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.

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.

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.

Video Goes Viral

Thanks to social networking sites such as YouTube, online video has quickly become an everyday part of the online experience. While marketers have been slow to capitalize on video so far, the low cost of producing content and potential for increasing reach will make it essential to performance marketing.

The audience that watches Web video skews younger, but nearly everyone online is doing it. According to market research firm comScore, nearly 75 percent of U.S. Internet users watched video during the month of May, viewing more than 8.3 billion video streams. Consumers are interacting with video more frequently in a wide variety of destinations, from “newspaper” websites to social networking to blogs. The most popular viral videos can garner millions of views, and video ads have proven to be more effective than their static counterparts in prompting user actions.

In 2008, more than half of the total U.S. population will be watching video online, according to eMarketer, and advertisers will spend more than $775 million in 2007 on video ads, up 89 percent over the previous year.

Since interactive video will catch and hold viewers’ attention longer, marketers are beginning to use the technology in four ways: on their primary websites; on microsites designed for specific campaigns; syndicating them through advertising networks; and releasing them to video search engines in the hopes that they go viral. The first step is to create professional and compelling content.

The Medium and the Message

Video starts with a camera, and MiniDV (digital video) is the industry-standard format for recording video on tape. MiniDV or hard-drive-based cameras are the best match for transferring video to a PC. To make it easy to transfer the video to a computer for editing, the camera should be able to record in MPEG 2 or 4 format and pass it through a FireWire (also known as IEEE 1394) or USB 2.0 (universal serial bus) connection.

These cameras range in cost from a few hundred to several thousand dollars depending on the features, including optical zoom; size of the LCD panel to preview the video; and the technology used to steady the image. Sony, Panasonic and Canon offer high-quality digital video cameras at a variety of price points and options.

For companies that want to tell a personal story in a vlog style, Jim Kukral, who blogs about using video at HowToDoVideo.com, recommends purchasing a set of lights that cost between $150 and $400 and a photo background (or green screen) that sells for approximately $50. Kukral, who produces videos and distributes them via YouTube, also recommends buying a tripod to provide a steadier image than with handheld shooting.

Kukral says videos about a company provide a more personal experience than blogs, and posting them on YouTube can drive traffic to your website. Publishers can “engage customers and illustrate things with video as opposed to [relying on] bullet points,” he says. Kukral posted videos on YouTube with tips on creating videos that generated new clients, several of whom commented that from his videos they “got the feeling that I knew you.”

Editing software ranges from free to more than $1,000, depending on the sophistication of the special effects. Macs include the intuitive iMovie, which provides basic functions for cutting and splicing together clips, adding titles and controlling sound. Similarly, Windows Vista PCs include a drag-and-drop video-editing application, Windows Movie Maker 6.

QuickTime 7 Pro ($29.99) is available for Mac OS X and for Windows, and includes more sound- and video- editing features, including the ability to export videos to iPhones. SimpleMovieX ($30) from Aero Quartet is a QuickTime competitor for Macs that works with more formats and larger files.

Marketers willing to learn more sophisticated programs so that they can add effects such as modifying the lighting, integrating multiple audio tracks and working with more file formats have several not-so-inexpensive options (see sidebar on page 048). Adobe Flash is becoming ubiquitous as a browser-friendly application that enables publishers to integrate interactive elements into their videos.

Kukral says the biggest mistake companies make in creating videos is insufficient branding. Videos should introduce the company at the beginning and reinforce the brand within the content.

For videos that are distributed outside of a corporate website, adding the URL in a title card at the end of the video is recommended. The videos should also be tagged with the URL and contact information, and keywords should be added to optimize the videos for search engines.

Marketing videos can range from a few seconds to several minutes in length depending on the type of content and target audience. Keeping the message short is essential to retaining the viewer, according to Michael Hines, the U.S. manager for network Zanox. Videos that are to be distributed as ads “can’t be 30 seconds long,” Hines says. He recommends that video ads be no longer than 10-15 seconds in length, while videos that introduce a company or illustrate a technology can be longer.

Publishers looking to create video marketing content without investing in editing software or expertise can refine their videos with a drag-and-drop online tool. Launched in August, Digital Canvas is a Flash-based service from Flimp Media that integrates interactive elements into a marketing microsite, according to company CEO Wayne Wall. These customized pages, also called flimps, can be shared as viral content, and built-in tracking mechanisms enable measuring their effectiveness, Wall says. The videos can tell the story of a company, or be used as an interactive component of marketing collateral, he adds.

Companies that lack video expertise or desire the highest-quality production values should consider using a video production service familiar with the optimizing content for the Web. Many of the companies that produce corporate training videos or video news releases are adding online services, with costs ranging from a few hundred to a few thousand dollars depending on the complexity of the shoot.

Putting Videos Online

Putting videos online that have been created on a website is not difficult, but finding an audience for them often requires manually uploading them to other sites or hiring someone to do so for you. Videos in the most common formats (MPEG, QuickTime and Windows Media) can be embedded on Web pages with a minimum of coding. As a more sophisticated alternative, embedding a Flash player on a site provides access to multiple videos and enables publishers to link to other interactive components or Web content.

For publishers with substantial traffic, adding videos provides an opportunity to retain visitors and to satisfy those who would rather watch than read content. If the videos become a runaway success, however, you may need to purchase additional bandwidth from your Internet service provider. Although the video quality can be compromised, uploading videos to YouTube and embedding their video on your site can reduce Web-hosting costs, according to video guru Kukral.

If you want videos to drive traffic to your website, they need to be optimized for search engines and syndicated through a growing number of video-hosting and search sites. As part of the upload process for submitting videos to search sites such as You- Tube, Revver, DailyMotion and Blip.tv, and syndication sites including Veoh, Brightcove and Maven, publishers fi ll out forms on each site and enter tags, descriptions and keywords. This painstaking process can take hours to reach just the most highly trafficked sites.

Companies such as TurnHere and Medialink work with networks of local video production companies to create the content and will also take care of the upload and submission process to sites including Google, AOL, MSN and Yahoo.

Through a partnership with RSS distribution company Pheedo, Turn- Here distributes content to sites looking to add video, including blogs such as BlogCritics and AlarmClock, and publishers including Slashdot, Red Herring, InformationWeek and ABCNews, according to CEO Brad Inman. Inman says travel, automotive companies and book publishers are among the early adopters marketing through online videos. TurnHere client Simon & Schuster has created hundreds of videos with authors talking about their latest books, and Inman says the top authors’ videos are viewed 50,000 times per month.

Local publishers are beginning to experiment with using video to tell their stories directly to customers. Superpages and CitySearch have recently introduced videos into their local listings. Marketing videos are “… really about long tail – not about a million streams, but [marketers] want 100 relevant streams,” Inman says. He recommends local business owners get in front of the camera because “no one can tell their story better.”

Getting the media and bloggers to write about or incorporate your videos can create signifi cant brand awareness and drive traffic to your website. Medialink, which has more than 20 years of experience in connecting companies with print and broadcast media, has video distribution services that start at $2,500. Medialink will host and present a video online and distribute it to local and national media including bloggers, and will also distribute the videos to aggregation and syndication sites, according to COO Larry Thomas.

In the fall of 2007, Medialink is launching Mediaseed, a Web platform that hosts and optimizes corporate marketing and communications materials for distribution. The platform contains tracking features for measuring a video marketing initiative’s reach online as well as on broadcast TV.

While accurately labeling videos will increase exposure on YouTube and the other top video sites, how to optimize content for video or general search engines remains largely a mystery. Google’s incorporation of video results into its universal search will increase the exposure of videos, but search engine marketers are still catching up.

Browsing videos and referrals from other users remain the most common methods by which people discover new videos. Being found on video search engines is not that easy, according to TurnHere’s Inman. People had a “false sense several months ago that ‘I can create a video and have it go viral on YouTube and it will go big,'” according to Inman. The reality is that most videos submitted to video sites will languish in obscurity. “The key is to start creating and experimenting,” he says. Search engines will take 18 months to catch on to the importance of video and properly index the content, according to Zanox’s Hines.

This fall Zanox will launch Zanox.tv, where publishers can post videos that will be used to attract partners. “The intent is to allow publishers to do an alternative to a text ad to encourage people to join as an affiliate,” says Hines. The video ads will likely pay on a cost-per-action basis, with Zanox and publishers sharing the revenue, according to Hines.

Ad Networks Monetize Video

Advertising networks are matching content companies with publishers large and small who are looking to use video to increase their audience. Startup video ad network Affliated.net is betting on a new video advertisement form opening a door into affiliate marketing. The borderless videos hover next to content and feature an actor or actress pitching a product or service. Since the video ads reside in the pixels along the edges of a Web page, publishers don’t have to give up their existing ads, according to Affiliated.net president Chris Skretvedt.

The videos, which range in length from 30 seconds to 5 minutes and will be paid for by Affiliated.net, are created to prompt user action such as generating leads or making a purchase, Skretvedt says. The ads launched in August and are to be sold on a CPA basis. The company is pursuing relationships with the major affiliate networks.

Tremor Media has combined forces with video distribution company ClipSyndicate to match content with relevant advertising. Tremor Media inserts in-stream ads with videos from sites such as DrPhil.com and making the content available to publishers, according to vice president of publisher relations Daniel Scherer.

Scherer says online video is hampered by a lack of technical standards in how to publish content. De facto standards for formats exist, but there is “no standard that supports integration of in-stream dynamic advertising,” he says. Content owners today are stuck in the struggle between controlling the advertising and monetizing their videos, according to Scherer. “The big puzzle is the upside-down reliance on You- Tube,” he says. If you want a video to be popular, put it on YouTube, but then you can’t monetize it; and if you want to control the ads, then you can’t put it on YouTube, says Scherer. Within the next year, You- Tube parent Google is expected to roll out a new video advertising service to address this problem.

Another opportunity for monetizing videos is to make them interactive so that the products featured within can be highlighted and sold via performance marketing. VideoClix provides technology that makes areas of a video clickable, according to Brent Stafford, the vice president of business development. “If you don’t make [your ads] interactive, you are underutilizing the medium,” he says. VideoClix has created ads for Levi’s and Honda, and shares revenue through CPA, CPC or CPM campaigns.

Once the science of increasing the search rankings of video has been significantly refined, publishers will rapidly increase their efforts to acquire or produce videos to place on their website. This strategy will be similar to how images of celebrities or top search terms are currently used to attract an audience, and will assure video’s place in the spotlight.

John Gartner is a Portland, Ore.-based freelance writer who contributes to Wired News, Inc., MarketingShift and is the editor of Matter-mag.com.

Search Marketing Is Direct Marketing

When I say the word “marketing,” what do you think of? Probably some kind of advertising – maybe a TV commercial for Coke. That’s brand marketing, and it’s gotten the lion’s share of attention from marketers for decades.

Far fewer people are direct marketers – the folks behind the catalogs and mail solicitations that fill our mailboxes. If you know any direct marketers, you may want to hire them to run your search marketing campaigns. Let’s look at the basics of direct marketing to find out why.

The Name of the Game Is Response

Direct marketing is truly measurable marketing. Unlike most TV commercials, every direct marketing message is designed to evoke a response, such as “call this number now” or “mail your order form today.” The return on direct marketing investment is based on how many customers respond to those messages. A very successful direct marketing campaign might sport a 4 percent response rate; a failure, less than one-half of 1 percent. Direct marketers make their money by increasing response rates.

Think about it. It doesn’t cost any more to mail a catalog that drives 4 percent response as one that drives 2 percent. The creative costs, paper costs, printing costs and mailing costs are about the same for each mailing, so smart direct marketers focus on raising response to bring more return from the same investment. Direct marketers spend their time figuring out just what causes more people to respond. A different offer on the outside of the envelope might get more people to open it. A different picture and product description in a catalog might cause more people to order. A yellow sticky that says, “Before you pass on our offer, read this” might cause a few people to do just that.

But how do direct marketers know what worked? They measure the response. They measure changes in response to every small variant of their sales pitch. And they keep the changes that work and throw the rest away.

When credit card marketers send out a million pieces of mail to sign up new customers, they don’t just write a letter and mail it out. Instead they write 10 or 20 different letters and mail them to 1,000 people each. Then they mail the version of the letter that generated the best response to the rest of that million-person list.

Direct marketers constantly tweak their messages to become more persuasive. They continuously experiment with new ideas. It may seem picayune to focus on raising response rates from 2.2 percent to 2.6 percent, but just such increases mark breakthrough direct marketing campaigns.

Another way to increase return is to cull your mailing list. If you know that certain customers never seem to buy, you can eliminate those addresses from the list and add new ones that might prove more profitable. Your mailing costs are the same, but your responses will go up.

You can see that the basics of direct marketing revolve around experimenting with your messages and your mailing list to drive more and more sales for the same cost. You can apply those basics to Web marketing, too.

Web marketing, done well, is the biggest direct marketing opportunity ever, because the Web is infinitely more measurable than off-line direct marketing. Off-line direct marketers can measure only the final response – the mail order or the phone call, for example. They can’t tell the difference between those who threw the envelope away without opening it and those who read the entire message but still did not respond. If they could, they’d know whether to change the message on the outside of the envelope or change the letter itself.

The kind of measurement the Web offers is the stuff of direct marketers’ dreams.

Passing the Test

In the May/June Affiliate’s Corner column, I wrote about the ways super-affiliates prefer to be approached by affiliate program managers and merchants for the purpose of program recruitment.

Wooing a super-affiliate over drinks and dinner with offers of exclusive landing pages, significantly higher-than-advertised commission rates, or showering them with free product samples will certainly get their attention, but it does not guarantee that you will get the heavy hitters to join your program, however.

Even if your product is a fabulous fit for the affiliate’s audience and your commission rates are more generous than your competitors’, no super-affiliate will send copious amounts of targeted traffic (read: their highly valued subscribers with whom they’ve worked hard to develop loyal and lasting relationships) to your site unless it first passes an affiliate’s Merchant Site Test.

This test evaluates many aspects of the site from both the affiliate’s and a visitor’s perspective. I personally start with factors that will affect a visitor’s experience, and keep the following questions in mind as I peruse a merchant’s site for the first time.

Does the site load quickly or does the server bog down under graphic-laden pages? If there is a Flash home page, is there an obvious “skip intro” link or am I forced to watch the video to the bitter end? Is the site attractive and professional in appearance or are there broken links, graphics and scripting errors? Is the sales page comprehensive and well written, or is it fraught with spelling and grammatical errors or “holes” in the sales copy?

I also check to see whether the site uses excessive newsletter sign-up popups or advertising fly-ins. Do site preview pop-ups such as Snap Shots block my view of the text each time I cursor over a link? Does a new window open every time I click a link? Although I may understand a merchant’s motivation for using such tactics, I am more concerned that visitors to the site will find such intrusions confusing and/or annoying to the point that they are likely to exit the site and kill any chance of a sale.

Appearance, functionality and copy rarely pose problems with professionally designed and maintained sites. Nor are they an issue for ClickBank affiliates who can code links to send traffic directly to the order form. However, having to bypass a merchant’s home page means that pay-per-click arbitrage isn’t an option for some affiliates, while others will have to write sales copy rather than a product review. Although some affiliates may be willing to make that effort to promote one exceptional product, most will pass on the program if the merchant offers a diverse or large selection of goods.

Another significant factor that I will evaluate is search functionality. Visitors must be able to search for and find what they want quickly and easily. For example, does a clothing site let visitors drill down to choose between designers, color and function, or does a click on the “Dresses” link slowly load a page that displays 50 thumbnails of cocktail, evening and wedding dresses?

If the visitor can find a product that she wants to buy, good affiliates will check to see whether the order process is functional, intuitive and secure. Does the site post a “Hacker-Safe” logo and a privacy policy? Are shipping policies and prices easy to locate, or does a customer have to go through the entire order process to determine the cost to ship to Canada or if GST and PST will be added to her order? Can the customer ship to an address different from the billing address and can she have that dress gift wrapped for her cousin in Amsterdam?

What happens if our customer has questions about either the product or her order? Is there a sizing guide or a customer FAQ? Does the site offer order tracking? Is there a contact link, Live Help badge or telephone number displayed on every page for support?

I’d be thrilled to see all but the last item on that list, as a prominently posted telephone number that encourages phone orders means that potential commissions will be lost through traffic leakage.

Traffic leakage occurs at any point on a site that allows visitors to leave the site without making a purchase through the affiliate’s link. Affiliates that pay for their traffic are particularly sensitive to this problem, and most affiliates will not join a merchant’s affiliate program if there is any leakage at all.

Phone orders must therefore be tracked to the referring affiliate – which does not mean asking your customers from which site they originated. Merchants who aren’t equipped with the technical wizardry to track phone orders should allow affiliates to send their traffic to a version of the site that does not post a phone number, and trust that their super-affiliates’ promotional efforts will more than make up for any sales that may be lost by doing so.

Most traffic leaks occur when merchants link to other sites that may be of interest to their visitors, or to partner sites with which they have reciprocal link agreements. Traffic leakage also occurs when a merchant with two or more online stores links to those other sites without compensating affiliates for sales from any and all of their stores.

The most offensive type of outbound link traffic leaks are affiliate or contextual advertising links (i.e., Google Adwords ads) from which the merchant hopes to profit. Most affiliates consider this practice more “traffic theft” than traffic leakage and will not only not join the program, they will also warn other affiliates of the merchant’s commission-stealing practices.

That’s not to say that as a merchant you shouldn’t promote other merchants’ products. You should. But do it on the back end or from within the secure area of your site, only after your own affiliates have had a fair chance to earn a commission for sending traffic to your site.

As you can see, the Merchant Site Test is comprehensive and super-affiliates are picky to the nth degree! If any aspect of the site misses the bar, most super-affiliates will go on to consider your competitor’s offer and promote their products without so much as a TYBNTY (thank-you-but-no-thank-you) note for your time and treats.

If you’re lucky enough to have a super- affiliate take time from her busy promotional schedule (or lounge chair) to explain why she’s chosen not to join your program, consider implementing her recommendations as soon as possible – and let her know as soon as the changes have been made.

Don’t stop there

Visit a Web developer’s forum and ask for feedback about your site. Ask your site visitors for their comments and suggestions as well. Check the affiliate networks for clues about what your competitors are doing right. For example, ask yourself how a merchant that pays only 8 percent commissions has an EPC that is triple that of the merchant who pays 12 percent. Do your own Merchant Site Test to find out why affiliates love to promote their program.

Getting just one super-affiliate on board can substantially increase a program’s earnings. The first super-affiliate in a program will generally use this advantage to heavily advertise the site or product using pay per click.

As other super-affiliates join the program and competition between affiliates increases, most will rise to the challenge and step up their promotional efforts using a diverse array of creative methods. Exposure to both the product and the affiliate program tend to increase exponentially at that point – which makes for very happy merchants and managers.

When you design your site with a view to building long-term relationships with visitors and potential super- affiliates, you too can get that kind of happy – perhaps even rich.

Rosalind Gardner is a super-affiliate who’s been in the business since 1998. She’s also the author of The Super Affiliate Handbook: How I Made $436,797 in One Year Selling Other People’s Stuff Online. Her best-selling book is available on Amazon and www.SuperAffiliateHandbook.com.

Making Over My Own Site

Being “Dr. Makeover” comes with plenty of pressure. There’s an expectation that everything I touch will be inherently beautiful and optimized for peak performance. I have a dirty little secret, though: I rarely spend much time working on the design aspect of my own sites. What’s that old saying about the cobbler’s children?

So I’ve decided to put some shoes on my own kids’ feet and I’m making the process public. For the next two issues, I’ll provide a behind-the-scenes look into one design firm’s struggle to redesign its own site. I’ll share failed designs. I’ll ask for your objective opinions. And, hopefully, when it’s all said and done, I’ll have a better site and you’ll have a clearer understanding of what it takes to design a successful online venue.

While I generally recommend redesigning websites every 12 months, the site for my design firm – SostreAssoc.com – has had the same look since early 2005. That’s right, over two whole years. Well overdue from a time perspective, but does it really need a redesign?

The current site has a pretty good conversion rate for this type of business. Although I don’t feel it’s the best it could be, some people still like it and by most accounts it doesn’t seem to be overtly hurting sales. If it ain’t broke, don’t fix it, right? Wrong.

Just because sales are coming in at a normal, healthy pace, doesn’t mean the website is performing optimally. Industry- standard conversion rates are often in the single digits. Three percent. Six percent. That means that roughly 90 percent of your site’s visitors are choosing not to do business with you (or me, in this case)! Of course, a 100 percent conversion rate is nearly impossible for several reasons, but setting your sites to that lofty goal can be more beneficial than simply striving for industry standards.

A good way to determine if your site could perform better is to review how it performs against its transitional goals. Start with a list of all the elements that contribute to the success of your site. Of course, there is the main conversion goal (in our case, increase the number of contacts we receive), but there are also a number of transitional goals we use to get users to take that conversion action. In our case, the list looks like this:

Goal: Communicate our services

Besides the overtly generic tagline, “Consulting, Design, Development,” it’s not immediately clear what services our company provides. If people don’t know what we offer, how can they buy it? Grade: D

Goal: Establish our credibility

The site uses third-party references (citations and client testimonials) to establish credibility. Grade: B

Goal: Convey our thought leadership and expertise

Our clients are always surprised at the level of thought and expertise that we bring to the table, but our website does very little to communicate that expertise. Case studies that explain exactly how we solved tough problems for our clients could help in this situation. Grade: D

Goal: Showcase our product

In the Web design industry, our client websites are our products and they have to shine. While we have a news section that highlights when a client site goes live, there is not even so much as a thumbnail of one of our client’s sites to be found on the home page. This is very, very bad. Grade: F

Goal: Make visitors aware of my writings and conference appearances

Some people visit the site not to hire Sostre & Associates, but to find more of my writings or see me at an industry conference. I wrote a book for a major publishing company. Can you find it on the home page of my site? No. I spoke at several conferences in the past two years. Were those events highlighted on the site? On a good note, I do include a link to this Revenue magazine column. Grade: D

Goal: Foster strong search engine rankings

The current site gets a fair amount of traffic from search engines but it still doesn’t come up for many top-tier, highly trafficked terms. Grade: B

Based on that evaluation, my cumulative grade is a D, and that means it’s definitely time for a redesign.

In the same way we used transitional goals to evaluate our existing site, we’re going to use those goals to drive our redesign priorities. The “problem” with transitional goals is that none of them are really more important than any other one.

In addition, we have outlying goals like generating SEO traffic and promoting my writings and conference appearances that are not directly related to the main goal of getting users to contact us.

The typical, old-school conversion process involved a linear conversion funnel where you took prospects from Step 1 to Step 2 in progressive order to close the sale. Online, there is no linear funnel. Visitors don’t always go from one Step 1, to Step 2, to Step 3 in orderly fashion. Some visitors only want to see the work, while others want to see what services we offer and still others want to start out by reading about our expertise.

Think of it this way: Traditional sales are like being a chauffeur. You drive visitors from one place to another, taking them where they want to go. Online, the visitor is in the driver’s seat and you aren’t even sitting in the car. All you can do is post road signs and hope they’re clear enough to lead the user where they want to go. And that’s where it gets difficult.

Individually, it’s easy to design a site that executes one of the transitional goals. Create a site that communicates services? Easy. Design a site that showcases a product? Simple. Develop a site that improves search engine rankings? No problem. But how do we put it all together so that everything is in balance? That’s exactly what we’ve been struggling with for the past 12 months. Since I started the redesign over a year ago, I’ve designed about 30 different layouts for the site, but I haven’t been happy with any of them.

This is where you come in. Send me (pedro@sostreassoc.com) your thoughts on the current site, or on any of the failed designs. Then next issue, we’ll take this discussion to the next level.

PEDRO SOSTRE is pioneering Conversion Design and its ability to turn online shoppers into online buyers. He is the co-author of Web Analytics for Dummies and serves as CEO of Sostre & Associates, an Internet consulting, design and development firm, which also promotes affiliate programs on its network of websites. Visit www.sostreassoc.com to learn more.

The Desire to Acquire

The new geography features auction-based ad exchanges and conglomerated companies with divisions that buy, sell and distribute ads: something that would have been unthinkable a decade ago.

The emergence of these new entities with intertwined relationships has the potential to streamline the media marketplace and drive costs down and return on investment up. Consolidation will likely enable the biggest players to increase their market share while also growing the demand for independent agencies and networks that operate outside of their reach.

Fast and Furious

To recap: In a shorter span than is required to complete the NHL playoffs, Google gobbled up DoubleClick, Yahoo lassoed RightMedia, Microsoft acquired aQuantive, WPP Group won 24/7 Real Media and AOL absorbed Ad:Tech AG.

LinkShare, a subsidiary of Internet services company Rakuten, purchased lead generation company Traffic Strategies in June. Rival Commission Junction is owned by potential acquisition target ValueClick, and Performics is a property of Google’s DoubleClick.

The acquisition frenzy has made tracking industry relationships as challenging as keeping up with the latest Hollywood romances and legal tangles. For the first time the largest media companies own ad networks and/or agencies, one of the largest agencies owns a network, plus countless smaller players also work on both the buy and sell side. (To untangle the web, see page 49 of the July/August 2007 issue.)

Consolidation, shakeout, maturation of the market: Whatever you want to call it, investment banker John Doyle of Peachtree Media Advisors says there are precedents in TV and print industries for large media companies doing a “land grab” to acquire related businesses. “It’s like getting a bigger bucket to stand under a waterfall,” he says. Advertisers are expected to greatly increase their online spend during the next few years, so it is not surprising that the top media companies attempt to expand their reach by buying companies offering related services, he says. Doyle expects the consolidation to continue as it adds value for buyers, and more midsize companies will likely want to increase their heft by scooping up smaller competitors. However, after the biggest deals are done, the largest players are unlikely to buy smaller shops, as it “won’t move the needle” in increasing their market share, according to Doyle.

Questions of Perception

The distinction between interactive/ creative agencies, advertising networks and media companies began to dissolve through smaller acquisitions during the past few years, but now the potential for conflicts of interest are as clear as they are abundant. That agencies, ad networks and publishers are owned by a single organization has many in the industry uncomfortable. “Most of the rules of online advertising are broken …” says Russ Mann, CEO of search marketing company SEMDirector.

By comparison, how would investors feel if one entity ran the stock market and owned an analyst firm and a brokerage? Not too comfortable, most agree. Not surprisingly, in May, the Federal Trade Commission began an antitrust investigation of Google’s purchase of DoubleClick to identify aspects of the deal that could limit competition.

Publishers might be reticent to partner with companies owned by a competitor, according to Dana Ghavami, CEO of CheckM8, which sells software to manage rich media campaigns. For example, ad networks could prioritize placement based on the needs of their corporate family of publishers. “My worry – if I am a media company such as Viacom or Fox [which have used DoubleClick’s ad network] – is who is looking after my interest?” says Ghavami.

Interactive agencies with ties to networks and media companies have the most at risk as they are likely to undergo the most scrutiny to remove any doubts that they are putting clients first. Trusting agencies to buy “in-house” is akin to “asking students to grade their own tests,” according to John Ardis, vice president of corporate strategy at ad network ValueClick.

Advertisers looking to optimize the return on investment from their media buys will want assurances that purchasing decisions aren’t compromised by a need to unload excess inventory from a sister company, CheckM8’s Ghavami says. That’s not a comfortable discussion for those sitting on either side of the table. These “umbrella” companies will have to institute internal safeguards to prevent the possibility or even the appearance that their actions are being influenced by other divisions of the company.

Advertisers may be unwilling to place their confidential and sacrosanct data about campaign performance in the hands of companies with divisions that are their direct competitors. For example, a liquor company might hesitate before signing on with a network that is part of the same company as an agency that represents a competing brand (see BT story on page 52 of the July/August 2007 issue).

Similarly, a media giant may not want its top advertisers’ performance data to be in the hands of a competing company. “Everyone has seen what Google is capable of when they have too much control – they start setting the rules,” says Ghavami. Giving the enemy the intelligence used to form your battle plan isn’t a strategy for success.

The Upside of Acquisitions

While organizations that span multiple aspects of advertising increase concerns about conflicts of interest, they should be able to increase efficiency and lower the cost of buying and selling. In theory, agencies would be able to buy from sister networks without the need for the sometimes lengthy approval process that slows insertion orders. Also, ad networks and their subsidiaries could combine campaign performance data with real-time analytics from their publisher properties with an ease and granularity not possible today.

“Microsoft [as one example] would be able to create bundled solutions that are more cost-effective and provide more value at the same price,” says Dema Zlotin, vice president of strategic services at SEMDirector. Advertisers would save time by working with one-stop shops and could better adjust campaigns by getting real-time site-by-site performance to complement their networkwide data.

Agencies, however, may have to rethink their fee structure if the purchase is made from elsewhere within the company. Charging a hefty commission when buying from its own network and properties won’t fly with some advertisers. Agencies that are part of other entities will have to work harder now to prove that their intellectual capital is worth paying the premium, according to ValueClick’s Ardis.

Greg Stuart, the former CEO of the Internet Advertising Bureau and co-author of the book, What Sticks, says online advertising was ripe for change. The buying and selling of interactive ads is costly and inefficient, according to Stuart, and consolidation and greater transparency will benefit advertisers. “Shame on the industry for letting it go for so long,” he says. “I am appalled at some of the things that go on,” says Stuart, stating that the failure rate (47 percent) of ad campaigns reflects poor performance by agencies.

While data sharing between organizations can simplify more “routine” buys, advertisers will continue to work with agencies for more complex purchases. The potential for conflict of interest could prove a boon to independent agencies. Some advertisers might be inclined to work with smaller but experienced shops whose allegiance can’t be questioned.

Though purchases through a single company might be more efficient, advertisers happy with an agency could go with networks from competitors, according to SEMDirector’s Mann. “Online is still best-of-breed world,” he says, adding that the various divisions of a one-stop shop might not be the best choice individually.

Rise of the Ad Exchanges

In this consolidated online environment, advertising exchanges that use auction bidding to sell ads and directly connect advertisers and publishers will see increased interest because of their transparency. Exchanges enable advertisers (either companies or networks working on their behalf) to bid for type of ad and the demographic that they would like to reach. Publishers set a minimum price for accepting the ads, and the exchange automatically matches buyer and seller.

Ad exchanges recently changing hands include Right Media, which was acquired by Yahoo, which previously owned 20 percent of the company, and an exchange being developed by DoubleClick that will become part of Google. Microsoft is said to be developing its own exchange, and independent exchanges include AdECN; Turn, Inc.; and ContextWeb.

Bill Urschel, the CEO of AdECN, says exchanges are differentiated from advertising networks because of the auction pricing, the transparency, and because the exchanges guarantee payment to the publishers. “[Exchanges] are taken from the stock exchange model,” says Urschel. AdECN’s exchange has signed up 28 ad networks since it launched in March of this year.

This transparency will attract publishers concerned about intertwined relationships since the services are (at least in theory) neutral to the source of the ad. While publishers and advertisers who compete with Google, Yahoo, etc., may not want to hire their agencies or networks, the exchanges can provide access to their sites.

Because of the negotiations involved in securing media buys, many large publishers such as The New York Times and The Washington Post often have 20 percent of their ad inventory unsold, according to CheckM8’s Ghavami. “Remnant inventory will be marketplace-driven,” he says.

Once they gain experience in using an exchange, some publishers and advertisers may bypass the ad networks and trade directly through the exchanges themselves. Ghavami estimates that 70 percent or more of major publishers’ inventories could be sold directly by exchanges. Ad exchanges will most directly compete with remnant networks such as Blue Lithium and Traffic Marketplace.

Exchanges may accelerate the shakeout of the weaker advertising networks, but they are unlikely to dominate the larger networks. Exchanges make sense for large publishers who have considerable unsold inventory, but publishers are likely to continue to get their highest CPMs through traditional sales channels.

Just as online stock trading didn’t cause brokerages to become extinct, the automated selling advertising is unlikely to replace networks. “There is a sliver of people who will be comfortable with the auction model, so auctions will have a place,” says ValueClick’s Ardis, whose company does not participate in an ad exchange, “but they won’t set the industry on its ear.”

The New Landscape

The current wave of industry consolidation will likely continue, enabling larger companies to become more powerful while at the same time providing opportunity for third-party auditing companies.

Google, Microsoft, Yahoo and Time Warner and their affiliated companies will have their hands in each step of the marketing chain, enabling them to increase the revenue generated from each client. The potential promise for advertisers is that these companies will be able to better target customers and increase by matching demographic and target data with real-time campaign analytics.

“The move away from AdSense to networks that are better at interpreting content” and matching it with advertisers makes sense, according to author Stuart. Advertisers would have greater control in distributing content to their target audience, such as being able to launch a campaign that is instantly delivered to a specific demographic (e.g., males between 18 and 35).

Though many of the sizable agencies and networks have been swallowed, the consolidation will likely continue. Networks such as ValueClick and smaller competitors could also be acquired. But analytics firms such as Visual Sciences (formerly WebSideStory) and Omniture are likely to be at the top of the media moguls’ shopping lists because of the additional insight they provide in maximizing revenue, according to Stuart.

Media companies are also likely to continue acquiring search and mobile properties (such as the recent acquisitions of Third Screen Media by AOL and ScreenTonic by Microsoft) during this continued consolidation, according to AdECN’s Urschel.

Advertisers and publishers may pressure multiservice companies to allow third-party auditing and oversight to ensure that ad buying, selling and placement are all completed without prejudice. Independent auditing firms could verify transactions between related organizations, or advertisers could request that purchases be made from outside networks and publishers. Industry groups will likely establish voluntarily privacy rules or codes of conduct to limit potential conflicts.

Exactly how companies will adapt with new services and systems to increase the efficiency of online advertising is uncertain today. But we can be sure that now that the rules have been changed, there is no going back.

John Gartner is a Portland, Ore.-based freelance writer who contributes to Wired News, Inc., MarketingShift and is the Editor of Matter-mag.com.

The Tangled Web of Link Spam

In my last column, you were warned to “Never watch sausage being made,” lest you find the process so unappetizing you’d never eat it again. But even if you find sausage links tasty, you’ll want to spit out those spam links every time.

Last time, we explored the consequences of content spam, which include bad publicity and getting banned from the search engines. This time around, we’ll explore link spam techniques so you can avoid them or notice when your competitor stoops to them.

Before we do, let’s review why legitimate links are so important to your organic search rankings. Suppose you have a page that you’d love to be the No. 1 result for the search query “digital cameras.” Tens of millions of Web pages contain the words “digital cameras,” with millions of those pages featuring those words in the title. Search engines distinguish the quality of each of these pages by checking how many other pages link to them. Think of each link as a vote for the quality of the content. To get your page ranked No. 1, you’d need to get as many links to your page from as many other high-quality pages as possible.

Links are extremely important in determining search rankings for “digital cameras” and other highly competitive queries. So it’s no surprise that spammers have come up with a bag of tricks to fool search engines about their link strength. Link farms are the most popular technique, so we’ll tackle them first.

Link Farms

Link farms are the name for a spam technique in which spammers set up dozens or hundreds of ersatz sites to be crawled by search engines. Spammers create link farms just so they can put in thousands of links to other sites that they want to boost in search rankings. Search marketers need to be able to tell the difference between link farms and legitimate directories, so they can spend their time soliciting real directories for links, rather than sites that will do them no good.

Here are a few ways you can spot a link farm:

Links R Us. Each directory category has dozens and dozens of links – more than any visitor could ever use. Your suspicions should grow if the URLs seem to be strings of hyphenated words. Or if an IP checker reveals that many of those URLs come from the same “C” block (the same set of IP addresses in the network). Or if the pages from these sites are all from companies you’ve never heard of, and those pages resemble each other.

Odd Lot. The sites linked seem irrelevant to the directory topic or seem like a set of odds and ends with no central idea. You see links about baby care and the petroleum industry on the same page. Link farms are often thrown together haphazardly, most often by automated programs that spew the links onto pages with no rhyme or reason. A cousin of a link farm, a “free for all” site, allows anyone to post a link on any topic. It’s similarly worthless for improving your search rankings.

Dollar Store. None of the links seem very valuable. They consist of pages with nothing but advertisements, or content that makes no sense. Don’t be fooled if these pages have high Google PageRank values shown in the Google toolbar. Some spammers can artificially inflate a site’s PageRank for a while, but Google eventually catches on and adjusts the value.

Before requesting a link to your site from a directory, look it over to see if it exhibits the tricky business listed above. If it does, it’s probably a link farm. Search engines recognize more and more link farms every day. When they do, they stop counting those links toward a page’s ranking, so there’s no point in you getting your site listed there.

More Spammy Links

Although link farming is the most prevalent tactic for link spam, many other tricky techniques abound:

Hidden links. In my last column, we discussed hidden text, a spam technique that hides words from people but shows them to the search engines. Spammers hide links the same way, such as overlaying the links with other content, allowing them to boost the search rankings of pages with hundreds or thousands of invisible links.

Blog and guest book spamming. Some spammers use programs to automatically add links to blog comments and trackbacks, or to guest books. Most sites have eliminated guest books in response. Many bloggers now block readers from posting comments, or they approve each comment and trackback manually.

Tricky two-way links. Some spammers try to trick you instead of the search engines. When people agree to trade links with you (linking to your site if you in turn link to theirs), make sure they are playing fair. Some spammers add the link to your site, but code that link using JavaScript to hide the link back to you from the search engines. So you see the link back to your site, but the search engines don’t. Why do spammers go to all that trouble? Because the search engines believe that you’ve added a far-more-valuable one-way link to the spammer’s site. Check out the linking site with JavaScript turned off to make sure the search engines see the link back to you.

While not strictly a spam technique, search engines are not big fans of paid links, where a site sells links to other sites. Search engines ask that those links be tagged with a “nofollow” attribute, telling the search engines that these links are not unbiased votes for the quality of the content. My advice is that paying for links is fine, but you should do so for the traffic only. Pay for a link when the visitors that click on that link are worth the cost. (This is exactly the same calculation you make with paid placement ads.) Search engines work harder and harder each year to recognize paid links and to devalue them, so I don’t recommend buying links to improve your search rankings.

This wraps up our three-part series on spam. If your site has been banned or penalized for using these techniques, you can clean up your site and request reinstatement, which is usually granted (although reinstatement sometimes requires an extended period of explanation and begging).

MIKE MORAN is an IBM Distinguished Engineer and product manager for IBM’s OmniFind search product. His books (Search Engine Marketing, Inc. and Do It Wrong Quickly) and his Biznology blog are found at MikeMoran.com.