20 – November/December 2007

Getting it Bass-ackwards

I used to tell people that if they were shopping online and using Google to search for specific products, that they should visit sites returned under the Sponsored Listings before they checked the natural search results; the rationale being that merchants who pay to advertise their products on Google AdWords will deliver more accurate results faster.

Well, after a frustrating – no, grueling – attempt to source a Christmas gift online this year, I won’t be sharing that particular tidbit of advice anymore.

The experience led me to conclude that most Internet merchants and affiliate marketers who use PPC to drive traffic are more interested in getting visitors to their sites than in actually selling to those visitors, a focus which in my opinion is completely bass-ackwards.

Case in point: I wanted to buy a specific 42-inch round teak coffee table online and have it shipped to a family member in Ontario, Canada. All summer, the table had been widely distributed through patio furniture stores in major North American cities, under a variety of brand and model names, including Kingsley- Bate and Candice. I bought the same table locally in the spring for $1,399, and was hoping to do some serious dollar-cost-averaging in September by taking advantage of end-of-season sales. Too, with the Canadian and U.S. dollars at par, inexpensive shipping rates and negligible customs duties, I was fully prepared to shop cross-border.

Googling the phrase "kingsleybate 42" round teak coffee table" produced exact product search results for merchants using Google Checkout, as well as page after page of highly relevant natural search listings. My curiosity as an Internet and affiliate marketer, however, led me to check out the Sponsored Listings first. What I found – and didn’t find – was disappointing to say the least.

Had I wanted to change the bait board to a food tray on my nonexistent boat, the product returned under eBay’s top spot "Bait Table" Sponsored Listing may have been a good find. Authenteak.com had a table similar to the one I wanted, shown without a price or full description, but the site didn’t facilitate online sales, and a 2,637-mile trip to Atlanta wasn’t an option. Authenteak did however have a link to Kingsley-Bate’s official site which listed U.S. dealers only, so I continued my search.

Frontera’s "Kingsley-Bate Furniture" Sponsored Listing title looked promising. After meandering through the Classic and Normandy collections, I found the table I wanted for a reasonable $531.00. A note under their "Policies" link, which read, "For international shipments, please contact our Customer Service department for information regarding shipping options and rates to your destination" led me to think that my search might nearly be over, but the "Customer Service" link within the statement was broken. The Customer Service tab at the top of the page provided an email address but no phone number. Suspecting that my assumption of success was premature, I visited the order page, where sure enough, "Frontera Furniture Company does not ship to Canada" was highlighted in yellow near the top of the order page.

Back to scanning the Sponsored Listings, BizRate’s somewhat generic "Round Teak Table" title with a BizRate.com/TeakOutdoor display URL got the click. Links near the top of the landing page labeled "Outdoor Furniture" and "Living Room Furniture" both led to product pictures of tables all clearly intended for outdoor use. I had to wonder whether the Biz- Rate folks care that they disappoint those looking for living room furniture or that visitors shopping for outdoor furniture might miss an array of relevant products shown under the mislabeled link. Indeed, as I scrolled down the page again past a Google AdSense display that took up most of the area above the fold, it appeared that BizRate’s primary objective was to make quick revenue from folks leaving the site, rather than sell their affiliated merchants’ wares.

Casting a Wide Net

Broadening my search to "42" round teak table," eBay.ca returned a "Teak Table" listing title. Products on the resulting page included teak patio furniture sets with tables, teak table lamps, fancy veneer radial tabletop skins (quarter teak) and an oil painting easel. The tabletop that I was looking for showed up on the second page, but I decided to forego the frustration of hunting for a matching set of table legs which the seller did not have listed.

Shopzilla merchants CSNLighting and Teak Wicker & More both showed the 36" model, so I clicked on CSNLighting and located the 42" model by doing a brand and highly specific keyword search. CSNLighting does not ship to Canada, so I visited Teak Wicker & More and discovered that it too is a division of CSN Stores, Inc., which sells everything from cuckoo clocks to Crock-Pots and trash cans to TV stands across a network of 212 websites, all with the same "we don’t want your Canadian business" policy. OK, those are my words, not theirs.

Results didn’t improve by adding "Canada" to the phrase. HomeDepot. ca and a furniture broker in Coquitlam, B.C., showed up, neither of which carried a stick of teak furniture. An onsite search for "teak" under Home & Garden at Sears.ca also produced "0 results" along with the suggestion that I might look at men’s shirts and ladies’ pull-on pants for "more shopping ideas."

Still Searching

A search for the phrase "teak furniture" had the no-content Ad- Sense and YPN (Yahoo Publisher Network) arbitragers showing up in droves. The "Teak Furniture Directory" promised "The Teak Furniture Deal Guide" where visitors will "Find Teak Furniture Quickly," yet sends them to a TeakFurniture subdirectory of SwimmingPools101. com where the only teak mentioned was in a YPN ad.

Most bizarre of all was a Sponsored Listing titled "The Teak Outlet Shop" that included "Find Teak Quickly" in its description. The landing page presented a "How to Install Moulding" article, and a quick browse around the site revealed it as repository of do-it-yourself articles monetized with AdSense.

Although neither carried the product I wanted, two sites deserve kudos for their sales conversion efforts. GoldenTeak’s "Summer Sale Teak 25% OFF" listing title was a big draw (to a sadly designed site), and the first thing I spotted on Decor Americana’s site was BETTER THAN TEAK – Brazilian Cherry is the hardest and most durable weatherproof wood available." They almost had me convinced, but didn’t carry anything remotely close to the table that I wanted.

Despite Wordtracker’s predicted 466 searches for the day and an ample supply of teak product merchants with affiliate programs, not one teak-selling content-publishing affiliate showed up in the Sponsored Listings. Commission Junction alone returned more than 1,000 "teak" products with merchants such as Yardiac paying up to 15 percent commissions. Although teak-related AdWords are pretty pricey at the moment, when Google finally gets serious about producing relevant search results and dumps the no-content AdSense and YPN arbitragers outright, advertising costs for real affiliates (and merchants) should decrease substantially.

So 10 years after the introduction of PPC search engines, most advertisers apparently still know very little about basic campaign management techniques; particularly broad, phrase, negative and exact keyword matching options as well as geo-targeting – all of which lowers advertising costs and increases sales. To rectify the problem, companies may elect to outsource their campaign management; however, having a PPC specialist on board who understands your business is the best option. An in-depth PPC training course is available at PPCClassroom.org.

As for my table, I toughed out another 6-hour round trip to buy the second one from my "local" supplier at 50 percent off the original price. I’m now looking for a large shipping box – something I won’t attempt to source online – as I suspect a Google search for "shipping container" would produce a "container ship" just full of 42" round teak tables en route from Vietnam or Indonesia.

How Do You Know When It’s Right?

Being a designer is fun. I get paid to play with pictures and colors all day long. How bad can that be? That’s what I and countless thousands of other high school kids thought when we chose graphic design (or "visual communications" as it said in my course book) as our major in college. As a result, nowadays everyone knows someone who designs websites. And chances are, most of those college students and recent grads can design a site that looks pretty darn good.

If you caught the last issue of Revenue, we’re right in the middle of a three-part series on my journey to redesign the corporate site for my design firm, Sostre & Associates. In the previous column, I showed you how I determined that we were in serious need of a redesign. Once it was clear that we needed to redesign, we set about designing some alternative looks for the site.

Now this part should be easy, right? I’m Dr. Makeover for goodness sake. I give presentations around the country talking about how to design great websites and Web design best practices. But, like any redesign, I want to start with the facts. What do users want from our site? For that, I need to review our Web analytics data.

A pretty simple analysis shows that the single most popular link from the home page is the link to our work. Roughly 20 percent of all home page clicks go to that page. Next, users are clicking on About Us, and third, they want to know what we do. If you have an existing site, I always recommend looking to your analytics data before starting any redesign project to make sure that the areas you feature are the same pages your users are really interested in.

With those data points in mind, the new design has a particular focus on showing more work, explaining more about us, and making what we do particularly clear. But there is another step. I know that my current site is not working, and I know what pages are important to my audience, but like many CEOs, I had to ask myself the question, "How do I know when the design is right?"

It’s not enough to come up with a design that looks pretty. How can I be sure a new design is going to perform better than my existing site?

Oftentimes website design reviews go something like this: Is the design attractive and pleasing to the eye? Did they use the colors we asked for? Does it have that cool feature our competitors are all using? Did they make the important stuff "pop"?

These are the honest-to-goodness evaluation criteria I hear on a regular basis. And they’re useless. Let me be clear on this: None of the questions listed above are valid criteria for a good website. Not for a design firm, and not for your business.

So how do we properly evaluate if a website design is going to work? Evaluate the design against our business goals.

After evaluating several mock-ups, we finally settled on one design. While a lot of the structure is very similar to our existing site, there are some notable changes. First, while it’s not apparent in the screenshot, we added a secondary level of navigation. When users roll over the main navigation items, they now see additional options. This will make our site more transparent to users and will let potential clients find the information they’re looking for much more quickly. Second, we added a phone number, email address and contact form on every page, in the top right section of the page. Our previous site did not do a good enough job of making our contact information readily available – this will fix that. Third, and possibly our most important of the three major enhancements, we added images of our work to the home page. The No. 1 link users click on our current site is to see our work. I want to give them what they want.

Now let’s see how it measures up to some of the goals from the previous issue.

Goal: Communicate our services

Our previously generic tagline has been completely removed. We’ll eventually come up with a new tagline, but until then, we’re illustrating our services by making the particular services available from the secondary navigation and by adding images of our work on the home page.

Goal: Convey our thought leadership and expertise

To establish our thought leadership and expertise, we have made a section to feature speaking engagements and white papers. Currently we have a picture of the book cover from my recently released Web Analytics for Dummies. In addition, the website thumbnails take users directly to case studies which explain how we solved tough problems for our clients.

Goal: Showcase our product

Again, by adding images of our work with featured clients on the home page, we are giving important real estate to our work. This was sorely lacking in the previous site.

Goal: Foster strong search engine rankings

The secondary level of navigation we added will allow us to create more pages describing our services and will help with search engine rankings.

By the time you read this article, the new design will be live on our site and we’ll have started crunching the analytics data. In our next installment, we’ll review that data to see whether the new site really does have the impact we’re expecting.

Remember, it’s never too late to put in your two cents. I personally read every email I get from Revenue magazine readers and I’d love to hear your thoughts on the new design we’ve chosen. Send me your thoughts, at pedro@ sostreassoc.com.

Would you like your website to be the topic of a future edition of By Design Makeover? Send your name, company, contact information (phone, email, etc.), a brief description of your business and its goals, and, of course, your URL to ByDesign@SostreAssoc. com. Please put "Revenue’s By Design Makeover" in the subject line.

Pretenders vs. Contenders

We’re all looking for the next big thing in online marketing. We’re marketers. We’re innovators. We’re hungry for new techniques, tools and tricks that we can use to produce results. It’s never-ending – our quest for innovation.

The biggest problem we face on this quest is figuring out the pretenders from the contenders. It seems that every day there’s a new start-up that promises the next "big thing" that will help us accomplish our goals. But testing them all out is a full-time job – a job a busy marketer usually doesn’t have time for – especially as we’re distracted Twittering and Facebooking.

But instead of being distracted, we should also be thinking about turning back to the proven champions; the kings of innovation that always seem to deliver the knockout blow. Of course, I’m talking about Google, the heavyweight belt holder for innovative tools that help marketers stay on top.

It’s no surprise to me that Google would eventually figure out a way to combine videos with advertising after buying YouTube for a whopping $1.65 billion. It’s also not a shock that the search giant would choose to do it via its Adwords/AdSense programs. In October, Google announced it had taken its AdSense program and combined it with the power of online videos to create AdSense for Videos.

Like most online marketers, I use AdSense. I’m also a huge proponent of video and have been for a while. I create vlogs and I make viral videos and I’m always exploring new ways to monetize those efforts. So this marriage of AdSense and video seems like a no-brainer.

Now when you log in to your Google AdSense account, you can choose the "video units" feature which lets you create custom AdSense-enabled video units that can be posted on your blog or website. These video units are touted by Google as a new way to enrich your site with "quality, relevant video content, in an embedded player." And having the video surrounded by ads – that’s the innovative part.

The Publisher Perspective

All publishers need to do is log in and create a customized player that will appear on their Web property. Then choose from various color schemes and pick from three enormous-sized players available to drop into varied formats.

Each format displays a video screen with player controls that your visitors can use to navigate through the video. Each video will display two types of ads: companion ads, which appear in the player above the video content; or text overlay ads, which are displayed in the bottom 20 percent of the video content as it plays.

The ads may be paid on either a cost-per-click or cost-per-thousand impressions basis. As usual, Google isn’t saying how or how much each party is getting.

Now it comes down to a choice of serving up the type of ads and videos in your player. Just like AdSense for content, ads in video units can be contextually targeted as well as site-targeted to individual websites. Both the ads and the video content can be served in this manner.

Or if you don’t want to trust their contextual abilities, you can choose from a list of top-level generic categories (such as entertainment, music, technology, news, etc.) or choose to serve content from a specific You- Tube partner.

For example, if you had a site about home improvement, you’d probably want to choose the AsktheBuilder. com channel, where Tim Carter has created hundreds of videos that talk about everything from fixing your kitchen sink to putting gutters on your home. Or if you wanted to have information about technology, you could choose the Chris Pirillo channel, where Chris’ videos hit just about every tech topic imaginable.

Your visitors interact with each embedded player using the video controls. This allows users to play and stop the video at any time. The theory is that while the video plays, the users can click on either overlaid or companion ads, and the advertiser’s site will open in a new window or tab. The video units are user-initiated, so they won’t be intrusive to your site’s visitors. Users also have the option to minimize the overlay ad if they’d prefer.

Relevant Video

So where do the videos in the player come from, and what’s so innovative about showing videos of kids falling off skateboards, or cute cats?

YouTube understands it can’t just show you random videos in their network. There are too many questions about copyrights and frankly, questionable video content that could be potentially associated with a big name brand that is advertising. Besides, how would YouTube choose from the millions and millions of videos they have?

To solve these problems, YouTube made the decision to only serve video content from select YouTube partners (about 100 of them under contract since launch) that have chosen to make their videos available to publishers in the AdSense network along with targeted advertising.

So who’s getting paid? As it stands right now, both the publisher and the video producer will split the revenue from the ad. Not surprisingly, Google and YouTube aren’t disclosing just how much.

As a publisher, statistics from your video units will be displayed separately from other statistics on your reports page. For video units, Google will show the standard details about clicks, impressions, clickthrough rate, eCPM and earnings.

Currently these video units are only available to publishers located in the U.S. with English-language websites. And, just as with other AdSense products, you can block specific ads from appearing in your video units by adding them to your Competitive Ad Filter list.

I’m going to continue testing Ad- Sense for Video as well as look to the proven companies that have served me well over the years for help in delivering results to me. Still, that doesn’t mean that I don’t have an eye out for the next big thing. After all, who had heard of YouTube 18 months ago, or for that matter, Google four years ago?

Got an innovative idea you think the world needs to know about? Send your thoughts to jim@jimkukral.com.

.mobi for All

Neil Michel bought .mobi top-level domains as soon as they were available without consulting his bosses. As eMedia Director of Prosper magazine in Sacramento, Calif., he saw it as his duty to claim ownership of the mobile domain names before anyone else could capitalize on the company’s brand name. He managed to snag ProsperMag.mobi and ProsperMagazine.mobi but not Prosper.mobi.

“At the time I registered them, no one knew .mobi existed,” Michel said. “I just did it and told [my bosses] we did.” The .mobi names went on sale on September 26, 2006, but only recently has awareness of the top-level domains become more pervasive. But even as the domains are being registered, there is still some doubt about their relevancy in an iPhone world where the full Web-browsing experience is finally coming to the cell phone.

The .mobi (also known as dotMobi) company is the informal name of the mTLD Top Level Domain firm appointed and approved by the Internet Corporation for Assigned Names and Numbers (ICANN) and is backed by mobile operators, Internet companies and device makers with investment by companies such as Ericsson, Google, GSM Association, Hutchison, Microsoft, Nokia, Orascom Telecom, Samsung, Syniverse, T-Mobile, Telefonica Moviles, TIM, Visa and Vodaphone.

While the idea for .mobi domains was a Nokia brainstorm that dates back to 2000, it wasn’t until March 2004 that 10 companies signed on to a .mobi consortium. In July 2005, ICANN approved the top-level domain and in May 2006, select big brand companies were invited to buy their domains before this was open to the general public.

A typical .mobi website is supposed to be formatted for easy display on a mobile phone. That means, in most cases, simple text, few if any graphics and content that is in an easy-to-read summary form. Ads can be placed in a .mobi environment – sometimes as a page before the content, sometimes placed between pages of content. More image-friendly banner ads for .mobi can be employed, as advertisers CNET, The Disney Channel, Zagat and the wildly popular “High School Musical” have done.

Michel says that buying the domains is “nothing – developing it is another story.” And that seems to be the hang-up right now with the .mobi explosion. While around 700,000 .mobi names have been registered so far, people like Michel are developing them for a very slow rollout. In the case of Prosper magazine, the publication in the last year redesigned its print magazine and its website and went through a hiring spurt before they could even think about their .mobi properties.

Finding Mobile Footing

Their .mobi dilemma is a case study in grappling with a .mobi strategy that fits in with a company’s overall business plan and vision of what they want to deliver to their customers versus what can be monetized over .mobi. “The game is changing under our feet,” Michel says, “because of the new more realistic browser experiences coming from the iPhone and others like it.” He wonders if the iPhone will allow them to do something in a more traditional Web browser environment, or if it would be better to cater to the 200 million handsets in America that may have limited browser capabilities.

Since Prosper is a regional magazine aimed at the Sacramento Valley area at large, Michel wonders what will be valuable to that audience in a mobile environment. It won’t be a 2,000-word article, he says. Plus, Prosper’s main website has a lot of video on it. “In a handheld, the video is a joke,” he says. “We can’t put our video into the .mobi domain.” In terms of mobile advertising, they are focusing on the mobile ad banner for now. “Until advertisers themselves have a .mobi strategy, we don’t have anything.”

Some mobile commerce networks are glad .mobi is around but don’t see a huge impact on their business yet. Dan Wright, CEO of mobile commerce portal mPoria, sees visibility gaining. “If the retailer sees value in .mobi and the customers do, then it does impact our business,” Wright says. He adds that “a good portion of our merchants are using .mobi. If they ask us if they should use it, we say it certainly is good to have. At least you can be found on mobile.”

Wright says that right now mPoria powers m-commerce sites on the mobile Web to help them sell their stuff. They provide the front end and the back end and the hosting for the sites. Medio is their mobile advertising partner. Wright says mPoria has seen 300 percent growth quarter-over-quarter using their current model, and that if .mobi helps their merchants’ marketing, “then that’s good for us.”

On the software side, some companies are still trying to decide what the mobile customer prefers. GoWare, makers of custom software for mobile publishers, perceives a disconnect. Jason Thibeault, CTO and co-founder of GoWare, says that “among mobile software providers that are dedicated to the mobile Web, there is a big disconnect. There are a lot of different Webs right now. The desktop user is very comfortable but the mobile Web user wants quick, efficient access [to content].”

He says that while .mobi is still in its infancy, GoWare is doing its best to integrate coupons and ads into a .mobi platform. “We are getting the targeted marketing messages to your mobile phone,” he notes. Yahoo, he says, is just serving banner ads. He wonders, who wants a banner ad in a .mobi environment? Thibeault believes .mobi is not visible enough right now. “The content sites are not sure they want to commit the research – not to the .mobi bandwagon right now.” He says he knows a lot of sites that are using their main top-level domain to serve up their mobile websites and not conforming to the simplicity of presentation the .mobi Web would seem to promise.

The folks at .mobi itself are proactive in their quest to put a spotlight on the possibilities of the domain. James Pearce, VP of technology at .mobi, thinks that as far as Web relevance, .mobi prevails even now. “A lot of people are not brave enough to type in an arbitrary dot-com Web address because the content will be irrelevant to them when they’re out and about with their phone.” He’s convinced .mobi will be automatically relevant and faster no matter what kind of browser your phone has. His current mission is to make .mobi part of the “consumer vernacular,” because he admits to a certain chicken-and-egg conundrum at the moment where content needs to be built out ahead of the platform but marketing it will be needed too.

Going Mobile

Mobile ad networks such as start-up AdMob are seeing tremendous growth without customizing for .mobi. They showed more than 1 billion mobile ads in just 28 days last summer. Companies such as AOL and Microsoft are acquiring mobile ad companies to add to their offerings. Microsoft is also expanding its mobile search efforts in a partnership with Sprint to allow easier Web searches on mobile phones.

And while developing for the .mobi experience on phones has been seen as a complex ordeal, executives at .mobi have also been proactive in quashing rumors about the new domain. Various blogs have dismissed .mobi as nothing more than a way for .mobi investors to get more money. The rebuttal: Investors are building out platforms and tools but it all takes time because huge companies such as Google don’t turn their product life cycles on a dime, and many initiatives inside these big companies are pretty confidential until launched. New tools are available at the dev.mobi site and they are pushing their mobile phone database and a content directory.

Others complain that .mobi is not releasing their premium brand and generic names to buyers yet so they can drive up the prices. In fact, the first load of premium names went on sale in September and the schedule was always to sell those names on the one-year anniversary of .mobi in bursts from September to January 2008. Some have said that waiting too long to auction those names has hurt the .mobi market, but executives at .mobi state that they always had the “long-term view” in mind, and essentially waited for the good content-making tools to be released. In fact, Google recently announced the launch of AdSense for Mobile, a campaign to encourage ad placement for sites designed specifically for mobile phones. Yahoo and AOL Time Warner have similar mobile- centric ad networks.

As far as the criticism that too many .mobi sites are still dark, it is true that parking pages are out there (the ProsperMag. mobi page is still unfilled), with about half of the .mobi registered names still not hooked up to DNS servers, but real sites are coming live every day. The .mobi people say they also provide free tools to help content get live as easily as possible. They say that there are about 5 million pages indexed on Google with .mobi addresses. They add that big brands such as ESPN, BMW, BusinessWeek, Amtrak, AAA and Fox News, to name just a few, all have .mobi presences.

.mobi’s Pearce indicates that with the high profile of the iPhone, the realities of surfing the Web on your phone look more attractive. But he cautions that it’s the diversity of handsets that is holding developers back. And while the iPhone’s browser is a full browser, the network is slow and won’t get any faster until sometime later in 2008 when the phone is likely to be 3G-ready. Yet the idea of a “cool” Web experience on your phone is largely due to Apple’s product. And while Apple sold 1 million iPhones in its first three months of selling, that’s still a far cry from the 200 million-plus handsets in use in the U.S.

Some detractors have also stated that the need for .mobi is completely unnecessary because sites can detect whether a Web page is being called by a phone (and in some cases what brand of phone), and serve up a more mobile-friendly dotcom landing page especially designed for handsets. The folks at .mobi argue that if dot-com domains fulfilled every surfer’s demands there wouldn’t be any need for .org, .it, .de, .fr or .biz.

For those in a quandary over whether to .mobi or not to .mobi, there is a .mobi Advisory Group that is independent of .mobi the company – financially and agenda-wise. The group gathers feedback and suggests initiatives to .mobi developers. Currently they are looking at such issues as mobile advertising, PPC, mobile commerce, browsing, mobile email and the mobile Net for developing countries.

Pearce says that since operators are beginning to flatten their tariffs and open out the access, the stage is set for the “culture, sites and services” over .mobi to explode. “We’ll look back on this as the time the mobile Web found its feet, like in 1997 when flat tariffs enticed a mass of content onto the fixed Web.”

In the meantime, Prosper magazine’s Michel has until December to ready a .mobi site to be part of an Apple demo, and appreciates the deadline pressure.

Going for the Gold

If asked to identify the characteristics of an ideal product to market, most would likely put at the top of the list broad appeal, the ability to evoke strong emotion, a venerable brand – and something very, very, sexy.

If this sounds a lot like the Olympic Games, then it’s easy to understand why TV advertisers line up from Beijing to Burbank with large checks in hand to get a piece of the action.

Capitalizing on the Olympic hype online isn’t nearly as competitive as buying TV spots, but not because of a lack of interest. Restrictive and complex licensing rules and requirements have kept many marketers on the sidelines. However, by marketing around the athletes and the teams instead of the Games themselves, online marketers still have a shot at bringing home some gold.

With nearly 3,000 years of history, the Olympic Games have an unparalleled tradition in sports. The images of the athletes ascending the podium clasping their medals while listening to national anthems evoke strong emotions. Sinewy athletes who push themselves to unparalleled physical achievements are the embodiment of sexy.

No wonder that every two years corporate sponsors spend billions around marketing the games, the national teams and the athletes themselves. The Beijing Olympics will bring more than $900 million in additional advertising to China in 2008, and $3 billion to the global market, according to media company ZenithOptimedia.

“We estimate that the last Olympics added about $2.5 billion to the world ad market, so [Beijing] will add about 20 percent more,” says Jonathan Barnard, the head of publications for ZenithOptimedia.

Millions of Chinese residents are also getting Internet access for the first time. In the first half of 2007, 39 million residents of China began logging on, a nearly 32 percent increase over the previous year, according to the People’s Daily Online. Marketing firm GroupM predicts that because of the Olympics, China will surpass the United States as the leading contributor to the worldwide growth in advertising in 2008.

Because the 2008 games will take place in China – a land of intrigue to Westerners and a land with a booming economy due to a new appreciation for capitalism – Beijing will translate into gold like no previous Olympics. The opportunity is also greater for this Olympiad because of the games being held in one of the world’s most populous cities (15 million people). Top-tier sponsors such as Coca-Cola and McDonald’s – who pay $50 million or more every four years to be associated with the winter and summer Olympics – are hoping for greater participation in the opening of the Chinese market to international companies.

“Athens and Sydney [the locations of the prior two summer Olympic Games] were in small markets,” says Ed Hula, editor of Olympic marketing site Around the Rings. “This is the largest market with the biggest potential,” … and companies see “more potential to use the Olympics to boost their market in China,” he says.

Since Beijing is relatively unknown to the rest of the world, the Games offers a chance to connect the region to a new audience and bring cultures together, according to Carter Westfall, vice president of consulting firm Helios Partners, which has worked with cities applying to host the Olympic Games. “Every city has a story to tell,” says Westfall. Similar to Berlin during World War II, “seeing the athletes competing inside Beijing is a unique opportunity given the current political climate,” he says. Westfall says that because of the location, nontraditional Olympic sponsors such as Australian energy company BHP Billiton, which is building a dam in China, are participating.

Beijing also presents a greater opportunity than the last Olympics, not only because of the size of the country, but also because of the changes in Internet technology and marketing vehicles. The new opportunity is “hard to quantify because there have been so many advances, such as blogs, virtual reality and social networking,” notes Westfall. During the last Olympics, websites such as SecondLife, YouTube and MySpace either didn’t exist or were not useful online marketing tools. While top sponsors will continue to spend millions on TV, “the online component is the way for sports marketers to differentiate themselves,” he says.

Jimmy Vee, a marketing consultant and co-author of the book Gravitational Marketing, recommends using athletes prominently in online marketing campaigns. Advertising on enthusiast blogs, athlete’s MySpace pages and posting training videos on YouTube are inexpensive marketing methods, Vee says. “Consumers don’t connect with companies, they connect with people,” he notes.

Getting Out of the Blocks

Early 2008 is the perfect time to begin marketing around the Olympics. Most initiatives surrounding Olympic marketing begin between three to six months before the games. Around the Rings’ Hula saw very little marketing activity off-line outside of China during his travels around the globe in 2007 and also noticed few online campaigns.

Top-level Olympic sponsors including Samsung, GE and AT&T began their marketing efforts online and off-line in early- to mid- 2007, but they have yet to start their sprint to the finish. Samsung used an online promotion to recruit torch bearers for the Olympic relay through an exclusive arrangement with the BOCOG (Beijing Organizing Committee for the Olympic Games). GE launched a micro website with videos detailing its involvement in building power, lighting and water systems in Beijing.

The small pool of Olympic licensees with campaigns active in the fall of 2007 includes Jet Set Sports, which has exclusive rights to sell Olympic hospitality packages to Beijing, and merchandising companies XP Apparel and Roots.com.

For merchants, getting the governing Olympic Committee to approve merchandising deals can be a marathon of negotiations. James Connell, the director of e-commerce and new media for Roots.com, says merchandising Olympic apparel “… is complicated because you have people with competing interest in what the products look like and how it should be worn.” The retailer, which is based in Toronto, obtained a merchandising license from the USOC (United States Olympic Committee) instead of the IOC (International Olympic Committee) and can therefore only sell apparel online to consumers within the U.S., Connell says. Recruiting for new affiliates to sell products around the Beijing Olympics will begin in early 2008, according to Connell. Consumer promotions won’t start until about 100 days before the games begin, he notes.

Roots.com is partnering with existing sports sites, and Connell recommends that publishers add content about individual athletes’ performances and their lives to increase traffic. The company does not have marketing agreements with any USA Olympic teams or athletes currently, so they can’t sell USA Gymnastics bags, for example. In the past, the company has signed marketing agreements with individual athletes such as skater Apolo Ohno.

AT&T, a sponsor of the USOC, began its marketing activities in the summer of 2006, according to Mary O’Connor, the director of Olympic marketing for The Marketing Arm, which represents the company. In addition to the marketing programs with the USOC, AT&T also indirectly markets around the Beijing Olympics by supporting two USA Teams.

Though marketers who partner with USA Teams cannot use the Olympic Rings or Beijing logos, they gain an association with teams and sports that have fans that match the attractive Olympic demographic. AT&T’s “Blue Room” website tracks the year-round exploits of the USA Diving and Gymnastics teams. The site provides results of pre-Olympic competitions and behind-the-scenes videos of the participants in training to engage the audience with the personalities, O’Connor says. The website will encourage fans of gymnastics to start talking about Team USA’s prospects for success in early 2008, in hopes that “the passion can come around Beijing,” according to O’Connor.

Amateur sports enthusiasts “have no mainstream outlet for their sports” and are hungry for content, according to Matthew Pace, a partner and chairman of the sports business at the law firm of Duval & Stachenfeld. Pace, who previously worked on Olympic marketing for General Motors at agency Eventworks, says marketing to a fan base can create an affinity. For example, if an automotive company sponsors the USA Swim Team and the fan also likes that sport or team, then he or she is more likely to buy from the company, Pace says.

Pace says sports enthusiast blogs and news sites that cover but are not affiliated with sponsored teams are a great place for “ambush marketing.” For example, automotive competitors can market to the same audience of sports fans on other sites to attempt to win over consumers.

Marketing in conjunction with USA Teams and enthusiasts sites provides access to a desirable demographic without having to pay premium Olympic sponsor dollars, according to Robert Prazmark, executive vice president of sales and marketing at the Wasserman Media Group. Prazmark, whose company markets for the USA Gymnastics, Swimming, and Track and Field teams, says that the USA Teams and their fan sites in aggregate create a larger marketing opportunity than the Games themselves.

While the Olympic TV audience has dwindled, interest in swimming and gymnastics clubs is growing, Prazmark says. An individual webcast may only draw tens of thousands of viewers, but collectively, online coverage of a team’s activities and competitions can surpass the viewers of Olympic events, he says. Prazmark notes that USA Team fans offer a desirable demographic because of higher relative incomes. “The audience is larger and deeper than a more generic Olympic audience,” he says.

So just like the journey of the Olympic athletes – persistence, preparation and training are required for marketers to take home gold.

UPDATE:

Media services company ZenithOptimedia released its forecasts for advertising expenditures in the U.S. It projects a banner year for Internet ad spend including a good year in 2008 for TV ad spend because of the Olympics – but predicts ad spend down overall.

Some of its projections include:

U.S. ad market has been downgraded to 2.5 percent growth in 2007 from the previous estimate of 3.3 percent – mostly because of the credit and housing market slump
The Olympics will lift TV’s share of the global ad market to a record 38.2 percent in 2008
Online video and local search will make for a 30 percent growth in Internet ad expenditures in 2007 – that’s nine times faster than the rest of the ad market
Between 2006 and 2009, Internet ad spend will grow 85 percent and raise its market share from 6.1 to 9.5 percent
It projects 29.9 percent growth this year in Internet ad spend – that’s up from 28.6 percent from its last forecast a quarter ago, and 85 percent growth between 2006 and 2009 (up from the previous forecast of 82 percent)
Internet advertising is expected to account for 9.5 percent of all expenditure in 2009, up from 9.4 percent last quarter

Natural Born Storyteller: Q & A with Steve Rosenbaum

Steve Rosenbaum made his name on MTV and doing documentaries. So it’s natural that he’s into Web video. Rosenbaum is the founder and CEO of Magnify.net, which powers user-generated video (UGV) channels for Web publishers, media companies and video bloggers. The Magnify. net platform searches and sorts virtually all video available on the Internet based on a site’s interest (such as hobbies, politics, music) and engages users to discover, share and rate them for relevancy and entertainment value.

Magnify.net came out of closed beta in January 2007 at the DEMO conference and had 20,000 to 30,000 page views a day. It is now averaging 350,000 and was on target to pass 10 million page views in October. Currently there are more than 15,000 channels for users to discover.

Revenue magazine Senior Writer Alexandra Wharton asked Rosenbaum how he got interested in collaborative media production, how users can provide tools to build vibrant video communities and about the impact video will have on marketers and performance marketers

ALEXANDRA WHARTON: Although user-generated content has been all the rage for the past few years, you have been involved in it for much longer. How did you get interested?

STEVE ROSENBAUM: I’ve always loved hearing the authentic sound of a storyteller’s voice. So before video, that meant autobiographies, diary entries or journals – I found the raw and intimate nature of first-person storytelling very compelling.

I have been a filmmaker, and more of a visual storyteller, but there really wasn’t much of a place for first-person media in film or TV. The gear was just too big and expensive.

Then, in 1991 I got an 800 number and had viewers to my TV show call in and record their story ideas. I put their voices on the air. It was amazing. In 1993, Sharp released the first LCD ViewCam and made it possible to shoot yourself on video.

The result was a show I created for MTV called “UNfiltered.” It was a program that literally put the power of TV in the hands of the audience and let them shoot their own stories. People were hungry to express themselves and become part of the conversation. That’s only become truer today. You can see some of the clips here (www.unfiltered.Magnify.net).

AW: Can you explain how a user could use Magnify.net to create a community?

SR: Magnify.net takes the idea that communities want to communicate and gives them the tools and resources to activate video sharing and engagement within their site. Really any site can do it. If you’ve got a site that is up and running, but you don’t have video yet, Magnify.net will let you choose your URL, and pick topics and keywords that you want video around. Then Magnify.net discovers the video and your community can act as the peer-review rating system.

AW: Do users need to be technically savvy?

SR: Magnify.net is built for site creators who are passionate about their content and community – technical skills are not necessary. All the tools are drag-and-drop simple; there are a few bits of code and you’re done. We have great tech support: FAQs, discussion boards and quick responses to our support ticket system. Other community members are supportive as well. It’s easy, fun and is ready to grow as your skills and abilities increase.

AW: You have been credited with creating a new paradigm for community- created video – did you always see the potential to monetize it?

SR: This may sound simplistic but I see the future opportunities for revenue clearly. Currently there is an advertising system that is optimized to reach a mass audience. TV media is designed to be mass media. But if you look at Google, for example, the real future is in aggregating the niches and providing contextual advertising into those verticals. Just look at the readers of this magazine. Many of them have sites that serve extraordinarily narrow audiences. But they have large defined audiences.

So yes – I think there will be an inevitable shift as more systems can target focused audiences. Content creators and community curators who do a good job creating high-quality audiences will be well-positioned to garner revenue as the spend against community-curated UGV increases.

AW: How does Magnify.net help serve those who want to build a community around a very niche site?

SR: There are two models: those who want to start from scratch and build a site, and individuals who have already built a site and want to add video. Two examples of this are PrettyToughTV.com and Radio Controlled Universe, respectively.

Pretty Tough TV [www.prettytough.com/video.php] is a network of Magnify. net sites created on Magnify.net that serve serious female high school athletes. It’s the work of a mom and her two daughters in Los Angeles who have a passion for sports. Magnify.net allowed them to build 14 channels into a sports network that they run out of their den.

On the other hand, there is the site Radio Controlled Universe (www. rcuvideos.com), which had a successful website with 300,000 registered users. When they built their Magnify.net channel, hits on the videos were through the roof. Now they’ve got thousands of video makers and watchers and it is growing every day.

AW: Can you explain Magnify.net’s sites’ different types of advertising, including Google AdSense ads and integrated ads?

SR: We’ve built a solution that has three user configurations: advanced, moderate and hobbiest. The “advanced” users are going to claim their own inventory. That means banners, in-page display, CPC, CPA, text, and click-to-play video space on our pages. They’re going to bring their own ad relationships with CJ, LinkShare, Performics, Google AdSense and Amazon – whoever they want. They’re getting paid directly so there’s no waiting for us to reconcile and no crossed wires over payments. This is ideal for advanced affiliate marketers.

For the “moderate” users who want revenue but don’t want to be spending time on optimization and multiple ad network management, we offer a one-click integration with AdSense – just put in the AdSense ID and Magnify. net will do the rest.

And for the “hobbiest” that is using Magnify.net for the occasional video, you don’t need to claim any ad space at all. Odds are that for the casual user sites, they are not going to be participating in the ad network. Of course if traffic grows, they can claim their 50 percent of the traffic with AdSense.

AW: Can you talk about the AdShare Network that launched in August, which aims to allow site creators the ability to broker more lucrative deals with advertisers?

SR: For Revenue readers, our AdShare network is really the most interesting alternative. It costs nothing to build a video page and gives 50 percent revenue share.

We think that empowering our users to make their own decisions about content curation is smart for all. YouSurfTubes is the world’s largest collection of surfing videos [www.yousurftubes.Magnify.net/]. Its site editor, DC Smitty, knows more about surfing than we could ever hope to. He also knows more about surf products and surf advertising. We think that over time, the more our partners fine-tune their pages to increase revenue, the more we will learn from them and improve the targeting and contextual relevance of our ads on those pages as well. Relevant ads serve everyone – sites look better when all the ads are appropriate and useful.

AW: Can you explain how to create a branded TV channel that pushes content through Facebook?

SR: We think that in some ways, Facebook is the future of network television. It’s the most direct way to plug in to the zeitgeist of what your friends think is cool, valuable and entertaining. We think that Facebook groups could be a launchpad for all kinds of things. Right now we’re learning a lot with our current Facebook application. It allows users to take their Facebook profile and use our technology to discover videos that meet their interests and share them with others on their profile page.

AW: How important is video to the performance marketing model?

SR: First, we believe that video will be ubiquitous on the Web within 24 months. That’s a sea change in the way people will be presented with information. Second, we think that the integration of UGV into content-oriented sites is inevitable and important. It means that publishers that have been marketing themselves as “speakers” will have to rebrand and rethink their offering and transform themselves into conveners of conversation really fast or miss out.

So performance marketing is logical as a partner to UGV because not all UGV is useful or valuable. And not all marketing messages have value. Now, customers get to vote – literally – and support marketing that supports sites they like simply by engaging in commerce within a context they want to support. This could be a powerful shift.

AW: If businesses are not currently using video, how do you suggest they dip their toes in the water?

SR: With both feet. There’s little to lose right now since it’s early. Customers aren’t yet critical and therefore won’t punish you for a misstep or a test. That doesn’t mean you can afford to have inappropriate content on your site, so curation is critical and essential. But it doesn’t need to cost a fortune. It can be as simple as adding video to an editorial product, getting some footage at a trade show or inviting your customers to videotape themselves using your product. But it needs to be interactive and enjoyable.

AW: What does video bring to online marketing that others can’t?

SR: Video is emotional – it can touch you in ways that text and photos cannot. It’s immersive – it can draw you in and take you on a journey. Video is convincing – you can convert people with a compelling pitch. But all of these things mean that you need to strive for authenticity and honesty – and really make an effort to go beyond marketing and into genuine storytelling. The Web is going to bring new tools to the experience as well – you’re going to see branch-and-tree video tools that allow viewers to respond to a story and have the video be responsive to that input.

For example, a company that’s touring a potential buyer through new construction of a high-rise could emphasize the playroom for families, and the neighborhood’s nightlife for 20-somethings. Old, one-size-fits-all video just won’t be enough, and that is what’s going to fuel innovation.

AW: Where do you see online heading in the next two years?

SR: I think the Web is the launchpad, not the destination. I think you’re going to see Web-programmed video on your flat screen [IPTV], and the iPod and iPod devices are going to be huge, and the iPhone will spawn a huge number of imitators.

The Web will be the engagement platform – it will be the place where you interact and “program” your video. I think that you’ll see RSS streams of your favorite Magnify.net channel on your TV within 12 months. That’s huge for marketers and users alike.

From a quality perspective, H.264 [a video compression standard] will mean a major jump up in quality. Not HD yet, but video on your TV that is looking good from the Web. For those of us that suffered through streaming video the last time, this is a major shift that’s been a long time coming.

In terms of revenue, you’re going to see two major changes. First, there are a ton of unhappy TV advertisers just dying to get their ads on the Web. It’s been a chicken/egg scenario – what comes first, the ads or the content to place them around? Now we know: Content is happening, and ads are next.

The second major change is the nature of who uses video for ads. We think of video ads as the realm of the big boys: national advertisers with big budgets. But that was back when making video and editing were expensive. Now with a digital video camera and a Mac with Final Cut Pro, you can whip up a great video ad for a couple hundred bucks or less. So as marketers figure this out, they’re going to jump to video in droves. Will it work for everybody? Certainly not. But for some categories it’s going to be huge fast – it’s a very exciting time to be in this space.

AW: What would you say to CMOs of big brands to convince them that video must be part of their marketing efforts?

SR: Most big-brand CMOs already know video works – they’ve been buying TV for years. The thing they’ve been facing is that there’s been a huge defection of the hard-to-reach consumer from TV to TiVO, DVD, the Web and other mediums that don’t do well using interruption advertising, so CMOs need to rethink how they talk to these customers. We don’t want to have our time wasted; we want to be educated and informed.

Community content is a powerful new tool that is just evolving – and it’s much nuanced, meaning that the line between education and evangelism is hard to walk. I think you’re going to see much more of what Seth Godin years ago called permission marketing – using video to deliver serialized messages to people who opt in. Today what a smart CMO should be doing is experimenting, taking moderate risks in a number of different platforms. The good news about all this is that it’s all measurable, so in the end, the new video-based solutions that will rise to the top will be the ones that work both for users and marketers.

Searching for Alternatives

It was a cold night in Pennsylvania when Leila Crooks was on Digg.com, the community-based popularity site, and came across a story about a "slanket" – a fleece blanket with sleeves that offers the freedom of arm movement so people can play video games or surf computers while snuggling under a blanket.

Crooks was intrigued, bought one, loved it and sent the link to three of her friends who all bought them. At $50 a pop, the maker of the Slanket was benefiting from Digg. The number of sites for finding information online – that are alternatives to search engines – is growing and the traffic to them is increasing. People go to them for different reasons: to find experts who can provide the best possible information, to have material presented in a different way, to see what other users value as important and to find information they know will be relevant to them specifically.

The Slanket example illustrates the difference between search (or "recovery") and discovery. Search (or recovery) is when you are looking for something specific – a confirmation of information that you know already exists, such as information about the governor of New Jersey or a recipe for meatloaf. Discovery is when you find something you were previously unaware of, weren’t specifically looking for or didn’t know that you’d have an interest in. It’s akin to reading additional stories in the newspaper because of the proximity to the article you wanted to read.

Amanda Watlington, founder of Searching for Profit, says social media sites like Del.icio.us or Reddit.com are organized to present information in different ways, which can appeal to people "depending on how their brains work." Users go to the Most Popular section of these sites and check out what others deem to be interesting.

Internet marketer Carsten Cumbrowski says he passes time on StumbleUpon.com, a browsing engine, to find sites that other online marketers find useful as well as to find sites that entertain him. He says it has a good filtering system – "if I say I don’t like something, I never get anything similar again."

Online marketers that want to leverage StumbleUpon can try its advertising system, which includes the link of the advertiser’s website in the regular StumbleUpon rotation. When a sponsored site is shown, a green button on the toolbar appears. However, some advertisers who have placed requests to get visitors in their category have received notices from StumbleUpon that there are not a sufficient number of people to view the ad in the category selected. Skeptics wonder if this is because StumbleUpon does not want to deal with a low ad spend or if they are overstating their traffic numbers.

Cutting Through the Clutter

As users become savvier in locating information, they realize that search engines are heavily monetized and loaded with nearly as many marketing messages as sought-after information, and they seek out alternatives, according to Sam Harrelson, general manager of the East Coast U.S., for Clicks2Customers.

Others agree that "less noise" and the struggle to find relevant information on search engines often lead people to alternative sites.

For example, if users are looking for tax help, they might go to Digg and read an article like "five ways to get your taxes done" rather than entering "tax help" into a search engine, which yields promotional sites about tax services, according to Chris Winfield, president of 10e20, an Internet marketing company.

Users often go to review or opinion sites to find information to complement what they have found on search engines. Winfield says he will search Google for a dentist in New York to get some names and then go to Yelp.com to look at their reviews. Searching for Profit’s Watlington says she searches for hotels in New York and then goes to TripAdvisor.com for the reviews.

Tim Mayer, vice president of product management of search at Yahoo, explains that when users don’t find the answers they want on search engines, they can ask a question on Answers.com. The site includes 4 million answers from publishers, original content created by its editorial team, community-contributed articles from Wikipedia and answers from WikiAnswers.com.

WikiAnswers is collaboratively written by volunteers "in the spirit of growing information for the public good," according to its website. For contributions that users find to be worthwhile, users vote with Trustpoints, which are indicators of how trusted the last contributor is as a member of the WikiAnswers community (as opposed to a measurement of how much you can trust the actual answer to a question). Trusting a user’s reputation is vital to not only WikiAnswers but to all social sites where users provide information or indicate the value of information (such as through tagging, bookmarking or ranking).

Just like in off-line world, the value put on information depends on who is giving it, and for this reason, users’ profiles can be weighty and influential. If you are reading an article about JavaScript on Del.icio.us, you look to see what other articles a user has saved – it gives you an understanding of that person’s knowledge base. It is similar to looking at someone’s book or record collection – it lends credibility and perspective.

Trust Me

Techmeme.com is one of online marketing expert Jim Kukral’s favorite sites because it decides what news is important as opposed to a site that simply aggregates feeds. "Techmeme saves me time. There is no need to go to a ton of blogs to figure out what is going on. That’s power to me," he says.

Techmeme works differently than other news sites. GoogleNews, a news aggregator site, uses its own software to determine what stories to display, but the sources are selected by a team of editors. Similarly, SFGate.com, the online version of the San Francisco Chronicle newspaper, also features stories decided on by editors. Techmeme creator Gabe Rivera explains that Techmeme uses a proprietary algorithm, which changes frequently, to analyze posts to determine what Web pages are being discussed or cited most often on the Web.

Blogger Robert Scoble (www.Scobleizer.com) explains that Rivera started by selecting 1,000 of the world’s top tech bloggers, put them in his server, studied their linking behavior and created a "fabric" that now includes thousands of blogs and websites. When Apple’s iPhone came out, high-profile bloggers in the fabric such as Michael Arrington (www.TechCrunch.com), Guy Kawasaki (http://blog.guykawasaki.com) and Scoble were all blogging about the new device. Because of this, the iPhone headline stayed up on Techmeme almost 24 hours a day over the summer. Scoble says he believes that information from a site like Techmeme is more valuable than information from Google because it’s more SEO-resistant – it is much more difficult for its links to be bought. For these top bloggers to link to each other, they must trust each other. "If I trust Arrington and he trusts Kawasaki and he trusts Joe Smith, then I am going to infer that I trust Joe Smith because my chain has trusted him. It would be very hard for a search engine optimizer to break into this chain," he says.

Dana Todd, president emeritus of SEMPO and SiteLab co-founder, says that she thinks it’s rather limited thinking to assume that all SEO is harmful and that SEO is the only market manipulation tactic on the Internet. "In any market, there are marketers – and they do exactly what marketers do. They attempt to find hype-holes in the system and exploit them." She notes that it took about 15 minutes for users of Digg to start manipulating the results. The findings of a September study by the Project for Excellence in Journalism (PEJ) warn that just because a news story is popular at a website (or within a certain community) does not mean that it is the most "important" story.

The PEJ study compared the headlines of user-driven news sites (including Digg and Reddit), and Yahoo News, which offers an editor-based news page and three lists of user-ranked news (most recommended, most viewed and most emailed), and compared these with the news agenda found in mainstream news outlets.

The study illustrates how the news looks different when audience members pick what story they want to read or recommend, as opposed to when a professional journalist makes the selection. The study found that the most popular stories on user-driven news are more fleeting and often draw on a controversial list of sources and reflect the interests of the participants in the community – stories on Digg and Del.icio.us tend to be more about technology, which is why they are popular among online marketers.

User-driven news isn’t new – in October the site Slashdot celebrated its 10-year anniversary as a site where users could scrutinize science, science fiction and technology- related news. It is credited for being one of the first sites to provide forum-style comments alongside user-submitted news stories. Just like Del.icio.us, you wouldn’t go to Slashdot to find out information on the latest U.S. billion-dollar defense policy bill.

In a post on his blog, Gaping Void, Web 2.0 writer/cartoonist Hugh MacLeod posits that if he were looking for a Vietnamese restaurant in Phoenix, he could Google "Vietnamese restaurant Phoenix" and possibly end up at a bad restaurant. Or as a blogger with a good-sized audience, he can ask about his dinner plans on Twitter or Facebook.com and get a couple of good recommendations within minutes. "Because I know these folks, or at least, they know me " there’s a certain amount of trust and bonhomie that comes with the recommendation," says MacLeod.

Social networking site Facebook has received lots of buzz and high financial valuation because of the "social graph" – a reference to graph theory that models the connections between things. Facebook founder Mark Zuckerberg says Facebook is not a social network but a tool that facilitates the information flow between users and their connections. It is the ability for users to get more out of their connections that people find compelling.

The Power of the People

According to Scoble, Facebook, Techmeme and Mahalo – a human-powered search engine that creates comprehensive and spam-free results for the most popular search terms – will kill Google in the next four years because users will get their information from these types of sites where trust is more than what algorithmic search results provide.

In October, Facebook added Facebook Flyers, which offers two different advertising options to the social network. Flyers Basic enables marketers to run ads on a $2 CPM with targeting based on age, gender and network. Flyers Pro lets marketers use pay per click with a minimum of 1 cent per click. As with other PPC ad buys, a higher max price per click increases the chance your ad will be shown. Online expert Kukral says Facebook Flyers "is basically Google AdWords within Facebook." He says that as an online marketer in Cleveland, this gives him the ability to do things like drill down to specific demographics with Facebook and target those users for a local "event."

"I can create an event in Facebook and then look at all the people on Facebook that are in the area and maybe have certain political or religious beliefs [based on their Facebook profiles] and then invite them to participate in an offer or event," Kukral says. "That is powerful and it could be the next big thing."

Part of trusting someone’s advice or being receptive to marketing messages is awareness of users’ tastes. David Rodnitzky, vice president of advertising at Mercantila – a collection of hundreds of online specialty stores selling to U.S. and Canadian consumers – says StumbleUpon and movie site Flixster.com are popular because they leverage collaborative filtering.

Here’s an example of how collaborative filtering works, according to Rodnitzky: Two users rate 200 movies on Flixster, and 90 percent of the time the ratings of the same movie are consistent (user A gives "Star Wars" a 10, user B gives it a 10). So if user A wants to see a Chinese-language movie but has never seen one before, and user B has seen five of them, the odds are good that whichever Chinese-language movie user B ranked a 10 will also be a movie that user A likes. When user B types in "best Chinese movies," the results are tailored to his specific likes and dislikes.

"Over time, if a collaborative filtering engine gains enough information about an individual user, it’s possible for the results to be very powerful – and far more accurate than what you get by just doing a search on a search engine," Rodnitzky says. However, the collaborative filtering engine first needs to have enough users to make those ratings viable.

Wikipedia.com is a popular search alternative that has garnered enough users to make it worthwhile. It reached 2 million answers in the English-language version in September 2007. Since starting in 2001, more than 100,000 registered users have made at least 10 edits each to Wikipedia articles. It is in the search toolbar in the Firefox browser and the sixth-most-visited network of websites worldwide. Internet marketer Cumbrowski claims Wikipedia is exceptional because it lists references – users can find out what experts think are the best resources for a topic – which obviates the need to research a topic any further.

Specialization

Finding the best information from the most informed user base is driving the growth in specialized communities and vertical search engines. Cumbrowski says there will be more specialization. As good examples of that, he points to BUMPZee.com for the affiliate community and Danny Sullivan’s Sphinn.com community for search information.

The explosion of content available on the Internet is fueling this specialization. Although Web 2.0 has made creating connections easier, it has made searching for information more difficult than ever. Because users’ queries are usually ambiguous, Google cannot serve the needs of every user. In turn, that has brought about an increase in the number of vertical properties, which restrict the scope of a search (see sidebar, Page 46).

Stephanie Agresta, a founder of the Conversation Group, says social networking sites such as Facebook and Twitter fill in the gaps. They allow individuals to tap in to different levels of networks of people to get information from someone who knows about a particular subject. Sites such as Mahalo and Squidoo.com enable users to view information through a specific user’s lens – the movement now seems to be toward a custom feed based on an individual’s friends and context, and away from algorithms.

But SEMPO’s Todd says it took only about 20 minutes for her to get bored with Facebook "because of all the ridiculous plug-ins and faux human interactions." She says that search engine optimization is not really the issue here. Google dominates that area because it caters to the very lowest common needs of users, and does so very elegantly. "It’s a tool, not a destination."

Moving forward, more of these types of sites are expected to pop up. Mixx, a new social news site – a cross between LinkedIn, Reddit and MyYahoo – is a social network that lets users find and share news based on their interests and location.

Another social network service is Ning, an online platform for creating social websites and social networks. Ning helps Web publishers create social networks around their content – more than 100,000 sites have used Ning’s tools to add their own networks. The sites range from a network of family members sharing content and photos to large networks such as Indiepublic, a social network for independent designers and artists.

Social sites are limited to certain topics, as several industries don’t have enough people using them yet and it’s tough to find any long-tail information on social sites, according to Web strategy consultant Cameron Olthuis. He expects that search engines and "alternative sites" will be completely necessary for people to continue to find information.

Scott Jangro: The Engineer

Just try and find someone that doesn’t like Scott Jangro. It’ll be hard work. Jangro, the president of affiliate company MechMedia, is an extremely likable guy and it’s not because he’s a shrinking violet or a glad-hander.

While Jangro is very vocal in the affiliate community, he’s also gained a reputation for clearly and effectively communicating his position on industry issues in a way that seems to avoid ruffling too many feathers. Maybe that’s because Jangro has the analytical brain of an engineer coupled with the passion and creativity of an artist.

Take, for example, his staunch stance against Commission Junction’s Link Management Initiative (LMI) back in the summer of 2006. There was a public outcry among affiliates over LMI. Jangro jumped into the fray, blogging about the topic frequently. He also developed a practical guide for affiliates on the subject, providing detailed technical information as to exactly what the initiative would mean for affiliates. He then rallied affiliates to sign a petition against LMI that would be sent to Commission Junction officials.

Commission Junction eventually backed down on its hard-line stance and revamped its policy to accommodate affiliates’ concerns. The move earned Jangro kudos from other affiliates. However, it was a slightly risky tact given that Jangro is a former Commission Junction executive, who as an affiliate also holds the status of a CJ Top Performer. He also works with all of the other big networks.

But for Jangro, there was no other option regarding voicing his views and beliefs. He needed to raise his concerns but also wanted to make sure he wasn’t just ranting without getting results. His message had to be delivered in such a way that it would have the most impact on the affiliate network. In short, Jangro approached the LMI petition like he does most everything else – with precision, pragmatism and passion.

The Mind of an Engineer

Jangro is an engineer. He earned his college degree from University of Massachusetts, Amherst, in computer systems engineering. However, unlike the stereotypical notion of engineers as nerds with few social skills and even less creativity, Jangro has all of those skills in spades, which makes him a very successful online marketer.

He started MechMedia (sort of a shortened version of mechanized media – since he likes to automate things) in October of 2004 after he left Commission Junction. He claims that the decision to go out on his own and work for himself as a full-time publisher was a "hard thing to do."

With the moral support of his family, he left the comforts of an executive-level position. His decision was based mostly on a lot of good ideas he had been kicking around for a long time. In 2004, he felt the time was finally right to begin building on those ideas.

Starting out with things that had been hobbies, such as his interest in genealogy, Jangro promoted Ancestry.com. However, back then, Jangro says the only constant thing about the affiliate space was change. He realized that to be successful, you needed to adapt, but an affiliate business also needed to be proficient at search and much more.

About six months into building MechMedia, Jangro hooked up with a former BeFree colleague who did consulting and management in the SEO field. The two also worked in Massachusetts, and having a local guy to collaborate with on projects was appealing to Jangro. After a few projects, the two decided to turn MechMedia into a full partnership.

"It’s like we were dating for six months, then we got married that summer. I don’t like being a lone wolf," Jangro says.

According to Jangro, that move was the "biggest factor that contributed to our success." He says it’s much like the old adage about the whole being greater than the sum of its parts.

While Jangro’s partner Damien Arlabosse is a "behind-the-scenes guy" dealing with the search engine end of the business, Jangro is the face of MechMedia, setting up partnerships. He’s much more public – speaking at industry conferences and writing a blog. Recently, they also hired a front-end Web developer that they’ve known for over a year, who also happens to be in the Boston area.

Jangro claims it’s a great relationship and that it’s a nearly ideal working situation with all of them working from home. They are constantly communicating via instant messenger, email and phone, and only live 30 minutes from each other, so they have long lunches every couple of weeks to catch up face-to-face and talk business. "It’s not that different from how I interacted with cube mates at work," Jangro says.

Working from home suits Jangro, who loves his "commute," which is 30 feet downstairs to an office in his home in Stowe, Mass. Even with a son who’s just over a year and half old (he also has a 10- year-old daughter), Jangro is able to be totally productive at home. Between his wife (who works four days a week), his Mom (who comes over to care for their son two days a week) and three days a week of day care, Jangro’s covered for child care and free to focus his efforts on work.

That’s convenient given that Jangro says he’s "always working." Even if he’s not sitting in front of the computer, he’s still working. An avid runner, Jangro will often go out for a run in the middle of the day and ruminate on work issues. He’s been running off and on for about seven years. Recently, he started up on a much more regular basis running 20 to 30 miles per week. He plans to keep up that pace even when the cold New England winter weather hits.

The flexibility to take a run in the morning or at midday is what makes him feel lucky about his work situation. He’s not one of those work-in-your-pajamas type of guys. He jokes that he gets dressed just in case anyone should come to the door. He also says he doesn’t have any weird work habits or rituals. He just works a lot. He’ll often wake up at 2:00 a.m. just to get something done. And after spending time in the evenings with his family, who go to bed earlier than him, he’s back to work.

He laughs that when he tells people how he loves working at home, they assume he’s raiding the fridge, watching TV or playing Xbox. He sheepishly admits that he used to work with his laptop while watching TV. He’s given up that unproductive habit – thanks to his DVR (which "changed our life") but he still manages to catch some regular shows on the tube as well as his beloved Red Sox. In what little free time he has, Jangro loves to hang out with his family, ski and attempt to play enough golf so as not to embarrass himself.

The Corporate Life

For Jangro it’s all about enjoying what you do. He certainly doesn’t miss his "monster commute" from his corporate days, where he started out at Dragon Systems. His degree was in software engineering, but he never really did "hard-core software." Instead he began right after college running Dragon’s technical support team for six years. The company is best known for developing Dragon Dictate, a voice recognition application.

That job set the direction of his career in motion. He was on a services track and not a pure engineering path. In 1996, he left Dragon to go to e-commerce infrastructure provider OpenMarket where he managed tech support. Then at the height of the Internet boom, in 1999, he went to BeFree, lured by friends and former colleagues.

"In the Boston area, it was a small, incestuous industry, and I followed some people who encouraged me to work at BeFree," Jangro says.

At the burgeoning affiliate network, Jangro was a product manager. During that time he had his own website and claims to have dabbled in affiliate marketing even before joining the company. He owned Jangro. com and was playing with Barnes & Noble links on his site.

"It was just beer money and I can’t say that I saw great potential. At that time I wasn’t thinking of working for myself," he says.

Besides, it was exciting times at BeFree where Jangro was employee No. 88 in a company that "was growing like crazy." Six months after joining the company, it went public. As the product manager for the affiliate e-marketing platform, Jangro got to help define the product and the opportunity to experience the heady days of the Internet boom.

Then in 2002, BeFree was bought by ValueClick in an all-stock deal valued at $128 million. And some things changed at the Marlborough, Mass.-based company. As with nearly all acquisitions, people left, duplicate job functions were eliminated and there were some layoffs. But as one of the core product people, Jangro loved his job and wanted to stay on. He claims that his job didn’t really change that much and that ValueClick was pretty hands-off when it came to the BeFree product offerings. "They just let us run it," Jangro says.

The significant changes came in October of 2003 when another (and larger) affiliate network – Commission Junction – was purchased by ValueClick for $58 million.

Jangro says that under ValueClick, BeFree and Commission Junction were "jammed" together. It became "a Sophie’s Choice moment" where like the movie, "a mother had to decide between her two babies," he notes.

ValueClick was set on having just one affiliate network and Jangro was put on a small team of about eight or so people charged with helping make that decision. After several months of interviewing a lot of merchants and other parties, the decision was made to go with the CJ platform.

While Jangro had started with BeFree, he claims the decision to shutter the BeFast platform wasn’t that hard. He says that he looked at it from a business perspective and took the emotion out of it when making his recommendation.

"I was trying to make the best business decision. There were no hard feelings," he says. Although, he acknowledges that years later, other publishers still pine for the functionality of the BeFast platform.

As a product manager at CJ, Jangro says it was challenging. The engineering team was now based thousands of miles away from him in Westlake, Calif., and the born-and-bred New Englander wasn’t interested in moving away from his family and friends.

Although Jangro says now that distance and time zones aren’t really a factor in the online marketing business, at that time it wasn’t quite as easy. When he was working at BeFree, he was an integral part of the decision-making process and that all the engineers were in the same time zone (Pittsburgh, Pa.). He knew all of them professionally and personally.

"That same rapport just wasn’t there at CJ and it got me thinking it might be time to move on," he says.

And once an idea gets in Jangro’s head, there is no stopping him. So in September of 2004, he finished up the project he was working on and handed in his resignation. He waited until after Commission Junction’s annual CJU event in Santa Barbara, Calif., to leave.

He claims that he maintains great relationships with his former CJ colleagues – even in light of his very vocal objections to CJ’s LMI policy.

"There have been some small tensions in the past with regards to LMI – but nothing big. CJ didn’t push back on me. It was more silence than backlash. Actually, I also received a lot of support and some private ribbings," he says.

Passion and Profit

These days Jangro is squarely focused on his business, which focuses primarily on paid search and SEO. MechMedia’s portfolio includes dozens of domains – about 10 are active, including several costume sites and BUMPzee.

"We try to focus on just a few things and do them very well. The strategy is long term," he says, adding that he’s not content to simply put up sites; each must have engaging community aspects and be substantial.

The BUMPzee project was born out of "random ideas as an affiliate marketing blogger" after Jangro made a post on his blog and decided to create a resources page and directory for affiliates with blogs to be more visible. He didn’t pay much attention to the project for a couple of months and then noticed BUMPzee had more than 80 responses. So in January of 2007, he picked it back up and made a bigger project out of it, adding a directory, user sign-up page, RSS integration and a newsreader pulled into an interface. BUMPzee suddenly grew into a blog community and quickly a couple hundred people were using it and keeping it going.

The technology behind BUMPzee could be used for any community (not just affiliates) to submit their blogs – whether it’s fishing, SEO or kite flyers. That fact didn’t go unnoticed, and MechMedia was approached by an investor, which the company turned down. "It wasn’t like it was Yahoo wanting to give us $10 million," he laughs.

To date, BUMPzee is not a revenue source for MechMedia. Jangro likens it to "a fun thing – like buying a boat." He also admits that like a boat, the fun costs money. Currently, the project has a few sponsors that are helping to defray the expenses. However, down the road, Jangro hopes to turn BUMPzee into a revenue-generating effort.

He credits his engineering background with helping him build BUMPzee and the rest of his sites. He understands how to build backend databases and do PHP. He does most of MechMedia’s development from scratch and admits that it would have been hard to get to this point as an affiliate without his engineering knowledge.

For Jangro it all comes down to a love of creating things. "I want to earn a living but I love doing this stuff – creating. Some people build furniture or cars. I love building websites that people use," he says.

For Jangro, getting up in the morning and looking at his stats can be a boost, and prove that all his hard work is paying off, but the real payoff is the activity and seeing that people are using something he built.

"I am a very lucky person to be able to do exactly what I love."

Vast Markets, But Fierce Competition

Recently, the owner of a successful local brick-and-mortar mattress store contacted me, disillusioned by Internet marketing. He expected that sales would soar once he put up his website, but it was a total flop. I asked him what was unique about his business and was told "wide selection, high quality and good prices." Then I asked him how many of his Internet competitors would probably say the same thing about their stores. He sheepishly replied, "All of them, I guess."

That sums up the problem that faces small businesses trying to reach new customers. The good news for these cash-strapped entrepreneurs is that Internet marketing is a cheap way to expand their markets. The bad news is that it’s cheap for everyone else, too. Yes, the Internet gives you access to vast new markets you’d never dreamt of a few years ago, but it also brings you face-to-face with untold new competitors.

There’s a secret about Internet marketing. Certain small businesses are ecstatic about their success online, but others can’t seem to get any traction. Why do some businesses succeed on the Web, while others can’t get a word in edgewise, given all the other companies with the same idea? I believe that one factor often separates the winners from the losers – a specialty.

What’s Your Specialty?

When a small business starts a website, its plan is often to build on its local success to go nationwide (or international or intergalactic). But popular search keywords are awash in competition. How do you sell digital cameras if everyone else sells them, too? How do you attract searchers for that broad a term? If you need to land on the first page of search results to get sales, how do you do that as a small business?

You specialize. Successful small businesses are marketing highly targeted offerings online – extremely specialized products and services. That way, they take advantage of Chris Anderson’s Long Tail effect to get on that first page of search results for something (even if it’s a somewhat obscure keyword) and they have a good chance of satisfying these customers because they are doing what they do best.

Some of you may resist this advice. Perhaps you’ve been a successful affiliate marketer for years with no real specialty – you just knew how to do search marketing better than the others. You might be in trouble. As search marketing skills proliferate, your old edge will begin to erode. As others learn what you know about search, you need to find a new edge.

That’s why you must specialize – focus on a niche. You can’t just say, "We are an affiliate of Big Important Manufacturer." So what? The customer can buy direct or from a different affiliate.

Ask yourself a few hard questions about your business: What’s unique about your business? Or your products? Or the way you sell them? What is it that makes you better than everyone else for a certain specific target segment?

When you answer those questions, you’ll know how to market yourself on the Web. You’ll know what that segment is looking for and you’ll know how to attract those customers with the right message. A small business really can’t be good at everything. Identify what you are uniquely better at — even if it is just a small segment of customers that cares.

Communicate Your Specialty

Once you’ve seized upon your specialty, it’s time to take the next step. You’ve got to let customers know what you do. You’ve got to get your message to that highly targeted market segment.

You do that with stories- stories that communicate what is so special about your company, how you understand things no one else does, and how you can solve the exact problem your target market has.

A furniture store recently asked me for advice on their organic search marketing. A quick look at their site revealed how few words were on their pages. It was full of pictures of furniture. That’s sensible, because no one would buy a piece of furniture without seeing it. But selling on the Web is different from selling in a store, because there’s no salesperson. There’s no one to tell the story.

It turns out that this furniture store prided itself on its staff designers who assist customers to pick out the perfect furniture. But the only hint of that service on their website was a single page that listed a phone number to call for design advice.

Instead, they should tell stories of the customer problems they’ve solved. If possible, they should hire a freelance writer part time – maybe a reporter from the local paper – to write a dozen customer stories. They could visit their customers and take pictures of them with their nice new furniture in their happy homes – real people with real stories.

Tell as many stories as you can think of – each will be unique. Invariably, they’ll use different words and capture different searchers with different problems. Not only will these problem-oriented customer stories attract searchers, but they will capture the interest of people who might link to your site, also. (In addition, those links will boost your organic search rankings.)

If you really think through what your customers are struggling with, you can meet them at their point of need. Most people are intimidated in the area of home decoration, for example. Selling to those ignored people might win that furniture store an untapped market. And the Web is exactly the place where intimidated people hang out because no one can see how clueless they are, so they avoid embarrassment. If that furniture Website promotes its phone number for expert advice, it might attract a whole new clientele – perhaps their specialized target market. You need to look for a specialty market ignored by your industry.

And what about that mattress store that was so disappointed in their Web sales? After I peppered the owner with questions ("Do you solve sleep problems? Home fashion problems? What exactly do you do better than everyone else?"), he decided that his most unique offerings were silk and hypoallergenic beds perfect for those with allergies to dust and dust mites. And he then set out to share his expertise by telling stories about helping allergy sufferers.

If your business offers the same products people can get anywhere for the same low price, elsewhere, then the Web can be a very competitive place. A successful small business, however, specializes to succeed on the Web. So what’s your specialty?