Blogation

I try to be polite to recruiters – in part because they have a tough job, and also because, well, I guess I’m a nice guy. So when I recently received a LinkedIn message from a recruiter for FindLaw.com, I politely declined the invitation to apply for the position. Here’s the first series of emails (name of recruiter omitted to protect the innocent!)

Hi David,

I work with FindLaw, a Thomson Reuters business based in Sunnyvale. We are expanding our team and looking to hire an Sr. Online Marketing manager to oversee the analytics and PPC initiatives for our internal site (Findlaw.com).

In reviewing your profile, your experience seems to be in line with what we are hiring for and I would love the opportunity to have a discussion with you. If you are open to exploring a new position please let me know, otherwise if you can forward this message on to your network, I would appreciate it!

My response to the recruiter:

Hi [NAME], I worked at FindLaw about 7 years ago and now have my own agency, so I’m no longer on the market.

Thanks,

David

Had I wanted to be a jerk about this, I could have also added that when I worked at FindLaw seven years ago I was a Senior Online Marketing Manager – the exact position for which she is now hiring. And not that title is the end all, be all, but since then I have had titles like “Director”, “Senior Director”, “Vice President” and “CEO”, so one might conclude that I’m no longer interested in the same exact job I had almost a decade ago. But oh well, I guess you can’t fault a gal for trying, right?

Well, this week, I received a second email from the friendly FindLaw recruiter. And as George Bush Jr. once aptly put it, “fool me once, shame on you. Fool me twice, a fool won’t get fooled again!” Here’s the email correspondence.

Hi David,

FindLaw, a Thomson Reuters business, is growing our team in Sunnyvale. We are looking to bring on board a Sr. Online Marketing Strategist to focus on the PPC initiatives for FindLaw.com.

In reviewing your profile, your background seems to be in line with what we are looking for. If you are interested in exploring this opportunity, please contact me, otherwise if you wouldn’t mind forwarding this along to your network that would be great.

I look forward to speaking with you!

My response:

Hi [NAME],

Thank you for reaching out to me. I have to admit, however, that I am confused by this job posting. You say you are from Thompson – which I know is the company that does water sealant for outdoor wood (like decks and patio furniture) but the company you are talking about is for finding law? Why would an outdoor water sealant company want to help people find law? I am sure that sometimes people do slip and fall on wet wood outside, so perhaps they might need a lawyer, but this is a pretty rare situation I would imagine.

Any light you can shed on this would be appreciated.

You might think that the recruiter would get the joke at this point (or at least check back and see that she had emailed me twice, or perhaps realize that I worked for Thomson – without a “p”), but alas, she did not.

Hi David – I apologize for the confusion. I actually work for Thomson Reuters (no p in thomson) and FindLaw is a division with in our company. Do you have time to chat either today or tomorrow for a bit?

I’m thinking I should write her back about this bridge in Brooklyn I have for sale.

Local was hot in 2010. From geo-location check-in services (FourSquare, Gowalla), to local deal sites (Groupon and a cast of thousands of imitators), to Google moving Marissa Mayer over to their local team, local was national news this year. Here’s how local impacted advertisers in 2010:

Daily deals. Groupon now has 3,000 employees and just rejected a $6 billion acquisition offer from Google. LivingSocial – Groupon’s biggest competitor – raised $175 million from Amazon. Yes, it’s been a big year for daily deal sites. Despite this incredible success, two outstanding questions remain that will determine whether Groupon’s momentum will continue in 2011 (and whether you therefore should care). First, is Groupon a good investment for advertisers? There have been some news stories from disgruntled Groupon advertisers this year, with the usual complaint being that their stores were over-run by deal-seekers and that they nearly went bankrupt trying to fulfill the demand (sounds like a good problem to have, unless you are giving away your product for such a huge discount that you are losing money on every transaction).

Initial surveys of advertisers, however, show that the vast majority of Groupon merchants have been satisfied with the results and would use Groupon again. I think the main takeaway from 2010 is that Groupon can work, but you need to set caps on the number of offers you give away, you need to make sure you price these offers high enough so that you don’t go bankrupt (um, duh), and you need to make sure that you sell a product that will result in repeat purchases and lifetime value, instead of just attracting ‘hit and run’ deal-seekers.

The second question about Groupon is whether it is a trend or a fad. Second Life, MySpace, and the Pet Rock were all clearly fads, whereas Google, Facebook, and smart phones represent trends. I put Groupon somewhere in between a trend and a fad. I think it is partially a fad, because consumers are buying up a lot of deals in part based on the novelty of the group-buying concept. Over time, consumers will lose some of their interest in daily deals, just like they have with the novelty of buying through online auctions like eBay (not to say that eBay is dead, but its marketshare is shrinking).

The trendiness of daily deals comes from the ability to fuse local, mobile, and social into one shopping experience. Groupon has benefited from friends sharing their purchases on Facebook, from the willingness of local merchants to participate (that wouldn’t have happened just a few years ago), and from the smart phone adoption (the Groupon app is currently the #30 app on the iPhone). Thus, Groupon is in the middle of a perfect storm of three emerging trends and should see continued growth in 2011.

As I noted above, I do think daily deal sites are worth testing, but they need to be treated as “demand creation” vehicles with an aim toward profitability from repeat purchases. Expect a short-term hit to profit but then work hard to make sure that all of the new potential customers exposed to your product have a good incentive to come back and purchase time and time again.

Local SEO. I am definitely not an SEO expert (I know enough to be dangerous), so I’m not qualified to talk at length about the goings-on in SEO in 2010. What I can say, however, is that I heard a lot of buzz this year about Google changing their organic results for local searches. The fundamental change basically centers around increased emphasis on “Google Places” results. Google Places allows local businesses to create listings about their businesses. And here’s the catch: to qualify for Google Places you actually need a physical address (they mail you a postcard at your address for verification). This means that many online businesses that had previously seen success on local terms in organic results (ex: “Los Altos Insurance Rates”) have seen their traffic plummet. Do any search for a local service provider and you’ll see that the first several (apparently up to eight) organic results are from Google Places.

My guess is that in 2011 we will start to see the line between organic local results and paid local results start to blur on Google. For example, Google is currently offering Google Places businesses the opportunity to add a free coupon to their listing, but I suspect that at some point this will migrate from a free offering to a paid upsell.

Map-based advertising. Google is already monetizing map results. As noted above, you can add maps to your AdWords results (which increases CTR, which in turn makes more money for Google). You can also advertise within a Google Maps result. And Google just recently announced a product called “Google Tags” (free for a limited time) that allows advertisers to add an icon to their map listing that indicates a special coupon or offer.

I have always felt that Google hates middlemen, and most of the lead generation or local directory sites that have dominated organic results for so many years are exactly the type of middlemen that Google is trying to eliminate with their increased emphasis on products and services for local businesses.

So just to reiterate, here’s what you’ll likely see from Google on the local front in 2011:

I.          “Offer Ads” in PPC (online to offline coupons);

II.          Google Places taking more and more real estate from local SEO;

III.          More opportunities for local business to advertise in organic results and maps;

IV.          An improvement or alternative to Google Product Search that allows merchants to provide local inventory availability information.

This was the year of Facebook: Mark Zuckerberg was named person of the year by Time, The Social Network movie was a huge hit and is probably the odds-on favorite to win the Oscar for Best Picture, the site passed 500 million users, and rumors have it that the company also made more than $2 billion in revenue. Not too shabby. Amazingly, however, building a great advertising platform is noticeably absent from Facebook’s impressive list of accomplishments.

Facebook’s user interface (UI) for advertising is sub-standard to say the least. Despite the incredibly rich demographic and psychographic data available to advertisers, running tests on different segments of data is simply not scalable in the UI. On top of that, Facebook’s tracking technology was misleading (treating both view-throughs and click-throughs equally) and was recently discontinued altogether. This lack of scalability has resulted in two consequences: first, many advertisers have tried and failed to make Facebook PPC work, resulting in low CPCs and a lot of negative press from advertiser blogs, pundits, etc. Second, numerous 3^rd party software companies have integrated with the Facebook API and created tools to make it easier for advertisers to scale on Facebook. Most major PPC management platforms (Marin, Kenshoo, SearchForce, etc) have included Facebook management as part of their workflow automation.

The big question I have about Facebook advertising is whether we need to look at it from a demand creation (branding, top of funnel) or demand fulfillment (direct response, bottom of funnel) perspective. Obviously, if you are marketing to someone who lists their marital status as “engaged” and is a fan of “wedding rings”, you can take a direct response approach to this consumer, much like you would if someone typed “buy wedding rings” into Google.  And if you want a quick way to build buzz around a new movie, you can reach millions of 18-34 year olds who like “movies” in a matter of days on Facebook (indeed, Facebook is now the largest server of display ads online, so for many demographics, it’s becoming the mass medium of the Internet).

These are two extremes, however; the bulk of advertisers – and of impressions on Facebook – fall somewhere in the middle. If you take the wedding ring example, the vast majority of Facebook users will not spend the time to express interest in “wedding rings.” When you buy an ad directed to all users who are “engaged”, should you assume that this ad will have the same ROI as your AdWords campaign, or should you think of this as “awareness” that will lead to a conversion down the road?

The answer to this question most likely comes down to proper attribution – if you can actually track a consumer from a click (or view) on Facebook to an eventual purchase days later through, say, a PPC click, then you can give Facebook the right amount of credit. Unfortunately, 99% of online advertisers at the moment have no way to track at this level of granularity (we’ll discuss this more later on).

What I’ve seen in 2010 is that advertisers that try to hold Facebook to the same standard as a PPC campaign will be sorely disappointed – it is definitely a hybrid of “creation” and “fulfillment” marketing. In 2011, I think that smart advertisers will change both their thinking and their measurement of Facebook and find a way to make Facebook work as a meaningful complement to existing PPC campaigns. Here are a few ways I think this will happen:

a.      Proxy Metrics. A proxy metric is a “soft” metric, i.e., one that shows a likelihood of a positive outcome, but is not the final positive outcome. For example, a user who clicks on a link to “get directions to store” could be measured as a proxy metric for user intent to purchase something in a store, whereas a shopping cart conversion is a hard metric. Because I think Facebook is a hybrid medium, you need to combine proxy and hard metrics to judge performance. So even if the conversion rate to a purchase is 50% of your average conversion rate on Google AdWords, if you also see that Facebook users have a much stronger tendency to sign up for emails, refer friends, bookmark pages, click the “contact us” button, and so on, you may still discover that Facebook is incredibly powerful for your business. Note that almost all of these metrics can be easily tracked through Google Analytics.

b.      Attribution: Online measurement tools will improve in 2011, and part of that improvement will come from better attribution. If advertisers can determine how Facebook impacts downstream conversions, the result may be more budget spent on Facebook ads.

c.      3^rd Party Tools: We’ll see more and better Facebook tools in 2011. So far the best one I’ve seen is Alchemy out of the UK, but I’m pretty confident that the paid search campaign management companies will be catching up quickly to the stand-alone Facebook tools (or they’ll just acquire them). These tools will enable advertisers to quickly and efficiently test hundreds of cross-sections of user data – e.g., massive combinations of geo, age, psychographics, etc – as well as many different images and ad text, and identify the sweet spots amongst the millions of users out there. Unless Facebook suddenly comes out with a better user interface (I’m not betting on it), investing in one of these tools will be a must for anyone who wants to spend more than a couple of thousand dollars a month on Facebook.

Ah AdWords testing . . . I love it when placeholders inadvertently go live . . .

Mobile: Android, AdMob, and iPad, Oh My! I’ve been hearing about how important mobile is to businesses since 2000! Every year, some industry pundit predicts that “m-commerce” is going to explode. I think we’re finally at a point when the pundits might actually be correct. In my mind, there’s a convergence of three factors that will make mobile important in 2011.

First, there’s Android, Google’s operating system (OS) that is now a serious competitor to the iPhone. Google is allegedly shipping 300,000 Android phones a day, and folks not on AT&T (which still has exclusive rights to the iPhone) are eating up Androids quickly. The iPhone and Android are the first mobile devices that are really being used by consumers as mini-computers. This is due to the incredible diversity of useful applications (“apps”), the bigger screens, faster browsing, and touch-screen usability. The number of consumers that now have access to a decent and useful Web experience on their phones has virtually doubled overnight thanks to Android. For 2011, this means that e-tailers who have a mobile-friendly site should start to see a small but meaningful number of transactions coming through mobile. For non-e-tailers, it means that an app strategy or even a straight mobile advertising strategy might make sense.

Apple’s iPad launch, while not really a mobile device like a cell phone, is still relevant to this space because it is basically a big iPhone without the phone part. Consumer usage of the iPad, however, is much different than a cell phone or a laptop (or even a netbook). I see tablets as purely interactive devices. They are useful for digesting and exploring content quickly. For some reason, it’s fun to flip through a bunch of pages of merchandise (or articles) on the iPad in a way that would be boring on a laptop or too slow on a mobile device.

What I think this means is that we are basically moving from one dominant form of online engagement (the computer) to three: the computer, the mobile device, and the tablet. The tablet is still at least a year or two away from mass adoption, so I don’t think tablet development needs to be a priority for 2011, but the success of the iPad (and subsequent launch of many competitors) tells me that this is coming in the near future. And if you are inclined to spend some money now building a really cool iPad app, you do stand a decent chance of getting good adoption from existing iPad users – the number of iPad-specific apps out there is still pretty limited so the competition is sparse (that won’t last, trust me).

Finally, with the growth of mobile, it’s not surprising that Google made a move in 2010 to protect its online advertising dominance, acquiring AdMob for $750 million (congrats to my friend Saar for being an angel investor in AdMob; he’s buying the next 25 lunches we have together . . .). While I know of few advertisers that have had a lot of success through mobile advertising in 2010, I believe that in 2011 all advertisers should at least begin experimenting with a mobile advertising strategy, and some advertisers will actually find some nuggets of gold in mobile ads. The big challenges that I see for mobile advertising are 1) proper tracking (no cookies!); 2) proper attribution (is it the top of the funnel, the bottom of the funnel, or somewhere in between?); 3) resource allocation (how much time should I spend on this now if I hardly have enough time to work on my existing channels?).

The good news is that you can dip your feet in mobile and figure this stuff out at a fairly affordable cost at the moment. Just as PPC was a great “arbitrage” opportunity in the early 2000s, so too is mobile these days. Starting some testing in 2011 gives you the opportunity to figure out the right mix and measurement of mobile and be a few steps ahead of the competition as mobile’s marketshare heats up.

For a great summary of mobile developments, I recommend this report: http://metrics.admob.com/wp-content/uploads/2010/06/May-2010-AdMob-Mobile-Metrics-Highlights.pdf

Editor’s Note: I sent an 18 page letter to PPC Associates clients earlier this year. This seven part series is basically that letter. Enjoy (and become a client and get it a month earlier next year!)

A year is a long time in “Internet time.” Companies and concepts that weren’t even a footnote to 2009 were major players in 2010 (e.g., Groupon, FourSquare, AdMob, and DSPs). Below are my “big seven” trends from online marketing in 2010.

1. PPC: The Fall of Text, The Non-Rise Of MicroHoo. While AdWords initially started as a non-obtrusive, text-based alternative to the “banner blindness” of display ads, there’s no doubt that Google now believes that future revenue growth will come from integrating ‘extra stuff’ into AdWords ad units. To that end, Google launched a bevy of “ad extensions” in 2009 that allow advertisers to supplement their text ads with pictures, maps, and more. A few of the more interesting launches included:
   1. Product Extensions: Show images and prices of relevant products;
   2. Star Reviews: Integrated customer rankings from BizRate;
   3. Phone Number: A custom phone number that can be tracked back to your AdWords campaign;

All of this is in addition to the existing extensions that Google already offered, including a Google Checkout logo and map extensions.

More ad extensions are coming in 2011. Google has a private beta called “Offer Ads” that will allow merchants to run printable coupons in ads. They have also experimented with allowing advertisers to run videos as an extension. It would not surprise me to also see Google launch a product similar to Milo.com (acquired by eBay), which provides in-stock availability of local merchandise. This would be a good complement to the existing product extensions.

The bottom line for AdWords advertisers is that text ads alone aren’t always going to work on Google anymore. It’s important to constantly test the different extensions currently available to determine which one drives the highest incremental click-through rate (CTR) and conversion rate for your business. All PPC Associates (PPCA) account managers are well aware of all of these extensions, so make sure you are asking them regularly about what is best for your business!

Meanwhile, after many months of preparation, Yahoo and Microsoft officially merged their PPC advertising platforms into one unit. The big question on the minds of many PPC advertisers was whether this merger would create “economies of scale” that would suddenly make it more worthwhile to spend time on Yahoo and Microsoft. Prior to the merger, most advertisers felt that they were lucky to get 10% of their total clicks from these two search engines (versus 90% from Google AdWords alone).

Since the merger, the general consensus has been that the combination of the two networks has caused more problems than benefits. Inconsistent volume, low quality clicks, and difficulty controlling partner sites and content networks have all been noted by PPCA team members. As a result, the current feeling on “MicroHoo” is that it is still not a huge opportunity for our clients.

I do think that many of these bugs will be worked out in 2011, so at least management of accounts will be easier. I don’t, however, think that we will see a significant shift in marketshare from Google to MicroHoo. While Bing has made some small gains in marketshare, the search wars are over and Google is the far and away winner. Running on MicroHoo can provide some incremental clicks, but the focus should still be Google first, then MicroHoo (time permitting)!

I’m always surprised to discover that anyone other that Steve in Des Moines, Chris in Palo Alto, Terry in SF, and Jeremy in Chicago actually reads my blog, so imagine my surprise when I got an email from Danny Sullivan at SMX contesting some of the points I’d made in my last post about SEM conferences.

For those of you (um, like Steve in Des Moines) who aren’t deep into the world of SEM, Danny Sullivan is a living legend. I’m not saying that to be sycophantic, he just is. He was writing about SEM before Google was even a twinkle in the eye of Larry and Sergei, and his Search Engine Strategies (SES) conference was pretty much the only place a nerdy SEM could go in the early 2000s to be surrounded by other people who actually found all of this search stuff interesting. After selling SES a few years back, he founded Search Marketing Expo (SMX), the conference I recently applied to – and was rejected from – as a speaker, and the catalyst for my recent diatribe on SEM conferences.

Over the last few days, Danny and I have had a frank dialogue over email about my blog post, SMX specifically, and SEM conferences in general. While it would not be appropriate for me to quote any of Danny’s comments from a private email conversation, he definitely convinced me that some of my statements about SMX were unfounded. In particular, I feel bad about the comment that SMX’s process of choosing speakers was based on “a complex vetting process that can only be described as a combination of Cronyism and laziness.” I’m now convinced that Danny and his team take speaker selection seriously and review all submissions carefully (though it is of course insane that they wouldn’t want me speaking on the panel I submitted to!)

And in general, I now see that Danny and his team have a genuine passion for creating great conferences and for trying to make SEM conferences better. I’ll be the first to admit that I stopped going to SEM conference sessions several years ago simply because I felt that “the definition of insanity was doing the same thing over and over and expecting different results.” So I’m almost ready to take Danny at his word and give SMX sessions a chance again.

Now that I’ve been uncharacteristically nice for this blog, there are still things about SEM conferences – SMX or otherwise – that trouble me, and I’ll use the rest of this post to outline my Utopian vision for the perfect SEM conference. Here, then, are BLANK ways to make SEM conferences better:

1. Speaker and Moderator Diversity: No doubt there are speakers out there who can prepare brilliantly for multiple sessions in a single conference, but my experience suggests otherwise for the vast majority of speakers out there. Moreover, because virtually every SEM out there has a unique approach to their trade, even if a speaker could talk on multiple panels, I still believe that more knowledge is shared when more people present.

2. Active Versus Passive Speaker Recruitment: Most conferences send out a call to potential speakers to submit their names for a panel. The problem with this approach is that it inevitably attracts consultants, agencies, and other sales organizations with ulterior motives. This is not to say that these speakers can’t provide valuable content (I know that I always try to . . .), but the best speakers are likely the ones who aren’t proactively volunteering. The “in the weeds” SEM nerds need to be coaxed to share their secrets.

3. Less Versus More Speakers: As Alex from ClickEquations noted in the comments from my last post, whenever you have more than two or three speakers on a panel, it’s impossible for anyone to actually share in-depth learnings.

4. Fewer and Longer Rather that More and Shorter Sessions: Basically the same point as above. I’d like to see 90 minute sessions with 2-3 speakers, rather than 60 minute sessions with 4-5 speakers.

5. Overwhelming, not Underwhelming Presentations: Rather than catering to the lowest common denominator, I’d like to see sessions where people leave scratching their heads, not yawning. Show me your algorithm! Decode Quality Score! Make my head hurt!

6. More Presos, Less Roundtables. As much as I hate to say it, there’s a time and a place for PowerPoint, and a conference is probably that time and place. Roundtable discussions are great if you want to hear theoretical musings from CEOs, and occasionally that is interesting, but for the most part I’m interested in tactical details. Plus, when a panel is filled with middle-level managers, a roundtable structure encourages rambling and a lack of preparation.

7. Required Draft Submission and Editing. Every speaker should be required to submit at least one if not multiple drafts to the moderator of their session, and the moderator should work hard to come back with constructive comments.

8. No Circuit Speakers: Anyone who speaks at more than 3-4 conferences a year should be banned from further speaking engagements that year.

9. No Computers on Stage: No emailing, tweeting, web surfing, or whatever else a speaker might want to do on his/her computer.

10. Free Admission for Experts!: OK, perhaps a pipe dream, but why not? Why not compel experts to join the audience – even if they aren’t speakers – by offering up free admission? This is already done for the exhibit hall, after all. (OK, this point is a bit of a silly one, but I felt like I needed to have 10 points . . . ).

So there you have it. Feasible? Utopian? Less cranky than the last post?

Upfront Disclosure: I applied to speak at SMX West and was rejected.

I don’t know anyone who has been in SEM for more than a year or two who has ever come back from a search conference with oodles of new and useful information. The purpose of going to SMX or SES or Search Insider Summit, or Search Outsider Summit (if it exists) is really to network, as far as I can tell. Typically the sessions have the same speakers every time, most of whom are either totally unprepared or totally unqualified, or both.

Last year I spoke on an “Advanced Paid Search” session at SES SF and one of my fellow “experts” told the audience to never buy competitors’ keywords. This is like a tax advisor telling you not to take charity deductions – it’s just wrong and will cost you money. I’ve also seen some well-known speakers who bring their computer up on stage and tweet/do work while other people are presenting. Isn’t that sort of like talking loudly on your cell phone at a five star French restaurant?

This year’s list of speakers at SMX West appears to have been chosen through a complex vetting process that can only be described as a combination of Cronyism and laziness. To wit, a quick review of the speakers (only on the PPC side mind you) reveals that the following companies each have representatives on three different panels (in some cases, the same person):

• AimClear
• Click Equations
• Did It
• Efficient Frontier
• Rimm Kaufmann Group

Don’t get me wrong, these companies have a lot of smart people working for them (and apparently even smarter PR and event management people). But given the sheer number of PPC agencies and experts in the SF Bay Area alone, one would think that having five agencies take up 15 speaking slots could be – and should be – avoided.

I find it especially troubling when I see the same person speaking on two or sometimes three panels. If you are such a great expert that you are worthy of appearing on three panels, you are no doubt in such high demand that you simply do not have the time to adequately prepare for multiple presentations. The inevitable result, of course, will either be rehashed or ‘re-purposed’ presentations from prior panels, or no preparation at all.

I’ll be the first to admit that I am not qualified to come up with a solution for this conference malaise. I tried to start my own conference two years ago and I don’t believe I succeeded in truly creating valuable content at every session. Based on my own experiences, I think part of the problem is that there is simply a disconnect between creating a ‘successful’ conference from a revenue-perspective, and developing high-quality content.

Building a conference requires a ton of work that is not related to content – booking event space, closing sponsors and exhibitors, promoting the event, selling tickets, biz dev deals, etc. Ironically, putting together great content almost becomes an after-thought. And let’s not forget the subtle and sometimes explicit pressure that comes from top sponsors to have their speakers on the primo panels. The line between editorial and business is not very clear in the conference world.

On top of that, there’s the problem of trying to be all things to all people. Conference organizers feel an obligation to create some panels for beginners, lots of panels for intermediate knowledge, and just a few advanced sessions. And speakers often feel that they must water down their knowledge, thereby talking to the lowest common denominator. It’s sort of like a one room schoolhouse – the sixth graders have to sit through 1st grade arithmetic.

It all comes together in a well-packaged, cool-sounding, but incredibly stale and pointless series of conferences. Attendees continue to attend to network and meet old friends, speakers continue to speak to build their personal brands, and sponsors continue to sponsor because they probably do snag a few new clients from the exhibit floor. In the process, little knowledge is actually shared. It pains me that we can’t break this cycle.

This will be my shortest blog post ever. Technology founders should not try to run their companies. I said this about Jerry Yang and Yahoo. I’ll say it about Larry Page and Google. Bad idea. Period. He’ll last one year.

I’ve never read Seth Godin’s All Marketers are Liars, but I assume the premise is something like this: marketing by definition is the art and science of manipulating behavior. Manipulation implies altering perception, perhaps through half-truths and outright lies. Thus, all marketers must lie to consumers to effectuate a desired outcome.

It goes without saying that there are good marketing lies and bad marketing lies, and the difference between the two comes down to whether consumers actually believe the lie (which would be a ‘good lie.’) For example, if McDonald’s came out with a marketing campaign with the tagline: “Eating a Big Mac for Breakfast, Lunch, and Dinner is the Quick Way to a Healthy You”, consumers would dismiss the ad outright as fraud. Instead, McDonald’s doesn’t explicitly make this claim, they just happen to show very fit, outgoing young people enjoying their good health while enjoying a Big Mac. That’s the difference between a good lie and a bad lie.

Driving up and down Highway 101 – the heart of Silicon Valley – I’ve recently noticed two billboards from AOL trying to recruit new employees.  The first, seen below, has the tagline: “Come Work for AOL Before Your Boss Does.”



I’ve also seen another billboard with the tagline: You’re the Start-Up, We’re the Venture Capitalists.” I couldn’t find an image of this one, but it looks about the same as the one above. The message on each of these, I guess, is that AOL is stealing away top talent in Silicon Valley to work on cutting edge projects. You should join too and enjoy the freedom and vast resources of the AOL empire!

If I asked 100 people in Silicon Valley to describe AOL in a word or two, I suspect I’d get answers like: dinosaur, irrelevant, dying, and left-behind. With a reputation like that, it’s a stretch to convince dot-commers that their boss is on their way over to AOL. As Michael Arrington put it, “If you want to go work somewhere in Silicon Valley before your boss does, it’s Facebook, Twitter or Zynga. The pre-IPO startups.”

These billboards, in other words, are really bad lies, and no one believes bad lies. To be a good liar, you’ve got to understand what you can and can’t get away with. For example, I could see an AOL billboard that said something like this: “AOL engineers filed 2,438 patents last year. Yes, we said AOL!” or “The old AOL culture is dead. Come help us build the new one.” In other words, you’ve got to base your lie on a modicum of truth, and then use that truth to insert the lie into the mind of your audience. AOL seems to have decide that they can just skip this step and go straight to the lie, and that won’t work.

Yesterday I discussed the concept of normalization of CTR by position and how this factors into Google’s revenue optimization algorithm. Today, let’s discuss the “sandbox.” The sandbox is basically a holding pen for new advertisers or new ad text. Google does not fully show your ads when you initially launch a campaign, instead testing your performance in small bits until it has statistical significance about you. This is the sandbox.

My theory (again, without any supporting evidence!) is that sandboxing has several elements:

• The average CTR of all ads on a keyword: Thus, if the top position for the keyword “blue widget” has historically gotten a 20% CTR, and your ad has 3 clicks after 10 impressions, Google might be able to quickly determine statistical significance and move you out of the sandbox. An ad, however, with a historical .001% CTR might need thousands of impressions to make the same conclusion.
• The likelihood of new ads beating historical CTR performance: If a popular keyword has thousands of new bidders every week but historical data suggests that almost all new bidders will not be able to create ad copy that outperforms the current bidders, Google requires very strong evidence for you to get out of the sandbox (and the opposite would be true if new ads typically beat existing ads);
• Your historical account performance: If your account has very low CTR throughout, the sandbox penalizes you, and vice versa.

All of this amounts to a risk/return analysis for Google. Google always wants to increase revenue by allowing higher performing ads into the auction, but they want to balance that return with risk mitigation against lower performing ads that reduce the revenue per thousand impressions.

One interesting point about this theory is that it essentially considers two factors totally independent of your actual behavior, and just one factor that is account-specific. In other words, your control over whether you could ever actually show up on a given keyword is largely determined by the historical data Google has amassed before you entered the auction.

This truth, combined with confusion about CTR normalization, has led to the notion that you can – or must – “buy your way into the auction.” The notion is that if you bid $50 CPC on a keyword that would cost an existing advertiser $.20, you can push your way into even the most competitive keyword auctions. My sense is that this strategy works for overcoming sandboxing on the most challenging keywords, but has no impact on Google’s scoring of your CTR. So if you are stuck in position #40 on a top keyword, Google is basically saying “we don’t think any new advertisers can make us more revenue on this keyword, so go away.” In such a case, a huge bid gives Google incentive to lower the barriers to entry and give you a shot at competing. Of course, once you lower your bid down to the level of other players, you must still overcome CTR normalization like everyone else!

Any questions?

I have heard this debate numerous times, so I felt it was time to step in and spread some truth(iness). Your ad’s rank in Google is based on three factors: maximum cost-per-click, click-through rate (CTR), and Quality Score (QS). Given the fact that ads in higher positions tend to get a higher CTR as a result of user behavior (people click the first thing they see), many SEMs have concluded that an easy way to reduce your CPC is to simply bid at a high position when you launch your ads, get a great CTR, and then surreptitiously lower your bid and position over time. The idea here is that Google’s system will have already given you a lot of credit for your CTR, and you can then pay a lower CPC to maintain a good position moving forward.

This plan would make perfect sense, if only Google was run by idiots with no knowledge of math or programming. Google’s objective is to make money. They make money on AdWords by maximizing the revenue per thousand impressions (RPI), which is calculated by CTR X CPC. If people could actually game the system by getting a quick CTR boost and then quickly reducing bids to a lower position, Google’s RPI would suffer.  So how do you stop the gamers? Well, there’s two ways to do it: normalization and sandboxing. Since I’m trying to write a blog post almost every day, I’m going to save sandboxing until tomorrow. Let’s focus for now on normalization.

Normalization means that the CTR at a given position for a given query is compared to other advertisers’ CTR at that position. So if I have a 20% CTR in position #1 and you have a 22% CTR in the same position, assuming max CPC and QS are the same, you will show up ahead of me. And if I have a 20% CTR in position #1 and you have a 2% CTR in position #2, this does not necessarily mean that you will show up ahead of me, because Google might extrapolate that my projected CTR at position #1 might in fact be 22%, so given the same bid and QS, I could still out-place you.

Do I have any proof of this? No, I didn’t even bother to research other articles online to support this point. Logically, however, it is impossible that Google doesn’t normalize, because it would cost them millions or billions of dollars. Who’s with me on this?

OK, tomorrow we’ll talk about the sandbox and how this further prevents gamers from getting cheap clicks at Google’s expense!

Trying to restart my regular blogging this year. Here goes  . . .

I’ve recently seen two ads that I found strange and/or funny. The first is a banner for a movie on Lifetime about “The Craigslist Killer”. Here’s the banner:

I have two comments on this banner. First, what’s up with the random use of URL structure. “//craigslist.killer” – so is there a domain name called killer.com and someone decided to create a sub-domain specifically for craigslist killers? And the sub-head says “be careful what you search for.” I’ve never really thought of Craigslist as a search engine – it’s more of a directory. Other than that, I love the bloody fingerprint on the delete button – nice work!

The next ad showed up in my Gmail account (via Google Display Network, or AdSense). The topic of the ad versus the semantic content of the email it was matched on is a stretch to say the least:

I don’t blame AdWords for this – I blame the advertiser, or the advertiser’s agency. I could see trying to match content around “suicide” but the word “clean up” has 10,000 meanings other than suicide clean up. I did click on the ad, out of morbid curiosity, and the company is hiring new team members, if anyone out there is interested.

Looks like SFGate.com needs to improve their semantic targeting, judging from the ad at the top of the page for this article.

For those of you who don’t live in Silicon Valley, or who do and just don’t care about the “inside baseball” goings-on of the start up investing world, a super secret meeting of “super angels” occurred in San Francisco earlier this week and has the Valley in a tizzy.

First, some terminology. In the world of start-up investing there are basically four species of investors: angels, super angels, venture capitalists, and private equity investors. Angels are basically rich people who make small investments (usually between $25K and $500K) in very early-stage start-ups. Most angels are retired entrepreneurs who enjoy working with start-ups and of course would like a nice return on their investment. Super angels are like angels, except that they are much more serious about their investments. They typically invest in dozens of companies, they may raise some money from outside investors, and they often have staff to help them with picking companies.

Venture capital firms are established companies with venture capital funds from outside investors. These firms will typically have anywhere from $50 million to many billions of dollars to invest, and their investments usually start around $2 million and go up from there. And finally, private equity investors are like venture capitalists, except that their investments usually start after a company is pretty well-established, and they like to put in $20 million or more in a company.

In the early days of the Internet, venture capitalists had a lot of power. It was difficult to really start a company without $5 or $10 million, which meant that you were too big for an angel and too small for a venture capitalist (and too risky for a bank). Since that time, the cost of launching a start-up has plummeted – largely due to open-source software, outsourcing, and better, faster and cheaper technology. Suddenly a lot of companies only need a couple of hundred thousand dollars to get off the ground. This new, lower cost of entry has created the world of super angels. Whew, that was a long explanation!

So this week, a bunch of these super angels held a super-secret meeting at a restaurant in San Francisco. Michael Arrington, founder of TechCrunch, a popular technology blog, found out about the meeting, showed up unannounced, and then wrote about a grand conspiracy that he believed was taking place at this meeting – a conspiracy to collude on deal valuation and exclude people outside of the meeting from deals. Attendees denied the allegations, and then Arrington struck back by releasing an email from Ron Conway, the “Godfather of Silicon Valley” and the world’s best-known angel, who wasn’t at the meeting and condemned the attendees for their evil ways.

So now that you are caught up on this crazy saga, let me explain to you why I think all of this is interesting. I think the first interesting point here is that super angels are a really important part of Silicon Valley these days because traditional venture capital is in trouble. Indeed, Dave McClure, one of the attendees at the secret dinner, made this point quite well in a recent blog post:

most VCs are Dinosaurs, and the World Wide Web is an Asteroid that hit the planet in a slow-motion cataclysmic explosion 15 years ago. It may take another 5 years for the ash clouds & nuclear winter of Browsers, Search Engines, Social Networks, & Mobile Devices to kill all the T-Rexes, but it’s a done deal. The marsupials are taking over and in 2015 there will be a lot more investors that look like Jeff Clavier, First Round Capital, Y-Combinator, TechStars, Betaworks, & Founder Collective than any Sand Hill VC (funny how all the innovation is from non-valley investors, isn’t it?).

I think he’s 90% right – I do think that the balance of power has shifted away from VC firms, or at least from anything but the Kleiner Perkins and Sequoia’s of the world (and firms of their stature). The problem with McClure’s argument, as I see it, is the notion that “the marsupials are taking over”, i.e. the super angels. After all, if its true that right now you need $500K and not the $5M you needed 10 years ago, isn’t it also likely to be the case that in five years, you’ll only need $250K, and perhaps five years after that, perhaps $100K?

If this is true, then what we are seeing is a classic innovator’s dilemma, where existing players continue to cede marketshare to new players who are willing to take the smaller deals that they believe are beneath them, until there are no large deals and only the small players are left. To put it another way, the marsupials will give way to the rodents, who will give way to the insects, who will eventually give way to the single cell organisms. Super angels will find themselves competing with “friends and family” investors or even traditional banks or SBA loans for great deals.

Ultimately, this means that the true value investors will bring is not their money, but their connections and advice. Or to put it another way, the concept of investing in start-ups will be replaced by start-ups simply finding good advisors that can help them build a successful business. There’s no question that many super angels are successful because they provide great advice to start-ups, but their power also comes from their ability to dole out six figure investments along with this advice. Take away the financial barrier to entry and suddenly the number of potential advisors goes from maybe 20 super angels to thousands of smart, experience people in Silicon Valley!

So today AngelGate may be a big deal, but in the long run it won’t amount to much – the power is shifting to the entrepreneur, and no amount of collusion from angels or VCs can stop that.

Once again, the Facebook ad team seems to be letting some, um, questionable ads through the approval process. Here’s one that I saw today. First, the ad itself – do you think this could be intended to confuse users as to whether this is a lead gen company or the government?

OK, I’ll give them the benefit of the doubt that the headline writer was just a bit over-zealous. Let’s move on to the landing page here:

So the URL is “CriminalJusticeDepartment.org.” Um, yeah, there’s definitely some misrepresentation going on here. Of course, not surprisingly, after filling out all of your personal information you get to the inevitable list of for-profit schools from which you can get criminal justice degrees (which is tangential at best to joining the CIA).

But lest we just conclude that this is simply false advertising to the nth degree, our friends at the CIA/Criminal Justice Department have one more surprise in store for us – that’s right, malware!

So let’s recap – representing themselves as both the CIA and the Criminal Justice Department *and* throwing some malware on users’ computers. Paging the Google Quality Score department – Facebook is now hiring!

Google’s investment in Trada, a company that uses crowdsourcing to manage SEM accounts, raised some eyebrows in the SEM community this week. Is this part of a grand conspiracy to crush 3rd party SEM agencies? Is this an acknowledgement of Google’s failings internally at providing quality advice to clients?

My sense, simply put, is that it is not the former, and probably not the latter either. Let’s start with the first theory: Google wants technology/outsourcing companies to replace agencies. This is the classic “man versus machine” debate that has occurred since the dawn of the industrial revolution. What we’ve seen over time is that machine beats man when it comes to rote processes and man beats machine when it comes to ingenuity and thinking. The Model T production line replaced hand-building cars, but strategic consulting firms like McKinsey and high powered law firms and lobbyists continue to thrive despite great technical innovations.

Crowdsourcing may well be a way for top consulting firms to improve efficiency by outsourcing some menial tasks to the masses, but crowdsourcing cannot replace good strategic thinking and advice. Just as black box bid management algorithms cannot operate independent from a smart operator, crowdsourcing of keyword creation, bidding, and the like will always be beaten by crowdsourcing combined with smart management.

OK, theory #2: Google thinks crowdsourcing can outperform their internal teams. I doubt this one as well, mainly because I don’t think Google has enough self-awareness to realize that a large part of their AdWords support organization is largely useless to SEM experts. If they did, they would lay off about 90% of their staff in this department and use Trada to help clients, or just come up with more instructional videos.

My theory on the Trada investment revolves around the myriad of ‘local’ SEM companies out there – companies like ReachLocal, Yodle, and Orange Soda. These companies emphasize “quantity over quality”, meaning that they do an average job for thousands of clients, rather than a great job for dozens of clients. Inevitably this means that many clients end up pretty disappointed. Disappointed clients – especially SMBs just dipping their feet into SEM – may decide that the problem was not with their local agency, but rather with the very concept of SEM. As a result, they may decide to not only fire their agency, but give up on SEM entirely.

That’s a big problem for Google, since SMBs collectively can drive huge revenue and are still largely untapped. Moreover, Google definitely does not want to serve these companies through their AdWords support team, as this would not be cost-effective. The answer may well be a company like Trada, which can displace the poor service of local agencies without breaking Google’s support infrastructure. That’s a win-win for Google.

Saw this ad on my homepage when I logged into FB:

Offensive as this is, it gets worse because it takes you to this horribly crappy site:

Allegedly this is a charity, until you scroll down further:

It appears to actually be an MLM/Get Rich Quick/Work from Home Scam.

This was approved on Facebook? For sham, I mean, shame!

“Example” toolbar? Try “Fantasy” toolbar.

I got six emails from AdWords today inviting me to participate in a survey about AdWords. Three of the messages offer me a free Google mug or gym bag and three offered me a free copy of the book Web Analytics 2.0. Hmm, mug, bag, or book. Which do you think I should take?

Note: If you didn’t watch Survivor: Heroes vs. Villains, this post won’t make much sense . . .

Reality TV is usually quite removed from actual reality, but there are occasional glimmers of relevance. Such is the case with the most recent season of Survivor, Heroes vs. Villains. I came away with two distinct business lessons, which I impart to you now . . .

1. You don’t get what you deserve, you get what you negotiate. Russell, the ultimate Survivor villain, made it to the finals of the show in two consecutive seasons, and in each case, overwhelmingly lost in the final vote. In each case, he was adamant that he “deserved” to win because he had played the best game. He even argued that the rules of the game were flawed and that they should be changed to be more fair (e.g. to reward the ‘best’ player).

Russell apparently is a successful businessman so he should know better – you don’t get what you “deserve”, you get what you negotiate. His pompous attitude, relentless deception, and lack of a final game plan may have made him feel like he was the “best”, but he ended up winning the battle and losing the war.

2. Your Title Defines You. The concept of this season’s Survivor was to split past season’s “heroes” (people who acted nobly) with “villains” (people who were deceptive). Personally, I thought that the labels weren’t entirely accurate, in that some of the villains were pretty decent, and some of the heroes were downright jerks. What was interesting, however, about the labels, is that they made the contestants start to act like their categorization. Just like Zimbardo’s Stanford Prison Experiment, calling someone a villain makes them act evil, and calling someone a hero tends to make them act nicely. The result: first off, the villains repeatedly justified their bad behavior my noting that they were the “villains tribe” and thus bad behavior was expected of them. Second, the heroes were completely manipulated by the villains, resulting in a final three made up solely of villains.

This sort of psychological shift happens in the business world when employees adopt the ‘personality’ of their business. This is known as the “agentic shift” and is why you frequently see perfectly ethical people acting quite badly when they are employed in unethical companies.  It’s no surprise that the same thing happened on a reality show!