Internet Giants

Saturday, January 20th, 2007

On the net, there are several industries dominated by one major player. Some include video, search, books, social networks, auctions, and classifieds. If you are unaware of who the industry leader is in any of these categories, then you’re probably living under a rock. In any case, check your answers against my list:

These Internet powerhouses dominate their respective realms with little threat from the competition. Furthermore, in most cases, they’re surging even farther ahead of the competition as we speak.

So how do you dethrone these Internet kings? By slicing their product or service offering into verticals.

Chop, chop, chop. It’s the only way to compete. Any start-up looking to break into the above categories needs to carve out a niche and extract of subset of the larger player’s target market.

I touched on this concept a little bit in my post about the Evolution of a Hot Internet Space. I’ve said it once and I’ll say it again and again and again… Verticals, fragmentation, and niches are what’s in store for the new web. Nobody can directly compete with the big guys right out off the gate. It’s certain death. But if they choose a smaller market, they can prosper.

Let’s look at potential niches within the big headings:

  • VIDEO - Vlogs, funny videos, news clips.
  • SEARCH - Product, forums, blogs.
  • BOOKS - Used, rare, comics.
  • SOCIAL NETWORKS - Age range, region, topic of interest.
  • AUCTIONS - Product type, region, auction type.
  • CLASSIFIEDS - By region… jobs, for rent.

As you can see, it’s easy break down the main categories into sub-groups. The hard part is creating a tailor-made service for the group.

An interesting point is focused around the marketing of the service. A generic offering is actually harder to market than a more specific service. Having ‘everyone’ as your target market is great, but doesn’t bode well for a marketing campaign.

Nowadays, blogs, blog communities, groups, forums, and niche interest sites are rampant. These make the task of marketing a targeted service much easier and more manageable. In addition, it’s also be much easier to locate and convert potential product evangelists and influencers.

So, next time someone says their target market is potentially everyone, tell them to grab a niche.

PayPerPost Deservedly Slapped

Thursday, December 14th, 2006

My most hated enemy, PayPerPost, recently got slapped in the face by the FTC and PayPerPost logorightfully so. This bottom-of-the-barrel, blood-sucking entity should be put out of business altogether. I have already written about their unethical practices here and here.

As a quick refresher, the company has created a marketplace for bloggers and advertisers. An advertiser pays a given blogger to post about their company. Pretty simple right? Yeah, but PayPerPost doesn’t understand the ethics of the blogosphere and the importance around transparency. Having said that, paid bloggers do NOT need to disclose payment information with the given blog post. In addition, all bloggers are paid the same amount per post, independent of your traffic or blog readership. Ridiculous to say the least.

My words of advice: please, please, please check out ReviewMe instead. This is a much ReviewMe logobetter marketplace for bloggers and advertisers. It eliminates the immoral practices of PayPerPost while providing a comprehensive solution for both bloggers and advertisers. 

Ok, so I strayed a little of course there…

My point was that PayPerPost is sacrificing the integrity and trust of the entire blogging community. The blogosphere is all about self-expression and personal beliefs, not fabricated opinions.

For this very reason, the Federal Trade Commission has stepped in and begun scrutinizing practices around writing a paid editorial piece and failing to disclosing payment. Woohoo!

 The FTC issued the following statement:

“Raised concerns about a specific type of amplified word-of-mouth marketing, specifically the practice of marketers paying a consumer (the “sponsored consumer”) to distribute a message to other consumers without disclosing the nature of the sponsored consumer’s relationship with the marketer.”

This is a step in the right direction and I hope that PayPerPost eventually makes payment disclosure obligatory.

Now, I’ve read and heard people talk about product placement in movies and how payments are not disclosed, but we’re talking about a whole different ball-game here. It’s like comparing apples and oranges. When most people see a product placement in a movie, they expect that it’s paid. The same goes for travel and vacation write-ups. Most people expect that the editor received a free trip or some sort of compensation in return for the article. These free incentives for travel writers and publishers have been around for years. It’s to be expected. But in the blogosphere, I would wager that most people believe 99%+ of all posts are written without payment for the sole purpose of expressing the viewers of the author. Paid blog posts are NOT to be expected. Therefore, disclosure should be mandatory if a transaction is completed.

NOTE: Factual information for this post was pulled from a Mathew Ingram post.