A Government Bailout? Pour Moi?

Surely a Facebook ad that promises that I can get money from the government to buy a house, pay bills, or start a business as part of “billions of dollars” of bailout money must be legit, right?

Oh wait, it’s yet another fake blog, but this time its sending us to the good ole “get government grants for free!” trick.

What’s next? How about a blog about someone’s incredible winning streak on an online casino, or the adult video web site that is absolutely free? When will consumers start to discount blogs entirely, or when will publishers stop this sort of nonsense? As for the latter scenario, don’t hold your breath, especially in this economy!

 

The Flattening of Teaching: EDUFire Globalizes Education

Technology has democratized learning. Think about life in the middle ages – only nobles and priests could read, in part because books were so expensive to produce. The printing press changed this and enabled the masses to get access to reading material.

Similarly, higher education was once a privilege for the elite. But the spread of land-grant public universities opened college to millions. And now we have Internet, which has created online universities that enable students to take classes in their spare time, without quitting their day job or even leaving their house! And of course we all know that Wikipedia and Google give the world a wealth of organized information never available before.

But while all of this is great for students, the benefit to teachers has been more limited. Elementary and secondary teachers are still grossly underpaid, lack resources, and must teach classes way over capacity. Getting a tenure-track job at a post-secondary institution is such a long-shot that many aspiring professors don’t even bother trying to get a teaching gig and end up doing something else. So it seems that the spread of information and access to education has been a boon for students but as yet has not produced the same benefits for teachers.

I recently came across a site that might level the playing field for teachers, at least temporarily. The site – EDUFire.com – works like this: as a teacher, you can list your area of expertise and an hourly rate and students can schedule time to video conference one-on-one with you. Even better, you can also offer to teach a class and charge students a per-seat fee. To wit, I just scheduled a class for this Saturday called “Introduction to Google AdWords.” I’m charging students $20 each for one hour (which is a lot less than what they’d pay for my consulting services!). So far, I have eight students signed up. That $160 – less a small transactional fee- not too shabby.

The ability to offer tutoring or classes online directly removed two barriers for teachers: locality and middleman. Previously, if you were an Arabic teacher in Saudi Arabia, you were limited by the number of potential students and the level of competition. So while an Arabic teacher might bring $50/hour in New York City, due to the local demand and scarcity of teachers, an Arabic teacher in Saudi Arabia might not be able to get any business at all. EDUFire solves the problem of locality – anyone with a computer can now access your services.

The other problem teachers had was that teaching opportunities were consolidated by middlemen – in this case, schools. If you wanted to teach a class, you needed a classroom, a marketing budget, and a brand to attract students. So that meant signing up to teach at the local community college or high school. Since there are only so many colleges and high schools, you would inevitably end up in fierce competition for the few teaching positions available, which meant that you would get paid less than the actual value of your services (in Marxist terms, you would be alienated from your labor). EDUFire, while still a middleman of sorts, eliminates most of the scarcity created by traditional middlemen. All you need is a computer and you are ready to teach a class – no lengthy applications to the community college needed.

The other nice element of EDUFire for teachers is that it rewards quality. There’s no concept of tenure when teaching online, and if you turn out to be a horrible teacher, students can rate you accordingly. Over time, the teachers that provide the greatest value to students will commandeer the highest ‘salaries.’ Anyone who has attended a high school or college knows that such a meritocracy doesn’t exist in the real-world!

So does this mean that EDUFire – if wildly successful – will free teachers from the shackles of low pay? Well, probably not. EDUFire is a perfect example of Thomas Friedman’s concept of a “flattening world.” The interconnectivity of the Internet makes it possible for anyone, anywhere to teach at anytime. Inevitably, that means that as EDUFire becomes more successful, the price teachers must charge to be competitive will decline rapidly. This is no different than what has happened over time on contracting sites like Elance or Guru.net – eventually there is always a .NET programmer in India who is willing to do work for $5 an hour. American contractors have a hard time competing at that rate. So while I may be getting $20 a head for my AdWords class today, two years from now the going rate will probably be more like $.50.

Of course, the elements of quality and scarcity will still apply. If I happen to be the best AdWords teacher in the world, of if there are only five or ten people that have the knowledge I have, I will still be able to charge a premium. But when it comes to teaching that is widely available, like learning a language or teaching math, the global marketplace will inevitably brings rates way down.

Tangentially, it turns out that I foretold the rise of EDUFire many years ago on this blog – albeit I predicted the concept in an entirely different vertical – online porn! In late 2005 I suggested that Google Video (now YouTube) could be a great leveling force in the world of online porn (a world which I would like to state I know very little about, but go ahead and start the snide comments!). Here’s what I wrote back then – just replace “actor” with “teacher” and you can see the similarities between online education and online porn:

This is a highly inefficient market, for two reasons. First, because the sellers are fragmented across the Internet into thousands of Web sites, it is difficult for the buyer to really see the entire market. A buyer would have to look at dozens of different Web sites – which would take hours or days – to determine which site has the best “product” for him (or her).

Second, the market is inefficient for the “actors”. A local actress in Pittsburgh, PA has only a few choices when it comes to selling her wares (the local porn Web sites). As a result, she gets paid a lot less than she would if she could choose from all of the different porn Web sites across the world, or better yet, not have to work with a middle-man at all.

This is the same type of inefficient market that existed prior to eBay. A buyer of farm memorabilia in New York City would have to pay way too much money to purchase his replica John Deere tractor from the local antique store, simply because the supply in NYC was so limited (his demand outstripped the limited supply). Similarly, a seller of farm memorabilia in Iowa
couldn’t make very much money, because the supply was so abundant (with little demand).

Once eBay came along, the supply and demand shifted from being local and inefficient to national (eventually worldwide) and efficient. On eBay, the true price of the John Deere tractor is achieved because all of the buyers and sellers have been aggregated in the same place. In economic terms, this is known as perfect competition.

Google Video will enable such perfect competition for online porn. Now, an actress in Pittsburgh will no longer have to deal with “JimmysHotGirls.com” down the street – she will be able to upload her own video, right onto Google Video. Google will, in turn, enable anyone in the world to download her video – taking a rev-share for Google and giving the rest directly to the actress.

Similarly, a purveyor of online porn won’t have to browse hundreds of small sites to find what he/she is looking for. He will be able to go straight to Google Video, where he will be able to use Google’s algorithmic technology to hone in on the videos that best suit his tastes.

Google Video, like eBay, will create a perfect and efficient market for online porn. Because this benefits both the buyer and the actual seller (the actress, as opposed to the middleman), this concept could rapidly become the de facto way to watch online porn. And because Google will take a few pennies from each transaction, this could be a huge part of Google’s business in the future.

So while I don’t expect EDUFire to get into the porn business anytime soon, I do think the concept of EDUFire could be applied to many other industries. For me, however, I’ll stick to teaching AdWords!

 

Surprising Data About Viral Growth Through Social Media

I’ve written several times about my experiences launching and growing a networking group (Online Lead Generation) on LinkedIn. What started with 60 friends in the lead gen industry in March 2008 is now a 4500 member, worldwide group, apparently one of the 1% largest LinkedIn groups on the planet.

My assumption about the growth of this group has been that it would see “hockey-stick” growth. In other words, membership would grow slowly at first until there was a critical mass of members, at which point the virality (network effects) of the group would kick in and I’d see a huge spike in weekly membership requests.

And this is what I anecdotally observed to be happening – it seemed that the number of applications was increasing each week. Well, nerd that I am, I decided that to really assess the growth curve, I had to get some real numbers in front of me. To wit, I downloaded an Excel sheet of the date of every member’s admittance to the group and then created a graph showing the progression of growth. Here’s the chart:

As you can see from this chart, the slope of growth is basically constant. There is a slight uptick about three months after inception, and then a significant uptick in mid-December, but beyond that, the growth is very constant. Moreover, I believe the growth that has been achieved in the last month is not organic but rather the result of global changes within LinkedIn (specifically, LinkedIn has started to include a list of “recommended groups” when you login to one of your group pages). So other than a bump right after the first three months of existence, the growth has been steady ever since.

This really surprises me. I’ve always assumed that viral growth was exponential in nature. I’m not a viral marketing expert, but perhaps this suggests that there are different types of virality – some steady and some exponential. I’d be curious to hear the opinion of experts in the space.

 

How to be a Good SEM Consultant – Rejects As Many Clients As You Can!

It’s been a strange week for PPCAdBuying, my up-and-coming paid search consulting juggernaut. To be specific, I had several meetings with potential clients and I managed to persuade all of them that they should absolutely, positively . . . not hire me!

So how did this happen? Well, let me give you a little background on each of these potential clients and why I steered them away from hiring me. Client #1 is a hot young start-up poised for success. They’ve got great funders, a super-smart founding team, and a really interesting idea. Problem is, they’re a good six months to a year away from having a business model that will be profitable via paid search. So I told them to keep working and call me in a few months. Strike One.

Client #2 is a VC-funded company trying to break into a highly-competitive vertical. They’ve never been successful at paid search, but they wanted me to give it the old college try. In talking with the CEO, I explained that there were no guarantees in paid search; I’d do my best to set up a profitable campaign for them, but the first month would likely be unprofitable and I really wouldn’t know how we were doing until the second month. He didn’t like the sound of that and wanted me to basically guarantee I could get him to at least break-even immediately. That’s a promise I’m not willing to make. Strike Two.

Client #3 ran into trouble with Quality Score. Their entire campaign was basically rated a “1” on Quality Score, which means Google thinks you really, really, suck. Their current SEM agency had done extensive research trying to find out what the problem was, but nothing worked. So they wanted to hire me to spend 15 or 20 hours digging into the account and looking for the problem. In preparing a pitch to them, I reviewed a few things about their site and in about 20 minutes found what appeared to be the likely problem (in essence, they were blocking the Google AdBot from spidering their site!). Rather than submitting a proposal for 20 hours of work and then actually just doing 20 minutes of work, I sent them an email with the answer and saved them a lot of time and cost me a lot of money. Strike Three.

So why did I reject these clients? Is it because I am just that ethical and good-hearted? Well, sure, I try to be ethical, but that’s not the only reason. In each of these cases, taking the client on would have been penny-wise and pound-foolish. In case #1, I would have taken on a project set up for failure. The client would be unhappy with my work and they’d never hire me again. In case #2, the same would likely have occurred – even if I had done a bang-up job, if I didn’t turn straw into gold and make a previously unprofitable campaign profitable immediately, I would have been chastized by the CEO. And in case #3, I guess I could have twiddled my thumbs for 15 hours and collected a big paycheck, but that goes against my belief in the categorical imperative (there’s the ethical part of the story).

The bottom line is this: there are plenty of people who need SEM help. If you’ve got a few years of SEM under your belt, you should be able to build a decent SEM business. But part of building a business is building it with the right clients. The wrong clients result in extra work, extra stress, and take away time from the right clients. Here are a few rules of thumb I’ve learned over the past year about what makes a good client:

1. They’re not jerks. Working with jerks is always more trouble than it is worth. Even if a jerk wants to pay you $250,000 a year for a few hours a month, it isn’t worth it. Read The No Asshole Rule if you don’t believe me.
2. Their business has back-end economics that give you a fighting chance to succeed. If your client doesn’t have the same economic foundation as their competitors, you will lose the paid search battle. Part of your role as a consultant is to understand the market and assess whether paid search should even be a part of the marketing strategy.
3. They have reasonable expectations. Understand the goals of your potential clients. Are they reasonable? It’s OK for a client to be aggressive about goals, but there is a difference between aggressiveness and fantasy. Make sure you and they understand it.
4. They see paid search as part of the overall business strategy. Paid search does not exist in a vacuum. Landing page optimization, tracking, sales process, uptime and many other parts of a business all factor into paid search success. Make sure your clients are willing to talk to you about their entire business and how you can help improve it, not just whether the right keywords are being purchased.
5. They’re open to change and constructive criticism. You need to be confident that you can build a relationship with a client that is build on trust. You both have the same objective – to grow their business – if you sense that there’s internal politics or too much “accepting credit and delegating blame,” reconsider whether this is the right engagement for you.
6. They’ll get real value from working with you. Your clients should look at you as a “profit center” not a “cost center.” If they don’t wake up every day excited to hear about how much money they’ve made from their paid search campaigns, your relationship is not sustainable.

The final point I’ll make about consulting – in particular paid search consulting – is this: Its a small Valley. Though it seems like a new Internet company pops up every five seconds, in Silicon Valley you will continually run into the same people over and over again. Serial entrepreneurs start new companies, VCs invest in new firms, marketing managers transfer to new employers; burning bridges is a bad idea in the Internet world. Which is all the more reason to not take on clients that aren’t going to be overwhelmingly happy with your work. Even if it isn’t your fault that a PPC engagement didn’t work out, a bad client experience can come back to haunt you. So choose your clients wisely and happy rejecting!

 

Heather, I Mean Kathy, Your Skin Looks Great! Fake Blogs Move Into the Wrinkle Cream Space

A few weeks back I pointed out an egregiously fake blog claiming to be an individual’s story of amazing weight loss through an Acai berry diet. It turns out that this blog was one of about 100 that are currently flooding contextual advertising online. Almost all of them recommend the exact same affiliate products, with the same pictures, ‘testimonials’ and fake comments. As I noted then, I think this is really fraudulent marketing and I think it is only a matter of time before either the ad networks or the FTC crack down on these bad actors.

Well, like a cancer that must be fought early to prevent spreading, the ‘success’ of these fake blogs has now spurned copycats in other areas of online marketing. Today I noticed more blatantly fake blogs popping up in Google AdWords, this time for wrinkle cream sales. Check out these two sites – one from “Heather” and another from “Kathy.” They look a wee bit familiar, don’t they?

And guess what – they’re both showing up on the exact same keywords too – so not only is this fake advertising, it’s also a violation of Google’s double-serving policy (and people marvel at Google’s ability to exceed earnings expectations – can you say ‘goodbye Quality Score during a recession?).

But wait – it gets even worse! It turns out that whoever created these fake blogs didn’t do very good editing because the comments in Heather’s blog have a comment from “Hannah, Heather’s sister” and the comments in Kathy’s blog have a comment from “Hannah Heather’s sister.” Um, Hannah, I think you meant that you were Kathy’s sister, right?

I could go on and on about the lameness of this marketing, but I think you get the point. The outstanding question, however, is when Google and the affiliate programs that allow this kind of crap, will get it. As I’ve noted before, when online advertising doesn’t regulate itself, we leave ourselves open to regulation by others. And that’s a lose-lose for everyone. Stop the insanity!

 

Smart Positioning and Incremental CPC – New Google Beta. Very Confusing and Potentially Revealing?

One of my clients had a message on their AdWords account login page inviting them to try out the”Smart Positioning” beta. The message, of course, suggested that feature would help the client save more money by paying less for the same amount of clicks. Naturally I was intrigued, but mostly just skeptical. Anytime the fox tells the hens they’ve invented a new way to help them, I just have to assume the worst! Here’s a screenshot:

I clicked the “learn more” link and was taken to a long informational page, which I’ve linked for you to read at your leisure. The page begins by explaining the benefits of Smart Positioning:

Smart Positioning (beta) is a bidding feature based on an auction model that differs from the regular AdWords auction model. Here are a few benefits of using Smart Positioning:

• It’s designed to get you more clicks for the same total cost.
• It aims to place your ad in the most cost-effective position each time it’s displayed on Google and the search network. (Learn how Smart Positioning works on the content network.)
• It can reduce the frequency with which you need to adjust your bids

When I hear “more clicks for the same cost” that immediately makes me think of “portfolio management bidding”, made famous by Efficient Frontier. The concept of “cost-effective position” sounds suspicious to me, simply because cost-effectiveness cannot truly be measured without considering both price and conversion rate. And “reducing the frequency of bid adjustments” I guess is a good thing, but again, only if this is based on some sort of ROI determination, which in this case it is not.

The page then starts to get into the details of smart positioning. This is where I started to get royally confused. Google introduces the concept of “incremental CPCs“, which is “The incremental CPC for any given position is a trade off between two factors: increasing the ad’s cost-per-click (CPC) and increasing the likelihood of getting a click (clickthrough rate, or CTR).” To show us further how this works, they include a graph:

Does this make sense to you? Someone paying $.47 in position #2 would have to pay $.75 to show up in position #1, even though the person currently there is only paying $.50? I don’t get it. Somehow, however, this is supposed to be a benefit to advertisers, as shown in a series of examples that demonstrate how your CPC can decrease as a result of enabling Smart Positioning.

I just don’t get these examples, for two reasons. First, shouldn’t the bidder with the highest CPM (and Quality Score, but these examples assume that QS is equal for all advertisers), always show up #1. If two advertisers have the same CTR but one advertiser has a higher Max CPC than the other advertiser, shouldn’t that advertiser always win? How is this system any different?

Second, I find it interesting that these examples show significant bid gaps by position. For example, in examples #3 position #1 is $.48, while position #2 is $.33. Shouldn’t the advertiser in position #2 only be paying $.34, or one cent above the advertiser in position #2? Why is advertiser #1 paying a $.15 premium? I know that AdWords doesn’t provide bidding transparency, but AdWords’ own help section explicitly states that an advertiser will always pay $.01 above the next advertiser:

So either this example is just a poorly written one, or this is an admission by Google (perhaps inadvertently) that the efficiency of the auction is not quite what advertisers have been told that it is (to Google’s benefit).

In any event, I’m hoping some people smarter than me can read about this beta and understand it – I am totally perplexed and keeping my clients away from it until I know what I am doing!

 

Google Print Ads Gone. Next Up: TV and Radio

I hate to say I told you so, but I told you so. Actually, I love to say so let me say it again. I told you so. I’ve predicted the demise of Google Print Ads, TV Ads, and Radio Ads for some time. When Print Ads launched in February 2006, I was skeptical. I noted:

The only people who are really going to be interested in print ads are traditional media buyers who a) already have a lot of experience buying offline; b) are interested in branding, or c) have a call-center that generates a lot of leads for them. This probably excludes 80% of Google’s advertisers.

A few months later, I felt like Google’s entire approach to TV, print, and radio was just off-the-mark:

Print and Audio hasn’t taken off [due to] publisher skepticism. Publishers have complained about Google’s heavy-handed approach to their channels, and have been unimpressed by the monetization delivered by Google products. Combine Google’s somewhat condescending attitude toward offline channels and bad monetization, and you are going to have problems breaking into new channels.

By 2007, in a post entitled “Grading Google’s Goods,” I gave Print Ads a D- (the lowest grade I awarded) and AdWords for Audio didn’t fare too much better, getting a C+ (if you are wondering, the highest marks went to AdSense, AdWords, Blogger, Domain Park, Gmail, and Toolbar).

And so today’s news that Google is dropping Print Ads doesn’t surprise me, and I will predict right now that TV ads will soon follow. AdWords for Audio (radio) will take a bit longer to kill off, simply because I think Google has invested a lot more money into this product, but I think its death is probably also inevitable.

So is Google a one-trick pony, as some are suggesting? Well, not so fast my friend. I do believe that the DoubleClick acquisition was a smart move, one that will enable Google to gain a foothold in the very valuable media buying space (banners). And if that’s the only non-search vertical Google does master, that still ain’t too bad.

 

Barack Obama – As Monetized in AdWords

In honor of tomorrow’s inauguration, I decided to type in “Barack Obama” into Google and see
what paid search results showed up. I guess my assumption was that there would a full 10 to 12 ads promoting everything from crappy souvenirs to IQ tests challenging me to beat Obama’s IQ.

Surprisingly, the selection was pretty limited. Here’s the results I got:

As you can see from this list, some of these seem fairly targeted (the Barack bust and the Franklin Mint), others were just bad keyword matching (Great Style Deals), one was outdated (the 2008 Democratic nominee) and one was just plain weird (“dopest” gear, save $4.20 – do stoners really type in searches for Obama?).

This suggests to me that there is probably a fair amount of opportunity to monetize these searches. Perhaps someone can create the Barack Acai Diet or the Barack Debt Consolidation Plan? There’s gold in dem hills!

 

Episode IV: Carol Bartz, A New Hope (or Change We Can Believe In?)

There’s no question that a lot has to change at Yahoo to give the company a chance to remain a viable company going forward. As loyal readers of this blog know, I’ve been calling for such change for some time, first by critiquing Terry Semel’s $230 million annual salary, then by questioning Jerry Yang’s appointment to CEO, and more recently by pleading with Yahoo to hire an outsider to replace Yang. By now, even those who bleed purple must know that the status quo ante ain’t working and can’t continue.

But we all know that change for the sake of change is pointless, so the real question we have to ask today is whether newly appointed CEO Carol Bartz is the right kind of change (the kind we can believe in). From the little I’ve read about Ms. Bartz, and the anecdotal info I’ve gleaned from employees who worked for her at AutoDesk, I’m prepared to throw my support behind her. I say this for a few reasons:

1. She’s not a Yahoo insider. The mere fact that she has never worked at Yahoo or been on the board, or even come from another search engine is a bonus as far as I am concerned. An insider, I fear, might want to cling to the Yahoo of 2000; that is, the idea that Yahoo can compete head to head with Google as a legitimate search alternative. Let’s face it, search is owned by Google, 100%. The fact that anyone still uses Yahoo, MSN, or other search engines is more and more an anomaly. To be successful, Yahoo is going to have to carve its own niche, and while search may be part of that niche, Yahoo is going to have to find something else that they can dominate that isn’t currently owned by Google.

Personally, I still like the Flickr and del.icio.us acquisitions as potential areas Yahoo could increase focus on. Obviously Yahoo still has a stronghold in banner buying, and that could be another area of focus. Yahoo needs something it can be #1 in, and to carve that niche will require new thinking previously non-existent at the high levels of Yahoo’s current management.

2. She’s Got Experience Turning a Company Around. Ms. Bartz allegedly did a great job re-making AutoDesk into a market-leader. I’m not sure whether this was the result of better management, better strategy, or just increased efficiency, but having past experience turning a frog into a prince is about the most important experience you can have coming into the head role at Yahoo.

3. She’s Got Balls. OK, I know that was crass, but I couldn’t help myself. My inside source at AutoDesk tells me that Ms. Bartz is not afraid to call bullsh*t when necessary, and doesn’t tolerate corporate politics and brown-nosing. My sense is that Yahoo is bloated and political right now – there are a lot of people coasting and a lot of people kissing a lot of ass to move up the latter. Just as Mark Hurd allegedly did at HP, if you simply get rid of the bad managers, promote the good managers, and implement strict financial accountability, you can do wonders for a company.

4. She Can’t Do Much Worse. I thought it was hilarious that Yahoo’s stock actually dropped when Ms. Bartz announced that her ‘gut’ told her not to do a search deal with Microsoft. Personally, I thought it was a very encouraging sign. It tells me that she is not desperate for some quick cash and quick exit. It’s also a smart negotiating tactic (just imagine how much Microsoft’s offer would have dropped if she had said that her gut told her to sign ASAP!). Yahoo’s stock is down about 65% from a year ago – I’m betting that basic blocking and tackling will improve the bottom line in a matter of quarters.

So welcome aboard Ms. Bartz. The bad news is the Yahoo ship is on the verge of hitting a massive iceberg, the good news is you’ve seen this situation before, and you’ve got your hands on the wheel. Here’s hoping you can steer the company to safety!

 

PriceGrabber Gets Into the Slavery Comparison Business; Amazon Dreams Outloud; Yahoo Wants to Hire Their CEO Back

I did a vanity search this evening on Google to see what comes up for “Rodnitzky” and I came across this ad from PriceGrabber:

Part of this ad is smart, since my Mother is a cookbook author for whom someone could conceivably do an author name search. But still, the auto-insertion of the author name into the ad text leaves a lot to be desired. I mean, “Buy Hemingway Today!” still sounds like you are selling the person, as opposed to the person’s works.

And while PriceGrabber is trying to sell me into servitude, Amazon is dreaming about a potential new hire:

Personally, I think it is going to take a lot to get him to leave Google, but maybe if you say it enough times, it will come true (imagine Jeff Bezos sitting in bed at night whispering “Larry Page at Amazon! Larry Page at Amazon! Larry Page at Amazon!”)

Amazingly, though, the competition for Jerry Yang turns out to be a lot hotter than that for Larry Page, as we can see below:

That’s right friends: not only is Amazon also hoping for Jerry to join, even Yahoo is putting out feelers – and this just months after he resigned as CEO. Perhaps both Amazon and Yahoo could benefit from USA People Search – they apparently have his contact info – that would probably be a lot cheaper than advertising on random keywords on Google!

 

When In Doubt, Google Sets Your Geotargeting to "Worldwide"

Geo-targeting is an important filtering technique that I use for virtually every account I manage. For hyper-local campaigns (for example, a divorce lawyer who only wants to target clients within 10-15 miles of his office), I use Google’s custom targeting to create either a radius around his address, or a custom-drawn geographic region. This sort of advanced geo-targeting saves a client a lot of clicks from people who will never actually convert into customers (and thus enables them to pay more per click for the clicks that might actually convert).

It turns out, however, that the AdWords Editor doesn’t recognize custom local targeting. Why this is the case, I don’t know, but if you try to copy a custom-targeted campaign in AdWords Editor, you get the following message:

I appreciate the warning message. What I don’t appreciate is the fact that Google changes your hyper-custom targeting to the entire world! That’s right friends, the local divorce lawyer covering 10 square miles in the Northwest Suburbs of Chicago will suddenly be shown in Angola, Bangladesh, Luxembourg, and 230 other locations that are sure to drive lots of divorce-related conversions. 

This is just a ridiculous line of reasoning. Anyone who has used custom targeting almost by definition is looking for a level of granularity not available through standard DMA, city, or state-based targeting. Indeed, I can think of very few advertisers who would ever want to target the entire world (and if you did, you would be wise to set up separate campaigns by country or continent to measure performance differently and adjust bids). 

Inevitably, more than a few advertisers have not understood the pop-up warning and just assumed that their targeting would revert to the nearest city or state, or at least the US. Defaulting advertisers to the entire world is either really bad reasoning, a really lame way to make some extra money, or both.

 

Google Thinks I’m Special (Education)! Yahoo Gives Me a Hand (And Reaches Into My Wallet)

A lot of people are up in arms this week about Yahoo’s change in terms and conditions to YSM accounts that gives them the right to “(i) create ads, (ii) add and/or remove keywords, and/or (iii) optimize your account(s).” In other words, YSM can dive into your account at any time and add stuff as they see fit. That’s analogous to Comcast deciding that I should subscribe to HBO or Wells Fargo taking my money out of checking and putting it into a CD. Anyway you slice it, this is a desperate and customer un-friendly move by YSM.

Of course, Google’s been effectively doing the same thing for a few months now, just in a much less blatant way. Google’s “automated matching” “shows your ads on relevant search queries not already captured by your keywords.” The definition of relevant – whatever Google says it is. I suspect that if I was selling bedroom nightstands Google would match me on “one night stand” – that sounds relevant doesn’t it?

One of my AdWords accounts got a funny message related to Automated Matching this morning. Here’s the screenshot:

In case the image is too small, the headline proudly proclaims “New! You’ve been selected to try automatic matching.” Wow, it makes it sound like I’ve won a prize, or that I’m one of the few accounts that Google is giving special treatment too! I think this is just as crass a money-grab as the Yahoo terms and conditions amendment; it’s one thing to add a feature that makes you money, but quite another to describe it in a way that makes it sound like an advertiser benefit.

Ultimately both of these changes reflect a movement that I’ve been observing for a long time (well, since at least 2006) – the keyword is slowly dying. YSM has never recognized the difference between singular and plural terms and Google now claims that multi-token keywords by definition merit low Quality Score. Add to this Automatic Matching, the ever growing broad match algorithm and now YSM editorial ‘help’, and I think it is just a matter of time until we are just bidding for categories instead of keywords.

Think about such a scenario – instead of buying 200,000 keywords, you simply choose five or ten categories, like “mortgage – refinancing”, “mortgage – new home”, and “mortgage – bad credit.” Google and YSM match you on any related queries (in their esteemed opinion) and – best of all for the search engines – the bidding auctions are reduced from hundreds of thousands of inefficient mini-auctions to one giant auction per category. Can you imagine what the top position would cost if all mortgage advertisers were confined to five or 10 auctions? The CPC benefit to Google would be enormous.

Of course, from an advertiser perspective this would be a disaster for most. 99% of the advertisers on the search engines would basically be pushed out of SEM entirely overnight. SEM technology companies would be rendered virtually obsolete. Consultants like myself would be out on the street. But from a revenue optimization perspective, this would probably be a win for the search engines.

If you don’t believe such a system is possible, consider some of the alternatives to AdSense currently available. Sites like AdKnowledge, Quigo, and IndustryBrains are all category-based. They have fewer advertisers, but they have all been quite successful and profitable.

The flip side to all of this, though, is that category-based advertising is bad for both advertisers and consumers. For advertisers, the inability to bid on keywords decreases accuracy and ROI and effectively punishes hard-working and sophisticated marketers. For consumers, extended broad match and category-based auctions diminish the relevancy of the ads that they are seeing. Over time, a system that benefits search engines at the expense of both consumers and advertisers could backfire badly. Indeed, the banner-filled pre-Google days of AltaVista, Excite and Yahoo – which resulted in a poor search experience for consumers and expensive inefficient advertising for advertisers – were the very environment that fueled Google’s incredible growth.

In other words, Yahoo’s ‘invisible hand’ and Google’s ‘invisible algorithm’ might drive short-term revenue growth, but they might ultimately be a long-term disaster (as Yahoo has already experienced once before vis-a-vis Google’s rise). For now, however, we advertisers must grin and bare it and hope that history does not repeat itself.

 

Take the AdSense Publisher Survey

If you are like me, you make a small percentage of your annual income from AdSense. Maybe you have a blog with a few AdSense links, or perhaps your ecommerce site monetizes non-converters with clicks from Google ads.

Are you happy with AdSense? Do you have suggestions for how AdSense could be improved? If so, here’s your chance to let your voice be heard! Take the AdSense Publishers Survey (created by Marc Phillips from SearchForecast)and you can add your two cents and even have a chance to win $500! Personally, I think the opportunity to give input is more important than the $500, but hey, I’m not complaining.

 

In Case You Missed – Blogation’s Top Ten Stories from 2008 (Reader’s Choice Awards)

After a review of my Google Analytics results from 2008, I am pleased to announce the winners of “The Best of Blogation 2008: Reader’s Choice Awards.” These blog posts are ranked based on the volume of page views each received. It turns out that the few posts that got decent SEO ranking seemed to dominate the list, so I guess I have to grudgingly admit that SEO is valuable!

Stay tuned later this week for the “Editor’s Choice” awards, where I rank my 10 personal favorites from 2008.

10. Yahoo Answers Fraud + Google AdWords Fraud = SEO + SEM Gain? One of my many posts “outing” a sneaky attempt to violate AdWords rules.

9. A Hilarious Attempt at Legitimacy Via PhotoShop. Another fraud, but this one stands out because it was executed so poorly.

8. Google Sneeze: Favicon Controversy -Is Anything Sacred? Google changes the little image that appears in your browser bar; bloggers naturally feel compelled to write about it.

7. Search Engine Marketers Salary Guide, 2008 Edition. A qualitative guide to how much you should be making in SEM, at least if you live in the SF Bay Area.

6. Bid Management Algorithms Demystified. An attempt to help people understand the terminology of bid management, and thus make better decisions about bid management companies.

5. Adteractive, Birthplace of Internet Founders. A post from 2007 listings all the former Adteractive employees who have gone on to greatness elsewhere.

4. Google TV Ads – Strike Three? My lukewarm reaction to Google’s TV advertising product announcement.

3. Geographic Performance Reporting from Google: Don’t Take This Feature Lightly! Reasons why you should be using the geographic performance report daily.

2. Does Anyone Listen to Song Lyrics These Days? A relatively inane post about Bruce Springsteen’s “Born in the USA.” It somehow shows up highly on Google Image Search.

1. Congratulations to Javier Andres Castro Pino – LinkedIn Group Spammer of the Year! Another SEO triumph (though unintended). Basically this post lists about 1500 LinkedIn Groups and thus shows up quite frequently.